Charities shouldn't set up business subsidiaries

Posed photo of hands holding donation tins.
Posed photo of hands holding donation tins.PHOTO: ST FILE

Traditionally, charities are run by donations from supporters of their cause. It is inappropriate for charities to use this money to set up business subsidiaries with the aim of generating revenue to support the main charity's activities (Watchdog to keep an eye on charities that run businesses, June 19; Publicise info on charities with business subsidiaries, by Mr Tan Yee Kiat, June 20).

Even if the money used to set up the business subsidiary comes from a separate source, how does one account for revenue contributed back to the parent charity? Is it also eligible for matching grants available to charities, such as the Bicentennial Community Fund?

There is also the risk of overtaxing the parent charity's manpower to perform "extra duties" for the business subsidiaries, since they are indirect beneficiaries of the extra revenue.

With the proliferation of social enterprises, the distinction between them and charities with business subsidiaries is becoming increasingly blurred. I am all for boosting charities' fundraising capabilities, but this requires careful consideration and implementation.

Charities are ultimately about doing good and trust. Any scandal or wrongdoing will have serious repercussions not just for the affected charity, but also the sector as a whole.

Gwee Chen Teck

A version of this article appeared in the print edition of The Straits Times on June 21, 2019, with the headline 'Charities shouldn't set up business subsidiaries'. Print Edition | Subscribe