Why It Matters

Holding charities to high standards

Stricter guidelines to improve the governance of charities have been proposed, and the public consultation started last week.

The proposals include guidelines on disclosure of information - such as board members' attendance at board meetings and the pay of a charity's three highest-paid staff - as well as term limits of board members and the setting up of whistle-blowing policies.

Some of the guidelines currently apply to larger charities but will be extended to cover almost all charities, except very small ones.

The proposed changes come at a time when the charity sector is growing: There were 2,217 charities last year, up from 1,875 a decade ago. As for donations, the latest figures show that they rose to $2.5 billion in 2014, up from $1.8 billion in 2009.

With more donations, charities may become complacent in ensuring good governance, but this must not happen. Local surveys have shown that every scandal is followed by a drop in donations, not just to the charity involved but to the whole sector.

The tweaks to the code will, hopefully, spur charities to ensure that their resources are used legitimately and to be accountable to the public.

Good governance is not just about ensuring that money is not misappropriated, but also about effectiveness and working towards making a bigger impact. As the charity sector grows, there will be more competition for donations, volunteers and board members. Setting a 10-year term limit for two-thirds of the board members could lead to new members giving fresh insights, but could also be operationally disruptive.

This proposed guideline may be tweaked after the consultation but, at the very least, charities will likely have to pay more attention to how impactful they are, so this also helps them attract new board members.

To be sure, the code of governance is a set of guidelines, not laws. But rather than the Government increasing regulation of charities, corporate and individual donors should practise more informed giving and hold charities to high standards.

A version of this article appeared in the print edition of The Straits Times on September 26, 2016, with the headline 'Holding charities to high standards'. Print Edition | Subscribe