Watchdog will monitor charities that go into business
Charities watchdog will provide 'guidance' to ensure activities do not distract it from charitable purposes, prevent conflicts of interest
The charities watchdog will be paying more attention to groups that venture into business, flagging conflicts of interest that may arise and the need for enhanced guidelines to protect the interests of charities.
In its 2018 annual report released last Thursday, the Commissioner of Charities, Dr Ang Hak Seng, said it will provide "guidance" to charities that engage in non-charitable activities, such as setting up business subsidiaries.
Dr Ang said: "It is essential that these activities do not undermine the charity's focus and distract it from its exclusively charitable purposes.
"More importantly, it is crucial that governance on areas such as conflict of interest are not overlooked."
He stressed that there has to be "an arm's-length relationship" between a charity and its business subsidiary.
His office will provide more guidance to "stress on the necessary governance to protect the charities' interests, such as their beneficiaries and charitable assets".
Although there are existing guidelines on how charities can engage in business, Dr Ang said that it plans to "enhance" them to better protect the interests of such organisations.
It will consult the charity sector in the process.
The office of the Commissioner of Charities told The Straits Times that some charities, in particular large groups whose gross annual income are not less than $10 million, engage in business activities to generate additional income or provide more goods and services.
The report did not provide examples of charities with business subsidiaries.
Mr Nizar Mohamed Shariff, the founder of Free Food for All, a small charity that distributes meals to the poor, welcomes guidance from the commissioner.
The 48-year-old also runs the charity's business subsidiary - the Food for Change frozen food store, which pledges 40 per cent of its annual profit to the charity arm.
"It is necessary for (the commissioner) to play a role so that charities that have subsidiaries doing businesses will remain true to their cause," he said.
Chairman of the Charity Council Gerard Ee also agreed that there is a need for clear guidelines.
He said there can be issues, for example, if the staff of a charity perform the duties of its business arm, although they are not paid staff of the subsidiary.
It can also be problematic if the business subsidiary loses money and the loss is subsidised by the charity's resources.
The commissioner's annual report showed that charities received $2.65 billion in donations in 2017, down 7.3 per cent from the previous year.
As of the end of last year, there were 2,277 registered charities here, up from 2,263 in 2017.
Meanwhile, the number of complaints about online fund-raising fell by 46 per cent in the past year.
It comes after the Code of Practice for Online Charitable Fund-raising Appeals was launched in January last year.