Client Name

Alkhidmat Welfare Society Karachi

Faculty Advisor

Ms. Mahwish Basit Hussain

SBS Thought Leadership Areas

Investment Decision Making

SBS Thought Leadership Area Justification

From a philanthropic finance perspective, resolving the regulatory and traceability gaps directly shapes the donor's capital allocation decision by securing their Section 61 tax incentives, while deploying advanced financial metrics empowers the board to execute optimal risk-adjusted resource management and secure international development grants.

Aligned SDGs

GOAL 16: Peace, Justice and Strong Institutions

Aligned SDGs Justification

This structural modernization directly aligns with SDG 16 by ensuring the sustainable, transparent deployment of resources across AKWSK's vast healthcare and social networks. 

NDA

Yes

Abstract

AlKhidmat Welfare Society Karachi is one of Pakistan's largest non-profit organizations, serving close to ten million beneficiaries across health, education, disaster management, clean water, and community relief. This ELP was undertaken to assess the organization across four areas where regulatory compliance, financial governance, and reporting quality intersect: PCP Certification performance, FBR donor-side tax compliance, SECP registration readiness, and IFRS adherence. The research combined field visits to AKWSK's Karachi head office with documentary analysis of the 2022-2024 PCP Performance Evaluation Report, audited financial statements for FY2021-2023, and the relevant provisions of the Income Tax Ordinance, 2001 and the Companies Act, 2017. AKWSK scored 798 out of 1000 on its PCP renewal, qualifying but down 3.5% from the previous evaluation. Three categories pulled the score down: Financial Management (70%), Program Delivery (72%), and Institutional Oversight (72%). Field research traced all three to the same operational habit: a deliberate preference for manual processes over automated systems. Financial statements are consolidated by a single person in Excel, donation receipts are reconciled manually into SAP, and program documentation sits unused in physical binders. The organization owns SAP software capable of addressing most of this but has chosen not to use it for consolidated financial reporting. On FBR compliance, AKWSK's existing donor receipts do not meet Section 61(4) traceability requirements, meaning donors cannot actually claim the tax credits they expect. The report proposes a redesigned receipt, a structured cashier protocol, a Digital Donor Register, and an annual donor statement — none of which require changes to the existing ERP. On SECP registration, AKWSK is still structured under the Societies Registration Act, 1860, a limitation that constrains institutional credibility and national reach. A phased roadmap for Section 42 registration under the Companies Act, 2017 is presented, alongside an urgent finding: both Section 2(36)(c) Commissioner Approval and the Section 159 withholding tax exemption lapsed on 30 June 2025 and have not been renewed. The IFRS assessment found the organization partially or fully non-compliant across six standards — IAS 1, IAS 16, IFRS 15/IAS 20, IAS 19, IAS 24, and IAS 36. The most significant gap is the absence of a going concern assessment and no distinction between restricted and unrestricted donation income, leaving donors and regulators unable to verify how funds raised for specific crises were actually used. The report recommends: immediate FBR renewal, SAP integration for financial consolidation, segregation of duties in the finance function, a digital document management system, appointment of a QCR-rated auditor, and early preparation for SECP registration. What makes the reform picture unusual is that AKWSK scored perfectly on three PCP categories — Tax Laws, Public Utility Compliance, and Legal Registration — proving the organization knows how to comply rigorously when external bodies require it. The internal operations have simply not been held to the same standard yet.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

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