In order to implement a more organized and transparent system for Money and Items Collection (the "Collection") within the context of social aid/welfare, the Minister of Social Affairs (the "MOSA") issued Regulation No. 8 of 2021 dated September 24, 2021 on the Implementation of Collection of Money or Items ("Reg. 8/2021"). Despite being a new regulation, MOSA Reg. 8/2021 is not the state's first attempt in governing the Collection mechanisms for social welfare. In 1980, the government issued Government Regulation 29 of 2018 on Donation Collection dated August 28, 1980 ("GR 29/1980") which governs similar matters. However, GR 29/1980 does not explicitly define what is meant by "donations". It is also important to that GR 29/1980 remains effective, meaning that MOSA Reg. 8/2021 and GR 29/1980 are complementary to each other.
MOSA Reg. 8/2021 revoked MOSA Decree No. 1/HUK/1995 dated January 6, 1995 on Collection of Donations for Disaster Victims and MOSA Decree No. 56/HUK/1996 dated September 19, 1996 on Collection of Donations by the Public. Further, MOSA Reg. 8/2021 itself contains provisions which details the requirements and procedures to carry out the Collection activities, which we summarize below.
- Scope and Types
Collection under MOSA Reg. 8/2021 only refers to Collection that is aimed for social welfare, mental/religious/spiritual, wellbeing and cultural development, and shall be conducted through a Mass Organization that has a legal entity status. The Mass Organizations that may conduct the Collection are only in the form of (i) an association (perkumpulan), or (ii) a foundation (yayasan).
The type of Collection is divided into two: (i) Collection that requires a permit (the "Unexempted Collection") and (ii) Collection that does not require a permit (the "Exempted Collection"). In general, all Collection activities require permits, unless expressly exempted under Reg. 8/2021, namely those that are:
- for zakat;
- done in places of worship;
- done in emergency situations within a closed community;
- for mutual cooperation (gotong royong) done within schools, offices, neighborhood communities, wards, villages, or other communities; and
- done spontaneously within limited meetings.
- Requirements and Procedures
As mentioned above, the Unexempted Collections require a permit from either the Minister, the relevant Governor or the relevant Regent/Mayor. Mass Organizations that intend to conduct the Collection activities may apply for the permit by submitting an application to the relevant institution, complete with all the necessary administrative documents. Among the required documents, the notable ones include a proposal for the activity and also examples for the advertisements/other promotional materials that will be used. Essentially, Mass Organizations must disclose the details, specifications, and purpose of the programs they wish to hold to the relevant institutions for further approval. If approved, the Collection permit is valid for 3 months and may be extended one time for no longer than 1 month.
While these licensing requirements are only applicable to the Unexempted Collections, both types of the Collection activities may be carried out through a number of methods/programs mentioned in Reg. 8/2021, such as holding shows, bazaars, auctions and a number of other programs that are in accordance with existing laws and regulations. It may be worth noting that these programs under Reg. 8/2021 are similar to the approved programs for Donations under GR 29/1980, although Reg. 8/2021 does include several more modern programs/methods such as social media programs, digital applications, electronic money services, etc.
Funds/items obtained through the Collection activities must then be channeled or distributed for development purposes, with the relevant Mass Organization having to bear the costs of the distribution. Furthermore, Mass Organizations that hold the unexempted Collecting Activities must submit an accountability report to the institution that issues their license. For the Collection activities that exceed Rp500 million, the report must be audited by a public accountant.
- Sanctions
Unlike GR 29/1980, Reg. 8/2021 does prescribe several administrative and criminal sanctions for violations of Reg. 8/2021. For the Unexempted Collections these sanctions include written warning, permit suspension, and/or permit revocation. On the other hand, administrative sanctions for the Exempted Collections are limited to written warning and/or publication of the violation in mass media. For the criminal sanctions, Reg. 8/2021 refers to the prevailing criminal law provisions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
