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Institutional Giving

Endowment Fund (USM)

The USM Endowment Fund provides a framework for managing endowment contributions to support the University's long-term financial sustainability, educational mission, research, student development and institutional advancement.

01 / Understanding Endowment

Definition

The meaning and forms of endowment contributions recognised under the USM Endowment Fund.

  1. 1.1
    An endowment refers to financial assets donated to a non-profit institution in the form of cash, shares, investment funds or capital assets, with mutually agreed terms governing their use.
  2. 1.2
    Endowments may be received in various forms, including monetary donations, investment shares, assets, the construction of buildings and infrastructure, investment returns or any other form of endowment contribution, subject to mutual agreement.
  3. 1.3
    Any other definitions shall be governed by the terms of reference specific to the respective fund.
02 / Contribution Framework

Types of Contributions Received for the USM Endowment Fund

The forms of contributions and conditions governing the preservation and use of endowment funds.

  1. 2.1
    With reference to Section 1.0 above, and in accordance with the tax deduction provisions under Subsection 44(11D) of the Income Tax Act 1967, only cash endowment contributions are eligible for a tax deduction. The original principal amount must be preserved, and only the returns or benefits derived from it may be utilised, subject to the following conditions:
    1. The donor specifies the intended use of the returns or benefits derived from the contribution.
    2. The donor does not specify how the returns or benefits are to be used, thereby granting the University or the relevant PTJ full discretion over their utilisation.
03 / Purpose & Impact

Objectives of the USM Endowment Fund

The Endowment Fund was established to strengthen the University's resources and support its academic community.

  1. 3.1
    To ensure the sustainability of the University's financial resources and generate long-term income to support the advancement of learning, teaching, research, equipment, infostructure and infrastructure at the University.
  2. 3.2
    To provide funding for gifts, scholarships and other forms of financial assistance for student welfare.
  3. 3.3
    To fund activities related to education, teaching and learning, research and innovation, skills development, welfare and humanitarian outreach for students.
  4. 3.4
    To fund facilities, equipment, infostructure and infrastructure that benefit the University and contribute to its overall development and the advancement of teaching and learning.
  5. 3.5
    To fund activities deemed to be in the interests of students and the University, subject to the approval of the USM Endowment Fund Committee.
  6. 3.6
    To cultivate a culture of giving among members of the University community and external stakeholders.
04 / Fund Contributions

Sources of the Endowment Fund

The Endowment Fund receives contributions through the following channels, subject to applicable terms and requirements.

4.1

Direct Contributions

Cash donations made by companies, corporate bodies, foundations, associations, government-linked companies (GLCs), community groups or individuals via cash payments, cheques or online transfers.

Cash pledges paid in instalments are also included in this category.

4.2

Retail Contributions

Regular or recurring cash donations made through the following channels:

  • Individual Contributions
    Individuals, whether internal or external to the University, may contribute according to their financial capacity through one-off donations, pledges, salary deductions or any donation platform introduced from time to time.
  • Faculty or PTJ Contributions
    Revenue generated by faculties through income-generating activities such as seminars, courses, consultancy services and other activities may be contributed to the Endowment Fund.

4.3 Unlawful Sources

Funds received from unlawful sources or through activities deemed illegal under Malaysian law shall not be accepted as endowment contributions.

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Important Note

The USM Endowment Fund is currently seeking approval under Subsection 44(11D) of the Income Tax Act 1967 (ITA 1967).

Frequently Asked Questions

Endowment Fund FAQ

Find answers to common questions about electronic receipts, expenditure requirements and tax-deductible donation receipts for endowment contributions.

01 Use of Electronic Receipt (e-Receipt)

In line with current technological advancements, entities that have obtained the necessary approval may apply to the relevant State Director of Inland Revenue (KPHDN) for permission to issue electronic receipts. The application must be accompanied by a justification for issuing electronic receipts.

02 Requirement to Spend 50% of Waqf and Endowment Income

For waqf and endowment contributions, reference must be made to the Memorandum of Understanding (MoU) between the waqif/donor and the fund, particularly regarding whether the principal amount must be preserved.

KPHDN has set a condition requiring 50% of the income to be spent on the fund's stated objectives. This means that 50% of the income (returns or benefits from the waqf or endowment) received in the preceding year must be spent in accordance with the fund's stated objectives. Compliance with this condition is necessary to maintain the fund's approved status.

Example

The waqf fund and the waqif have signed an MoU stating that the RM10 million investment must be preserved and invested rather than spent. However, the returns (dividends or interest) generated from that investment may be used in accordance with the fund's stated objectives. Therefore, the dividends or investment income are subject to the 50% expenditure requirement.

03 Can a tax-exempt receipt be issued if the contribution is refundable to the donor?

An official receipt qualifying for a tax deduction under Subsection 44(11D) of the Income Tax Act 1967 cannot be issued to the donor if the endowment contribution agreement between the fund and the donor is purely investment-based and includes a condition requiring the contribution to be returned to the donor.

This is because the contribution is considered a refundable principal amount. Receipts qualifying for a tax deduction can only be issued for non-refundable (consumable) contributions.

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