More donation transparencyA report that a lack of financial transparency at non-profit and civic organizations discourages companies from donating suggests something.
According to yesterday’s report by the Federation of Korean Industries on the challenge of encouraging corporate donation, the total charitable contribution by major companies amounted to 741.1 billion won ($805.5 million) in 2005. By that calculation, each company donated 3.6 billion won on average, which is very encouraging when considering the poor culture of donation in Korea.
Unlike developed countries like the United States, where personal donations account for 80 percent of the total donated amount, most donations are credited to companies in Korea.
Just look at the sum by donors for the “Hope 2007 Love Your Neighbor” campaign of the Community Chest of Korea: Companies donated 118.5 billion won, which makes up 73 percent of the total contributions.
But companies complain that it is difficult for them to set a budget for donation because the non-profit organizations don’t clearly state how they spent the money.
The report said that 46 percent of surveyed companies considered the lack of transparency as an obstacle for donation. One corporate spokesperson said his company donated hundreds of millions of won to a non-government organization, but hasn’t been told where the money went for more than a year.
When the company requested the information, the charity sent a two-page report that contains only statement lists, without attaching any evidence.
This anecdote explains roughly how the organizations execute the budget. As a result, the company couldn’t get tax benefits for the donation.
It’s no wonder that firm greatly reduced its budget the following year. The lack of transparency worked against donation culture.
Fortunately, some civic groups build their own information system in order to publicize projects they are working on and report financial information.
That kind of action helps to ultimately increase transparency and gain trust.
But there still are more groups that lag behind. A social system to audit the transparency of fund execution is necessary.
And civic groups should realize their social responsibility and publicize lists of projects and accounting information.
That’s the only way to boost donation by both companies and individuals.