Fundraising in Malaysia: the rules that actually apply to your NPO (2026 guide)

This is part 1 of a two-part guide. It maps the whole landscape in plain language. Part 2 goes deep on the Social Exchange Platform (SEP) — what it is, who it's built for, and when running your own donation channel is the better fit.

The landscape at a glance

The rest of this article takes each row in turn.

1. Your legal identity decides who you answer to

Before any fundraising rule, there is the question of what your organisation is. Almost every Malaysian NPO is one of three things:

• A society registered under the Societies Act 1966 with the Registrar of Societies (ROS / Jabatan Pendaftaran Pertubuhan). This covers most temples, associations, clan associations, alumni bodies and community groups.
• A company limited by guarantee (CLBG) registered under the Companies Act 2016 with SSM. Common for larger charities and foundations that want a corporate governance structure.
• An incorporated board of trustees under the Trustees (Incorporation) Act 1952, administered by BHEUU in the Prime Minister's Department. Often used by religious bodies and endowments.

These three are exactly the entity types the SC recognises for its Social Exchange Platform as well ^{[3, para 14.02(a)]} — a useful confirmation that this is the government's own map of the sector.

Why it matters for fundraising: whichever body you registered with is the one that expects your annual returns and accounts, and those accounts must include every ringgit you raised — online, offline, cash in a donation box, or through any platform. There is no fundraising channel that sits outside your ordinary reporting duty.

Practical tip: keep every channel in one ledger. If online gifts live in a payment dashboard, bank-ins in a spreadsheet and cash in a receipt book, your year-end return becomes an archaeology project. (This is the single most common reason organisations come to DonorCARE — more on that below.)

2. Tax-deductible donations: subsection 44(6)

When people say a donation is "tax-exempt" in Malaysia, they almost always mean it was given to an organisation approved by the Director General of Inland Revenue under subsection 44(6) of the Income Tax Act 1967.

According to LHDN's own overview (last updated 9 June 2026) ^[1], read alongside the guideline actually in force today ^[8]:

• Approval is by application, not automatic. LHDN's overview page still names application guidelines dated 20 January 2020 ^[1], but the guideline has since been reissued twice: the Garis Panduan Bagi Kelulusan KPHDN Di Bawah Subseksyen 44(6) ACP Bagi IOT now in force is dated 23 October 2025 (ref LHDN.600-1/7/3), and its own §1.2 states that it replaces the edition issued 20 August 2024 — itself understood to have replaced the 20 January 2020 edition the overview page still cites ^[8]. For anything version-sensitive, cite the dated guideline, not the overview page.
• An approved organisation gets two benefits: its own income is exempt from tax (under paragraph 13(1) of Schedule 6), and its donors can deduct their gifts, subject to a limit of 10% of aggregate income ^[1] — a cap the current guideline confirms unchanged, at 10% of the donor's aggregate income ^{[8, §11.3.2]}.
• LHDN issues an approval letter stating the approval number, the approval period and effective date, and the conditions and prohibitions that apply during that period ^{[8, §4.8]}. The receipt format is a separate matter: after receiving that letter, your organisation must submit a draft of its official donation receipt format to LHDN for its own, separate approval ^{[8, §4.9]} — the approval letter itself doesn't set the format.

That last point is where many organisations get caught out. A tax-deductible receipt isn't just "a receipt" — once LHDN has approved the format your organisation submitted, it has to match what was approved, carry the right approval reference, and be issued for cash (money) donations. If your approval lapses, the receipts you issue after that date can't be claimed by your donors, however correct they look.

Practical tips:

• Put your approval period in your calendar with a reminder months before it ends.
• Never issue a "tax-deductible" receipt for a campaign or fund that isn't covered by your approval.
• Keep receipt numbers sequential and never reuse one — auditors and LHDN both look for gaps and duplicates.

3. e-Invoicing and donations

LHDN's e-Invoice rollout reached donations too, but with important exceptions. In brief (full detail in our dedicated article, Do we need an e-Invoice for a donation?) ^[2]:

• Religious institutions established exclusively for worship or the advancement of religion are currently exempt from e-Invoicing the donations they receive — unless they also hold a 44(6)-type approval or run an approved charity project, in which case the ordinary rules apply.
• Everyone else with tax-exempt approval issues e-Invoices on donations: an individual e-Invoice when the donor asks, or a monthly consolidated e-Invoice covering the rest.
• The general small-taxpayer exemption (RM3,000,000 annual turnover under e-Invoice Guideline v4.8, 30 August 2026) applies to all categories of taxpayer, NPOs included.
• From 1 January 2026, a single donation over RM10,000 needs the donor's complete information before a 44(6)-approved IOT can e-Invoice it ^[8] — though an organisation with turnover up to RM5,000,000 may still consolidate it under the Specific Guideline's interim relaxation, until 31 December 2027 ^[2]. This applies only to e-Invoicing by approved IOTs, not to donations generally; see Do we need an e-Invoice for a donation? for the exact wording and what counts as complete information.
• Anything you sell — tablets, meals, hall bookings, books — sits under the ordinary e-Invoice rules, separately from donations.

This is the area that moves fastest. The threshold has changed twice in under a year, which is why that article carries a three-month review cycle.

4. Collecting on the street or door to door: Act 200

The House to House and Street Collections Act 1947 (Act 200) requires a licence for physical collections — soliciting money house to house, premise to premise, or in streets and public places. It was last reviewed in 1978 ^[4]. If your volunteers are going to stand outside a shopping centre with donation tins, or knock on doors in a housing estate, check the licence requirement — and who issues it for your area — before you start.

It does not cover online giving. As ROS itself acknowledged, it has no specific policy for online donation drives, and there is no permit or authorisation requirement for them ^[4].

Collections inside your own premises — a donation box at your temple, a collection during your own service — are a different matter from soliciting the public on the street. If you're unsure where the line falls for a specific activity, ask before you collect rather than after.

5. Online fundraising: open, but not unwatched

Because no specific law governs online fundraising yet, the practical rules come from everything else ^[4][5]:

• Your registration body still expects every ringgit in your accounts.
• LHDN's receipt and e-Invoice rules apply to donations however they arrive.
• Your payment gateway has its own onboarding checks — CHIP, for example, verifies your registration, bank account and representatives before activating your account, and asks card-accepting merchants to publish refund and privacy policies on their website. (See Register a CHIP account.)
• Public trust is the real regulator. Well-publicised cases of fund misuse have made donors more cautious, and they increasingly expect to see where their money went.

The freedom here is real: you can open a campaign today, on your own website, without asking anyone's permission. The responsibility is equally real — and the organisations that do well online are the ones that make transparency effortless for donors.

6. Admin costs: the 30% guidance and the 20% SEP cap

Two different numbers circulate, and they are easy to confuse:

• ROS guidance: up to 30% of donations collected may go to administrative purposes. ROS has said this guidance is not legally binding ^[4].
• SEP rule: no more than 20% of funds raised through a Social Exchange Platform may fund operating costs for the project — and that 20% includes the platform's own fees, legal fees and the cost of verifying your reports ^{[3, para 14.09]}. This is binding, but only on money raised through an SEP.

For money raised through your own channels, the practical standard is what your constitution, your board and your donors expect — and what you disclosed when you asked for the money. If a campaign says "100% goes to the flood relief fund", keep it that way and be able to show it.

7. The Social Exchange Platform: a new, optional route

On 19 September 2025, the Securities Commission Malaysia issued the Guidelines on Social Exchange Platforms (SC-GL/4-2025) ^[3]. The first platform operator, LC Wakaful Digital Sdn Bhd, was named on 12 February 2026, and its platform, Impakrintas, went live on 19 February 2026 ^[6]. By May 2026 it had onboarded eight NPOs, supported by a RM2 million government grant for onboarding and fundraising costs ^[7].

The SEP brings capital-market-style structure to charitable fundraising: vetted organisations, detailed disclosures, a segregated trust account, quarterly and audited fund-use reports, and independently verified impact reports. Donations through it receive the same tax treatment as donations to a 44(6)-approved organisation ^[6].

Two things are worth knowing up front:

1. It is opt-in. The guideline applies to an entity operating an SEP and to "a non-profit organisation seeking to raise funds through the social exchange platform" ^{[3, para 2.01]}. Nothing in it requires your organisation to raise money through an SEP, or changes how you raise money through your own channels.
2. The entry bar is high by design. Three years of continuous operation, at least two full-time employees, RM100,000 of annual spending in each of the past three years, 44(6) approval, and projects in specific social-impact categories ^{[3, paras 14.02–14.07]}.

For some organisations and some projects, the SEP will be a valuable extra channel. For most day-to-day fundraising, your own donation site remains the primary route. Part 2 covers the SEP in full — eligibility, obligations, costs, and how to decide.

8. What's changing

• Societies Act review. In April 2026, the ROS Director-General said ROS is reviewing improvements to the legal framework for organisations handling public donations, including independent audit mechanisms for entities collecting public funds "on a certain scale" and specific guidelines on fund management and transparency ^[5]. As of this review date, these are proposals under review, not law.
• Online fundraising legislation. No law specific to online donation drives has been passed as of this review date; ROS has said it has no specific policy for them ^[4].
• The SEP's expansion. The SC describes the Social Exchange as a first step, to be expanded to a wider range of stakeholders ^[7].

The direction is clear even where the details aren't: more disclosure, more auditability, more visible fund use. Organisations that build those habits now — on their own terms — won't be scrambling when the rules arrive.

What this means for your organisation

A practical checklist, in the order it usually matters:

1. Know your registration and filing calendar (ROS, SSM or BHEUU), and make sure your fundraising income lands in one set of books.
2. Know your 44(6) status and approval period. Only issue tax-deductible receipts that your approval covers, in the format your approval letter specifies.
3. Work out your e-Invoice position — religious-worship exemption, turnover exemption, or consolidated monthly filing. Re-check it every quarter.
4. Get a licence before any street or door-to-door collection. Nothing is needed for giving on your own website.
5. Publish what donors need to trust you: what the campaign is for, what it will achieve, how much goes to operating costs, and updates as the money is spent.
6. Decide whether the SEP fits any specific project — usually a large, multi-year, impact-measured project where you want institutional donors — and treat it as an addition to your own channel, not a replacement.