HK's reputation for supporting charitable causes is well-earned. But those warm hearts and good intentions may easily fall prey to scoundrels, in a city where charities thrive in an unregulated, Wild West environment. Evelyn Yu reports.

Hong Kong has been relatively free of charities' scandals, but with the lack of any official oversight, it's hard to know exactly what's going on. Charities are under no obligation to prove that they operate according to their declared mission. Charities have expenses, and those include the salaries of the administrators who oversee the disbursement of donations. Globally, charities' scandals are rife, with documented evidence that some pay out as little as 4 percent of what they take in to the intended recipients.

Hong Kong awaits answers as to what happened to hundreds of thousands of dollars donated to the Ting Wai Buddhist monastery in Tai Po. The unanswered questions have only added to the ongoing outcry from several quarters, demanding that free-wheeling charities be brought to heel.

In the case of the Ting Wai Monastery, the head nun, Sik Chi-ding, remains under investigation revolving around what happened to those hundreds of thousands of dollars, donated by well-meaning people to help pay for renovations to dilapidated structures.

A member of the Ting Wai board, solicitor and former actress, Mary Jean Reimer, spoke of "dark secrets" behind the monastery's finances. At a press conference this month, Reimer disclosed financial records, purporting to reflect the abbess's personal spending habits, including a sales memo for HK$11,340 for a "non-lace sexy bra" and HK$7,170 for skin care products. These expenses and a gold necklace, Reimer said, were all billed to the monastery's "repair and maintenance" account.

The monastery solicited donations to repair the compound. The cloister, battered by the elements and invested with termites, is falling to ruin. Some fear that the temple's main place of worship could fall down.

Reimer said she was limited in her ability to remedy the financial woes at the temple and she blamed government failure to oversee charities more closely, for helping to create the financial chaos.

Charitable organizations are tax-exempt, under Hong Kong's Inland Revenue Ordinance (IRO). It's common practice all over the world, based on the expectation that donated funds will go to the greater good of the community at large.

There are more than a million adherents to Buddhism and Taoism here, respectively. The potential for annual, charitable donations to local religious institutions is massive.

Religious institutions, shielded by additional protections guaranteeing religious freedoms and practices, are even more at risk of malpractice. Religious charities taking donations at temples, monasteries and shrines don't even need a license to collect money. Other charities, on the other hand, need at least a license for public fundraising.

Scant oversight

Outside of this pro forma license, charitable organizations are not even required to register with the government.

More than 8,000 charitable organizations have tax-exempt status under the IRO. It is believed that more than 1,000 other charities operate without tax exemption. The Inland Revenue Department (IRD) says its mandate over charities is limited to vetting their tax-exempt status, but the agency has no authority to oversee charities registration.

"Some organizations represent themselves as 'registered charities', presenting an aura of authenticity, implying some sort of official oversight. But no registry exists in Hong Kong. So these claims are untrue," said Bernard Chan, chairman of the Law Reform Commission's Charity Subcommittee.

Charities operating under tax-exempt status come up for periodic review by the IRD. But that's only about once every four years, according to IRD's e-mail response to China Daily. The department stated that the reviews are conducted only to ensure that the charities involved are sticking to their declared mission, but "monitoring their operations is not within the ambit of IRD."

There is no legislation regulating the financial governance of charities. A handful of government departments have offered guidelines for fund-raising and management of charitable agencies. The Independent Commission Against Corruption (ICAC) issued a checklist for management of charities and fund-raising activities. The Social Welfare Department released a "Guidance Note on Internal Financial Controls for Charitable Fund-raising Activities".

But these are "best practices" guidelines, vested with no authority. There're no audits of charities. ICAC, the police and prosecutors are dependent on tips about irregularities. That's what happened in the case of the Ting Wai Monastery.

It's suggested but not mandatory for religious charities to publish annual financial reports. Private charities, registered as companies like Ting Wai Monastery, are required to file annul returns to the Companies Registry. But the submission covers only basic facts, offering no insight as to how charitable donations are dispersed.

The information reported to the Companies Registry is not standardized, either. Some institutions may submit detailed, audited financial reports. Others send a few pages showing only total income and expenditures.

There is a growing concern over the transparency and accountability of charities in general. Local civic groups have formed to try to put head and tail on this chimera that grew from the careful financial omissions of religious groups and the government's evident paralysis in facing the problem.

Call for wise giving

Charity watchdog iDonate was formed in 2010 with the aim to evaluate operational transparency of NGOs. Bonita Wang, founder of iDonate, said that her organization has acquired over 2,000 financial reports from the Companies Registry information system, at a cost of around HK$20 each. Among agencies not registered as incorporated companies, few bother to put their financial reports on their website.

Wang is critical of the lack of transparency among the city's charities. She says her agency has been hindered, owing to the lack of information, and thus far, has been unable to generate any comprehensive evaluation.

WiseGiving, launched in 2007 as an initiative of The Hong Kong Council of Social Service (HKCSS), aims to provide a platform for potential donors, to assess how charities operate. The council provides information on governance and finances, publication of the financial records of charities. But the information is limited to charities willing to cooperate. Business director of HKCSS, Cliff Choi, said the website so far has listed only about 200 charities in its database. The agency has encouraged other charities to participate, but most invitations go unanswered.

Wang said NGOs such as Christian Services, a charity with a religious background but serves society at large, maintains high efficiency and transparency in its disclosures. When it comes to most religious organizations, including monasteries and shrines, the financial records are either completely absent, or so vague that iDonate's analysts find it impossible to figure out where the money went.

Chan attributed the absence of a greater public outcry and the paralysis of government, to the fact that a "huge crisis" is brewing. If a crisis really strikes local charities, any ensuing government action will be too late. In such a case, all charitable causes are likely to suffer.

Mary Jean Reimer disclosed to local media that the misplaced donations to the Ting Wai Monastery ranged from tiny amounts given by elderly people, who only had meager resources, to a large sum of HK$80,000 by a dying woman who made it her final bequest.

Chan said donors' intentions are honorable in supporting charitable organizations and their noble causes. But it may be wise to only support those that have the integrity to submit to reasonable supervision.

Contact the writer at evelyn@chinadailyhk.com

(HK Edition 11/24/2015 page12)