LETTER | Malaysia urgently needs a charities commission

LETTER | There is an urgent need for the government to form a new commission to regulate donation fundraising and charities in Malaysia.

In light of increasing donation fraud and misuse of funds involving charities in Malaysia, how does one go about finding out if it is indeed a legitimate charity in Malaysia?

In the absence of a dedicated regulatory body or a statutory register for charities such as in the United Kingdom, Singapore, and Australia, it would be a challenge for a layperson to know if a charity is indeed registered as a charity.

As a fundraiser, a charity can be formed under several legal vehicles or structures under the existing laws. A charity may be formed as a company limited by guarantee under the Companies Commission of Malaysia, a foundation under the Prime Minister’s Department, or even as an association or a society under the Registrar of Societies.

Considering there is no requirement for a charity to publish any disclosure or verification, a donor may need to do his own independent search and obtain a company profile with the Companies Commission of Malaysia.

The donor may also have to obtain the company’s incorporation and tax exemption certificates, constitution, and audited accounts to ascertain the governance structure as there is no legal requirement for these documents to be made available online for inspection.

In contrast, established charities may get funded more easily due to the availability of publicly documented initiatives and media coverage.

Why do we need a new commission of charities? The usual enforcement authorities and regulatory bodies like the police, Bank Negara Malaysia, and the Securities Commission are already overwhelmed with daily cases and reports by victims affected by emerging crimes such as scams and cybercrimes that are becoming increasingly more sophisticated.

Soliciting donations is also becoming more sophisticated as fundraisers form dedicated crowdfunding websites to solicit funds. Creative stories are also shared online in the hope of them going viral to attract donations.

Unlike physical donation solicitation which requires a police permit, there is likely a regulatory gap when it comes to the online donation fundraising space.

The formation of a charity commission will draw up a proper regulatory framework on how a charity may be formed by people who are “fit and proper”, drafting the criteria for granting and conditions on fundraising permits, minimum disclosures on funding utilisations, and to also perhaps streamline present tax regulations when it comes to granting income tax exemption for verified charities and tax deductions for donations made by taxpayers.

The commission will also formulate best practices and guidelines on how charities should run and operate from appointments of a board of trustees consisting of independent members and professional managers that can increase the charity’s potential.

A strong governance structure can also enhance the charity’s credibility and ease fundraising efforts.

The supportive Malaysian culture of giving and showing concern for others in all forms, including cash donation, can be seen even during the #kitajagakita period to help the underserved and support local enterprises and charities.

A charity commission will enhance transparency, accountability and streamline charitable activities in Malaysia, and hopefully reduce the likelihood of donation fraud and misuse of funds by charities.

The government must look into forming this commission as a matter of priority.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.