InterMinistry Committee on Regulation of Charities

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Inter-Ministry Committeeon Regulation
ofCharities IPCs

• 13 February 2006

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IMC on Regulation of Charities IPCs

• Chaired by the PS (CYS) to review the regulatory
  framework for charities IPCs to
• Develop regulatory models for charities IPCs to
  help the sector to grow
• Rationalise existing regulations, roles powers
  of various regulatory agencies
• Streamline processes to facilitate registration,
  reporting fund-raising requirements

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IMC Members
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(No Transcript)
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Key Principles

• Basic set of rules
• Not to over-burden the sector nor stifle
  volunteerism
• But basic rules enforced to maintain standards
  uphold public confidence
• Move towards self-regulation
• Boards of charities are ultimately responsible
• Lead charities towards greater transparency
  accountability to gain public support

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Key Principles

• Build a culture of transparency among charities
  IPCs
• Facilitate informed giving grow charitable
  giving
• Should not be one-size-fits-all
• Stratified by size and fund-raising target
  audience

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Recommendations

• Regulatory framework
• Specific governance, financial reporting
  fund-raising regulations
• Facilitating charities IPCs

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Recommendation Commissioner of Charities

• Commissioner of Charities (COC)
• Transfer office of COC, currently under the
  purview of MOF, to MCYS
• COC will be appointed by Minister(CYS)
• The COC will
• Regulate charities IPCs
• Promote governance standards best practices
• Conduct audits investigations into charities
  IPCs where necessary

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Recommendation Commissioner of Charities

• Consolidate regulatory powers for both charities
  IPCs under COC, in Charities Act
• To oversee both charities IPCs effectively
• Grant COC additional powers to act for the
  protection of charities IPCs (slide 10)

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Additional Powers for COC

• While the charity or IPC is being investigated,
  COC may suspend all forms of public fund-raising,
  including fund-raising conducted by 3rd party
  fund-raisers
• After completion of inquiry and there is a
  necessity to act in protection of a charity or
  IPC, COC may continue to suspend or prohibit any
  public fund-raising by the charity or IPC,
  including fund-raising conducted by 3rd party
  fund-raisers
• In acting for the protection of a charity or IPC,
  COCs suspension or removal of a trustee shall
  also disqualify the person from standing for
  election at the next AGM or for a period of one
  year, whichever is later and
• COC may give specific directions on the
  management of the property of the charity or IPC
  upon its dissolution

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Recommendation Sector Administrators

• Rationalise current 11 CFAs into 6 Sector
  Administrators, overseeing both charities IPCs
  in their sectors (slide 12)

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Sector Administrators

• NCSS Social Welfare
• MOE Education
• MICA Arts Heritage
• PA Community Youth
• MOH Health
• SSC Sports
• Charities IPCs that do not fall neatly under
  any of the six Sector Administrators will be
  regulated directly by COC

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Recommendation Sector Administrators

• To delegate certain powers from COC to perform
  their role more effectively
• Receive annual reports statement of accounts
• Ensure proper annual financial audits of
  charities IPCs
• Call for documents search records of charities
  IPCs and
• Appoint auditors to investigate into charities
  IPCs

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Recommendation Sector Administrators

• COC will work with SAs to co-ordinate regulatory
  stance for consistency across sectors
• Points of contact for public to raise concerns
  over any specific charities, conduct
  preliminary checks further investigations, if
  necessary.

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Recommendation Charity Council

• Set up a Charity Council
• Chaired by a prominent people sector person
  members (leading representatives from the people
  sector) will be appointed by the Minister.
• Functions
• Promote self-regulation good governance
  standards and
• Advise COC on key regulatory issues

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Recommendation Charity Council

• Council comprises
• Chairman from people sector
• 6 representatives from the people sector
• 6 representatives from the Sector Administrators
• A representative from COC
• A representative from NVPC

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Recommendation Charity Unit

• COC should be supported by an adequately
  resourced unit, which will
• monitor charities IPCs
• coordinate the various SAs regulatory stance for
  consistency
• carry out audits investigations from
  time-to-time
• promote governance standards best practices
• help develop charities IPCs capabilities in
  governance

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Recommendation Charity Unit

• COC, supported by the Charity Unit, will regulate
  the charitable sector in a more systematic
  structured manner
• Focus on large charities IPCs (with total
  annual income 10m)
• Actively review the accounts of large charities
  IPCs
• Introduce random audits of large charities IPCs
  
• Conduct more field visits to better understand
  charitable sector

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Recommendation Proposed Regulatory Framework
Commissioner of Charities (under the purview of
MCYS staffed by adequately resourced Charity
Unit )

• Charity Council
• Chairman (from the people sector)
• 6 people sector appointees
• 6 representatives, one from each Sector
  Administrator
• Representative from COC
• Representative from NVPC

6 Sector Administrators (Overseeing charities
and IPCs under their sectors purview)
Charities and IPCs that do not fall under any of
the 6 Sector Administrators
PA Community Youth
SSC Sports
NCSS Social Services
MICA Arts Heritage
MOE Education
MOH Health
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Recommendation Governance, Financial
Fund-raising Regulations

• Strengthen regulatory oversight over IPCs large
  charities (with total annual income 10m) by
• Introducing additional regulations that require
  greater disclosure compliance on the part of
  IPCs (with more stringent requirements placed on
  large IPCs) large charities (slide 21-25)

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Additional Rules for IPCs (All IPCs)

• All IPCs have to
• Disclose use of commercial third-party
  fund-raisers during their public appeals, in
  addition to other disclosures currently required
• Disclose ratio of reserves to annual operating
  expenditure online
• Declare their conflict of interest policy in
  their annual report
• Ensure that total expenses incurred on
  fund-raising appeals in a financial year do not
  exceed 30 of total donations collected through
  the appeals in that year
• Have their auditors certify whether they have met
  the 30/70 rule on fund-raising expenses as part
  of their annual audits.
• Where a non-commercial 3rd party fund-raiser
  raises funds for or on the behalf of an IPC, the
  third-party fund-raiser should submit to the IPC
  a statement of its expenses

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Additional rules for IPCs (All IPCs)

• All IPCs will be exempted from 30/70 rule for
  house-to-house and street collections under the
  House-to-House and Street Collections Act and
  lotteries under the Common Gaming Houses
  (Exemption) Notification
• They will be subjected to the 30/70 rule under
  the IPC regulations, on an annual basis
• To assist IPCs, COC will clarify accounting
  definitions, e.g. accounting for sponsorships
  under the 30/70 rule, definition of operating
  reserves and operating expenditure, and to make
  explicit auditing specifications expected of
  public auditors in their annual audits of IPCs
• IMC recommends that for this computation, IPC
  shall include sponsorships both as expenses and
  donations where receipts have been issued

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Additional rules for IPCs (Large IPCs)

• Large IPCs have to
• Have at least 10 members
• Post their annual report audited financial
  statements online, in addition to information on
  online disclosure template that they are already
  required to post

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Additional Rules for IPCs(Best Practices)

• Best Practice for Large IPCs
• Disclose remuneration of trustees top 3
  executives in annual report
• Disclose number of trustees whose remuneration is
  more than 5,000
• how many trustees receive annual remuneration btw
  5,000-15,000, how many trustees receive
  annual remuneration between 15,000-25,000 etc.
• Disclose number of top 3 executives in wage bands
• how many executives receive annual remuneration
  btw 0-100,000, how many executives receive
  annual remuneration btw 100,000-150,000 etc.

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Additional Rules for Charities

• Large Charities have to
• Have at least 10 members
• Seek COCs or respective Sector Administrators
  approval for the appointment of external
  auditors.
• Change external auditor/firm every 5 years
• Best Practice for All Charities
• All Charities encouraged to follow
• Financial Reporting Standards (FRS) and
• Statement of Recommended Accounting Practice
  (RAP) 6 for Charities issued by Institute of
  Certified Public Accountants of Singapore (ICPAS)

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Recommendation Governance, Financial
Fund-raising Regulations

• Bring forward recommendations by Council on
  Governance of IPCs, which were originally to be
  implemented on 1 January 2007, to take effect
  from 1 July 2006
• Additional requirements for IPCs large
  charities (refer to recommendation 9) will also
  be implemented from 1 July 2006

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Recommendation Governance, Financial
Fund-raising Regulations

• For All Charities Third-party Organisations
• Certain basic regulations on public fund-raising
  that currently apply only to IPCs should be
  extended to charities (slides 29-32)

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Recommendation Governance, Financial
Fund-raising Regulations

• Public Fund-raising
• Going beyond the charitys membership to actively
  raise funds
• Public includes both individuals
  organisations (e.g. companies and institutions)
• Examples
• House-to-house collections, fund-raising events
  at public venues, mailers, TV shows, telephone
  etc
• Unsolicited donations not considered public
  fund-raising

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Fundraising Regulations To Be Extended to
Charities

• Ensure that total expenses incurred on public
  fund-raising appeals in a financial year should
  not be more than 30 of total donations collected
  through the public appeals in that year
• Have independent examiner or auditor to certify
  if charity has met the 30/70 rule as part of
  their annual audits
• Submit examiners or auditors report on use of
  donation monies raised through public appeals and
  whether such use is in accordance with the
  charitys objectives
• Submit to COC no more than 6 months from close of
  financial year
• Exempted from complying with 30/70 rule for
  house-to-house and street collections under the
  House-to-House and Street Collections Act and
  lotteries under the Common Gaming Houses
  (Exemption) Notification.

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Fundraising Regulations To Be Extended to
Charities

• Ensure information provided to donors, potential
  donors and general public in their public appeals
  does not contain any misrepresentation or
  material omission that will lead to a conclusion
  of misrepresentation
• Disclose name of their organisation, intended use
  of funds and use of commercial 3rd party
  fund-raisers during their public appeals
• Disclose total funds raised, fund-raising
  expenses incurred planned use of funds raised
  for each public fund-raising event that raises 1
  million or more
• Disclosure should be done online at end of each
  financial year (need not be audited or examined
  separately)
• Maintain separate financial accounts for public
  fund-raising events that raise 1 million or more
• Accounts need not be audited or examined
  separately

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Fundraising Regulations To Be Extended to
Charities

• Ensure adequate control measures for all
  collection instruments used in public appeals,
  e.g. serialise collection tins or pledge cards
• Ensure that funds and donations raised through
  public appeals are used in accordance with
  donors intentions and the specific purpose as
  communicated when soliciting for donations
• Respect donors confidentiality e.g. not to
  transfer donor lists or records without donors
  prior approval, respecting wishes to remain
  anonymous and to be excluded from contact lists,
  etc.

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Fundraising Regulations To Be Extended to Third
Party Fund-raisers

• In a commercial 3rd party fund-raiser
  arrangement, all donations shall be made directly
  to the charity
• Fees to the fund-raisers shall be separately paid
• Where a non-commercial 3rd party fund-raiser
  raises funds for or on behalf of charity, the 3rd
  party fund-raiser should submit to the charity a
  statement of its expenses

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Recommendation One-Stop Charity Portal

• Build one-stop online charity portal for
  registration reporting
• Registration Reporting to be less confusing
  time-consuming for charities IPCs
• Common platform for greater coordination across
  different regulatory agencies

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Recommendation One-Stop Charity Portal

• Resource Centre
• Advice on complying with various regulatory
  requirements,
• Best practices and information on permits for
  fund-raising events
• Charity Registration
• Incorporate with ACRA, register with ROS,
  register with COC apply for IPC status
• Processing by the different authorities can be
  done concurrently

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Recommendation One-Stop Charity Portal

• Charity Reporting
• Upload annual reports financial statements and
  submit requests
• Automatically route documents requests to
  relevant authorities
• Fund-Raising Permits
• Provide a listing of permits commonly required
  for various types of fund-raising events
• Work towards leveraging on Online Business
  Licensing System to allow application for permits
  online and simplify process of obtaining relevant
  permits

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Recommendation Rating System

• Move towards a system of rating of charities to
  facilitate culture of greater disclosure
  transparency, and of informed giving
• Rating initiative can be carried out by
  non-governmental organisations, as is the case in
  the USA, or by the Charity Council

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Implementation

• Other recommendations will be implemented by end
  of 2006, taking into account legislative
  amendments required

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Feedback

• Government Consultation Portal
• http//www.feedback.gov.sg
• Public consultation will close on 17
  February 2006.

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Thank You