CHANGES TO CHARITY LAW
|(1995) 7 SAcLJ 291
|01 December 1995
|01 December 1995
This article highlights and comments on the far-reaching effects of the Charities Act 1994 and examines the rationale behind the changes.
Charity law is a moving subject. As new needs arise, new charities are set up and new fund-raising methods are invented. Any legislation regulating charities must keep abreast of changes in society and the charity world. A Charities Act enacted in 1982 and modelled on the English Charities Act of 1960 is outdated. Since 1960, the charity world in England has changed dramatically and charity reform was long overdue. It was not until recommendations for reform were made in the Woodfield Report (1987)1 and the White Paper (1989)2 that the English Charities Acts of 1992 and 1993 were enacted. Over the years, the Singapore Charities Commissioner has pointed out in his Annual Reports certain weaknesses in the regulation of charities. Parliament recently answered his call for change by enacting the Charities Act of 1994. The Act incorporates substantial portions of the English Charities Acts of 1992 and 1993.
In 1988 the Charity Commissioner observed that with the increasing number of charities being set up, the possibility for abuse increased. By 1989 he had indicated that there was a corresponding need for more regulation of charities and investigative work. Some indications of abuse were high administrative expenses, dubious fund-raising methods and abnormally high fund-raising costs. Although attention had been given to these areas, the outcome was less than satisfactory, primarily due to the lack of manpower which often prevented in-depth scrutiny of charities. As a result, investigations were carried out only when complaints were lodged. This meant that much reliance had to be placed on the integrity and honesty of charity trustees and constant vigilance by the public. In addition, the administration of some charities was far from satisfactory.
On the other hand, a lot of time was spent on the examination of charity accounts in order to detect irregularities in financial affairs or mismanagement and for the purpose of ascertaining whether or not the objects of the charity were adhered to.
The need to remedy the deficiencies highlighted by the Charity Commissioner is reflected in the changes made by the Charities Act 1994. It came into operation, with the exception of Part VII of the Act, on 1 January 1995. The Act re-enacts with amendments certain provisions of
the Charities Act 1982. It also introduces innovatory provisions which make important changes in many areas of charity law. These provisions seek:
(a) to enhance the Charity Commissioner’s powers generally and to strengthen his supervisory powers in investigating and checking abuses;
(b) to improve the administration of charities;
(c) to tighten up on charity accounts;
(d) to disqualify unsuitable persons from acting as charity trustees;
(e) to make provision for small charities and
(f) to control fund-raising and public charitable collections on behalf of charities and certain non-charitable institutions.
This article highlights these important changes and examines the rationale behind such changes.
With the increasing number of charities being set up, the effectiveness in monitoring and supervising charities should be enhanced. The Woodfield Report at paragraph 69 stated that while the English Charity Commissioner had extensive powers, these were exercised sparingly due to lack of resources, inadequate information and the fact that the powers needed some clarification and strengthening. Therefore the Charity Commissioner’s powers need strengthening and an accurate and up-to-date register of charities should be maintained. Section 5 provides for the continued keeping of a register containing the name of every registered charity and such information as the Commissioner thinks fit. The register is open to public inspection, a way of ensuring accountability of charity trustees. The new section 5(8) paves the way for the register to be computerised. This will no doubt render greater accessibility to up-to-date information on registered charities and make monitoring and supervising of charities more effective.
The Commissioner is vested with new power under section 7 to order a change of name in order not to mislead the public where it is the same or too alike that of another charity or if the name is offensive or misleading as to its activities or status. This provision also applies to charitable companies but not to exempt charities.
The Charity Commissioner should have access to sufficient information if he is to carry out his functions effectively. Hence his existing powers to
institute inquiries and to call for books or require any other relevant information relating to any charity are widened under sections 8 and 9.
To enforce the Commissioner’s powers, a new section 10 creates an offence of supplying false or misleading information to the Commissioner or altering, suppressing or destroying any document.
In relation to the exchange of information, the Charity Commissioner has reported that co-operation from other government departments such as the Registries of Societies, Companies and Businesses and the Inland Revenue Authority has been beneficial. This is now embodied in legislation. Presumably, such co-operation has been useful in detecting the misappropriation of charity funds, using charity funds for non-charitable purposes and non-charitable activities. Section 11 facilitates the exchange of information between the Commissioner and certain bodies and persons. The relevant bodies and persons are any government department, statutory authority, police officer and any other body discharging the functions of a public nature. The disclosure of information to the Commissioner is to enable him to discharge any of his functions under the Act, not only for determining charitable status as in the previous Act.
The Charity Commissioner has new powers of intervention in specific areas under section 25 which amends section 15 of the 1982 Act.3 These relate to the prevention of mismanagement, the protection of charity assets and the provision of remedies where misconduct or maladministration have been established.
To reinforce his role, the Charity Commissioner is given new protective powers to suspend, appoint additional trustees, order debtors not to discharge their liability to the charity without his approval and to appoint receivers and managers to look after the property and affairs of the charity.4
The Commissioner may invoke certain additional powers if he is satisfied after an inquiry under section 8 that there has been misconduct or mismanagement and that it is necessary to protect charity property. He may, with the consent of the Attorney-General, proceed to do one or more of the following:
(a) establish a scheme for administration;
(b) suspend any trustee, charity trustee, officer, agent or employee of the charity from his duties pending consideration of his removal;
(c) appoint such additional trustees as he considers necessary for the proper administration of the charity;
(d) order the vesting of property held by the trustee in the Public Trustee;
(e) order any person who holds any charity property not to part with the property without the approval of the Commissioner;5
(f) make orders in respect of debtors;
(g) make orders to appoint a receiver and manager and
(h) make orders restricting transactions and payments made in the administration of the charity without the approval of the Commissioner.
Under section 25(II) certain...
To continue readingRequest your trial