It’s all for charity … or is it?|Alex Price
Helping the needy is – or at least should be – a good thing. You’ve got a bit of cash left after paying the rent, bills and barman, and USD50 can go a long way to helping a homeless woman in Hong Kong or an orphan in Haiti.
But can you be sure that money is really going somewhere useful?
There is no central registry for charities in Hong Kong. The closest thing we have is the Inland Revenue Department’s (IRD) list of tax-exempt organizations – which runs to over 9,000 such entities. In order to qualify, you need to state that you want to either reduce poverty, advance education, promote religion, or carry out “other purposes of a charitable nature beneficial to the Hong Kong community”. You will also need a director and secretary (could be your neighbor and brother) and to submit accounts to the IRD on the few occasions they ask.
Ker-ching! You now have a tax-exempt charity. You can raise funds from named or anonymous donations, and pay your staff (er, that’s you) as much as you want with little worry.
You only have to publicly reveal your earnings made from actively soliciting people: donations from billionaire land barons or Russian oligarchs don’t count. In fact, until 2018 you didn’t even have to disclose the publicly-solicited earnings. The rules were only changed after the government finally took notice of recommendations from the Law Reform Commission that went back 10 years.
Among other things, the commission found tax authorities had failed to review the charitable status of hundreds of registered organizations. It also said the IRD been slow to delist inactive charities, with one allowed to continue even though it had never operated as a charity for 12 years. And some NGOs were found to have been paying directors in breach of the regulations.
As it stands, many charities in HK make most of their money from private donations and government grants. There is no legal obligation for them to show where that money came from or how it is spent. We don’t know how much is going to the bosses or how much is going to the intended beneficiaries.
And since there is no single government department tasked with monitoring or accrediting charities, it’s very hard to tell who is who and what is what. The list of tax-exempt NGOs on the Inland Revenue Department website is enormous. I tried entering about a dozen names into the checklist for audited charities (ie the ones who admit to soliciting). Every one came up with “not found”.
This includes the Bauhinia Foundation, a pro-Beijing think-tank stacked with tycoons. When David Webb, the crusading shares activist, asked them for details on their income he received this reply: “Bauhinia Foundation is a private trust. We’ve said in our previous reply that we are not at liberty to disclose details regarding our donors. On this point, I am afraid that we have nothing further to add.”
However the late Macau gambling tycoon Stanley Ho is reported to have said that he along with the property magnates Lee Shau-kee and Cheng Yu-tung were asked to give USD 0.4 million for the “charity”.
In many countries NGOs have to make audited accounts available to the public. We should do the same in Hong Kong; people here are extremely generous when it comes to charity: billions of dollars a year are donated. People need to know where charities get their money and what they do with it.
(Alex Price is a journalist who has lived and worked in Hong Kong for over 30 years.)
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