The Need for Transparency in Charitable Donations
The Need for Transparency in Charitable Donations
  • Lee Sun-min
  • 승인 2019.07.16 15:49
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Donor group officials who used donations from donors to enjoy a yacht trip and luxurious life(Provided by Seoul Metropolitan Police Agency)
Donor group officials who used donations from donors to enjoy a yacht trip and luxurious life(Provided by Seoul Metropolitan Police Agency)

 As the world develops, peopleʼs lives become better and their ability to give back increases. With this increase in the ability to be more charitable, and an awareness of the importance of communities, many people are becoming more interested in donating money to causes such as needy neighbors, animals, and the environment. As such, we are seeing an increase in donation-related activities in many countries around the world.

 Despite this current increase in charitable donations, Korea ranked 60th out of 146 countries in the global donation index released by Britain’s CAF in October 2018. This is a very low ranking considering the current size and scope of Korea’s economy. For example, Christmas kettle  donation, which increased during the IMF financial crisis, decreased by 16 percent in 2018. According to a survey conducted by the Korea Institute for Health and Social Affairs, 60.7 percent of the respondents said that the reason why Koreans do not donate money was that the use of donations was not transparent. Even those who made donations, 61.7 percent reported they did not know if the money was spent properly. People’s concern about the uncertainty of whether their donations were being used for the correct purposes has caused anxiety amongst donors, and thus decreased their willingness to continue to donate.

 In fact, embezzlement of donations has occurred in many organizations, businesses, and individuals over the past few years. In August 2017, high-ranking officials, including the representative and CEO of a well-known donation group, were caught by police and criticized for using about 12.6 billion won out of 12.8 billion won to enjoy their lavish lifestyle – such as overseas golf, apartment purchases, and foreign car purchases. In other words, only 200 million, a tiny fraction of the 12.8 billion won, was appropriated for its proper purpose. In another famous case, Lee Young-hak, famously known as “Molar Daddy,ˮ was involved in fraudulent fundraising activities to supposedly pay for his sick daughterʼs surgery. However, it was revealed that he used the donations on foreign cars, luxury goods, and plastic surgery for himself. Likewise, in 2019, a supposed animal rights group embezzled tens of millions in donations in the name of treating and rescuing abandoned dogs. Angry donators called and demanded transparency for how the funds had been used. The cases of misappropriated donations continue, and as such, many people hesitate to donate as they lose faith in charities or organizations.
Of course, the decline in donations is not entirely due to these incidents. But if factors such as social and economic conditions are excluded, these types of incidents and non-transparent use of donations, are expected to have had the most impact. If this continues, it could lead to a situation where people in real need are not supported.

 The situation is not getting any better because there is no proper state agency overseeing the details of donation spending. In order to cultivate a thriving culture that is more comfortable and willing to give to those in need, a system needs to be established to provide a sort of checks and balances program to ensure the correct appropriation of funds. However, rather than the government taking action and imposing legal restrictions, it will be best if the charities themselves come forward and take active measures to avoid such issues, if in fact, their organizations were created with good intentions.

 As transparent use of donations is emphasized, some organizations in Korea are also relaying information related to the results of their use of the donations through their websites or newsletters. In one of these cases, KTʼs foundation will launch a global donation campaign by applying ‘blockchain’ to their ongoing project to ‘prevent Laos infectious diseases’ for the first time in the country. Also, the Laos project allowed the conversion of donation points to ʻdonation tokensʼ so that they could not be used for anything other than related donation activities. This has increased transparency as it can track the donor’s funds and all processes, including purchases and delivery of donated goods.

 Clearly, there are various ways to win the trust of donors by increasing transparency, but many charities have not been proactive to implement changes. Since charities are – by definition – designed to be for the greater good, they need to actively embrace new measures to assure donors of their good intentions and allow well-intentioned citizens to feel secure in their donations so that all can continue to benefit from a more charitable society as a whole.

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