A Study of Corporate Governance Disclosure of Non-Governmental and Charitable Organizations in Hong Kong

Abstract

With about a quarter of the overall Hong Kong government’s welfare expenditure, a sum of HK$9.7 billion, allocated to subvented organizations in the fiscal year of 201'22011, it is expected that the government should have mechanisms in place to monitor these organizations closely in order to ensure that these organizations use this money effectively to achieve their designated organizational objectives. To our surprise, there is no legal and regulatory framework in Hong Kong to govern the operations of this type of organizations nor does the government impose any obligation of accountability to them. Recent reports from the media queried some non-governmental organizations (NGOs) to spend more than 50% of their donation in administration expenses. This type of media reporting has raised the concerns of some lawmakers in the Legislative Council who tabled a lot of tough questions to government officers on how the government monitors subvented organizations properly. A NGO, as defined by the NGO Global Network, is any non-profit, voluntary citizens’ group which is organized on a local, national or international level. NGOs perform a variety of services and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. Some are organized around specific issues, such as human rights, environmental protection or health. The provide analysis and expertise, serve as early warning mechanisms and help monitor and implement international agreements. In the “Guide to Corporate Governance for Subvented Organizations” recently released in May 2010 by the government, senior government officers all recognize the importance of good governance for all subvented organizations which received public funding from the government as good corporate governance is essential to the credibility, success and sustainability of such an organization. One important good governance practice that should be implemented for all subvented organizations is transparency, especially the disclosure of their governance mechanisms in place and their financial information as they bear the responsibility to allow the public to know their operations and effectiveness in carrying out the designated organizational objectives. This study attends to provide a better understanding of the disclosure of corporate governance practices and financial information of Hong Kong NGOs and charitable organizations as so to evaluate the quality of their corporate governance.