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InterMinistry Committee on Regulation of Charities

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Title: InterMinistry Committee on Regulation of Charities


1
Inter-Ministry Committeeon Regulation
ofCharities IPCs
  • 13 February 2006

2
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

3
IMC Members
4
(No Transcript)
5
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

6
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

7
Recommendations
  • Regulatory framework
  • Specific governance, financial reporting
    fund-raising regulations
  • Facilitating charities IPCs

8
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

9
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)

10
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

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

12
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

13
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

14
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.

15
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

16
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

17
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

18
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

19
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
20
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)

21
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

22
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

23
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

24
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.

25
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)

26
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

27
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)

28
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

29
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.

30
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

31
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.

32
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

33
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

34
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

35
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

36
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

37
Implementation
  • Other recommendations will be implemented by end
    of 2006, taking into account legislative
    amendments required

38
Feedback
  • Government Consultation Portal
  • http//www.feedback.gov.sg
  • Public consultation will close on 17
    February 2006.

39
Thank You
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