Those who run charities must be beyond reproach.

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WE are often told that charity begins at home. But what happens when money meant for charity lubricates the lavish lifestyle of some fundraisers? Ideally, the misuse of charitable funds should not happen anywhere.

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Recently, at a regional conference on corporate governance issues, participants from African nations asked us about transparency and governance standards within charitable organisations.

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Around the region, Singapore has stood out more than most in the past few years for several cases in which people siphoned charitable funds for their own use.

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These include a recent high-profile case involving a revered Buddhist monk, who reportedly raised about S$7mln for a local hospital by performing dangerous stunts.

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He was later found to have misappropriated public donations to swan about in a luxury car and lend huge sums of money to his right-hand man, among other transgressions.

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He has since been sentenced to 10 months jail but is appealing against it. Still, his many excesses exposed in the trial will have the public questioning his charity’s integrity for a long time to come.

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We have learnt that some Malaysian charities too have codes of conduct which leave much to be desired.

 

With natural calamities occurring more frequently these days, many people have set up charities to help those affected by earthquakes, typhoons and so on.

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As the trustees of such charities have little or no fund-raising experience, they often employ professionals to help them run things.

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However, these professional “fundraisers” quite often take up to 80% of the funds raised as fees for their services. This means that for every RM1 raised for charity, its intended beneficiaries get only 20 sen.

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If that is not bad enough, our scrutiny of some charitable funds’ details showed that some of their trustees flew first-class to Paris for a three-day meeting, staying at the swanky George V Hotel, where they sent their clothes for dry-cleaning – all on the money meant for the destitute. Could those trustees not have brought along clean clothes to their Paris pow-wow?

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We’ve also learnt that a family-run charitable foundation is spending much of its funds for a famous talk show host to publicise their work.

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What is really interesting is that these apparent do-gooders are neck-deep in debt. Shouldn’t their money woes raise an eyebrow? Could they have set up the foundation to solve their own mess? After all, it has no proven track record yet, so its troubled founders might seem to be riding on the charity tag to dupe the media into giving them a good spin.

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Evidently, no one has scrutinised the creditworthiness of the foundation’s chief executive and his spouse.

 

Perhaps they initially signed a standard statutory declaration that they are not financially bankrupt. But they have not yet provided proof of their collective creditworthiness.

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It would thus be reasonable to suspect their intentions; hopefully they are not taking “charity begins at home” literally.

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Many foundations in Malaysia are incorporated under the Companies Act as a limited company by guarantee, and so have to apply and comply with the same rules as any private limited (Sdn Bhd) company.

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This means they need to file audited accounts for public accessibility, hold annual general meetings, board meetings, and toe the line on restrictions on mergers and acquisitions, as well as asset allocations and borrowings.

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Sponsors, especially corporate donors, would want such foundations to provide them with audited accounts for the previous year, and then a statement as to how their donations will be used.

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It calls for the foundations to strictly practice a code of governance that is rooted in transparency.

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To ensure a greater level of transparency, foundations should review the way they screen prospective and incumbent trustees.

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For example, they should review yearly the trustees’ statutory declaration that they are not financially bankrupt or heavily debt-ridden, and make it imperative for the same trustees to declare their assets and debts every year too.

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The chief executive of such foundations should be a bridge between trustees and staff by embracing transparent standards and enforcing checks and balances to keep abuses of public trust and money at bay.

Here are the basic principles which all charities should follow:

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●  Ensure board and trustee integrity;

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●  Conduct regular reviews and renewal of the trustees;

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●  Comply with all financial and corporate rules and regulations;

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●  Ensure that all trustees declare their assets and liabilities at least once a year;

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●  Ensure that all information posted on their website is accurate and factual;

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●  Declare how much the CEO is paid and what his expenses are; and

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●  Declare the track record of CEO in running the foundation.

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Also, given the mushrooming of foundations in Malaysia of late, the Government should appoint a commission or independent body to regulate the way foundations operate and collect funds.

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Any institution that takes money from the public and well-meaning corporations should be monitored closely, especially at a time when funds that sponsor terrorists are being moved from country to country into “legitimate” foundations.

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The proposed commission much have broad enough powers to enforce strict rules for transparency, legal and financial compliance as well as investigate abuses and breaches of trust.

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If you are thinking of donating to any charity or foundation, you must first be very clear about what the charity will do with your hard-earned money.

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Grill it for details as to how it intends to raise and spend its funds, who its trustees are, who run the whole outfit, and who has the biggest say in how, when, where and why its funds should be spent.

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Those who run charities are not only accountable to donors and beneficiaries, but must be beyond reproach.

 

Good causes and good intentions are not good enough to ensure that do-gooders really do good.