How to start a non-profit organisation

Published Monday 8 June 2026

Table of contents

• What is a non-profit organisation?
• Types of non-profit organisations
• Can you make money from a non-profit?
• How does a non-profit generate revenue?
• How to start a non-profit organisation
• Simplify your non-profit's finances with Xero
• FAQs on starting a non-profit organisation

Key takeaways

• A non-profit organisation exists to serve a social or charitable purpose, and any surplus revenue must be reinvested into its mission rather than distributed to owners or shareholders.
• Starting a non-profit in Hong Kong involves nine key steps, from initial research and planning through to registering with the Companies Registry, recruiting a board of directors, and setting up your financial infrastructure.
• Non-profits can generate revenue through donations, grants, fundraising events, programme service fees, and corporate sponsorships to sustain their operations.
• Ongoing compliance, financial transparency, and strong governance are essential for maintaining your non-profit's legal status and building trust with funders and the community.

What is a non-profit organisation?

A non-profit organisation is a type of entity that operates to serve a charitable, educational, or socially beneficial purpose. Unlike a for-profit business, any surplus income is reinvested into the organisation's mission rather than distributed to owners or shareholders.

Non-profit status can bring significant financial advantages in Hong Kong. Your organisation may qualify for tax exemption under section 88 of the Inland Revenue Ordinance, and donations made to your organisation may be tax-deductible for contributors. You may also become eligible for government grants and funding programmes.

The specific requirements for non-profit status, and the tax obligations that apply, depend on your organisation's structure and activities. Check with the Inland Revenue Department to understand the benefits you are entitled to and the non-profit accounting practices you need to follow.

Types of non-profit organisations

Non-profit organisations come in several forms, each serving a different purpose. Understanding the main types can help you decide which structure best suits your goals.

Charities

Charitable organisations provide services and support to the public. In Hong Kong, charitable status is recognised for organisations with purposes that are charitable in law, including the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community. A charity might be established to run a school, fund disease research, or operate an animal rescue shelter.

Foundations

Like charities, foundations have a humanitarian outlook, but they typically provide funding or grants to other non-profit causes rather than running their own programmes. Foundations are often established by individuals or corporations to support specific interests. For example, the Hong Kong Jockey Club Charities Trust funds community, education, and social welfare projects across the city.

Social advocacy organisations

Social advocacy groups exist to promote a social issue or cause. They may champion the interests of large populations, such as human rights organisations, or focus on specific communities and issues. These organisations raise awareness, influence policy, and mobilise public support for their cause.

Membership organisations

A membership organisation promotes the collective interests of a particular group. These organisations represent professions, industries, locations, or shared activities.

The Hong Kong Medical Association is one example, representing the interests of the medical profession. Membership organisations usually charge fees that fund their activities and advocacy work.

Can you make money from a non-profit?

Yes, non-profit organisations can and often do generate income. Earning revenue helps reduce dependence on grants, donations, and government funding, making your organisation more financially sustainable.

The key distinction is purpose. The primary goal of every non-profit is to further a social cause or mission, not to generate profit for owners or shareholders. While you can earn revenue, any surplus must be reinvested into the organisation to hire employees, fund programmes, or expand services.

How does a non-profit generate revenue?

Even though making a profit is not your primary objective, you still need enough income to keep your organisation running. Here are the most common ways non-profits generate revenue.

Donations

Donations from individuals and corporations are a core funding source for most non-profits. Individuals often give to causes they believe in, while corporations may be motivated by the tax deductions available for charitable contributions in Hong Kong.

Grants

Grants from government bodies, the Hong Kong SAR Government, or private foundations can provide significant funding for non-profits. Grants often come with additional responsibilities, such as financial reporting and transparency requirements. If you are unfamiliar with grant applications, consider engaging a grant writer to help.

Fundraising events

Hosting fundraising events can boost both your finances and your organisation's profile. Events range from charity runs and silent auctions to galas and community gatherings. A successful event can also increase ongoing donations by raising awareness of your mission.

Because events can be costly to organise, make sure the expected return outweighs the time and money invested in hosting them.

Programme service fees

Charging fees for the services or programmes your non-profit provides is another way to generate income. Arts organisations, professional associations, and community groups commonly use this model.

For example, a dog shelter might charge an adoption fee, or a training organisation might charge course fees. Programme service fees can create a reliable, recurring revenue stream.

Corporate sponsorship and partnerships

Corporate sponsorships create a mutually beneficial arrangement. Your non-profit receives financial support, while the sponsoring company gains brand exposure and demonstrates social responsibility.

A corporate partner may sponsor an event, provide ongoing financial support, or contribute resources that save your organisation money. Building long-term partnerships with aligned businesses can create a stable funding base for your non-profit.

How to start a non-profit organisation

Setting up a non-profit takes careful planning and a series of deliberate steps. The following nine steps will guide you through the process, from initial research to ongoing governance.

1. Research and plan

Start by identifying the social need your non-profit will address. What gap exists in the community, and how can your organisation help fill it? Conduct landscape research to understand what other organisations are already doing in your area of interest. Choosing a strong name for your non-profit can also help establish brand recognition from the start.

This research helps you clarify your purpose, identify potential supporters, and build evidence that your organisation is needed. Look at existing non-profits, government reports, and community data to understand the scope of the issue you want to tackle.

You should also identify any permits or licences you may need to operate in Hong Kong, depending on your planned activities.

2. Define your mission and vision

Your mission statement describes what your organisation does and who it serves. A strong mission statement is specific, action-oriented, and concise. For example, a youth literacy organisation might state: "To improve literacy outcomes for children in underserved Hong Kong communities through free tutoring programmes and reading resources."

Your vision statement describes the long-term change you want to create. While the mission focuses on what you do today, the vision focuses on the future you are working towards. A vision statement for the same organisation might read: "A Hong Kong where every child has the skills and confidence to read by age eight."

Together, your mission and vision create a touchstone that guides decisions as your organisation grows. Write them down and revisit them regularly to keep your work aligned with your founding purpose.

3. Create a business plan

A business plan maps out the financial needs and operational structure of your non-profit. It helps you decide what to spend, how much to raise, and where your income will come from.

Include these key areas in your plan:

• Executive summary: summarise your mission, research findings, the community need you aim to meet, and how you plan to meet it.
• Offering description: describe your programmes, services, or products in detail, including your impact goals.
• Marketing plan: explain how you will reach your target audience and build awareness of your non-profit.
• Operating plan: outline your team structure, each role's responsibilities, and how the organisation will run day to day.
• Financial plan: detail your startup costs, budget, projected cash flow, income statements, balance sheets, revenue streams, and operating expenses.

Get started with the free non-profit business plan template from Xero. For a step-by-step guide on structuring your plan, see how to write a business plan.

4. Choose your legal structure and register

Selecting the right legal structure is an important early decision. In Hong Kong, the most common structures for non-profits include:

• Company limited by guarantee: incorporated under the Companies Ordinance and registered with the Companies Registry. This is the most common structure for larger non-profits and charities.
• Society: registered under the Societies Ordinance with the Hong Kong Police Force. This structure suits smaller community groups, clubs, and associations.
• Trust: established through a trust deed, often used for grant-making foundations.

The right structure depends on your organisation's size, purpose, and activities. Getting professional accounting and legal advice early can help you choose the structure that best fits your needs and gives you access to the financial benefits you are eligible for, such as tax exemption.

Once you have chosen your structure, register your organisation with the relevant authority. You will receive an identification number for tax purposes. If you intend to apply for charitable tax-exempt status, you will need to submit an application to the Inland Revenue Department.

Find a financial adviser with the Xero Advisor Directory.

5. Recruit your board of directors

A strong board of directors provides governance, strategic oversight, and credibility for your non-profit. In Hong Kong, a company limited by guarantee is required to have at least one director, but most non-profits benefit from a board of three or more members.

Look for board members who bring a diverse mix of skills, including financial management, legal expertise, fundraising experience, and knowledge of your organisation's cause. Each board member should understand their role, which typically includes attending regular meetings, approving budgets, and ensuring the organisation meets its legal obligations.

Establish clear bylaws early on. Your bylaws should cover meeting frequency, voting procedures, term limits, and conflict of interest policies. Well-defined governance structures help your board make decisions efficiently and maintain accountability.

6. Set up your infrastructure

Before you begin operations, put the essential systems in place to manage your organisation effectively.

• Bank account: open a dedicated bank account in your organisation's name. Keeping organisational funds separate from personal accounts is essential for transparency and compliance.
• Accounting system: set up cloud-based accounting software for your non-profit to track income, expenses, and cash flow from the start. Accurate financial records are critical for reporting to funders and maintaining tax-exempt status.
• Donor management: use a customer relationship management (CRM) or donor management system to track contributions, communicate with supporters, and manage fundraising campaigns.
• Insurance: consider the types of insurance your organisation may need, such as public liability, directors' and officers' liability, or professional indemnity insurance.

Setting up reliable infrastructure early saves time and prevents problems as your organisation grows.

7. Develop your fundraising strategy

A clear fundraising strategy is essential for long-term sustainability. Start by identifying which income streams are most relevant to your non-profit, whether they are individual donations, grants, events, corporate partnerships, or programme service fees.

Be realistic when creating a budget. Consider your monthly cash flow so you can cover operating costs throughout the year. Include reserves you can draw on during higher-cost periods, such as when hosting events, and balance this with quieter months when you rebuild those reserves.

Building a base of regular donors provides predictable income. Consider setting up a monthly giving programme and maintaining regular communication with your supporters about the impact their contributions make.

Keeping your financial records open and accessible is essential for non-profits. Funders and regulatory bodies may require access to your financial statements, so make sure your records are accurate, up to date, and compliant with Hong Kong reporting requirements.

8. Build your non-profit's presence

A clearly communicated and professionally presented website helps anyone understand your non-profit and what it stands for. Make sure your site communicates your mission and goals so that funders, supporters, and community members immediately know what your organisation does.

An active, brand-appropriate social media presence helps build your community and share your non-profit's achievements. While online engagement is important, do not overlook the value of networking and meeting people in your community face to face.

Before launching your marketing efforts, carry out market research. Once you know who your target audience is and how to reach them, you can craft a strategy that builds awareness and supports increased donations and funding over time. Use a marketing plan template to structure your approach.

9. Manage ongoing compliance and governance

Starting a non-profit is just the beginning. Maintaining your organisation's legal standing and public trust requires ongoing attention to compliance and governance.

In Hong Kong, your obligations may include:

• Annual reporting: companies limited by guarantee must file annual returns with the Companies Registry and submit audited financial statements.
• Recordkeeping: maintain accurate records of all financial transactions, board meeting minutes, and organisational decisions. Good recordkeeping supports transparency and simplifies audits.
• Conflict of interest policies: establish and enforce a written conflict of interest policy for board members and staff. This protects your organisation's integrity and ensures decisions are made in the best interest of the mission.
• Financial transparency: regularly share financial reports with stakeholders, funders, and the public as required. Transparent finances build trust and help you retain donor support.

Strong and supportive leadership is key to building an effective team. Everyone who works for your non-profit, whether paid staff or volunteers, should be clear about their roles, feel supported, and understand how their work connects to the organisation's mission.

As your non-profit evolves and adapts to new opportunities and challenges, your strategy and team structure will need to evolve too. Regular evaluation and assessment frameworks can help keep your organisation on track and responsive to change.

Simplify your non-profit's finances with Xero

Starting a non-profit takes dedication, planning, and attention to detail. From registration and governance to fundraising and compliance, every step benefits from having clear, organised financial records.

Xero's online accounting software for non-profits can help simplify your accounting processes, from tracking cash flow and managing expenses to sharing financial reports with your board and funders. With less time spent on financial admin, you can focus on what matters most: advancing your mission. Get one month free.

FAQs on starting a non-profit organisation

Here are answers to some of the most common questions about setting up and running a non-profit in Hong Kong.

How much does it cost to start a non-profit in Hong Kong?

The costs vary depending on the legal structure you choose. Incorporating a company limited by guarantee with the Companies Registry involves a filing fee, and you may also need to budget for legal advice, accounting setup, and insurance. Overall, initial costs can range from a few thousand to tens of thousands of Hong Kong dollars, depending on the complexity of your organisation.

How long does it take to set up a non-profit?

Registering a company limited by guarantee in Hong Kong typically takes a few weeks once your documents are in order. Applying for charitable tax-exempt status under section 88 of the Inland Revenue Ordinance can take several months, as the Inland Revenue Department reviews each application individually. Planning, research, and building your board and infrastructure can add additional time before you are fully operational.

What is the difference between a non-profit and a charity?

A non-profit is any organisation that operates for a purpose other than generating profit for owners or shareholders. A charity is a specific type of non-profit that has been recognised as having exclusively charitable purposes under Hong Kong law. All charities are non-profits, but not all non-profits qualify as charities. Charitable status brings additional benefits, such as tax exemption under section 88 of the Inland Revenue Ordinance.

Do non-profits pay taxes in Hong Kong?

Non-profits that are granted charitable tax-exempt status under section 88 of the Inland Revenue Ordinance are exempt from profits tax on income related to their charitable purposes. However, non-profits that do not hold this exemption may still be subject to profits tax on certain types of income. It is worth consulting a tax adviser to understand your specific obligations.

Can a non-profit have paid employees?

Yes, non-profits can and often do hire paid employees. Staff salaries and benefits are legitimate operating expenses. Because non-profits often operate with tighter budgets, you may need to think creatively about compensation packages and consider supplementing paid staff with volunteers where appropriate.