theonlinecitizen

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NKF – more in reserves now than during the scandal

Posted by theonlinecitizen on February 5, 2008

By Leong Sze Hian

I refer to the article “NKF moves forward with $31.2m in surplus” (BT, Dec 15), and media reports that charities like the Salvation Army, Boys Brigade, Heartware Network, etc, received less donations during the Christmas season, and that charities earned nearly $5 billion in 2005 .

The National Kidney Foundation (NKF) presently has $269.5 million in its reserves, compared to $262.8 million in Dec 2005, according to a Business Times report.

When the NKF saga broke in 2005, one of the issues which riled Singaporeans was that it had some 30 years or so of reserves instead of the 3 years that the public was lead to believe.

At its current rate of chalking up a $31.2 million surplus, how much more and how many more years of reserves does it want to keep building?

Surely, there ought to be a limit as to how many years of reserves a charity should have? Why is the NKF apparently paying little heed to the new guidelines for charities on the accumulation of reserves?

As an issue that was raised in the NKF case, are larger charities collecting and accumulating too much of the charity dollar, relative to smaller charities ?

By the way, despite all that has happened, is the NKF still the largest charity with the most number of years of reserves?

According to NKF, it had investment income of $22.3 million in the last 18 months, and a surplus of $31.2 million.

The Business Times reported that:

“Mr Ee said that the board is looking at putting the reserves to good use by helping patients in a number of ways in addition to the traditional subsidies for treatment.”

Perhaps the NKF should detail what it plans to do by way of “helping patients in a number of ways”.

With reserves of $270 million, I estimate that its annualised rate of return (investment income) over the last 18 months was about 6 per cent.

Charities should pool their funds

With charities earning a total of $4.97 billion, I would like to suggest that the charity sector explore the possibility of pooling their funds for better and more prudent fund management.

For example, a one per cent increase in returns, may provide an additional $49.7 million a year to help needy Singaporeans.

If the total of $5 billion in the charity sector can earn a similar rate of return as the NKF, the investment gains for a year may be as much as $300 million. This amount I understand is more than 7 times what the Community Chest gets in public donations in a year.

If Town Councils were recently given guidelines on how to manage their funds, why not have guidelines for charities too ?

Here are some questions which perhaps those concerned should address:

Of the 12 charities which closed last year, how many did so because they ran out of funds ?

When charities close, what happens to the needy that they have been helping ?

Is there some process for charities that have no alternative but to close, to arrange for the possible smooth transfer of their beneficiaries to other charities ?

With 80 new charities set up last year, I would like to ask how many charities have closed over the last 3, 5 and 10 years ?

With 64 large charities having annual incomes of over $10 million, and accounting for three quarters of the total figure, are there any statistics to indicate how many of the other 1811 charities, representing 97 per cent of all charities, may be having difficulties in funding their activities ?

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5 Responses to “NKF – more in reserves now than during the scandal”

  1. […] NKF, Charities et al – The Online Citizen: NKF – more in reserves now than during the scandal […]

  2. la nausee said

    If what is being suggested is that there should be an absolute cap on a charity’s reserves, with any surplus going to a common fund to be redistributed among all charities, I’m not sure that’s workable.

    Isn’t it more efficient if every charity strives to collect as much money as possible? Shouldn’t we allow charities which have engaged in better financial management, to reap the attendant benefits? That’s the best incentive we could offer for good financial management.

    The problem lies in the fact that many charities are too small to enjoy the economies of scale and the visibility which institutions like NKF do. The solution, I think, is that these smaller charities collaborate, either among themselves, or with the mega-charities. A drastic approach would be to forcibly consolidate some of the smaller charities. There are obstacles in the way of consolidation, though: each charity might have different goals, different management values, different target beneficiaries.

    In any case, however, forcible redistribution of any surplus funds collected by the mega-charities is surely not the way to go. Even the average donor would want, I think, some autonomy in deciding where his or her money goes.

  3. sevenleleven said

    this just shows how memories is short-lived in Singapore

  4. benji said

    hi sze hian,

    Governance of charities is at best still murky in Sg. It truly lacks much needed transparency and a system of best practices to prevent abuse.

    Btw, I have been an avid reader of TOC since its beginning so it strikes me as quite puzzling why an earlier comment on this article was removed. It had something on some aunties in the west of Singapore addressed to choo zheng xi. Might it be related to this latest saga over TOC’s choo being paid to write? Hope you can clarify this omission of that comment. Remember your actions will determine the extent of your credibility.

    Thanks. To safeguard my comment, I think I will print screen this yar? Cheers

  5. Cecilia said

    Yes the charity sector is slowly improving, but still there are questionable activities going on in the NKF. Does anyone know that they only buy their water purify system from ONE german manufacturer. all their 24 centers have the same, and rumours are that the boss of this german firm and the ex-nkf boss “TT” or notoriously called “Toilet Tap” were close buddies. to top it, no other charity in SG or even private dialysis center buys from this german here. why should nkf continue to buy from the same german “friend” when you can get cheaper and equal good quality machines in singapore. very very fishy. wasting public money again. maybe someone has to blow the whistle on this too. maybe the authorities are deliberately blind and dont want another controversy at nkf!!

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