CHARITY PRACTICES

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CHARITY PRACTICES: 6.08 pm

Ms Braema Mathiaparanam: Thank you, Mr Deputy Speaker, Sir, for granting me this opportunity to speak on this topic, and to all Members of this House for being charitable enough to listen as it is already past six o'clock.

I wish to speak on this issue of charity practices as the recent developments over the National Kidney Foundation (NKF)'s reserves have highlighted practices that are too varying in nature, too polarised and, I think, this has already been spoken

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on twice this year, in dire need of better governance. It is my hope that some of the issues I have raised here can be taken on board by the Council of Governance as they mediate on the guidelines that will be announced soon.

Firstly, NKF needs to be applauded for being creative, having long-term vision and for branding itself so well that so many people immediately can recognise what it does and donate generously. There are inherent good practices that one can learn from. Forward-planning and amazing reserves up to $189 million is not wrong in itself. But when it comes to such large charities, it must also be seen as an equal responsibility to exhibit good corporate social responsibility and be accountable to all their shareholders, that is, each and every donor. In reference to this particular comment, I would like to point out a few areas where I think corporate social responsibility means sharing with the public clear information. The most important criterion to a member of the public is what comes back to the beneficiary. In this case, NKF, in the public domain, has made two announcements of 52 cents coming back to the beneficiary, as well as 56 cents. One has been passed off as a computing error and the other has been accounted for as well.

What I am raising here with this incident is that different definitions do go into making up what comes back to the beneficiary in terms of a precise dollar value. There needs to be greater consistency in the factors that go into such computation.

Another example - operational costs. Comparing an apple for apple, NKF cites an example of $31,200 per annum to help a patient on dialysis. Kidney Dialysis Foundation (KDF)'s figure is $15,079. The manpower resource for NKF is one person to two beneficiaries. And KDF works with

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a much smaller manpower pool. The subsidies granted to the beneficiaries are also not very clear, from both the websites. Therefore, it becomes imperative that as these guidelines are being mediated by the Council, it is my hope that very clear criteria are spelt out so that the public will know once and for all what are the factors to look for, what goes into the computing, and then make a considered decision.

I do not wish to knock NKF here. But what I would like to point out, using them as a case study, is that it is difficult for the public to become a wise donor if basic issues on monetary value on each charity dollar given to the organisation, or operational and administrative costs, as depicted by the organisation, are not consistently applied. This includes transparency issues on salaries of top management - the CEOs. After all, public listed companies - the banks - recently announced what their CEOs are earning. And when we talk about mega dollar charity organisations, transparency issues should cover such areas too.

The second part of this is to highlight the proportion that is allocated to fund-raisers. It is currently at 70% back to the organisation and 30% - up to 30% - back to the fund-raiser. The recent NKF shows over the two weekends have reaped about $14 million from the very generous public - well and good! Thirty percent of that can roughly amount to $4 million, which is also well and good. Because this means we can really churn a good fund-raising industry. However, there are some outcomes that one must be a bit cautious about. Bigger charities can throw bigger money to lure more money; sometimes crowding out, in the absence of enlightened donors, the smaller charities.

Secondly, fund-raisers' creativity - after all, they have a 30% stake in this business - can lead to a staple fair of

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stunts in some particular cases, as we recently saw, each more demanding than the last in an effort to lure the charity dollar.

Thirdly, the most important - what are we then leaving as our heritage to our children or to the next generation? A warped sense of values - as we are now dangerously close to linking charity-giving to how hard or how well they perform their stunts, what kind of celebrity performs the stunt. In the whole issue, as already mentioned by the Minister, there are issues here for governance on how funds are raised, if we are going to remain watchful on how values are going to be transmitted to our younger people.

Another area of fund-raising is cross-selling. The recent one, as in the papers, is Aviva (the insurance company) and NKF. Cross-selling and sharing of databases - this is an area which I would also hope that the Council will look into.

The third part of this that I would like to raise is the attention on how the charity dollar is used. We have seen in some organisations aquariums galore, in some instances, TV sets, plasma screens, plush surroundings, water features - nothing wrong with that at all. What is more important is the system with which the dollar was lured. Was the donor given a whole spectrum of things that are needed by the charity, so that the donor can make a considered choice of where to put his or her one dollar? And it was not told instead that, "Here, this is our need. Could you please donate to this item? We need it badly." What I am talking about here is enhancing the capabilities such that the individual donor can make good and well-considered decisions.

And, fourthly, the whole issue of the IPC status. We have big umbrella funds - health endowment fund and the education endowment fund - and it is sometimes an auto registration if you come

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from a particular field closely related to health or education that you do get your IPC status. Maybe this needs a review under the guidelines that are to come. We have asked earlier when these guidelines are due. It is my hope that, in the interim, when the new set of guidelines comes on board, we still have instruments that will govern any practice that may not be so conducive, as it has already been acknowledged that the current guidelines are a little bit too broad.

At the end of the day, I totally agree with what the Minister said earlier. It is important to note that as Singaporeans become more sophisticated and ask the right questions, they want to know where to park the precious charity dollar. If Singaporeans themselves are too easy going on where they would like to place their charity dollar, then we are just opening the doors to charities which will work less hard in being as transparent as they ought to be in sharing the information with the public.

And, lastly, it is my hope that bigger charities will allow smaller charities to piggyback on their fund-raising efforts so that both can share proportionately the goodies that Singaporeans are willing to give them.

The Second Minister for Finance (Mr Lim Hng Kiang): Mr Deputy Speaker, Sir, we have gone through this debate a couple of times, once in the Committee of Supply and, also, this afternoon during the Questions for Oral Answer. In responding to the Member, I would just like to clarify a few points.

First, on the press release put up by NKF. I am not aware of the details. I think they put up the press release and explained the differences between 52% and 56% go to the beneficiaries. I recall also that they indicated in the press release that about 26% goes to the reserves. So, actually, if you add up the

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two numbers, nearly 80% goes to the beneficiaries. I think that puts NKF on quite a sound record. The vast bulk of the money goes to the beneficiaries, both immediately as well as in the reserves.

Secondly, on the operation cost of running a dialysis centre. From my experience in the Ministry of Health, I can tell you that running a dialysis centre is very, very expensive. The NKF looks after more than 2,500 patients and the average cost is more than $25,000 or $30,000 per patient. That is the reason why the NKF requires a budget of $50 million to $60 million. These are not small sums to run the centres.

As I mentioned this afternoon, when NKF takes on a patient, it is committed to the patient for life. I have met patients, both locally and overseas, who have been on dialysis for more than 20 years. The medical record of NKF is extremely good, better than world standards. So, the patients that go to NKF are actually treated to very high medical standards and therefore they live much longer. That is the reason why they need more funds. And there is nothing wrong in putting these funds in the reserves because they are committed to the patients for their lifetime.

On the point about cost and salaries of CEOs, this is a decision by NKF whether to disclose the salaries of the CEOs. Here, I have some sympathy for their dilemma. If they do not disclose, then there will be critics who say they are not transparent. If they disclose, there will also be critics who will say that whatever they pay are too high. So I think they are caught between a rock and a hard place. I think it is their decision not to disclose.

We also discussed earlier this afternoon about the proportion of expenses towards fund-raising. And the

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reason why we set the 20% rule is to have a reasonable cap that will facilitate fund-raising for the smaller charities. Smaller charities require high overheads in fund raising. So if we were to lower the cap to something below 20%, then I think we will constrain the smaller charities.

On the issue of cross-selling and the sharing of databases, I think NKF has come up to clarify its position. So I see nothing objectionable to its position. What they are saying is that they will only release this data if there is consent from the donors. I think that is a very sensible position to take.

On aquariums and TV sets, if you have been attending dialysis three times and each time it takes long duration, I think it is nothing wrong actually to have aquariums and TV sets to keep the dialysis patients occupied. We do have aquariums and TV sets also in our blood donation centres. So these are not unusual, I would say, distractions for the patients to keep them busy.

On the running of the IPCs, our administration is to appoint administrators for different groups. So it is not true to say that if you belong to the education or the health group, you get your IPC status automatically. The fund administrator in each group has certain criteria by which he evaluates applicants who want IPC status, and these criteria are set by IRAS, and we make sure that people who apply have to qualify before they are given this IPC status.

Let me conclude by saying that it is not a zero sum game. I think there is room for the big charity organisations and there is room for the smaller charity organisations. And if both groups go out and convince Singaporeans, I think Singaporeans have big hearts and are willing to donate to the wide range of charities. We have 1,300 charities registered in Singapore and we have 820 IPCs. So there are

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more than 2,000 organisations out there doing good for Singaporeans, largely run by volunteers. And Singaporeans, by and large, if you convince them of the worthiness of the causes, will open up their wallets. So I do not see this as a zero sum game. I urge all the VWOs to continue their good work and continue to solicit the donations from Singaporeans. One way to do so is, of course, to have good corporate governance and to be transparent as to how the donation dollar is going towards the beneficiaries. The more people are convinced that the money which they contribute goes directly to the beneficiaries, I think the more they will be willing to donate.

As for the smaller charities, I think there is a case to be made for them by combining their resources so that they go out and operate as a group or as a cluster. I think there are efforts made by the

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Community Chest and other groupings so that clusters of smaller charities can go out and solicit the donation dollar as a group. So these are some of the ways in which they can get a bigger share of the pie.

Ms Braema Mathiaparanam: rose ---

Mr Deputy Speaker: Sorry, Ms Braema, you are allowed to speak only once under SO 45(3).