Review Report on the Lump Sum Grant Subvention ... - lwb.gov.hk

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<strong>Report</strong> of the Lump Sum Grant Independent <strong>Review</strong> CommitteeExecutive SummaryThe Lump Sum Grant Subvention System1. The Lump Sum Grant Subvention System (LSGSS) was introduced inJanuary 2001 as a major revamp of the public funding and management ofnon-government organisations (NGOs) in the social welfare sector. Immediatelyprior to this reform, the Social Welfare Department (SWD) reimbursed NGOs for theactual costs incurred in delivering recognised welfare services through a systemwhich was considered inflexible, complex and bureaucratic. With the introductionof the LSGSS, the SWD no longer imposes rigid input controls on NGOs’ staffing andsalary structures or individual items of expenditure. Recurrent funding is granted toNGOs in a lump sum (thus the name Lump Sum Grant, or LSG), and NGOs are givengreater autonomy and flexibility to deploy resources and re-engineer their services tomeet changing social needs.The review2. By early 2008, the LSGSS had been in place for seven years. Both theGovernment and the welfare sector saw the need for a major review of the system.While acknowledging that the LSGSS had its merits, the Government also agreed thatthere was scope for improvement. It therefore appointed the Lump Sum GrantIndependent <strong>Review</strong> Committee (IRC) in January 2008 to assess the overalleffectiveness of the LSGSS and identify areas and scope for improvement, coveringbut not limited to the following –(a) overall implementation;(b) flexibility, efficiency and cost-effectiveness in the use of public funds and inservice delivery by subvented NGOs;(c) the accountability and corporate governance of subvented NGOs;(d) the impact of the LSG on the quality of welfare service; and(e) the handling of complaints related to implementation.3. The IRC set out to conduct the review in an impartial, open-minded,transparent and thorough manner, and has consulted stakeholders, including the- i -
Government, NGOs, staff, service users and the public at large through variouscommunication channels. By the end of the review, the IRC has received 133written submissions and met all the 112 stakeholder groups which requested meetings.It has also commissioned a consultancy study on overseas welfare funding models.The IRC’s assessment4. Stakeholders’ feedback suggests that most of them consider the LSGSScapable of achieving its objectives. Moreover, they have already adapted to thesystem. Although there are concerns about the implementation of the LSGSS, areturn to the former system would not be advisable or practicable. Having analysedthe views collected, the IRC considers that the principles of the LSGSS are sound.Therefore, the system is worth retaining, and every effort should be made toimprove it. Highlighted below are the key issues identified by stakeholders and theIRC’s recommendations on how to address them.Issues identifiedOverall implementation5. Under the LSGSS, many NGOs have introduced new staffing arrangementswhich have a significant impact on the career paths and pay packages of their staff.During the review, staff representatives have expressed concerns about NGOs’management practices (e.g. capping staff salaries at mid-point of the correspondingcivil service pay scales, not fully deploying the additional Government funding forpay adjustments on staff salaries, etc.), the apparent high turnover and wastage ratesand insufficient support for training and capacity enhancement in the welfare sector.Having staff employed on different terms (some as “Snapshot Staff” 1 and others ontime-limited contracts) has also created tension between the NGO management andstaff.There are demands for “equal pay for equal work”, i.e. for staff working insubvented NGOs to be paid like their civil service counterparts.examined these issues in detail, as reported in Chapter 3.The IRC has6. A number of financial issues have also affected the implementation of theLSGSS. For instance, an LSG which is determined primarily on the basis of NGOs’notional staff establishment in 2000 and further reduced for efficiency enhancement isconsidered insufficient to meet present day needs. Stakeholders also have different1 These are staff on the recognised establishment of NGOs’ subvented service units as at 1 April 2000.Their terms and conditions of employment are guaranteed provided that they remain employed bythe same NGO and have not been regraded or promoted to another rank.- ii -
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Page 5: ANNEXES1. Stakeholder groups which
Page 9 and 10: 10. Feedback is essential for the i
Page 11 and 12: issues. The resources thus released
Page 13 and 14: (c) where a project is carried out
Page 15 and 16: NGO to run a particular service, it
Page 17 and 18: following chapters. In summary, the
Page 19 and 20: Staff and had sufficient time to ad
Page 21 and 22: major events described above would
Page 23 and 24: 1.31 Shortly after its formation, t
Page 25 and 26: Chapter Two --- Overall Assessment2
Page 27 and 28: enhancement. Greater autonomy and f
Page 29 and 30: and community sectors are redefined
Page 31 and 32: to develop their own human resource
Page 33 and 34: 3.12 More importantly, the civil se
Page 35 and 36: Recommendation 2The Government shou
Page 37 and 38: adjustments in accordance with thei
Page 39 and 40: sector-wide transition scheme as pr
Page 41 and 42: 3.40 The IRC considers that contrac
Page 43 and 44: 3.47 IFSCs run by the SWD function
Page 45 and 46: Table 3: Wastage rates (C) of socia
Page 47 and 48: e detrimental to the professional d
Page 49 and 50: Chapter Four -Financial Issues and
Page 51 and 52: their services, and indeed a large
Page 53 and 54: Recommendation 7In view of the chan
Page 55 and 56: LSG reserves4.21 Before the introdu
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of staff. NGOs are encouraged to be
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Recommendation 11NGOs should fully
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4.42 Indeed, the re-engineering eff
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4.52 The LSGSC is an important plat
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the LSG, the PF provision for Snaps
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stakeholders which look to the manu
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Recommendation 16The SWD should rat
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edirected and innovative thinking e
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SWD’s audit procedures5.8 Many NG
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about the parameters set by the SWD
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Recommendation 20The SWD should rev
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with an annual subvention of more t
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to form federations or jointly prov
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The figures do seem to support the
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their existing services.existing on
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5.52 Many BIPs have indeed helped N
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Chapter Six -Accountability and Cor
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2001-03 : Issued booklets on five b
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practice guidelines currently avail
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6.17 Chapter 4 of the LSG Manual on
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of income and key expenditure items
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cherished no less in the welfare se
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ief, it monitors NGOs' performance
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7.11 Frontline staff have also poin
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planning mechanism described in the
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(iii) have obtained SWD’s prior a
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Chapter Eight - Handling of Complai
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ight of appeal or objection or a re
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Underinvestigation4 17 16 37Total :
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community will expect intervention
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eferral unreasonable.8.27 The IRC h
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Chapter Nine - Related Issues9.1 Th
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eplenishment of F&E items costing n
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eliance on their professional certi
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contracts or had not yet joined the
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additional resources, not only can
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Chapter Ten - Recommendations10.1 T
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passion of the many people we have
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Chapter 5(17) The SWD should conduc
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e informed of the ICHC’s decision
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Annex 1Page 2 of 343. Hong Kong Alz
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Annex IIPage 0 of 8Report</
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Australian system at that time.Anne
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Annex IIPage 4 of 8Hong Kong 2008-0
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Annex IIPage 6 of 8in reducing the
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Annex IIPage 8 of 8is consistent wi
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Annex 3Page 2 of 26. 終止合
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Annex 6Page 1 of 1Flowchart on how
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Page 2 of 9Chief Executive announce
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Page 4 of 9services operated by NGO
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Page 6 of 9Lump Sum Grant Steering
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Page 8 of 9Social Welfare Advisory
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