Charity: Not so Cut and Durai

Two major court cases are in the news this week. In one courtroom, the murder trial of the chap who is accused on murdering young Huang Na last year. In another, NKF CEO TT Durai has taken SPH to court over an article in the Straits Times last year, in which NKF was depicted as somewhat lavish in its spending on taps in the CEO's executive washroom.

Usually, the lurid tale of murder and sexual molestation of a child would grab all the headlines, but the outrage and public attention have landed squarely on a defamation suit over bathroom fixtures. I bet more than one NKF PR advisor had taken heart that the Huang Na case was being tried in the same week, the better to deflect attention from the NKF suit. You simply have to love the unpredictability of public response!

And now, public outcry has led the resignation of NKF's CEO and Board. It happened within a space of 2 amazing days after court proceedings revealed a littany of lavish spending by NKF on salaries and executive perks. Singapore had not become so united behind a non-sport event since the MacDonald's Hello Kitty craze, when young and old queued overnight outside MacDonald's restaurants and established a kampung camaraderie reminiscent of the pre-1960's.

What is at the heart of this public outrage? The surface facts are enough to set off several alarm bells:

• NKF CEO earned $25,000 a month
• He received 12 months' bonus last year, earning $600,000 in total
  
• In last 3 years, his salary and bonuses totalled $1.8 million
• NKF's coffers has enough reserves ($260 million!) to last over 20 years , not the 3 years previously stated
• NKF has overstated the number of kidney patients that need its help - the true number is closer to 2,000, rather than the 3,000 plus figure that Durai has stated in the past
• NKF CEO is entitled to business class travel on SIA
• He has traded this for flying 1st class on lower-cost airlines
• NKF CEO has used NKF resources for his and his family's personal convenience

Many of these revelations did not surprise me, not the salary and the bonus, nor the inaccuracies about the number of patients and the size of the reserves. For more than a few years now, I have regarded NKF as an anomaly - a charitable organisation run like a profit-oriented conglomerate. NKF has engaged in active expansion of services and operations, marketed aggressively and successfully branded itself as the household name in charities. It is a corporatised charity, its management driven by financial and market imperatives. Its reward structure would naturally encourage income maximisation; in its case, income in the form of public and donations (corporate donations are apparently a minor proportio of its funding). In pursuit of this, is it any wonder that the need for funds is somewhat exaggerated? Would we be as willing to give if we knew NKF had enough reserves for 10 years, never mind 20? 3,000 patients instead of 2,000; reserves for 3 years instead of 20. To certain NKF executives, this might have seen like nothing more than taking minor creative license. After all, advertisers engage in "puffery" when selling a product or service; it makes the public more inclined to part with its dollars. It is accepted practice in business, so why not for a corporatised charity?

TT Durai was something of a fund-raising savant, coming up with ever newer and brighter ideas, from SMS solicitations using the name of stars to lucky draw chances. He also engineered an alliance with Mediacorp, which at times almost functioned like the solicitations arm of NKF. The alliance was wildly successful, raking in tens of millions in donations each year. (Surely it's not being cynical to note that it also boosted the visibility of the Mediacorp artistes, adding a heroic dimension to their public persona. Next to family and friends, "Mr Durai" might have been the person most thanked at last year's Star Awards.)

It made me uncomfortable, this juggernaut with its large databases of donors and ever-more frequent star-studded charity shows. I have the fullest sympathy for kidney patients (and know families who have had to deal with kidney diseases). Dialysis is expensive and the need for assistance is real. But NKF so dominated the fund-raising space that there seemed to be nothing left for the 900 other charities in Singapore. What of the cancer patients, orphaned children, the disabled and the infirm elderly? How much more can individuals give to others if so much already goes to NKF? NKF itself, in its zeal to swell its own coffer of reserves, did not seem to have ever considered the needs of other charities. It was never openly said, but its "business model" might have regarded other charities as "competition". After all, when your KPI is to bring it as much public funds as possible from a limited pool, can you help but regard the likes of Singapore Cancer Society and Singapore Heart Foundation as competitors? Every dollar that goes elsewhere is a dollar less for NKF, a dollar less counting towards the KPI.

For so long, NKF was the household name in VWOs. It was the most visible, even sponsoring Mediacorp drama serials in the run up to its various charity shows (I have my beef with Mediacorp's role in this, but this is not the place to voice that). It was the one that most people donated to, whether through monthly contributions or donations during televised charity shows. Other charities were relegated to the back of our minds, because they did not market themselves so aggressively that they were in our consciousness the way that NKF was. Now that NKF is disgraced, will the public be able to continue separating NKF from other charities? Or has this one broad brush tarred all the others? It seems that Singapore Cancer Society has already received requests to cancel monthly contriutions, although they have absolutely nothing to do with NKF. Perhaps this confusion arose because NKF's latest drive was for its Cancer Fund. Which then brought this question to my mind - was there a need for a NKF Cancer Fund when the Singapore Cancer Society has accumulated more experience and expertise in cancer-related programs? Was this not creating competition in a sphere that would probably best function without it?

Arising from the ashes of this debacle is the need for greater transparency and better governance at NKF and other VWOs. It is actually remarkable to me that this hasn't become an issue before. NKF raises so many millions a year, yet its practices have never been scrutinised closely. Perhaps we had thought that governance belonged in the realm of private corporations, where scandals such as Enron and CAO have been widely publicised. Perhaps it was unthinkable that charitable organisations would not be able to self-govern with the same ethics, altruism and selflessness that seemingly underly their very existence. It is ironic that the NKF saga broke the same week that the Government announced that it is accepting proposed changes to the Code of Corporate Governance. The newspapers were a hoot; one on page, we saw headlines about Madam Ho's speech on Corporate Governance as the Singapore Economics Society dinner; on the facing page, we read about the public's outrage over the NKF revelations.

Of course, the Code does not apply to non-profit organisations, but perhaps these organisations should be held to be just as accountable as public-listed corporations. If NKF has prided itself on its corporate management style, then if should have been subjected to the same legal, reporting and disclosure requirements as any corporation. Under the mantle of a non-profit organisations, they get many breaks - not the least of which, tax-related exemptions - but they have manifestly not functioned like a non-profit organisation. They have been labelled social entrepreneurs, which is remarkably telling. I believe that social entrepreneurship is one of the great developments in business philosophy. But I have always upheld it to be wonderful because it was practised by profit-oriented organisations. In the act of making profits, an entrepreneur is socially responsible and positively affects society in a way that circularly benefits his business venture. It is beautifully, elegantly complete - a rare synthesis of socialism and capitalism. It is about serving society's good while making profits. It is in fact the reverse of what NKF does, which is to make profits while serving a social cause. If this appears a stylised over-simplification, it is. The facts lend themselves to stylisation; I just do not believe that NKF is in any way a suitable model for social entrepreneurship as I understand it.

I am NOT against a more professional approach to fund raising and running charities. Yes, you have to spend money to raise money, and yes, you have to reward professionals who do a good job raising money. But I would contend that the sky is NOT the limit for a charity, the way it is for a private concern. You can raise TOO much money, although most charities are never in this happy position. You have raised too much money when you can survive for another 20 years without active fund-raising and if you do not invest in high-risk basic research. Who knows, in 5 year's time, we might have a cure for diabetes and viable low-cost options for patients with kidney failure. What will happen then to the excess funds - declare an even fatter bonus for the staff?

I hope this incident has opened the public's eyes to the importance of finding out about the charities they donate to. In the past, were we blinded by the dazzling star power that entreated us to give to NKF? Did we feel compelled to donate as we watched Mediacorp artistes endanger their lives on live television? Did we fall for the hard-sell that follows the free health screenings provided? Were we tempted by the chance at winning a condominium or a fat wad of cash? Probably yes. Are these really the reasons why we give to charity? Do we not care where the money goes as long as the message (or messenger) is persuasive enough? To be responsible donors, we need to do our research too. Whatever the reason we give to charity (for good karma, because of pure altruism, out of gratitude for past assistance), we should know how our money is being used and how the cause is being supported. It is the responsibility of the VWO to provide this information for us to make informed decisions.

This does not detract from what NKF has achieved and the good work that it has done and will continue to do. It serves an important cause and provides invaluable assistance to many people, and should be lauded for its forward-thinking initiatives and innovative practices. NKF does many things which are very right and for the right reasons. But I am glad that what it has done wrongly has come to light. It was time that we knew.