Boards of charities face greater scrutiny under revised code

Board members serving more than a decade at large charities and Institutions of a Public Character (IPCs) will now be put under increased scrutiny.

Under revisions to the code of governance for charities from January next year, charities with annual receipts or expenditure of more than $10 million and IPCs with either figure exceeding $500,000 will have to justify why they continue to retain such long-serving board members, the Charity Council said in a statement yesterday.

"The intent of this guideline is to encourage charities to practise succession planning at the board level," said the council, which is under the Ministry of Culture, Community and Youth.

The change is actually a softening of the council's proposal, made in September last year, to set a maximum term limit of a decade for at least two-thirds of the board of a large charity or IPC.

The council said: "The majority of feedback received indicated that the initial proposed code guideline was too stringent."

Speaking to The Straits Times, Shared Services for Charities (SSC) chief executive Chris Ong said: "It is very likely that the charities are concerned about the challenges in getting new board members with the desired background and willingness to commit their time to these charities." SSC is a charity and IPC that specialises in providing affordable professional shared services, such as auditing, to its peers.

Charity boards with mostly long-serving members may need more time to renew the board, said Mr Ong.

In addition, charities face enhanced disclosure requirements, such as board member attendance at meetings and remuneration, as well as total annual remuneration for staff. Mr Ong said: "The board attendance is one of the key indicators of an effective board."

Other changes to the code include:

•Pegging the definition of a charity's size to its gross annual receipts or total expenditure, whichever is higher, in the two preceding financial years.

•Removing the "not applicable" option in the Governance Evaluation Checklist (GEC) used by charities and IPCs to evaluate their compliance with the code.

•Waiving the GEC submission requirement for small charities that have gross annual receipts or total expenditure of less than $50,000.

•Introducing risk management measures.

Removing the "not applicable" option means larger charities and IPCs will now have to comply with the code of governance or explain why they do not. Smaller charities are, however, exempt.

Mr Ong also noted: "If the option of 'not applicable' is allowed, this may provide an easy exit route where controls are not there to mitigate the risks."

An IPC that already has term limits is the Singapore Cancer Society (SCS). "For many years now, SCS has in place succession planning and policies to govern the terms of service for SCS council members," said chief executive Albert Ching.

Of the 12 members currently, only one - an oncologist - has served for over a decade, he added.

A version of this article appeared in the print edition of The Straits Times on April 07, 2017, with the headline 'Boards of charities face greater scrutiny under revised code'. Print Edition | Subscribe