Good governance for non-profits

WE read with interest the Sunday Star Says on “New rules for non-profit organisations” on November 12. We cannot agree more that there has to be good governance, transparency and accountability not just in Government and business, but also in civil society, which refers to the wide array of not-for-profit (NPOs) and non-governmental organisations.

Most of us also expect and demand the same of all associations within the country, of which many of us citizens are members and stakeholders. This is especially so when these associations solicit funds from members and the public to set up and manage foundations.

In this regard, the argument presented for advocating improvement in the monitoring and administration of trustees set up by NPOs certainly should apply to associations and their foundations as well, to address possible abuse and misuse of funds.

Therefore it is our humble opinion that it is high time that the Cabinet also reviews the Societies Act (1966) and the role and function of the Registrar of Societies (ROS) to ensure good governance, transparency and accountability in all associations.

We are advocating this in light of our experiences as members of an alumni association of a premiere university in Malaysia. There have been serious irregularities and financial mismanagement in the association over the past few years, which prompted us to file a complaint with the ROS in September 2015.

Amongst the many irregularities and misdeeds is this very obvious one: the exco contravened a clause in the association constitution that prohibits employing members for non-professional work, by paying the honorary secretary a salary of RM5,000 a month over a period of four years for some dubious administrative work.

Another case in point: this same association set up a foundation to provide scholarships to needy university students many years ago, and has since accumulated a few million ringgit in its coffers. In recent years, the association took a loan amounting to one million ringgit from the foundation to cover some association expenses, which contravened the goals of the foundation.

Some members complained to the Inland Revenue Board of Malaysia which purportedly did a routine audit and advised the association to pay back the loan. But, at the 2017 Annual General Meeting, as usual, the foundation did not present its audited annual account as it should, and the loan was not repaid. There is suspicion and some evidence that funds from the foundation may still be used by the association for the wrong purposes.

In light of the above, what can the Government do to ensure good governance, transparency and accountability in civil society, vis-àvis non-governmental organisations – including the many societies, associations and their foundations?

If more responsive and effective action is continuously not taken by these various institutions, public perceptions of the Government will certainly be adversely affected.