[Column] Rethinking state subsidies for NGOs

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[Column] Rethinking state subsidies for NGOs

Kim Won-bae

The author is an editorial writer of the JoongAng Ilbo.

A non-governmental organization (NGO) in Korea must take two primary steps to source funding for its mission. First, it must register either with the central or local government authority as a nonprofit civilian group to receive funding from it. NGOs also need to register with the Ministry of Economy and Finance as a “public-interest” entity so donors can receive tax exemptions for their contributions.

Registration as an NGO is not difficult. The body simply needs to prove that its service benefits unspecific masses and the members do not share any of the profit. Subsidies are granted to reward its social services substituting or supplementing government roles. But often the grants have ended up in undesired places.

There is a group called Chotbul (Candlelight vigil) Student Alliance purported to fight for the rights of middle and high school students. The civic group sponsored a rally of teenage students calling for the impeachment of President Yoon Suk Yeol last month. It registered as an NGO with the Seoul Metropolitan Government in March last year. Three months later, it was also designated by the ministry as an NGO.

According to its settlement for last year disclosed on its website, the civic group received 48.8 million won ($30,000) in subsidies from the Seoul municipal government and another 5 million won from the Ministry of Gender Equality and Family. It also collected 4.95 million won from Seoul City’s support center for democracy education. Since its membership revenue was 33.1 million won and donations 3.29 million won, the group relied more on grants from tax coffers than on donations from its members.

The Seoul government on Dec. 27 announced it was cancelling the administrative permit for the civic group, claiming it violated the rules by expressing support for certain candidates for education superintendents in Seoul and financed their seminars while campaigning against particular candidates and their party during the June 1 local elections.

Under the NGO Act, a nonprofit civilian organization receiving state grants must not support or finance a certain political party or candidates for elected office or operate with a specific purpose for opposition or promotion of a certain religion.

The Seoul city government also plans to confiscate money it gave to the Chotbul student alliance last year after finding misappropriation in its spending. The group claims that it has funded political activity with donations and spent the city subsidy on its registered mission.

If an NGO’s registration is cancelled, it must make the notice public and report to the Ministry of the Interior and Safety. The subsidy act should be amended so that an NGO whose funding had to be returned or permit cancelled should also report to the Minister of the Economy and Finance. It does not make sense for the entity to maintain its NGO status after it spent subsidies in the wrong way.

The biggest controversy with NGOs blew over with the Korean Council for Justice and Remembrance for the Issues of Military Sexual Slavery by Japan in 2020 when Lee Yong-su, one of the survivors of Japanese wartime sexual slavery, raised questions about the way the civic group managed the fund. Its former head and current lawmaker Yoon Mee-hyang came under prosecutorial probe. The first trial is still pending.

The civic group, formerly known as the Korean Council for Women Drafted for Military Sexual Slavery by Japan, used a 1-billion-won donation from Hyundai Heavy Industries in 2013 to build a shelter for surviving victims. But in a 2015 evaluation by the Community Chest of Korea (CCK), the organization scored C in business operation and F in bookkeeping. It received the poor grade for its off-the-cuff use of the facility and lacking documents and receipts for its expenses.

The CCK overseeing charity organizations and appropriating donations levied punitive action on the council, disallowing it from receiving donations for two years. The evaluation result was only notified to the council and the prime donor, Hyundai Heavy Industries, not notified to other government offices. In 2020, People Power Party (PPP) Rep. Chung Jin-suk proposed a bill to revise the Community Chest Act so that its evaluation on charity recipients is reported to the Health and Welfare Minister and shared with related government offices. Although the bill was submitted to the Health and Welfare Committee of the National Assembly, it was not discussed fully. A review by an expert group under the committee pointed out that it would be difficult for the charity organization to identify every supervisory office and notify it of the results of the evaluation.

The review report also said that the health and welfare minister already had the authority to supervise the Community Chest.
Lee Kwan-sup, senior presidential secretary for policy and planning, announces the interim result of a two-month study into state subsidies doled out by the previous administration for NGOs and the Yoon Suk-yeol administration’s future plans to raise the transparency of their spending in a press conference at the presidential office at Yongsan on Dec. 28. [JOINT PRESS CORPS]

It would not be easy for the CCK to notify every government agency of its audit reports. But if a civic group received restrictions limiting receiving donations by the CCK, such facts should be publicized. A civic group must not go on colleting public grants and private donations even after it was under sanction for problematic management.

An NGO’s sovereignty must be respected. But it is not qualified to act as a public-interest and civilian body if it cannot prove its proper use of public grants and civilian donations. The act constitutes brazen exploitation of donations from taxpayers and others.
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