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Philanthropy

Charities in Hong Kong forced to reveal finances – but critics say new measures don’t go far enough

Voluntary set of ‘good practice’ guidelines also issued in response to criticism from watchdog over lax rules in sector

PUBLISHED : Thursday, 02 August, 2018, 8:02am
UPDATED : Thursday, 02 August, 2018, 11:20am

Charities operating in Hong Kong will have to reveal their financial accounts on a designated government webpage for public inspection as part of a series of measures to make their fundraising activities and use of donations more transparent.

The administrative measures, announced on Wednesday in response to the government audit chief’s criticism last year over lax rules in the sector, also introduced a voluntary set of “good practice” guidelines for charities to follow.

But critics said the measures, announced by three government departments, were too mild and called for a statutory commission to oversee charities and their fundraising.

Audited accounts of fundraising activities approved from Wednesday must be uploaded to a GovHK webpage for public inspection for 12 months.

Members of the public can also call a telephone hotline, 3142 2678, with inquiries or complaints about fundraising activities in public.

A 33-page “good practice guide on charitable fundraising”, covering donors’ rights, fundraising practices and financial accountability, has also been made available. Charities are advised, among other steps, to issue receipts to donors and to limit the frequency of solicitations if asked.

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Those who employ the services of professional fundraisers are advised to pay them fees, rather than commissions or other forms of remuneration based on the number of donors secured.

“Charitable organisations are highly recommended to adopt this good practice guide to ensure the accountability and transparency of charitable fundraising activities and the use of donations so received,” the guidelines read.

However, “responsible charitable organisations may also have their own reasons for not adopting this good practice guide”, including those having “already adopted a separate but no less ethical code of practices”.

A report by the director of audit last year on the monitoring of charities highlighted loopholes in the rules governing them. In a subsequent investigation report in January this year, legislators also expressed “grave concerns” about the government’s “limited monitoring” of charitable fundraising activities.

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There is no consolidated law in Hong Kong on such activities. Regulation is incidental to legislation that controls acts of nuisance committed in public places, gambling and hawking.

Monitoring is confined to those requiring permits or licences from the Social Welfare Department, Home Affairs Department or Food and Environmental Hygiene Department, such as flag days, sale of raffle tickets and on-street charity sales.

Labour Party lawmaker Fernando Cheung Chiu-hung said the new measures would not go far enough.

“The guidelines are too mild and non-binding,” Cheung said. “And it is funny for the government to note that those not adopting the guidelines should not be regarded as being ‘bad’.”

Cheung also expressed disappointment that the government had not heeded a 2011 Law Reform Commission proposal to set up a centralised authority to register charities and regulate their fundraising activities.

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Instead, the government said a one-stop service would be provided to the charities to save their time to get necessary permits or licences from different departments for fundraising activities.

“At present, it is too easy for one to set up a group and get it recognised as a charity under section 88 [of the Inland Revenue Ordinance],” Cheung said. “There are just too many such god-knows-who-they-are groups soliciting donations at street corners every now and then.”

Social welfare sector lawmaker Shiu Ka-chun was similarly critical, and urged the government to step up public education “to arouse the awareness of donors of their rights”.

At present, it is too easy to set up a group and get it recognised as a charity
Fernando Cheung, lawmaker

A Social Welfare Department spokesman said: “The charities can choose to adopt the guidelines or not, but we would tell them they are ‘good to have’ practices and if they adopt them it can help brush up their reputation and thus may make it easier for them to raise funds.”

In a statement, the Hong Kong Council of Social Service, an umbrella group of some 460 welfare organisations, acknowledged that “public trust is an important cornerstone of social service organisations” and pledged that its member groups would “make every effort” to follow the new government guidelines.

But it added: “We also hope members of the public can appreciate that with higher public expectations of accountability, organisations also need to cope with increasing and heavy administrative work like auditing and internal compliance work, and this will push up costs.”

It said regular donations could help keep groups’ fundraising costs down.