Profits should not be charities’ aim

I REFER to last Saturday’s report, “Charity commissioner questions City Harvest” and the letter from the Ministry of Community Development, Youth and Sports, Urban Redevelopment Authority and Inland Revenue Authority of Singapore, on the same day (“Drawing the line on commercial deals”), which said: “A charity’s main purpose is to provide public benefits through its charitable activities.”

Churches like other religious organisations are classified as charitable institutions. The core business of a religious community is to cater to the religious needs of its members and to provide charity to the poor and needy. Funds from members and the public are solicited primarily for that purpose. Its purpose is not profit-making and accumulation of financial assets for further investment in the business and commercial sectors.

Historically, business activity in printing and publishing, religious supplies, media and communication is meant to enhance the religious outreach. The investment of surplus funds is directed to equity blue chip stocks and rental of properties. As has been rightly pointed out by the Government they are “not to subject the charity’s assets and resources to unacceptable risks”. And that includes speculating in the stock market. It is further questionable for the religious community to set up a separate business entity in order to avoid taxation.

Whatever surplus funds the religious institution gets each year is not meant to be accumulated for the purpose of engaging in business and commercial activities. Exceptional risks are taken in profit-making activities and they deviate from the nature of charitable institutions.

The relevant authorities should provide regulations and enact legislation to address this situation.

Yap Kim Hao

Source : Straits Times – 24 Mar 2010