Times are tough: so open your wallets

PUBLISHED : Monday, 02 January, 2012, 12:00am
UPDATED : Monday, 02 January, 2012, 12:00am


This is the time of year when thoughts normally turn to helping those less fortunate. Except, that is, when the euro-zone sovereign debt crisis has everyone sitting on their wallets.

The Community Chest, the city's 42-year old charity organisation, which raises funds for 150 groups, has been hit by a drop in donations over the past 12 months as corporations and individuals appeared to decide that charity begins at home - their home. Fears of further financial ructions from Europe and jitters about a recession in the US economy have prompted Hong Kong's normally generous donors to hold back.

Between April and mid-December, the Community Chest collection stood at about HK$161 million, representing only 46 per cent of the amount raised in the last financial year (from April 2010 to March 2011) as a whole, when a record HK$350 million was brought in.

Margaret Leung Ko May-yee, chairman of the executive committee of Community Chest, and chief executive of Hang Seng Bank, said: 'Please remember: Christmas is a time to give.

'When CEOs are complaining about the tough business operating environment, they should also remember that they are better off than many underprivileged people. For those who can afford it, Christmas is a time for us to think about helping those in need,' Leung told the South China Morning Post.

Leung is facing an uphill battle to cover the funding gap at Community Chest, which has already scaled down its fund-raising target for the year to March 31, 2012, by 30 per cent to HK$245 million. That still leaves it with HK$84 million to raise over the next three months - or it may need to dip into its reserves. The same thing happened in 2008 and in the 1997-1998 financial crisis.

During the financial crisis in 2008, the Community Chest's fund-raising totalled just HK$197.3 million, down 24 per cent from the HK$259.4 million it raised in 2007. Donations tend to recover when markets recover, as was shown in 2009, when the group raised HK$279.1 million.

Edward Chow Kwong-fai, deputy chairman of the Business and Professionals Federation of Hong Kong, said many businesses had been forced to scale down their donation budgets this year. 'It's inevitable for the business sector to scale back donations as businesses face declining orders and there are rising pressures to cut costs. Many companies have to lower their donation budget this year because the European sovereign debt crisis has had an impact on investment markets globally,' Chow said.

'This trend will continue, and corporates are likely to remain cautious about making donations because the economic outlook for next year isn't promising,' he said.

Donations by individuals have also fallen, reflecting the impact of mass layoffs.

A banker who did not want to be named said that it was hard for banks to make big donations when they were laying off staff. In August, HSBC, Bank of America and many other lenders announced plans to cut a total of 90,000 jobs. 'We would still try our best to give to those in need - but not as much as we would in a good year,' the banker said.

Leung said so far, organisations that have already committed to donations have kept their promise, but it was difficult to say if they would be as generous in 2012.

Another challenge for the Community Chest stems from last year's many natural disasters, including flooding in Australia, and a deadly earthquake in New Zealand in February, followed by an even more deadly earthquake and tsunami in Japan the following month. Donations to help victims of these disasters were sometimes at the expense of donations to Community Chest.

Leung said she hoped that some of the 6.1 million permanent residents who received the government's HK$6,000 cash handout would consider giving some money to charity.

'If you don't need the HK$6,000 cash, why don't think of making a donation to help others?' she said.

A fall in initial public offerings last year was also bad news for the Community Chest, because stock code balloting for charity has been a major fund-raising engine in recent years. Under the scheme, newly listed companies can choose a stock code by donating HK$1 million to Community Chest. The number of IPOs on the main board in Hong Kong for the first 50 weeks of 2011 fell by almost a quarter, to 81, compared to 106 for the whole of 2010. As a result, the charity stock code scheme only raised HK$40 million from April to mid-December, down from HK$70 million in the previous financial year.

But Leung was optimistic that companies and individuals would open their wallets again when things improved. 'There are always ups and downs in markets and in the economy. There may be tough times ahead but we can always cope with that,' she said.

'I believe in the inherent goodness of people. I believe they do care about those less fortunate. During the festive season, remember to spend time with your family and remember to make a donation.'


The sum in Hong Kong dollars that the city's Community Chest charity group needs to raise in the next three months to meet its target