Overview of the law of charities - The Law Reform Commission of ...

The Law Reform Commission of Hong Kong
Charities Sub-committee Consultation Paper
Charities This consultation paper can be found on the Internet at:

June 2011
This Consultation Paper has been prepared by the Charities Sub-committee of
the Law Reform Commission. It does not represent the final views of either
the Sub-committee or the Law Reform Commission, and is circulated for
comment and discussion only. The Sub-committee would be grateful for comments on this Consultation Paper
by 16 September 2011. All correspondence should be addressed to: The Secretary
The Charities Sub-committee
The Law Reform Commission
20th Floor, Harcourt House
39 Gloucester Road
Wanchai
Hong Kong Telephone: (852) 2528 0472 Fax: (852) 2865 2902 E-mail: hklrc@hkreform.gov.hk It may be helpful for the Commission and the Sub-committee, either in
discussion with others or in any subsequent report, to be able to refer to
and attribute comments submitted in response to this Consultation Paper.
Any request to treat all or part of a response in confidence will, of
course, be respected, but if no such request is made, the Commission will
assume that the response is not intended to be confidential. It is the Commission's usual practice to acknowledge by name in the final
report anyone who responds to a consultation paper. If you do not wish
such an acknowledgment, please say so in your response.
The Law Reform Commission of Hong Kong Charities Sub-committee
Consultation Paper Charities
CONTENTS
|Chapter |Page |
| | |
| | |
|Preface |1 |
| | |
|Introduction |1 |
|Terms of reference |2 |
|Membership of the Sub-committee |2 |
|Format of this paper |3 |
| | |
| | |
|1. Introduction to charities in Hong Kong |5 |
| | |
|What is a charity? |5 |
|The growth of philanthropy in Hong Kong |6 |
|The need to review Hong Kong's charity law |7 |
| Other initiatives in relation to non-profit organisations|8 |
|in Hong Kong | |
| Objectives of the review by the Sub-committee |9 |
| | |
| | |
|2. Overview of the current legal position in Hong Kong |12 |
| | |
|Introduction |12 |
|The legal definition of "charity" |12 |
|The privileges associated with charitable status |14 |
| Tax privileges |14 |
| Other advantages of charitable status |16 |
|Formation of a charity: the legal structures available |17 |
|Oversight of charitable organisations |18 |
| Charities established by statute |18 |
| Charities receiving Government subvention |18 |
| Other charities |18 |
| Oversight by the Inland Revenue Department |19 |
| Oversight by the Companies Registry |19 |
| Oversight by the Secretary for Justice as "protector of |19 |
|charities" (parens partriae) | |
| Oversight by other Government departments |20 |
|Oversight of fundraising activities |21 |
| Existing oversight by the Social Welfare Department, TELA|21 |
| | |
|and other authorities | |
| Types of fundraising activity not subject to Government |22 |
|monitoring | |
|Dissolution of charities and the doctrine of "cy-près" |22 |
| | |
| | |
|3. Perceived deficiencies in the regulatory framework for |23 |
|supervision of charities in Hong Kong | |
| | |
|Introduction |23 |
|Problems in the oversight of charitable organisations in |23 |
|Hong Kong | |
| Out-dated definition of charity |24 |
| Lack of a coherent system for the registration of |24 |
|charities | |
| Inconsistent standards or requirements on governance, |25 |
|accounting and reporting by charities | |
| Limited control of charitable fundraising |26 |
|Conclusions |27 |
| | |
| | |
|4. Overview of the law of charities in other jurisdictions|28 |
| | |
|Introduction |28 |
|Australia |28 |
|Canada |29 |
|England and Wales |30 |
|Ireland |32 |
|New Zealand |35 |
|Scotland |36 |
|Singapore |37 |
|South Africa |39 |
| | |
| | |
|5. Conclusions and proposals on the definition of charity |42 |
| | |
|Current situation in Hong Kong |42 |
| The legal definition of "charity" |42 |
| Historical development of the common law position on | |
|charities |42 |
| The specific heads of "charitable purpose" at common law |44 |
| Purposes held not to be charitable |47 |
| The extent to which "charity" is defined under Hong Kong |48 |
|legislation | |
|Problems with the current law and the need for reform |51 |
| Outdated definition |52 |
| The law is confusing and unclear |52 |
|Pros and cons of having a statutory definition |53 |
|Issues to be considered in defining charitable status |54 |
| Exclusively charitable purposes |54 |
| "Public benefit" versus "private benefit" |54 |
| "Public benefit" rather than "altruism" |56 |
| "Charitable purposes" rather than "charitable activities"|56 |
| Other considerations |57 |
|Possible reform models: definitions in other jurisdictions|58 |
| England and Wales |58 |
| Scotland |60 |
|Categories of charitable purpose - our proposals |63 |
| "The prevention or relief of poverty" |63 |
| "The advancement of education" |64 |
| "The advancement of religion" |65 |
| "The advancement of health" |65 |
| "The saving of lives" |66 |
| "The advancement of citizenship or community development"|68 |
| "The advancement of the arts, heritage, culture or |69 |
|science" | |
| "The advancement of public participation in sport" |69 |
| "The provision of recreational facilities, or the |71 |
|organisation | |
|of recreational activities, with the object of improving | |
|the conditions of life for the persons for whom the | |
|facilities | |
|or activities are primarily intended" | |
| "The advancement of human rights, conflict resolution or |73 |
|reconciliation" | |
| "The promotion of religious or racial harmony" |76 |
| "The promotion of equality and diversity" |77 |
| "The advancement of environmental protection or |77 |
|improvement" | |
| "The relief of those in need by reason of youth, age, |77 |
|ill-health, disability, financial ha