For years, we’d talked about how we can earn more, save more, lower debt and invest better. This is so that we could build ourselves a financially richer life. 

But, what about donating and being generous?

Well, to be honest, I’m not exactly the type that is into charity and social works. Sure, I made regular but insignificant contributions to church. Apart from them, I thought little about it. 

That is until two years ago, when I was introduced to Daniel Tan, the Founder of Yayasan Generasi Gemilang (GG), a foundation that focuses on improving both the literacy and nutrition levels of underserved children via programmes: Super Sarapan, Projek Makan Sihat, KidzREAD, and LIT Mathematics in Malaysia. After we met, I decided to make small contributions on a monthly basis to GG, upon a quick background check on its website and LHDN. 

Fast forward to today, I had the privilege to meet up and interview Daniel Tan & Melissa Ngiam, CEO of GG, to have their perspectives and insights on initiating and managing a foundation in Malaysia. Of which, I’ll list down 4 major pointers that I’d obtained from them over the interview. 

They are as follows: 


1. Background: Do You Need to be Rich to Start a Yayasan?

Is Daniel Tan a businessman, a multi-millionaire or an heir to his family fortune? 

The answer is no. Instead, Daniel came from a broken family and was not raised in an environment to succeed. In his teens, Daniel went to church and thus, had his life transformed for the better. He pursued a career in the IT industry, where he worked as a corporate trainer & consultant with MNCs such as Microsoft. He then pursued a pastoral career and started GG via church support as a channel to help local children of similar circumstances. 

As for Melissa, she is a Chartered Accountant. She began her career in charity & social works as a finance staff with GG after her departure from PwC. She then progressed and now leads GG as its CEO. For most accountants, such is indeed an unusual path. But, as one who holds a similar background in accounting, I do find her and the role she plays at GG to be highly inspirational. 


2. Impact: Maximizing Value from Each Donation Dollar

Source: GG Annual Report 2022


Since its inception in 2010, GG has raised RM 3-4 million per year from corporation partners and the public. Of which, GG spends 80+% of its total annual expenses on its charitable programmes as stated above. 

But, the question is: “How does GG measure the success of its programmes?”.

From Melissa, she shared an example from GG’s Super Sarapan programme. In brief, Super Sarapan is a programme that provides a meal for school children so that less children will go hungry in school. Beyond the number of children being fed, GG monitors each students’ school attendance and tracks their hunger levels using a global standard tool (The Food Insecurity Experience Scale). Seeing students less hungry or no longer going a whole day without food is an indicator of success. 

GG uses different measures in their other programs to track if it’s achieving the intended impact. She shares they are constantly learning and changing because they want donations to help as best possible. 


3. Transparency: Why Does GG Release its Annual Reports?

In 2023, Wiki Impact issued a report upon researching 1,567 foundations across Malaysia and found that:

  • Half of them achieved a transparency score of 10/100.
  • 37% of them do not have a published website.
  • <3% of them published an impact / financial report publicly. 


Only 7 Foundations in Malaysia have a transparency score of 100/100. Yup, GG is one of them and that is an amazing feat. This is important as obtaining a high transparency score is a testament of accountability and governance. Such could be translated into trust and confidence to prospective donors.

Source: Wiki Impact


Personally, I found that Melissa’s background as an Accountant had contributed to GG’s transparency score. According to her, she envisions and shapes GG in a way to be a foundation where ‘auditors enjoy auditing its financial accounts’. I also learnt that local foundations are not required to publish financial reports in public. 

But GG did otherwise. It publishes both its impact & financial reports annually. This would allow donors like myself to know how our funds are being managed, allocated and distributed. Also, we can assess how much impact our funds have brought into our community on a yearly basis. 

Hence, donating money is not just about generosity. It is also about the wisdom of such generosity so that our funds are apportioned for the right causes and as such, making a real difference in our community. 


4. Tax Benefits: Subsection 44(6) of Income Tax Act 1967

According to LHDN, donations to an approved institution or organization can be deducted from one’s total income in computing final income tax payment. So, it means that donors would obtain some tax benefits for their donation. But here, to be eligible for such a deduction, I need to be aware of 3 things: 

1. Is GG an approved institution under Subsection 44(6)? 
After a simple check at LHDN’s website, GG is an approved organization and its tax exemption status was granted on 1 June 2020 and expires on 31 May 2025.

Source: LHDN

According to Melissa, the tax exemption status is renewable every 5 years once. So, GG would need to reapply with LHDN to keep its tax exemption status. 

2. How much is my total income? 
Let’s assume that my total income is RM 150k. I could only deduct up to 10% of my total income. That works out to be RM 15k. Upon reducing this amount, the income tax payment would be calculated based on RM 135k in adjusted income (before tax reliefs). 

Obviously, if my total donation is below RM 15k (let’s say RM 10k), then, I could deduct this amount in full and thus, calculate my income tax payment based on RM 140k (before tax reliefs). 

Therefore, if my annual income is RM 150k and I wish to donate RM 20k to GG in that year, what I can do is to donate RM 15k under my name and have RM 5k donated under my wife’s name. Such would allow my wife to obtain income tax deductions.  

3. What is Your Maximum Income Tax Rate?
If my annual income is RM 150k for 2023, the maximum tax rate is 25%. Thus, if I donate RM 15k to GG, I could save RM 3,750 in income tax payments. Hence, my netted cost for my donation is RM 11,250 (RM 15,000 – RM 3,750). 


Conclusion: 

GG was founded to support underserved children in Malaysia. Since then, GG has successfully worked with corporate partners and kindhearted volunteers on executing its literacy and nutrition programmes. In mid-2020, GG obtained the tax exemption status and so, allowing donors to enjoy tax savings. In 2023, Wiki Impact granted a 100/100 score in transparency to GG and thus, recognising it to be a Yayasan that is accountable to its stakeholders (donors & beneficiaries). 

Check out GG: 
Yayasan Generasi Gemilang 


Information related to Income Tax (LHDN):
1. To check if your preferred organization is an approved institution by LHDN
2. Tax deductions for gifts and donation 
3. Tax Bracket


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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