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City Weekend

Can Hong Kong charities be trusted? Here’s how to donate your money with care

With loopholes in rules governing organisations, City Weekend reviews an official guide on ‘good giving’

PUBLISHED : Saturday, 18 August, 2018, 3:00pm
UPDATED : Saturday, 18 August, 2018, 3:00pm

In a city where life moves at breakneck speed and the high cost of living coupled with rocketing property prices mean most are pinching their pennies, Hongkongers might not be perceived to be the most generous when it comes to charitable giving.

But according to a survey this year by the University of Hong Kong, the city’s residents are altruistic: at least four in five people donated to charities over the past year.

And the British-based Charities Aid Foundation in 2017 ranked Hong Kong an admirable 25th out of 139 countries and territories based on the proportion of people who reported they had recently helped a stranger, donated money or did volunteer work.

Still, generosity aside, can we trust the charities we donate to and sleep easy knowing the money goes to those we intend to help?

Just last year, Hong Kong’s Audit Commission reported loopholes in the rules governing charities. The commission found that in one case, a local organisation had not carried out any charitable operations in the 12 years since it was recognised as a tax-exempt charity.

In two cases, charities were unable to account for how they had spent their donations. The commission discovered 14 land sites granted to charities, but they were partly used to operate hotels.

In an effort to quell concern over such irregularities, the government this year released the “Good Practice Guide on Charitable Fundraising”, a 33-page document intended to “enhance transparency and public accountability of charitable fundraising activities”.

However, the measure was dismissed as “too mild and non-binding” by lawmaker Fernando Cheung Chiu-hung of the Labour Party, who pointed out there was no law to make the guidelines mandatory.

Cheung said Hong Kong had no single official body overseeing charities’ activities and that a Law Reform Commission proposal in 2011 to set up such an authority had been ignored.

The situation is far from likely to reassure those keen to do their bit for a good cause. So in the absence of stringent rules, City Weekend pored over the guide to sum up what every well-intentioned donor should know.

Check the details

Start with the basics: in its promotional material, make sure the charity provides an address and up-to-date website and contact information.

Know your rights as a donor

Always ask for official receipts from charities so there is documentation. Donors should have access to charities’ financial reports, and organisations should protect donors’ details under the Personal Data (Privacy) Ordinance, meaning they cannot sell their donor list to third parties. A donor’s right to remain anonymous should also be respected.

Pay attention to practices

Under the law, charitable organisations should reveal conflicts of interest among directors and staff in their fundraising activities. Both donors and potential donors should be given access to this information.

Understand where the money goes

Your money should go towards supporting the charity’s objectives, and the charity should show how and where donations are used. Ideally, a charity’s individual projects should be delineated to indicate to donors what their money is being used for. A charity should also reveal the cost-effectiveness of its programmes.

Who can you trust?

Here are three considerations for deciding whether a charity deserves your donation.

Is the charity registered?

In Hong Kong, the simplest marker is whether a group is recognised by the government. The Inland Revenue Department maintains a list of institutions and trusts that are tax-exempt.

But note: the department does not provide extensive information on the listed charities. In this void, Hong Kong has independent organisations that keep tabs on the city’s charities. The NGO WiseGiving provides a search function turning up a great deal more about a charity than the tax authorities do, including information on each organisation’s mission, financial information, governance and handy contact details. WiseGiving is an initiative of the Hong Kong Council of Social Service that was launched in late 2007.

Find out what the charity says about its aims and how good it is at achieving them

A charity that is worth your time (and money) will be at pains to demonstrate what it has done to deserve donations and where those contributions go. Does it maintain a website disclosing what it does? Are its aims unambiguous and concise? Can it explain exactly what it will do with your donation? If you phone or email, does it answer this sort of question promptly and clearly?

Charities forced to reveal finances – but critics say new rules are too mild

Research, research, research

Read around, ask friends and colleagues, search online, and keep an eye on social media. No matter whether a charity is large or small, if it is legitimate and ethical, there should be ample information available about it. One should also be able to find testimonials by other donors as well as people who have worked with it. Conversely, if a charity is famous for the wrong reasons, news headlines about it should speak volumes about whether it can be trusted with your money.

How do other countries do it?

Critics have noted there is no single body dedicated to policing charities in Hong Kong. So what’s the answer? One possibility is for lawmakers to examine how it’s done elsewhere, and consider establishing an authority to oversee charities. Two relevant examples:



Singapore

The government of Singapore has its own Charities Unit, also known as the office of the Commissioner of Charities. Set up in July 2006, the unit covers good practice recommendations and ensures that charities comply with regulatory requirements. Singapore has fairly stringent legislative conditions for bodies that wish to register as a charity, and charities can be searched via the unit’s website.



England and Wales

Given Hong Kong’s shared legal heritage with Britain, local lawmakers might be interested in how charities there are governed. In 2013, England and Wales began registering charities as charitable incorporated organisations with the Charity Commission, an official regulatory body operating in those regions. Each charity receives a number and is searchable in the commission’s database, which provides key facts and figures about every organisation listed.