Should donors have a say in how to use charity money?

Categories: Singapore

Following the NKF debacle, many donors are now very weary about the use of donation money. This is a healthy development in itself. It is only fair for donors to know precisely how their money are going to be spent. But can donors decide on how fund should be used? [Today newspaper March 17, 2006].

Given the numerous charitable organisations in Singapore, it is easy to understand that some of their principal aims may be overlapped. Good example will be the National Kidney Foundation and the Kidney Dialysis Foundation (KDF), both of which helps in providing dialysis subsidy to renal patients. This is further complicated by the fact that there is an umbrella body that forsee and helps in raising charity money for its member. This body takes the form of National Council of Social Service (NCSS).

Currently, donors generally give money to such organisations based on their broad aims. For example, NKF for kidney patients and NCSS under the Community Chest scheme. This has the advantage of simplicity for donors. Donors do not have to wonder how exactly the money will be used but who will use the money. The downside is that sometimes the money may not be channelled to the intended use of the donor. For example, donation to the NKF may end up being used for education purposes and not for dialysis per se as what the donor may have intended. And given the worse case scenario as in the NKF saga, the funds can be easily abused.

On the other hand, giving the donor a say on how to use their donation may create numerous conflicts. Organisations like Singapore Heart Foundation spend most of its donation money on education which it feels is important in preventing heart-related condition in the first place. This may not be what the donors felt and thus donations may be inadequate. Then there are varied opinions as to what each donor may want the charity body to use his donations. This may give rise to many smaller funds resulting in lack of real overall funding as the already precious little donation money is spread into many funds. This may result in a charity body with large overall donations but too little to fund an individual project.

A possible solution is probably to let the public know exactly what the organisation planned to do and how much each project is expected to cost. The collected donation is then dispersed proportionately into each project. If this is not feasible, then have the project prioritised so that the most important will get the funding first followed by the rest. This method serves to create a little more transparency compared to the 'old' tried-and-tested method. Now the donor gets a better picture of how the money is to be spent. Further it prevents the chaotic situation where each donor has a say in how the money is to be spent. The charity body can steer the donation money to what it felt is most important for the members they serve.

Talking about transparency, it would be good if a charitable organisation can publish a simplified financial report in the newspaper - on how much it has canvassed, how and where the money was spent and left overs if any - before they have a campaign for donations. This is especially so for the those organisations that canvas their funds via the television as such events generally rakes in millions of dollars. Donors are 'shareholder' in such charitable organisations and this is only fair that a report card of sorts is published. After all a public listed company is also required to report to their share holders.

Whatever the outcome of this discussions, it is most important that the needy does not suffer as a result. Whichever method is used, the utmost important is transparency so that a repeat of NKF fiasco can be avoided. In the end it is not only the needy that benefits if all goes well, the donors also benefit because they know that their hard earn money is put to good use.