Sunday, November 01, 2015

How to prevent abuse by IPC charity

Mr. Tan
Is City Harvest Church a charity that enjoys tax privileges? Should the government regulate it more closely?

I found this posting. It states the CHC is an "ordinary charity" and is not an "IPC-charity". Being a non-IPC, it does not enjoy any tax privileges and is not regulated by the Commissioner of Charities, who is a government official.
We must remember that the government does not prevent the abuse of funds. In recent years, two IPC-registered charities were found to have breached the regulations, i.e. the National Kidney Foundation and the Ren Ci Hospital.

What is the problem and how can it be solved?

If the government grant IPC to a charity, it is contributing towards the funds collected by the charity through tax deductions. The government has a large financial interest in ensuring that the charity is managed properly.

The government should appoint a few directors to the board of the charity and make it clear that these directors are independent of the leaders of the charity and are responsible to look after the interest of the taxpayers.

This may be insufficient.

The government, through the Commissioner of Charities, may have to appoint the chief financial officer of the charity or have frequent and direct access to this person.

There is a similar practice in the commercial world. If a Singapore company enters into a joint venture with a foreign company, e.g. to manufacture or sell its product in the country of its foreign partner, the Singapore company will usually insist that they have the right to appoint the chief financial officer, while the foreign partner appoints the chief executive officer or the other way around. This ensures that the financial interest of both partners are protected.


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