Better regulation needed for the city’s charities

The Audit Commission has again put the spotlight on long-standing problems. The government should tackle the issues highlighted by the report with a greater urgency lest confidence in our city’s fine charitable tradition be undermined

PUBLISHED : Sunday, 14 May, 2017, 1:18am
UPDATED : Sunday, 14 May, 2017, 1:18am

Hong Kong has a good reputation for charity. Be it citywide fundraising campaigns or street donations for individual groups, hardly a day goes by without some charity events taking place. But beneath this fine tradition lies the long-standing problems of poor governance and regulation. The need for an overhaul is evident.

Credit goes to the Audit Commission for again putting the spotlight on the issue. The number of tax-exempt charities has grown dramatically over the years, up from 3,819 in 2003 to 8,923 by 2014-15. The amount of tax deductions also jumped from HK$2.99 billion to HK$11.84 billion during the period. But regulation and monitoring are falling behind. According to the auditor, one charity breached rules to reward nine directors with a total of HK$13 million between 2012 and 2014. But the directors were not required to refund the money and the group was allowed to keep its charity status and did not receive any punishment. Another case saw a director being given HK$236,000 by his charity group to renovate his ancestral halls and graves. Some groups were also found to be running commercial hotels and serviced apartments on land granted for charity purposes, raising serious concerns over land use and questions over unfair competition with other hotels.

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The problems facing Hong Kong charities were highlighted in a Law Reform Commission study as early as 2013. Currently, there is no legal definition for a charity, nor is there a single body overseeing their activities. Given different departments only supervise certain aspects, gaps and inconsistencies abound.

That it takes another report to renew attention on the issue is to be regretted. Despite calls by the Law Reform Commission for a better regulatory regime and more stringent governance standards for charities, little progress has been made over the past three years.

We hope the auditors’ scathing report will expedite the reform. At stake is the integrity of our charities. The government should tackle the issues with a greater sense of urgency lest confidence in our fine charitable tradition be undermined.