PETALING JAYA: Malaysians are a generous lot, always willing to part with their money for charity. But too often, the funds do not go where they are intended.
There have been too many scams in the name of charity and many have fallen victim without being able to identify the culprits.
With the abuse of public generosity, there are now calls for a charities commission to ensure effective and transparent fund-raising policies, especially those involving large-scale efforts.
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This commission will not only oversee such fund-raising but provide a clear avenue for those whose noble intentions are hijacked, say law experts.
Prime Minister Datuk Seri Anwar Ibrahim himself said recently that funds raised should be scrutinised for transparency.
“There should be rules, for example, in collecting donations to build tahfiz schools. Otherwise, the money is used to repair houses instead,” he said on Feb 17.
Keeping it transparent: With Malaysians being a generous lot, making sure donations go where they should be is a priority for any fundraising efforts.His comments came two days after top guns of the charitable organisation Aman Palestin were slapped with money laundering, criminal breach of trust and cheating charges involving RM39mil at the Sessions Court in Shah Alam.
It was not the first time the government had raised the need for better regulation of funds collected for charity.
In 2020, then Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail had said the establishment of a Malaysian charities commission would improve the efficiency and transparency of the social finance sector.
Malaysians often do not do due diligence on charities.
“For some Muslims, it is the intention of giving that matters. Whether the money is used for other purposes is a different matter,” says International Islamic University Malaysia (IIUM) lecturer Asst Prof Dr Zati Ilham Abdul Manaf.
Malaysia also has many charitable bodies and numerous laws which deal with breach of trust and cheating, so a commission that provides oversight would be practical.
“For waqaf (public trust) matters, the Federal Government has created Jawhar – the Department of Waqaf, Zakat and Hajj – and this is a body under the Prime Minister’s Office.
“The government has also allocated a lot of funds to develop and advance waqaf in the 12th Malaysian Plan.”
The government should now find a way to form a charities commission, she said.
“The first step is to regulate any body that wishes to collect charities with rules on how funds are managed.
“If they fail to abide by the rules, they would lose their licence to collect funds and their tax-exemption status.
“Charity has always been used as a tool to get tax exemption but there is the money laundering aspect to look at.”
Established charity regulators can be found in at least six countries – Singapore, the United Kingdom, the United States, Canada, Australia and New Zealand.
“Singapore, however, has a well-run Charities Unit and they are able to attract foreign charitable bodies to set up shop there. It was set up on July 1, 2006, as part of the Inland Revenue Authority of Singapore (Iras),” said Zati Ilham.
Prof Dr Zuraidah Ali, a fellow lecturer at IIUM, agrees.
“The Charities Commission in the UK has been in existence for very long and is able to centralise the monitoring of all organisations, in whatever form, including Muslim trust (waqaf). The Charities Act has gone through much evolution since it was first formulated in 1601.
“Malaysia, however, cannot follow the UK structure as we do not have a Charities Act. The structure in Singapore is much easier to follow.
“The charitable organisations we have in Malaysia are similar to Singapore,” she said.
“Singapore engages more with the sectors involved directly with any form of charitable organisation – as most mismanagement happens there,” said Zuraidah, adding that forming a Malaysian charities commission would be challenging, with jurisdictional complexities, stakeholder resistance and resource constraints.
She pointed out that Muslim charities like Aman Palestin and Yadiem come under the Registrar of Societies (ROS).
Although these Muslim NGOs allow for regular contributions through salary deductions, there is no single regulator to monitor such deductions.
Non-profit organisations and foundations, meanwhile, are placed under the purview of the Legal Affairs Division of the Prime Minister’s Department.
The issue, she said, would be the independence of the commission, if it is formed.
“It should be financially self-sustainable,” she said.
