May 17, 2021

The Editor Speaks: Charities are again under the microscope

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Colin WilsonwebCharity begins at home and home here in the Cayman Islands we have many charitable institutions.

It is a good thing because without them the whole country and its citizens would be the poorer.

The question is how many of our charitable institutions have been the subject of abuse and corruption?

How much of the money they have collected actually has gone to the actual source they have campaigned for?

How much has ‘disappeared’ into the drawer marked ‘administrative costs’?

How much of the ‘part proceeds to the Tom, Dick and Harry Old Persons Home’ actually goes there and how is it calculated?

The Tom, Dick and Harry Old Persons Home doesn’t mind as for them to get a donation they haven’t had to work for is still music to their ears. It is much needed funds they wouldn’t have got.

However, charities are once again in Cayman coming under the microscope of government. They must be regulated and this will mean administrative costs, that could be very large, will eat into the money they collect and could hold up the time the actual cheque is written and handed over to the recipient.

On May 8th the Government produced a new legislative proposal seeking to establish a legislative framework for charities and make them more accountable for the funds and donations they receive. This is also to ensure “Cayman compliance with international regulations on anti-money laundering and terrorist financing”. The bill will also establish a charities register for all charitable organisations in the Cayman Islands.

The Portfolio of Legal Affairs has invited charities and the public to comment by July 7th on the Charities Bill, 2014. It also applies to churches that collect funds.

There has been much controversy at previous attempts by government to create a legal framework to make charities accountable for the monies they collect.

The last attempt, the Charities Bill 2010, was immediately withdrawn to allow for wider public consultation, after many charitable organisations and churches raised concerns over the administrative and financial burden of the extra record-keeping, audit and reporting requirements.

Not much has changed in the Charities Bill 2014. It still provides for the appointment and functions of a registrar of charities in charge of monitoring the conduct of charitable organisations and the charities will still have to register.

The new bill states that all charitable organisations MUST include the words “Cayman Islands Registered Charity” or “CIRC” in their official documents, materials, collection receptacles and identification labels or badges.

The charities will, if the Bill becomes law, have to file annual returns with the registrar within six months of the end of their financial year and will require them to employ acceptable accounting standards, maintain proper records and conduct audits. They will also have to maintain the names and contact information of all its donors. Where this information is not easily ascertainable the fund raising method used must be explained. Evidence of “know your client” compliance has also been introduced in the registration process.

The Attorney General also gets into the act whereby he has the power to inquire into the operations of a charity and take action where the organisation may, in his opinion, have been engaged in misconduct or committed a criminal offence.

If all that isn’t enough the bill will also regulate how fundraising activities have to be carried out:

Fundraising efforts “should not unreasonably intrude on privacy, place undue pressure or make unreasonably persistent approaches to potential donors.” Charities, in their attempts to raise funds, are also prohibited from making “false or misleading representations about the extent and urgency of funding needs, the use of funds or the activities, achievements or finances of a charity or company”.

Over the 32 years I have lived in Cayman I cannot remember any big scandal relating to misappropriating funds by charities although I expect the odd dollar here and there disappeared but quite frankly I have never thought charities in Cayman have warranted such Draconian legislation.

I am afraid there will be fewer charities, less charitable fundraising and less monies going to the needy that include animal welfare.

Even the ones that remain will have the monies they collect further eroded by the adherence to all the rules and regulations, especially the requirement of an auditor who must be a duly qualified accountant, who is licensed or competent to provide audit services. The only dissipation from the previous proposed legislation is that the audit doesn’t have to be executed by an audit firm.

As to the reference to ‘terrorism’? Come on. To me it smacks of outside interference. Who told our government to insert that? Is the thought of terrorists maybe hiding in the animal cages of the Humane Society going to make us quake in our boots?

Absolute baloney! (And I wanted to use other words!!)

Of course all of this will require additional staff by government to examine all the additional paperwork, the creation of another monster and an even bigger microscope.

PLEASE don’t do it!!!!!

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