NKF moves forward with $31.2m in surplus
Fall in donations mitigated by cut in activities, savings in manpower costs
By CHOW PENN NEE
THE new leadership at the National Kidney Foundation (NKF) has been able to move on from the charity’s crisis of two years ago, strengthening reserves and seeing a surplus for the current financial year.
For the 18 months of December 2005 to June 30, 2007, the NKF turned in an excess of $31.2 million. On an annualised 12-month basis, this translates to $19.1 million, an 8 per cent increase of the previous financial year’s $17.7 million.
Strong investment gains made on the back of a robust economy and favourable market conditions were credited for most of the increase in surplus. Net income from investment management came up to $22.3 million for the 18 months, or $14.8 million annualised. This is 76 per cent higher than the previous year’s net income of $8.4 million.
‘The income next year (from investments) will not be as dramatic as was achieved this year,’ cautioned NKF chairman Gerard Ee. ‘We don’t expect to achieve this type of results unless (the economy) is in the same bullish state.’
The charity said in its annual report released yesterday that the new NKF management has adopted a more conservative investment strategy, to ensure capital guaranteed returns, rather than the previous balanced portfolio investment policy.
The charity has an investment committee which recommends an investment policy to meet the investment objectives of the NKF. The committee is chaired by Gan Seow Ann, SGX senior executive vice-president and head of markets, and its members are bankers or heads of asset management firms. NKF recently appointed Credit Agricole and UOB Asset Management to manage its money.
Another source of NKF’s funds is donations, although these were smaller than in the previous financial year. The fall-off in donations was mitigated by the charity ‘cutting its fundraising activities and savings in manpower costs’. Net income from donations and grants came to $37 million for the 18 months of FY06/07, or $24.7 million annualised. In contrast, FY05 recorded $42.9 million.
The absence of the charity show resulted in the decrease. The main source of donations this financial year came from the LifeDrops programme, where a set amount is deducted every month from donors through Inter Bank Giro or credit card. Currently, there are about 189,000 donors through this programme, compared to 280,000 donors just before the NKF scandal broke. ‘We will not aggressively go after donations but grow through promoting an understanding of what we do,’ said Mr Ee.
The accounts were also boosted by $4.1 million in settlement it is receiving from TT Durai, the charity’s former CEO.
Administrative costs have gone up. For the 18 months, it was $15.1 million, $4.6 million of which is a non-recurring legal expense paid to lawyers, forensic accountants and other supporting services relating to the court case against Durai, the former chairman and former directors. Annualised, excluding the non-recurring legal expenses, administrative costs were reduced from $8.8 million in FY05 to $7 million in FY 06/07.
The charity is currently also on the look-out for voluntary welfare organisations to whom it can rent out five floors of its Kim Keat premises. This could potentially bring in about $90,000 per month in rent for 29,000 square feet of space. All this surplus goes back to the charity’s total reserves, which stand at $269.5 million as at June, compared to $262.8 million in December 2005.
Mr Ee said that the board is looking at putting the reserves to good use by helping patients in a number of ways in addition to the traditional subsidies for treatment.
Source : Business Times - 15 Dec 2007
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