Charities struggling with rising costs

It is indeed encouraging to see that donations increased in 2016 from the years before ($2.9b donated to charities in Singapore in 2016; Nov 14). While this is good news for the charity sector, the actual situation may be less optimistic.

Charities are generally set up to assist the vulnerable and the disadvantaged in the community. Like commercial organisations, charities struggle with increasing cost of operation. Inflation, increasing cost of manpower, utilities and goods and services add to operating expenditure. Yet, charities are hard-pressed to keep programmes and services affordable while maintaining service quality.

Policies and regulations to enhance governance and compliance of charities are crucial in helping to instil confidence and trust by donors to the charity sector. While charities want to be transparent and accountable, these come at a cost as well. Putting in place compliance procedures and reporting mechanisms requires resources and building up of corporate capability and capacity.

On the other hand, charities face greater fund-raising challenges as donors are increasingly more cautious with their giving and have higher expectations of the outcomes and returns. Many also prefer that their contributions go directly to those served by the charities rather than channelled to operating costs.

A more holistic approach could be taken to examine how expenses have simultaneously increased for charities and if the positive effects of increased donations were being negated by rising costs.

Similarly, when donations in 2016 were 61 per cent more than the $1.8 billion received in 2008, the cost of running charities would likely have increased. Perhaps, more could be done to assist charities to mitigate rising costs and improve productivity, so that increased donations can truly benefit the people whom charities are trying to help.

Abhimanyau Pal

Executive Director