Preliminary Recommendations by IMC on the Regulation of Charities and IPCs
Posted on Friday, January 27, 2006 - 12:00 AM
The Inter-Ministry Committee (IMC) on the Regulation of Charities and Institutions of a Public Character (IPCs) has released its preliminary recommendations for greater regulatory oversight of charities and IPCs, and to facilitate the growth of the charitable sector. The IMC invites public feedback on its proposed recommendations.
The Press Release is as follows:-
IMC on Charities and IPCs Invites Public Feedback
1. The Inter-Ministry Committee (IMC) on the Regulation of Charities and Institutions of a Public Character (IPCs) has released its preliminary recommendations for better regulatory oversight of charities and IPCs, and to facilitate the growth of the charitable sector. The IMC invites public feedback on its proposed recommendations.
2. The IMC would like to emphasise that its preliminary recommendations and the earlier report on the Council on Governance of IPCs are not meant to be the complete solution to proper governance of charities and IPCs. In line with the drive towards greater self-regulation, the IMC would like to encourage all charities and IPCs to consider, formulate and publish their own plans for improving their standards of governance and management.
The IMC on the Regulation of Charities and IPCs
3. There has been greater public attention on governance issues related to charitable organisations recently. The National Kidney Foundation (NKF) issue in particular has heightened public concerns on the governance and management of charitable organisations.
4. The IMC on the Regulation of Charities and IPCs was set up in October 2005 to develop a regulatory framework to regulate charities and IPCs. This is with a view towards helping the sector to grow, rationalise existing regulations and the roles and powers of the various regulatory agencies involved in overseeing charities and IPCs, and streamline processes to facilitate the registration, reporting and fundraising requirements of charities and IPCs.
5. The IMC is chaired by Mr Niam Chiang Meng, Permanent Secretary of the Ministry of Community Development, Youth and Sports (MCYS). Please see Appendix I for the list of IMC members.
6. In arriving at its preliminary recommendations, the IMC studied the recommendations of the Council on Governance of IPCs that were accepted by the Government in May 2005 and specific governance related issues raised in the KPMG report on the NKF. The IMC’s draft report is attached at Appendix II.
Nurturing a Community-driven Charitable Sector with Greater Self-regulation
7. The IMC is of the view that our regulatory approach should nurture a charitable sector that remains driven by the community. Regulatory requirements should be kept to a minimum so as not to be onerous, which would stifle volunteerism. Nonetheless, they should be strictly enforced to maintain public confidence. The boards of charities are ultimately responsible for the charities and should take ownership to improve their governance through raising standards, hiring competent persons, building expertise and incorporating best practices. The Government should only intervene in the administration of the charities as the last resort.
8. The regulatory framework should encourage self-regulation within the charitable sector. Government can facilitate by setting minimum guidelines on disclosure requirements to help to build a culture of transparency, but the donating public should also be discerning so as to make informed decisions as to which charities are deserving of their support. The regulatory framework should not be “one-size-fits-all”, but should instead be stratified. For example, charities that raise funds from the public (typically IPCs) should be subjected to more stringent rules, compared to those that interface only with a defined membership. Larger charities should be subjected to more stringent rules compared to smaller ones.
Proposed Regulatory Framework
9. The IMC recommends a regulatory model in which the Commissioner of Charities (COC), with enhanced authority, will regulate charities and IPCs with the help of Sector Administrators and the community. This is illustrated in Appendix III.
10. Commissioner of Charities. The COC currently reports to the Ministry of Finance (MOF). The IMC recommends that the COC come under the purview of MCYS, in line with the IMC’s view that the COC should go beyond tax issues related to charities and IPCs, to also focus on their governance. The COC will regulate charities and IPCs, promote governance standards and best practices, and conduct audits and investigations into charities and IPCs where necessary.
11. To ensure the COC can carry out these functions effectively, the regulatory authority over both charities and IPCs will be consolidated under the COC, in the Charities Act. The COC will also be given additional authority to act for the protection of charities and IPCs. The COC will also work closely and synergise its efforts with the National Volunteer & Philanthropy Centre (NVPC), which promotes informed charitable giving among corporate organisations and individuals.
12. Sector Administrators. The IMC also recommends rationalising the existing 11 CFAs into six Sector Administrators (SAs), covering the social services, education, arts and heritage, community and youth, health, and sports sectors, to better reflect their wider role in overseeing both charities and IPCs in their sectors. Each of them will oversee a fairly significant number of charities. Their expanded role will be supplemented by certain regulatory authority delegated by the COC, who will also work with the SAs to coordinate the regulatory stance for consistency across sectors. Both the COC and SAs should serve as the points of contact for the public to raise concerns over any specific charity or IPC.
13. Charity Council. The IMC recommends introducing people sector involvement in the regulation of charities and IPCs, especially in the promotion of good governance and management, in line with the move towards greater self-regulation. A Charity Council should be set up, chaired by a prominent people sector leader and comprising representatives from the people or private sectors and SAs, which will advise the COC on regulatory issues, as well as charity and IPC registrations. The Council will also work closely with the COC to promote self-regulation and good governance standards in the charity sector.
14. Mr Niam Chiang Meng, Chairman of the IMC said: “The setting up of a Charity Council with people sector representation is consistent with the spirit of self-regulation of the charitable sector. The Charity Council will be instrumental in promoting good governance within the sector and will help to promote a culture of informed giving over time.”
Governance, Financial and Fund-Raising Regulations
15. To refine the recommendations of the Council on Governance of IPCs (CGI), as well as address the specific governance issues raised by the KPMG Report, the IMC recommends additional regulations for charities and IPCs. The IMC is mindful of the compliance costs to charities and IPCs, and recommends stratifying the requirements such that the more stringent ones will only be extended to large charities and IPCs. The IMC also proposes that the additional regulations, together with the CGI’s recommendations for IPCs which were originally to be implemented from 1 January 2007, be implemented from 1 July 2006.
16. The IMC also recommends that the COC extend basic regulations on public fund-raising, which currently apply only to IPCs, to charities that carry out public fund-raising.
17. Mr Benedict Cheong, CEO of NCSS, said: “The IMC is conscious not to have a knee-jerk reaction and impose too many restrictions on charities and IPCs. Having a tiered approach ensures that we do not penalise the majority of charities, which are small. However, it is to the advantage of charities and IPCs, big and small, to share more relevant information with the public to foster greater public trust and support for their causes.”
Facilitating Charities and IPCs – One-Stop Portal
18. The IMC recommends building a one-stop portal to help those interested in setting up a charity/IPC. This portal will also provide one-stop service for the registration and reporting for charities and IPCs. The portal will also list the permits required for different fund-raising events. The IMC has identified the need to work towards leveraging on the Online Business Licensing System (OBLS) to make it easier for charities to apply for the permits online.
Implementation Timeframe
19. The IMC recommends that while the specific regulations governing charities and IPCs should be implemented with effect from 1 July 2006, other recommendations should be implemented by end 2006, as they may require legislative amendments.
Public Feedback
20. The IMC’s preliminary recommendations can be found on http://www.feedback.gov.sg. Members of the public and all charities and IPCs are invited to give their feedback on the IMC’s recommendations via the Government Consultation Portal http://www.feedback.gov.sg from today. Public consultation will close on 17 February 2006.
The IMC on the Regulation of Charities and IPCs
27 January 2006
