Trust matters in the charity sector

Sectors

Charities

8 October 2024

Speech by Mr Edwin Tong, Minister for Culture, Community and Youth & Second Minister for Law, at the Charity Governance Conference 2024 on 2 October 2024

Ms Theresa Goh, Chairperson, Charity Council

Mr David Gerald, Founder, President, and CEO of Securities Investors Association (Singapore),

Professor Robbie Goh, Provost, Singapore University of Social Sciences,

Ladies and Gentlemen

People of the Charity Sector and Corporate Sector

Introduction

Thank you very much for being here this morning.
This year’s theme is something that would resonate with all of us – something we know about, something we believe is at the core of what we do. But I think we can never discuss it often enough, and we can never share ideas often enough.
It is not something entirely new, but it is such a critical success factor for all that we do. If we, as a charity sector, are to deliver on our mission to make Singapore more inclusive, to measure ourselves by how much we can lift the vulnerable among us, and to bring everyone along across the finish line, then we have to ensure that trust is deeply ingrained and very much second nature in everything that we do.
This morning, I want to talk about how talk about how charities play a crucial role in society and what trust means in the context of that role that it plays.

Importance of Public Trust and why trust matters in the charity sector

I think we all agree that trust is the bedrock upon which charities build their relationships with all stakeholders, including donors, volunteers, beneficiaries, and indeed the wider community. Without it, it will be very hard to make a meaningful impact in the work that you do and influence an outcome that is positive for the beneficiaries.
When people trust that their contributions and that's in the case of whether it's time, money, talent, treasures, or the resources, if it is not used effectively or ethically, they are not likely to give.
At the same time, this trust is often fragile. You know the saying “It takes a lifetime to build it, but just one moment to lose it”.
1. Instances of mismanagement, financial impropriety, or ethical lapses can quickly erode public confidence, not only in individual charities but also across the sector as well.
2. The National Giving Study 2023 by National Volunteer and Philanthropy Centre (NVPC) revealed a dip in donations and volunteer hours in 2023, as compared to 2021.
  1. I do not put this down to the lack of trust. In 2021, where we were in the middle of COVID-19, you could see a very different Singapore at that point in time, with everyone stepping forward to help.
  2. In 2023, 32% of participants who did not donate cited fear of scams as their reason for not donating, and this represents a 9% significant increase from 2021 to almost one-third of all donors.
  3. It is something to make us sit up and shows you that at its core, if you don't trust, you don't have full faith and confidence – then that impacts the extent to which you're prepared to give.
This reinforces the point that we really cannot allow any erosion of public trust in charities. We cannot let this take root, let alone settle in Singapore.
1. We must prioritise good governance through the practice of ethical and empathetic leadership, and maintenance of high standards of transparency, openness and accountability.
2. By holding on to these very important currencies of trust, we can build a sustainable and resilient sector that continue to inspire public confidence and therefore engender public support.
The Commissioner of Charities (“COC”)’s Office and the Charity Council will support our charities with the necessary resources towards stepping up, building and maintaining this public trust between charities and the public.
1. This morning, I wanted to spend some time announcing three very important initiatives aimed at strengthening charities’ governance capabilities.
2. I want to start this with a preamble to say that in all of these three initiatives, we see a good collaboration between the charity sector and many generous private sector donors, private sector parties stepping forward, lending their expertise and skillsets in helping us ensure that we build up, promote and maintain public trust.

(1) Embracing Practice of Ethical Leadership through ESG

First, to further support charities on your ESG journey, the Charity Council has partnered with KPMG in Singapore to co-develop an ESG Playbook For Charities, drawing on KPMG’s expertise in ESG transformation work and our commitment to sustainable development.
1. This playbook will offer practical, tailored steps designed to align with each charities’ operational needs at every stage of your own ESG journey.
  - I appreciate that each charity will be embarking on this journey at different points. This playbook will be useful to contextualise how you see that journey as you make way towards ESG.
2. The Charity Council and KPMG will also organise workshops to onboard charities to implement these practices as seamlessly as possible. I encourage you to join these workshops once available and to use this ESG playbook as a resource.
While the ESG concept has traditionally been associated with the corporate sector, its relevance to the charity sector is no less important. ESG practices are essential for charities to drive positive impact and ensuring long-term sustainability.
1. Sometimes, we see this as operating in two different silos - charities in one sector, and not overlapping with corporates. We need to change this mindset and culture.
  - A good charity needs to have good corporate governance, and the practices we employ in ensuring that we have a strong and resilient corporate sector are equally applicable to the charities. So the ESG concept is equally applicable to how charities can operate, and it is in fact, in my view, essential for charities to drive positive impact and ensure long term sustainability.
2. To give you one example, younger donors for instance, they look at ESG as one principle consideration. They look at not just what you offer but how good are you and what impact do you make in society.
  1. This mindset about looking at ESG is not new, but it is something that we need to more deeply ingrain into the charity sector.
  2. Strengthening governance, attracting more donations, aligning with corporate partners who prioritise responsible and sustainable operations – all these are principles that we should see in the charity sector as well.
There is funding support to help charities adopt ESG practices:
1. There is Charities Capability Fund for your internal ESG projects.
2. The Ministry of Sustainability and the Environment also administers the SG Eco Fund, which supports ground-up projects that advance environmental sustainability and engage the community to raise awareness and a conscious thinking about the environment in everything that we do. For example, the Fund has supported the charity Image Mission Ltd, to teach women from disadvantaged backgrounds how to remake unwanted clothing into reusable items like bags. In this way, it fulfils their mission of empowering women while promoting upcycling and reducing textile waste, combining two very important missions into one.

(2) Empathetic Practice through New Mediation Service for Charities

Second, the COC's Office is in discussion with Pro Bono SG to launch a pilot programme to provide mediation services for resolving disputes involving smaller charities in Singapore, on a pro bono basis for charities who pass the means test.
Volunteers, staff and supporters dedicate their time and skills to drive the charity’s mission and I have no doubt about that. People come into this sector because there is a cause they want to support. Often done with good intentions, there will be times where conflicts arise. It is in human nature, it is in all our interactions. We come together, we do good, but sometimes we have a difference in opinion and conflicts do arise.
It is not so much when, or whether conflicts arise, but more in terms of how we address these conflicts that matter the most.
1. Poorly managed conflicts can drain resources and undermine public confidence in the charity’s integrity and effectiveness.
2. Worst of all, it destroys long term relationships that we built up over many years. In some cases, charities have been working together with volunteers, staff, sometimes with other charities as well in collaboration. When you don't manage the conflicts carefully, it undermines and destroys long standing relationships.
Pro Bono SG’s pilot programme aims to preserve the reputation and resources of these charities, allowing them to focus on their core missions.
1. When I was a practicing lawyer, I was in disputes. Very often, we look at things in black and white. It is either you-are-right or I-am-right kind of approach and we go to court to deal with cases like this. But mediation became a very effective tool even in that very acrimonious, very confrontational adversarial system.
2. It was effective and we look at how we can find common ground, how we can give or take in some cases, how we can look at models of solutions outside of the existing framework to find a solution to this particular problem. Most importantly, it maintains the longevity of the relationship, keeps it amicable and long lasting, and the goodwill will not then be lost.
3. I think this is particularly important, if not more important in the charity sector, where there is already a lot of goodwill and a lot of desire to come together to collaborate, I think it'll be wasted if we allow one dispute to destroy that relationship.
4. More details on the mediation process and protocols will be provided closer to the launch, but you may approach the COC’s office to register your interest in the pilot program. We will get back to you once this is launched.

(3) Uphold the high standards of transparency and accountability by safeguarding charities against potential risks of money laundering and terrorist financing

Many charities have requested for more guidance and support in mitigating risks related to money laundering and terrorist financing. Sometimes, charities are seen as softer targets, more vulnerable and at risk of money laundering.
The refreshed Singapore Terrorism Financing National Risk Assessment 2024 also indicated that the understanding of the risk of abuse for terrorist financing still varies very much across charities. Some know the standards and how to guard against and mitigate the risks better. Others, however, may not even know what the rules are.
We have heard many requests for more robust measures and education to safeguard charities from being exploited for illicit purposes such as money laundering and terrorist financing.
1. The COC’s Office has partnered with WongPartnership LLP to co-develop a guidance template on appropriate anti-money laundering and countering the financing of terrorism policies and procedures (“AML/CFT” in short). This will help charities to enhance their own skillsets, knowledge, raise awareness and develop a system to mitigate and protect yourselves against financial crimes.
2. We have also collaborated with the Institute of Singapore Chartered Accountants (“ISCA”), and TT Foundation Advisors, Temasek Trust’s philanthropy advisory services arm, to roll out subsidised screening services for all charities.
  1. Charities can tap on ISCA’s Charities AML/CFT Services Panel to enhance their AML/CFT measures, including conducting checks on stakeholders, interpreting screening results and hiring consultancy services on risk management.
  2. TT Foundation Advisors will pilot an initiative enabling selected charities with overseas beneficiaries to conduct enhanced due diligence screening at a subsidised rate, set to launch in early 2025.
The charity sector remains vulnerable to being unknowingly exploited illicit purposes such as money laundering and terrorist financing, given the inherent risks related to the nature of activities and the locations in which charities operate beyond Singapore.
To ensure the sector remains credible and secure, I encourage all charities to take advantage of these services so that you can proactively mitigate the risks of your organisation being misused for terrorist financing, money laundering and other illicit activities.

Update on ISCA’s Community Accounting Programme

Beside the new initiatives, we have made good progress with the Community Accounting Programme, which aims to help charities, especially smaller ones with limited resources, to accelerate their digital transformation and governance.
1. Launched in October 2023 by ISCA in collaboration with the COC’s Office and National Council of Social Service, the pilot programme was successfully completed by three charities in March 2024.
2. One of the pilot charities is Fo Guang Shan (Singapore). Supported by Singapore Corporate Services Pte Ltd (“SCS”), the charity transited to Xero, a cloud-based accounting solution, which improves Fo Guang Shan’s financial management, security and operational efficiency, allowing the charity to focus on its mission.
3. The SCS team’s dedication in supporting Fo Guang Shan’s digitalisation journey was commendable. From understanding the charity’s financial and administrative needs to delivering highly customised and tailored training, their support highlights the critical role corporates play in helping charities enhance their services and efficiency.
This programme, backed by ISCA members and accounting firms, targets to support at least 50 more charities and non-profit organisations by end of this year.
The support from our partners such as ISCA, KPMG in Singapore, Pro Bono SG, TT Foundation Advisors and WongPartnership LLP highlight the power of corporate support and collaboration.
1. It underscores the part I made earlier that charities and corporates should not operate in two separate sectors, two separate Venn diagrams that do not intersect. There is a lot of prospect for that intersection.
2. It also tells us how coming together, collectively employing our own skill sets and expertise can really amplify impact and deepen support for charities in a way which we previously have not done.
3. Sometimes giving talent, skills, expertise is a lot more sustainable and impactful than just giving financial resources. I look forward to more corporates and professionals coming on board and stepping forward to offer their own skill sets to support the good work of our charities.

Closing: Together, we can build Public Trust

The point that I am making, as I conclude the speech, is that the purpose, practice, and impact of charities are closely intertwined.
We need all charities to come onboard alongside us, to succeed in building public trust in the charity sector.
1. We all know that collectively, if a few among us break this trust, damage public confidence, it will undermine all of us.
2. It is important that we work collectively to affirm our own collective commitment to uphold the highest standards of transparency, accountability, and ethical conduct.
3. We can no longer go back to the days, if it ever was, where we look at charities as almost like a corporate minus; I take it as “we do not need the best HR or financial controller in this sector because it is a charity”. We cannot go back or adopt that mindset. In fact, we have to say we must be a corporate plus because in as much as we are trying to build confidence, it starts with all of us. If we can demonstrate the good examples, exemplifying good behavior, engendering trust then the sector will be fine.
4. Ultimately, it is your beneficiaries who will gain from these enhanced standards of governance and transparency. They are the true beneficiaries of this exercise. Collectively, we can say that coming together is our modus operandi and formula for building a more inclusive Singapore.
5. Let us strive to be worthy of the trust placed in us by the public, knowing that it is the key to unlocking the full potential of the charity sector and creating a brighter and impactful prospect for all our beneficiaries.
I would like to end today by thanking our partners who made today’s conference possible.
1. Thank you, Mr David Gerald and your team, from Securities Investors Association (Singapore) for the support in co- organising this year’s conference with the Charity Council.
2. Thank you, Professor Goh and the team from Singapore University of Social Sciences, for supporting the conference as the knowledge partner. We do not take the partnership for granted. It is important that we leverage on these partnerships, bring the different skill sets and experts onboard, and collectively serve Singapore.
3. I want to extend all my thanks to our distinguished partners who have contributed in one way or the other, either as a sponsor or speaker of the panel, sharing your knowledge or even developing collaborations with us beyond today, who have contributed to today's conference and also generously lent their own expertise, time, talents and treasures to support the growth of our charities.
4. I also want to thank the 9 th Charity Council for their tireless dedication and efforts in championing good governance and accountability in the charity sector.
Finally, for all of you, I hope that you leave the conference with a lot more knowledge, know how, but also build networks. It is equally important for this sector to know one another, to leverage off the skills of one another, to find best practices. We all have a goal to want to amplify our own individual contributions and the best way is to build these networks to help us achieve that and build a stronger foundation of public trust in the charity sector.
Thank you very much for listening to me, making time to be here today and I wish all of you a very fruitful session.
Thank you.

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