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LCQ18: Lump Sum Grant reserves of non-governmental organisations

     Following is a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, to a question by the Hon Cheung Kwok-che in the Legislative Council today (June 10):


     Regarding the 162 non-governmental organisations funded under the Lump Sum Grant subvention mode in the 2008-2009 financial year for providing welfare services, will the Government inform this Council whether it knows the respective amounts of cumulative reserves of each organisation at the end of the 2007-2008 and 2008-2009 financial years (year-end reserve amount), expressed as percentages of the actual amounts of allocation received for the respective year; if it does, group these organisations by their year-end reserve amounts and the aforesaid percentages (each group covering five percentage points) in each of the two years, and set out in the table of Annex 1 (i) the number of organisations and (ii) the average year-end reserve amount for each group?



     Generally speaking, the Lump Sum Grant (LSG) reserves of non-governmental organisations (NGOs) are generated from staff turnover, service streamlining and re-engineering, organisational restructuring and successful bidding of new services, etc.  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 individual NGO's cumulative LSG reserve as a percentage of its recurrent subvention and take that 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.

     As at March 31, 2008, the cumulative reserve of the 162 NGOs on LSG is estimated at about $2.2 billion. A breakdown of the reserve banding is at Annex 2.  We do not have the requested details available in the format specified.  As NGOs on LSG are required to file their Annual Financial Reports by October following the end of each financial year, the Social Welfare Department (SWD) does not yet have information on their reserves in the 2008-09 financial year.

     To enable NGOs on LSG to accumulate sufficient resources to achieve financial viability in the long run and to honour their contractual commitment to their Snapshot Staff*, SWD 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 LSG reserves can only be spent on designated services and activities in all circumstances.

* 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, June 10, 2009
Issued at HKT 12:50


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