Regulation of charities must be strengthened to restore public trust

A recent report has shown widespread abuses of the charity status, due to a lack of effective oversight and a confused monitoring system that draws in too many government departments

PUBLISHED : Thursday, 20 July, 2017, 5:11am
UPDATED : Thursday, 20 July, 2017, 5:11am

If we did not have it on the authority of Home Affairs Secretary Lau Kong-wah, it would be hard to believe that no fewer than 18 government departments are involved in monitoring charitable fundraising activities in Hong Kong. Sadly even this does not appear to enhance either scrutiny of, or public protection from, unscrupulous practices such as the abuse of their generosity, judging by a recent report from the Audit Commission.

Some charities are taking taxpayers for a ride

One charity breached rules to reward nine directors with a total of HK$13 million between 2012 and 2014, without recovery of the money or loss of charity status. In another case, the director of a charity group was given HK$236,000 to renovate ancestral halls and graves, while some groups run hotels and serviced apartments on land granted only for charitable purposes.

Yet more than three years after the Law Reform Commission put forward a range of recommendations to better regulate the sector and crack down on the betrayal of public trust, Legco’s Public Accounts Committee has expressed “grave concern and dissatisfaction” over government inaction.

In holding out hope of action as soon as possible, Lau admitted progress was slow but said the fragmentation of departmental authority made it a complicated process.

Expressing concern over slack oversight of fundraising activities, the Public Accounts Committee highlighted the lack of effective monitoring of new modes such as online appeals. The fact that there is still no consolidated legislation or authority to regulate fundraising is a matter for grave concern, for two main reasons. As of 2015 taxpayers subsidised tax-exempt charities and their donors to the tune of nearly HK$12 billion in tax deductions, and lax accountability risks public confidence in a city renowned for a vibrant charitable culture.

Officials slammed over inaction on regulation of Hong Kong charities

The LRC proposed a registration system for groups that receive public donations or seek tax exemption; compliance with one of 14 broad valid charitable goals; and financial reporting and fundraising application requirements to enhance transparency and public monitoring. Regulation is a small price to pay for public trust.