A Question of Ethics
What is Ethics?
The word “ethics” is derived from the Greek word ethoswhich can mean custom, habit, character or disposition. It can also be defined as a system of moral principles which is concerned with what is good for individuals and society and affects how people make decisions and lead their lives.
We turn to look at charities, which are built on ethical values, to decipher how ethics may be applied practice. All charities have their own core values setting out the reasons for their existence but how would the core values guide charities and their internal stakeholders such as employees, volunteers and trustees so that they make ethical decisions? How would charities articulate and apply these values so that these internal stakeholders can live up to them?
The Code of Governance for Charities and IPCs published by the Charity Council (“Code”) aim to provide charities with a set of guidelines, tiered based on their status and size, on how to manage the various aspects of governance and administration of the charities/IPCs. These cover areas spanning programme management, human resource and volunteer management, financial management, fund-raising practices, disclosure and transparency etc. Just looking at the breath dealt with by the Code, one can only imagine the number of decision points faced by the various internal stakeholders of the charities on a day to day basis. Should an executive of a charity travel by cattle or business class if air travel is required? Should volunteers be treated to meals and if so, what would be the appropriate quality of meals? Who decides? Is the Code sufficient?
Prior to the introduction of the Code in 2007, the National Kidney Foundation saga increased scrutiny by the Commissioner of Charities and enhanced support for the charity sector to improve governance. The Charity Council was set up and the Code introduced in 2007. Whilst these efforts may have improved governance at charities, they unfortunately did not stem malpractices at charities. In 2010, the Singapore public was thrusted with City Harvest’s misuse of church funds to the tune of S$50 million, the largest amount of misappropriated charity funds in Singapore’s legal history. Both cases draw immediate parallels. Both are “brand name” charities with large number of donors and a long history of receiving large amounts of donations. With or without the Code however, the lack of governance, transparency and accountability was evident in both. The question is why?
Regulators impose codes and guidelines, require disclosure and transparency but codes by themselves cannot create an ethically strong organisation. As investigations into corporate/charities downfalls have shown, the outcome is never the doing of one or a few individuals. Along the way, blind eyes are turned, rationalisation sets in (“it is probably alright for my CEO to have golden taps?”) and before we know it, the problem is out of control.
In addition to regulations, ethical culture and tone needs to come from the top. Internal stakeholders need to know clear OB markers. External stakeholders such as the donors need to play an active complementary role. Singapore was ranked 7thin the world based on the World Giving Index Report published by the Charities Aid Foundation. We are evidently a giving nation but giving sufficient?
Why do donors donate? The reasons for charitable giving can broadly fall into three categories, pure altruism – the wish to contribute to the good done by the charity, impure altruism – the desire to know that one has contributed to the social good, and the not at all altruistic – the desire to show off to others one can do good. All these reasons do not require the donors to ask for accountability for donations already made as the reasons for giving are fulfilled once donations are made. It does not then matter whether and how the donations end up in the hands of the beneficiaries. However, giving without requesting for accountability is giving without sight of the end. If donors do not question the appropriateness of the actions or choices made by charities, the moral compass of the internal stakeholders cannot be developed further or to its fullest extent.
Life is a journey. Past experiences bring us to where we are today and now it is time for all stakeholders of our ecosystem to play a catalytic role in creating a more ethical culture.
About The Author: Chan Sing Yee
CHAN Sing Yee is a Partner in both the Corporate/Mergers & Acquisitions and Private Equity Practices of WongPartnership LLP. Her main practice areas are mergers and acquisitions, venture capital, corporate finance and general corporate law.
Sing Yee has been recognised for her work by legal publications such as Chambers, The Legal 500 and IFLR 1000.