Business activities give charities sustainable source of money

File photo of donation tin cans.
File photo of donation tin cans.PHOTO: ST FILE

It is not surprising that the Commissioner of Charities' statement that it is paying more attention to charities that venture into business has caused concern within the charity sector (Watchdog to keep an eye on charities that run businesses, June 19).

The announcement itself is surprising because there is already an existing document, titled Guidance For Charities Engaging In Business Activities, for charities that wish to venture into business.

Charities are generally set up to serve a social cause, and their income streams largely depend on generous donations from the public and corporate entities and, in some cases, government grants.

Charities incur operating costs like any commercial organisation. They need to pay rent, staff costs and other ancillary expenses. A large proportion of the operating costs is fixed.

If charities are to depend solely on donations to fund operating activities, most will face a huge challenge to remain financially sustainable in the long term and continue to carry out their social missions. Donations are voluntary, and subject to volatility.

Therefore, charities should be allowed to venture into business activities.

As the saying goes, in order to do good, you have to do well, then you can do more good, and so on.

In fact, all charities should generate a reasonable surplus annually, like any commercial organisation, so as to be financially sustainable in the long run.

Governance is good to ensure money from donations is properly accounted for and not diverted to other purposes, but the measures should not hinder the objectives of charities.

Victor Tan Thiam Siew

A version of this article appeared in the print edition of The Straits Times on June 25, 2019, with the headline 'Business activities give charities sustainable source of money'. Print Edition | Subscribe