Governing Board’s Duties and Responsibilities
- Duty of Care and Prudence
- Day-To-Day Operations of Your Charity
- Update Your Charity Profile
- Engaging In Business Activities
Your charity’s governing board members must comply with the following:
Charities Act and Regulations
- Ensure that the governing board members, key officers or trustees of your charity are not disqualified from acting in their respective office under the Charities Act;
- Ensure that your charity complies with the Charities Act and Regulations, as well as regulatory requirements of the Commissioner of Charities or Sector Administrators;
- Comply with other legislations which govern your charity’s activities such as the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits), Terrorism (Suppression of Financing) Act , Trustees Act, Companies Act and Societies Act, if applicable;
Good Governance Practices
- Establish good governance practices that increase your charity’s transparency and accountability;
- Exercise prudence over financial matters and ensure that your charity remains solvent;
- Avoid undertaking activities that may place your charity’s funds, assets and reputation at undue risks, including the risk of being misused for terrorist financing, money laundering or illegal purposes;
- Act in good faith and ensure proper management of your charity such that it is not subject to abuse;
- Establish proper procedures to manage and deal with conflict of interest, if any;
Charitable Purposes and Objects
- Understand your charity’s purposes as stated in its governing instrument and ensure that charitable resources are used only in furtherance of these purposes;
- Act lawfully, responsibly and reasonably in the best interests of your charity and be actively involved in the management and decision-making process, and jointly make decisions as a governing board on policy matters;
- Stay true to your charitable purposes and be clear about your charity's ethical values;
- Ensure that the charity only conducts activities in keeping with its governing instrument and for the furtherance of its objects, which must be
exclusively charitable. Among other things, a charity should not allow its funds and/or premises to be used for political purposes and should refrain from conducting itself in a way that can be reasonably construed as involving partisan politics;
Appropriate Due Diligence
- Exercise appropriate due diligence on beneficiaries, partners and donors;
- Resource permitting, make best efforts to confirm their identities, credentials and good standing;
- Establish clear selection criteria for beneficiaries, ideally documented in a policy and made publicly available;
- Have clear written agreements with partners concerning the scope of work/activities, monitoring measures and use of your charity's name/resources;
- Know what the donor's specific business is with your charity - be mindful that donations with conditions attached do not compromise your charity's purposes, priorities and activities;
- Watch out for
red flags that serve as a warning of suspicious situations and possible concerns;
- Establish a clear process to report suspicious activities and incidents of fraud to the relevant authorities; and
- Have a clear and documented dispute resolution process.
Section 27 of the Charities Act disqualifies a person from being a governing board member, key officer or trustee of a charity if he/she does not fulfil the necessary requirements. It is the responsibility of the governing board to ensure that its members and key officers fulfil the requirements. When updating your charity’s profile, you need to declare whether your governing board members, key officers and trustees have met the requirements under section 27 of the Charities Act. If any appointed person is disqualified, the governing board should replace the person and inform the Commissioner of Charities or Sector Administrator about the change online via the Charity Portal.
Click here for more information on the eligibility of governing board members.
You should take note of certain administrative details in the course of managing the day-to-day operations of your charity. Apart from complying with the Code of Governance, you may be required to update your charity’s governing instrument and the profile of your charity on the Charity Portal from time to time to ensure relevance.
Click here for more information on the various grants which the Commissioner of Charities provide.
Knowing the types of funding support available to your sector will also help to defray some costs incurred in the course of improving your charity’s governance standards.
From time to time, there may be changes to your charity’s governing board composition or other particulars which you had provided to the Commissioner of Charities (COC) or your Sector Administrator (SA). Your charity should inform the COC or your SA within 7 days if there is any change in the particulars entered in your charity’s profile in the Charity Portal. This is to ensure that updated information are presented to members of the public on the Charity Portal and that the COC or your SA is kept informed of the changes timely.
Your charity should notify the COC or your SA for changes in:
- Composition of the governing board;
- Personal details of governing board members;
- Address of each immovable property;
- Appointment or removal of trustees;
- Changes in your charity’s governing instrument; and
- Any other organisational details such as key officers and contact information.
If your charity is a society or company limited by guarantee, certain updates (such as addition and removal of governing board members, change of your charity’s name or registered address) will have to be updated through lodgement with the Registry of Society or the Accounting and Corporate Regulatory Authority, respectively.
Some charities (including IPCs) engage in business activities to generate additional income. Others may do so to provide goods or services for their members or clients. It is essential that these business activities do not undermine the charity’s focus and distract the charity from its exclusively charitable purposes. The governing board of charities should also be prudent and must not expose their charitable assets to significant risk.
To help your charity in deciding when and how it may engage in business activities, the Commissioner of Charities has developed a guidance note which sets out the main principles applying to business activities conducted by charities, as well as to those conducted by their business subsidiaries.
For more information, please download a copy of the guidance which is available in both English and Chinese: