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LCQ14: Lump Sum Grant subvention system

     Following is a question by the Hon Wong Sing-chi and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (April 22):


     In the 2008-2009 financial year, 162 non-governmental organisations (NGO) providing welfare services were funded under the Lump Sum Grant (LSG) subvention mode.  In this connection, will the Government inform this Council:

(a) of the respective amounts of subvention granted to each NGO in the current and the past two financial years; and

(b) whether it knows the amount of cumulative LSG Reserves of each NGO at the end of the 2007-08 financial year?



(a) In the 2008-09 financial year, 162 non-governmental organisations (NGOs) were funded under the Lump Sum Grant (LSG) subvention system.  The levels of their subvention in the three years from 2007-08 to 2009-10 are set out at Annex 1.

(b) In order to enable NGOs on LSG to accumulate sufficient resources to achieve financial viability in the long run and to honour their contractual commitment to Snapshot Staff (Note), the Social Welfare Department did not claw back the reserves of these NGOs in respect of the 2004-05 to 2006-07 financial years, though the amount might have exceeded the normal cap, i.e. 25% of the annual operating expenditures of the NGOs.  It should be noted that in all circumstances, LSG reserves can only be spent on designated services and activities.

     Generally speaking, NGOs' LSG reserves are generated from staff turnover, service streamlining and re-engineering, organisational restructuring and successful bidding of new services.  The situation varies from NGO to NGO.  Individual NGO's LSG reserve level needs to be looked at with reference to its overall financial position and service structure.  It would be misleading to consider only the level of LSG reserve as an indicator of the financial situation of an NGO.  A more useful benchmark for the sector as a whole would be the cumulative reserve of all the NGOs on LSG, which is estimated to be about $2.2 billion as at March 31, 2008.  A breakdown by the reserve banding is at Annex 2.

Note: These are staff on the recognised establishment of NGOs' subvented service units as at April 1, 2000.  Their terms and conditions of employment are guaranteed provided that they remain employed by the same NGO and have not been regraded or promoted to another rank.

Ends/Wednesday, April 22, 2009
Issued at HKT 11:31


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