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Philanthropy

Tougher oversight of Hong Kong charities required

The city has a fine reputation when it comes to helping those in distress, but a proper regulatory framework is needed to prevent the occasional scandal

PUBLISHED : Tuesday, 14 August, 2018, 8:25pm
UPDATED : Tuesday, 14 August, 2018, 10:06pm

Rain, hail or shine, boom or recession, charity is a resilient sector of the city’s economy, with a turnover on the scale of a small to medium-sized enterprise. But what really sets it apart is that despite government subsidies and widespread tax exemptions, it lacks an effective regulatory regime, being subject only to piecemeal oversight by various government departments. As a result, it is prone to poor governance leading to financial distress, and occasional scandal, recently highlighted by the Audit Commission, including one charity that rewarded nine directors with HK$13 million between 2012 and 2014, and another that gave a director HK$236,000 to renovate ancestral halls and graves.

These instances, thankfully, are exceptions and the city has built a fine reputation for compassion, especially in times of other people’s need and distress, such as earthquakes and tsunamis. So it would be a tragedy in its own way if such abuses prompted would-be donors to keep their hands in their pockets in the absence of regulation and transparency, especially since the Law Reform Commission proposed a proper charity law years ago. But Chief Secretary Matthew Cheung Kin-chung said the implementation of such a new regulatory framework would be “highly complicated”. Instead, following the Audit Commission report last year, the government has announced measures to make charitable fundraising and the use of donations more transparent, including the disclosure of financial accounts for public inspection on a government webpage, and a voluntary set of “good practice” guidelines for charities to follow.

Hong Kong's charities need effective regulation

Critics immediately dismissed the measures as too soft and called for a statutory commission to oversee charities and their fundraising. They are right. And so are lawmakers who have expressed “grave concerns” at the government’s limited monitoring of charitable fundraising activities. Most charities may be reputable, but the solicitation of cash from the public in the name of worthy causes is so easily open to abuse that putting all of them and their agents on their honour to do the right thing is just naive. It is most likely to end in tears and the drafting of a proper regulatory framework that should have been put before legislators by now.