Legislative Council Panel on Welfare Services
Meeting on 8 March 1999
The Community Chest and Funding for Social Welfare Services


This paper informs Members of the respective roles played by the Government and the Community Chest in providing funding support to social welfare services.

The role of the Community Chest

2. The Community Chest is set up under the Community Chest of Hong Kong Ordinance (Cap.1122). Its objectives are :
  1. to obtain donations through community wide appeals to help people in need;

  2. to allocate these funds as trustees of the donors, to member agencies for the provision of social welfare services; and

  3. to provide an integrated service for donors wishing to support a wide range of welfare services in Hong Kong.
3. Since its establishment in 1968, the Community Chest has been an important source of funding for innovative welfare projects and complementary social welfare services. Through organising various fund-raising activities, the Chest collects donations which are then allocated to its member agencies for the provision of welfare services. There are currently 140 Member Agencies under the Chest's umbrella. The St. John's Ambulance, Mother's Choice, Hong Kong Sea School are just a few examples of the wide spectrum of non-government organisations receiving allocations from the Chest. Allocations from the Chest for the year 1998/99 amounts to $202 million.

4. In addition to being a fund-raiser, the Chest also plays an important role in encouraging community involvement for welfare causes. The multitude of fund-raising activities organised by the Chest every year, targetted at all members of the community, helps to complement the Government's efforts in building up a caring community.

The role of the Government

5. For its part, the Government is committed to supporting social welfare services that meet our policy objectives. Whilst the Community Chest and other charitable trusts help provide funding support to complementary welfare services, we have the responsibility of ensuring that essential welfare services are always available to those in need.

6. Over the years, Government has devoted substantial resources to welfare development. In the current financial year, we will spend $24.9 billion on recurrent welfare expenditure of which, some $5.4 billion has been allocated to 184 subvented non-government organisations for the provision of direct welfare services. In the coming financial year (1999/2000), direct subvention will grow from $5.4 billion to $ 6.2 billion.

7. In the early years of the Chest, its allocation to selected services accounted for almost 50% of total Government recurrent subvention for direct welfare services. As the Government expanded the range of welfare services and the amount of subvention involved, the proportion of allocation by the Chest to recurrent Government subvention has decreased substantially over the past two decades. A table comparing Government subvention to that of the Chest's allocation is at Annex A.

Current financial position of the Community Chest

8. The present economic downturn has led to difficulties for the Chest in raising funds. According to information received from the Chest, projected donations to be received in 1998/99 are likely to fall short of its allocation requirements for 1999/2000. The initial estimated shortfall is in the region of $ 60 million. The Chest also envisages difficulties in raising funds in the next couple of years. (A table summarising the financial position of the Chest is at Annex B )

9. We are concerned about the financial difficulties faced by the Chest. And, whilst we recognise the Chest's invaluable contribution to society over the years, we do not consider it appropriate for Government to directly inject funds into the organisation at this juncture for the following reasons:-
  1. the Government's role is to provide essential welfare services. Through granting direct subvention to service providers, we ensure that essential services are available to those in need. Charitable donations and trust funds however, provide a valuable supplement by funding new and innovative welfare services on a pilot basis, or by enhancing the basic level of provision supported by Government. Hence, we have different funding priorities; and

  2. as we have stated in previous occasions, a very substantial proportion of public funds is already allocated to the welfare sector on an annual basis. Despite the economic downturn, there will continue to be healthy growth in direct subvention for welfare services. Given limited funds, any injection of public money into charitable trusts and funds would be at the expense of funding other welfare services. Given that the Chest is an independent entity with its own allocation priorities, the Government could not ensure that its limited resources were allocated to its own priority areas.
Future Direction

10. We understand that the Community Chest is examining ways to sustain its existing level of support to Member Agencies, including the possibility of using its reserves. It is also reviewing its allocation policy with a view to enhancing the impact of its donations on the social welfare services it supports. We support the Chest in its plans to focus on service output and to develop a stronger link between allocation policy and the output achieved by Agencies. Government will also continue working towards greater flexibility in the use of funds by NGOs so as to complement the new allocation measures being developed by the Chest.


11. The Government recognises the Community Chest's invaluable contribution in providing funding support for complementary welfare services. We also reiterate our commitment to providing essential welfare services to those in need, in collaboration with the Chest. This partnership has worked well in the past, and we will ensure that quality welfare services will always be available to help the needy and vulnerable in the community.

Health and Welfare Bureau
March 1999

Annex A

A Table Comparing Government Subvention for Welfare Services and the Community Chest's allocation to its Member Agencies

YearGovernment Subvention($ Mn)Chest's Allocation($ Mn)Chest's Allocation as a percentage of Government Subvention
1999/2000(estimates)6,200.0187.0 3%

The Chest's allocation of $202 Mn in 1998/99 has included a one-off lump sum grant of $ 12Mn to provide bridging assistance to Chest's member agencies for 1998/99 only.

Annex B

Financial Position of the Community Chest for the years 1995/1996 - 1999/2000

YearDonation Income($ million)Allocations to Member Agencies($ million)Reserve($ million)
1998/1999127(projected)202 130(projected)
1999/2000120 (projected)18765 (projected)
2000/2001130(projected)185(projected) 10(projected)


1. Donations received each year are used to fund member agencies in the following year, ie, donation of $189 million in 1995/1996 was used to match allocaton of $188 million in 1996/1997.

2. The Chest's allocation of $202 Mn in 1998/99 has included a one-off lump sum grant of $ 12Mn to provide bridging assistance to Chest's member agencies for 1998/99 only.