Governance in the charity sector refers to the systems and processes for managing the overall direction, effectiveness, supervision, and accountability of an organisation.
In the context of governance, non-profit organisations (NPOs) in Singapore are segregated into two categories – Charities and Institutions of a Public Character (IPC). Institutions of a Public Character (IPC), is a subset of Charities as they are exempt or registered charities which are able to issue tax-deductible receipts for qualifying donations to donors, and therefore are held to a higher standard in terms of regulatory compliance and governance.
Despite being a small country, the hearts of Singaporeans are not at all small. With more Singaporeans taking interest in meeting the needs of the less fortunate around them, the number of registered charities have been booming. As of 2015, there were 2,215 registered charities, a 23% increase from a decade ago, according to the Office of the Commissioner of Charities (COC).
As the number of charities surges, the regulatory body in Singapore is reacting quickly to regulate them, especially after the 2005 National Kidney Foundation scandal rocked public confidence in charities. Thus, the Code of Governance was first introduced by the Charity Council in 2007 and further refined in 2011 to provide greater clarity and relevance. It is meant for all registered charities in Singapore and self-funded grantmakers, which in each case does not have IPC statuses, such as philanthropic foundations funded with private family or institutional money.
The three main objectives of the Code is to make charities more effective in the way they operate, provide guidance to Board members to help them carry out their duties as fiduciaries and to boost public confidence in the charity sector.
The Code is organised into nine sections and four tiers - guidelines are tiered according to status (Charities or IPCs) and size (based on gross annual receipts or total expenditures). The Code of Governance comprehensively covers sections that one would typically find in the Code of a typical organisation (such as Board Governance, Conflict of Interest, Strategic Planning, Programme Management, Human Resource Management, Financial Management and Controls, and Disclosure and Transparency), as well as sections focusing on the fundraising industry (i.e. Fundraising Practices and Public Image).
Although the Code operates on the principle of ‘comply or explain’ and is not mandatory, Charities are subjected to reporting requirements in the form of a Governance Evaluation Checklist from 2018 onwards. This illustrates Singapore’s swift improvement of regulations and the nation’s take on a corporate-style type of governance for NPOs.
In contrast, Korea Society of Philanthropy’s Code of Governance, which also is not mandatory, focuses more heavily on adherence to values, although it does have in place sections pertaining to fiscal and legal compliance as well as how leaders should act.
Perhaps, Korea could learn a thing or two from Singapore, by rolling out more stringent guidelines on Governance of its non-profit organizations (NPOs) and then phasing in reporting requirements to ensure NPOs stay compliant.