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Developing a well-governed and thriving charity sector

09 January 2018
1. Mr. Deputy Speaker, Sir, I beg to move, "That the Bill be now read a second time".

2. Sir, the vision of the Commissioner of Charities is to nurture a well-governed and thriving charity sector with strong public support. To achieve this, the legislation governing charities and charitable fund-raising in Singapore should provide a regulatory framework that fosters a safe giving environment, where there is a high level of public trust and confidence. Yet, our framework must be balanced so as not to stifle charitable work.

3. Since the Act was last amended in 2010, the charity landscape has continued to evolve and develop. We have therefore reviewed the Charities Act to ensure that our regulatory regime remains relevant and effective to support our vision.

4. As part of the review, the Commissioner consulted charities across the various sectors, stakeholders such as the Charity Council and our Sector Administrators, as well as the public on the proposed amendments. Dialogue sessions were held with charity representatives to explain the rationale for the amendments and understand their concerns. We are heartened by the interest shown in our proposals and the general support given for them. The Bill before the House today is the outcome of our review and consultation. 

Key aims of proposed amendments

5. Sir, the amendments proposed in the Bill seek to better protect charities and donors through the following two areas:

(a) First, to strengthen the governance, accountability and transparency of charities and fund-raisers in Singapore; and

(b) Second, to enhance the regulatory powers which the Commissioner can invoke so as to maintain a high level of public trust and confidence in the charity sector.

Allow me to elaborate on the proposed key amendments.

Strengthen governance, accountability and transparency of charities and fund-raisers

Strengthen the regimes for disqualification and removal of persons to safeguard charities

6. Sir, the governing board members, as stewards of a charity are responsible for its operations and accountable to its stakeholders. Together with the key officers and employees, they have a duty to ensure proper management and administration of a charity, including the proper use of charitable assets. Our regulatory regime should therefore ensure that charities are managed by fit and proper persons who can help maintain public trust and confidence in the sector.

7. The current Charities Act already provides specific grounds to disqualify unfit persons from holding key positions. For instance, a person who has been convicted of an offence involving dishonesty would be disqualified from being a trustee, governing board member or key officer of a charity. The Act also specifies the circumstances under which the Commissioner can remove a person from his position in a charity.

8. The Bill seeks to update and strengthen the disqualification and removal regimes in the Charities Act. First, two new grounds for disqualification will be introduced. Presently, after the conclusion of an inquiry, the Commissioner can, with the consent of the Attorney-General, remove trustees, governing board members, officers, agents or employees of charities from the exercise of their office or employment, on the ground of any misconduct or mismanagement of a charity. However, only those removed in certain specified capacities, namely trustees, governing board members, or key officers, will consequentially be disqualified from assuming key positions in charities. We propose to disqualify any person who has been removed by the Commissioner pursuant to an inquiry, regardless of his position held in a charity. Next, in this climate of concern about terrorism, the Commissioner is stepping up efforts to counter money laundering and terrorism financing in order to better protect the integrity of the charity sector and its stakeholders. The second proposed new ground for disqualification expressly provides that a person convicted of an offence involving terrorism, terrorism financing or money laundering will be disqualified.

9. The next amendment expands the list of capacity in which disqualified persons cannot act. In addition to the current capacities that are proscribed, the new provision will disallow a disqualified person from indirectly managing the affairs of a charity by holding a key position in another entity which is a member or governing board member of the charity. This is to ensure that the disqualified person will not participate in key decision-making fora of a charity through another entity. Given this proposed amendment, section 28 of the Act is also proposed to be amended to clarify that it is an offence for a person to act in any capacity from which he is disqualified. The amended section 28 further makes it an offence to contravene an order by the Commissioner to repay moneys received while acting in a disqualified capacity.

10. Allow me to move on to the proposals relating to the removal regime. First, section 25 will be amended to introduce a new ground for removal, such that the Commissioner can now remove a disqualified person who continues to act as a governing board member or key officer of a charity despite the disqualification. This enables the Commissioner to intervene should a disqualified person refuse to resign from his position in the charity following the disqualification.

11. Second, we propose to allow the Commissioner to declare a person as someone whom the Commissioner would have removed from his position in a charity, if the person resigns before the Commissioner can order his removal. Currently, before the Commissioner removes a person, for example, on the ground of mismanagement, the Commissioner will first give the person at least one month’s notice and the opportunity to make representations. Should the person resign during this notice period, under the existing provisions, he can no longer be removed by the Commissioner even if there are sufficient grounds to do so. Subsequently, he would be able to return to a key position in that or any other charity. With the proposed amendment, we will enable the Commissioner to, by an order, declare a person as someone whom the Commissioner would have removed if the person resigns from the charity before the Commissioner can order his removal. The order will have the same effect as if the person had not resigned and was removed by the Commissioner. This will better safeguard charities and ensure that they are managed by fit and proper persons.

12. While we seek to strengthen the disqualification and removal regimes, we also recognise the spirit of the Yellow Ribbon Project that encourages the rehabilitation of ex-offenders. The Bill proposes to clarify that a person ceases to be disqualified once his conviction for a relevant offence is spent under the Registration of Criminals Act, or if he is granted a pardon for the offence. Similarly, going forward, it is proposed that the Commissioner will not be able to initiate a removal of a person from his position on the basis of a spent conviction, or an offence for which he has been pardoned.

13. Sir, with the introduction of references to spent convictions in the Act, the Bill also takes the opportunity to clarify the effects of removals and disqualifications under the Act. First, disqualification will stop once the ground for disqualification ceases. A person convicted of an offence involving dishonesty, will cease to be disqualified when his conviction is spent. Likewise, a person who was disqualified because he was an undischarged bankrupt, will no longer be disqualified once he is discharged from bankruptcy.

14. On the other hand, removals, unlike disqualifications, are permanent. Sir, I assure the House that any removal by the Commissioner is a carefully deliberated decision that is undertaken with the aim of protecting a charity and its assets. The permanence of removals is therefore necessary. For example, an employee of a charity who was removed by the Commissioner because he was found responsible for mismanagement of the charity’s assets, would be permanently barred from returning to that charity as an employee, and from holding key positions in any charity. Taking another example, should a board member of a charity with frequent interactions with youth be convicted of having sex with a minor and is subsequently removed by the Commissioner, he would be permanently barred from returning to that charity as a board member or a key officer. This remains the case even if the person’s conviction later becomes spent. This is because the reason for the removal does not cease to be a concern even after the conviction becomes spent. The person can still serve or be employed in the charity sector in other capacities.

15. The Charities Act, with the proposed amendments, will provide a strong yet reasonable regulatory framework; one that seeks to ensure that our charities are managed by persons of integrity and that the interests and good reputation of our charities are protected.

Clarify the definition of “fund-raising appeal” to ensure transparency and accountability of fund-raising activities

16. Sir, our regime for the regulation of fund-raising appeals for charitable, benevolent or philanthropic purposes, whether conducted online or offline, serves to encourage transparency and accountability of fund-raisers. It should also provide effective means to address any abuse. This is to safeguard public interest and trust, so that the public can continue to support charitable causes with confidence.

17. Fund-raisers are increasingly going online, turning to social media and crowdfunding platforms, to garner support for their charitable initiatives. The reach of such online fund-raising appeals can be significant, raising substantial amounts of donations. A recent example reported in the news is the case of a baby who was born with only part of her esophagus and whose parents raised S$1.2million, largely online, to help her get specialist surgery in the United States. It is heartening to see Singaporeans responding generously to these appeals. However, the reach and scale of these online appeals highlight the need for a regulatory regime that promotes transparency and accountability so as to maintain a high level of trust and integrity, including in the online giving environment.

18. The Bill thus proposes to amend the definition of “fund-raising appeal” in the Act to clarify and reflect the current policy position that all fund-raising appeals, whether big or small, online or offline, are subject to regulation.

19. First, this means that fund-raisers are subject to basic regulatory requirements such as the duty to provide clear and accurate information to donors, as well as to manage and use donation moneys responsibly.

20. Second, this means that where there is misconduct in any fund-raising activity, the Commissioner can act to protect donors, for example, by prohibiting or restricting that activity.

21. We have consulted the public and held dialogues with charity representatives on the proposed amendment and have explained our policy position. Like them, we are mindful of the need to refrain from over-regulation which could stifle charitable efforts as well as charitable giving. I would like to assure the House that the regulatory requirements placed on fund-raisers will be reasonable and fair, taking into account the nature and size of the appeals. We will review our fund-raising regulations to minimise administrative burden on small-scale and private fund-raising efforts, in particular, appeals for local causes, and exempt them from some of the requirements.

22. For example, we will not expect detailed accounts to be maintained for a small fund-raising effort conducted amongst family and friends for a local cause. On the other hand, charities and institutions of a public character, or IPCs, who count fund-raising activity as one of their core-functions, will be subject to the regulatory requirements of maintaining proper accounting records and keeping fund-raising expenses within the specified limits. These institutions, which enjoy tax benefits for their charity and IPC status, have a public duty to ensure high standards of accountability and good governance in managing their charitable funds.

23. In relation to the online giving space, I would like to share with the House that we are co-developing with the major crowdfunding platforms in Singapore an Industry Code of Practice. The Code will set out recommended practices for fund-raising platforms, so that they can be trusted intermediaries for donors and beneficiaries in fund-raising for charitable, benevolent and philanthropic purposes.

Electronic filing of annual submissions to facilitate transparency

24. Sir, most of our charities today file their annual reports and financial statements electronically with the Commissioner via the Charity Portal. These submissions are published online for public access. The proposed amendments to section 48 will formalise this current practice by allowing regulations to be made to mandate the electronic filing of annual submissions and applications. This is part of our efforts to enhance transparency by making information on more charities available online.

25. As we make this change, we will support the charities in electronic filing. Charities can tap on our VWOs-Charities Capability Fund to purchase computers. We are also working with partners to set up shared services to support smaller charities. Charities will have at least 2 years’ notice before the mandatory electronic filing takes place.

Other amendments to offence provisions in the act

26. The Bill also introduces and amends various provisions to promote compliance with our regulatory requirements and ensure consistency in the penalties prescribed. Section 18 of the Act is proposed to be amended to make it an offence if a charity, without reasonable cause, fails to preserve accounting records, financial statements and annual reports for 5 years. The Bill also clarifies that there does not have to be a persistent default before an offence is committed under section 18.

27. Currently, contravention of some of the IPC regulations result in a penalty that is lighter than that incurred by non-IPC charities. The Bill proposes to amend section 40C of the Act to allow consistency, across both IPC and non-IPC charities, in the penalty for contravention of regulations, other than for wrongful issuance of tax deduction receipts. For that, the existing financial penalty will be retained.

28. The Bill also proposes amendments to align the penalties for serious offences under the Act. For example, the penalties for a person acting whilst disqualified, and for supplying false or misleading information to the Commissioner, have been increased to meet the current levels of penalties prescribed for other offences of similar severity, such as for falsely holding out as a registered charity or IPC.

Enhance regulatory powers of the Commissioner to safeguard public trust and confidence

29. Next, on enhancing regulatory powers of the Commissioner to safeguard public trust and confidence, allow me to move on to the next set of amendments that seek to enhance the regulatory powers of the Commissioner.

Extend the suspension of persons from their positions in a charity

30. At present, after an inquiry against a charity has been instituted and the Commissioner is satisfied that there is a need to protect the charity, he may, with the consent of the Attorney-General, suspend a person from the exercise of his office or employment with the charity. However, the suspension is for a maximum of 12 months and this has proven to be insufficient in some cases. For example, in complex cases where investigations into financial transactions over an extended period of time are required, the inquiry may take more than a year to complete. The Bill therefore seeks to protect the charities by allowing the Commissioner, with the consent of the Attorney-General, to extend the suspension beyond 12 months, up to 24 months.

Introduce suspension orders for improper fund-raising appeals

31. Next, the Bill seeks to enable more timely intervention by the Commissioner. Section 39B of the current Act allows the Commissioner to prohibit or restrict a fund-raising appeal in certain circumstances, such as when the appeal is found to be improperly administered. However, such prohibition and restriction orders can only be issued after the completion of investigations. As investigations may take some time, the donating public may be exposed to questionable fund-raising activities in the interim.

32. The proposed amendments to section 39B will allow the Commissioner to order the suspension of a fund-raising appeal for a period not exceeding two years, pending the completion of an investigation. This can be done if the Commissioner has reason to suspect, for example, that the appeal is not being properly conducted. The Bill also proposes to make it an offence if the suspension order is contravened. The suspension order is akin to a stop work order while investigations are ongoing, and can be followed-up with a prohibition or restriction order if irregularities are indeed found.

Enhance Commissioner’s power to call for documents and information

33. Lastly, in relation to the Commissioner’s powers to call for documents and information, the Bill proposes to amend section 41A of the Act to clarify that the Commissioner can require a person to provide information and documents that are not only already in the possession or under the control of the person, but which come into the possession or under the control of the person at a future point in time, within a period not exceeding 2 years after the order is made. This would facilitate the Commissioner’s work, such as when conducting on-going monitoring of a charity under investigation, as there will not be a need to raise a new order each time new documents or information become available.

Conclusion

34. Sir, in the review of the Act, we have affirmed that the charity sector is an integral part of the Government’s “Many Helping Hands” approach. Charities play an important role in our society by meeting the needs of underserved communities, providing essential services, and championing causes close to our hearts. They are instrumental in building a caring and cohesive society.

35. It is only with strong public support that the sector can thrive and continue to benefit our community. Reputation is key to the sector, and one bad apple can erode public trust and confidence in the whole sector. The amendments that we are making to the Act, are therefore part of our efforts in ensuring a charity sector that continues to enjoy the trust and support of the community.

36. We are committed to striking the right balance in maintaining a sound and effective regulatory regime that ensures trust, and yet facilitates the good work carried out by the sector. The enhanced powers of the Commissioner that are proposed by the Bill will not affect the vast majority of charities and fund-raisers. These powers will only be used as a last resort or when there is an urgency to act for the protection of charities and donors. Checks and balances are also in place to ensure that these regulatory powers are exercised fairly.

37. As we enhance our legislation, we will continue to build capacity to strengthen governance across the sector. This will be through the continued partnership between the Government, charities, stakeholders and the community. Together, we will achieve our vision of a well-governed and thriving charity sector with strong public support.

37. Sir, I move the Bill.
Last Updated: 10 January 2018

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