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LCQ3: Boards of NGOs receiving Lump Sum Grant
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     Following is a question by the Hon Wong Sing-chi and a reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (January 13):

Question:

     Quite a number of organisations have relayed to me and expressed concern that the Government has not established a stringent system of management and governance in respect of the structure and fiscal reserves of the 162 non-governmental organisations (NGOs) receiving lump sum grants (LSG) for providing welfare services.  In this connection, will the Executive Authorities inform this Council:

(a) whether they have looked into information relating to the formation methods of the Boards of the various NGOs receiving LSG, the background and terms of office of their Board members etc.; if so, of the details; if not, the reasons for that;

(b) of the NGOs at present having Board members who are representatives appointed by the Government, the number of NGOs involved, the number of government representatives on each NGO Board, as well as what their roles are; and

(c) whether they will formulate a code of practice to require the aforesaid NGOs to enhance their transparency, promote pluralism in participation and increase their level of public accountability; if so, of the details; if not, the reasons for that?

Reply:

President,

     My reply to the three parts of the Hon Wong Sing-chi's question is set out below ¡V

(a) Non-governmental organisations (NGOs) that receive subvention from the Social Welfare Department (SWD) are required to hold valid company/society registration certificates in accordance with the relevant ordinances in Hong Kong and obtain tax exemption status under Section 88 of the Inland Revenue Ordinance (Chapter 112) as charitable institutions.  Since these NGOs are not established by the Government but are independent and autonomous companies/societies/charitable institutions registered under the relevant ordinances, the formation methods of their boards or the background and terms of office of board members fall outside the purview of SWD.  SWD therefore does not have the information in question.

(b) The focus of SWD's monitoring of NGOs is on their subvented services.  Since the 1999-2000 financial year, SWD has implemented the Service Performance Monitoring System to ensure that subvented services comply with the requirements under the Funding and Service Agreements (FSAs) and the criteria of the Service Quality Standards.  As NGOs are independent and autonomous entities and responsible for their own governance, the Administration's current policy is that no representative would normally be appointed to NGOs' management committees or boards or be involved in the management of NGOs.  In fact, the scope of services run by many NGOs goes beyond social welfare services, and some NGOs are operating self-financing services at the same time.  These services do not fall within the confines of FSAs nor do they fall under SWD's purview.  It is therefore inappropriate for SWD to appoint representatives to participate in NGOs' management.

(c) The boards and management of NGOs which receive Lump Sum Grant (LSG) and other welfare subventions are responsible for the proper management of LSG/ subventions.  They should ensure that the use of LSG and subventions meets the requirements and objectives stipulated in the FSAs and complies with the provisions set out in the LSG Manual, in order to ensure proper and prudent use of public resources.

     On the corporate governance of subvented NGOs, the Administration has been performing the role of a facilitator ¡V highlighting the importance of good corporate governance in the LSG Manual, strengthening NGOs' management capacity through seminars and publications, and promoting good practices.  SWD will continue to play this role and in a more focused manner through helping the social welfare sector develop a Best Practice Manual and setting up a Social Welfare Development Fund to support NGOs' training and capacity building initiatives.  The Lump Sum Grant Steering Committee, chaired by the Director of Social Welfare and comprising representatives from NGOs' management, frontline staff and service users and independent members, will help the welfare sector develop a Best Practice Manual on various management issues such as human resources policies etc. Corporate governance and accountability issues will be addressed in the manual.

Ends/Wednesday, January 13, 2010
Issued at HKT 13:57

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