Introduction
In Hong Kong, most welfare services are not directly provided by the government but instead offered by Hong Kong NGOs. However, the government supports the NGOs in providing a wide range of core services through cash grants and other forms of assistance. This funding arrangement between non-profit organizations and the government constitutes an evolved subvention system. Major reform of this subsidy system occurred in 2001 with the introduction of the Lump Sum Grant Subvention System (LSGSS) that restructured the centralized budgeting system of social welfare and other services (Aspalter, 2021).
It is believed that under this new system, different service organizations have introduced greater autonomy and flexibility, which deploy resources, and others introduced new services that meet the changing social needs in the nation. The vision for this system is to transform and encourage the management and staff service organization to take active roles in managing their resources which leads toward long-term services. Therefore, the paper will examine the subvention mechanism of a non-profit organization with particular reference to the lump sum grant in Hong Kong and its implications for different stakeholders.
Lump Sum Grant Subvention System (LSGSS) Reforms
The LSGSS reform in Hong Kong can be viewed as a classic example of managerialism as it embraces its fundamental principles and creative ideas of the non-profit organization’s autonomy and financial efficiency. Under this system, the organizations no longer need any follow-up on job ranking and payment scales of the government. Some organizations invent new job titles for social workers, such as service directors, rather than using their original system (Cheung, 2018).
As a result, the Hong Kong government has declared that reforms on the system’s autonomy and flexibility would allow service organizations to use their future resources better and offer reasonable remuneration packages to their employees. In Hong Kong, local organizations have a new system based on employment schemes that give incentives and other adequate resource levels (Dai et al., 2022). However, various organizations in Hong Kong create autonomy and flexibility through the given subvention mechanism, which mostly expresses their interaction on the capital level and manner of savings.
In policy reflection, the Social Welfare Department of Hong Kong has alleged that NGO autonomy would benefit its users who are in smaller service organizations. Analysis of this shows that more flexibility of this autonomy consolidates their limited resources. In contrast, smaller organizations are more creative in capacity building using a system that offers a competitive package and retains talents. During interaction and strategic planning, local organizations noticed that more extensive administrations under LSGSS emphasize managerial professionalism. An example is the Food Angel organization which collects surplus food from different manufacturers and prepares it to feed those in need within the Hong Kong region (Food Angel, 2022).
Lump sum grants affect the NGO by helping it achieve its objective of helping the poor, refugees, and asylum seekers. The organization is credited with its ability to change the lives of the less fortunate who would otherwise struggle to get a meal (Food Angel, 2022). However, the NGO’s issues are not resolved under the grant as there is no empowerment effect that is well established. Based on the example it is valid that its outcome leads to ineffective changes that deploy for alteration of policy practices and subvention. However, it is an issue that increases their bureaucracy and work environment (Aspalter, 2021). Some of the local workers in Hong Kong cherished the subvention mechanism in to hope that NGOs would be more resilient in their dominance of managerialism in social service.
Modes of Subvention
There are various modes used by NGOs that assist the organizations’ success and positive operationalization. As a result, the lump sum grant system is highly considerate as it offers different rates and other allowances based on charges set in each NGO. Most of these offers are specified on matters of rents and rates, while their cost of salaries is related to allowances incurred from the organization and maintenance and utilities. According to Tse (2020), non-profit firms in Hong Kong usually receive Lump Sum Grants (LSG) based on existing service units and others on newly allocated services from local organizations.
Existing units from this system are unit rate subsidy, model system, lump sum grant mode, and modified standard cost (Dai et al., 2022). Therefore, each given unit ensures that the NGOs are put in place and properly utilize the subvention mechanism. In addition, the government must advise the Hong Kong NGOs on improvement unit that enhances its existing system set.
The lump sum grant mode in Hong Kong constitutes salaries and other related allowances and fee income usually granted to the Hong Kong NGOs at specific times as agreed by the organization. Therefore, this system can be revised from time to time on the effect of creating change in taking action on different activities. Based on subvention changes, the LSGSS must advocate granting autonomy to organizations, an issue that improves the efficiency of management and provides more career choices for different individuals. For instance, different Hong Kong organizations have abandoned the current rigid schemes related to the system mechanism, like payment scales and employment terms (Cheung, 2018). They are abandoned into the system due to differences in their provident fund incurred on the staff and other documented charges with similar units.
The benchmark on this set of mechanisms has executed snapshot staff at the midpoint, expressing their service master pay scale. Most of the snapshot staff in the system are known based on the enterprise of the NGOs-subvented service units stated in 2000. However, their employment conditions and terms make diverse speculation based on the guaranteed gap and functional level of the Hong Kong NGOs (Tse, 2020).
Though there are domination changes, some of the attendees of this organization have been promoted to another level, an aspect that supports the organization’s success. Analysis shows that Hong Kong NGOs have snapshots framed on their benchmark and how they are validated on the organization supporting the receivable gap of the LSGSS views enrolled in the subvention system (Cheung, 2018). However, some changes ensure that the system creates service units that receive the same funding as the LSGSS, though at a reduced rate of almost 2% annually, which began in 2008-2009 (Cheung, 2018). However, if Hong Kong NGOs have their snapshots below the benchmark, then the organization will receive a standard based on LSGSS activities and commission set, which act below the same workforce.
Service Performance Monitoring System
The organization’s subvention mechanism monitoring system must have fundamental managerial principles to grant autonomy changes. For proper utilization of the lump sum grant given to Hong Kong, there is a need for an efficient service performance system that supervises all services incurred or that must be undertaken by any NGOs. The set system ensures that the Hong Kong NGOs do their work in a designated manner based on how it is funded. As a result, the system must ensure that the non-profit organization provides high-quality service based on the impressive of concerned parties (Dai et al., 2022). To achieve this viable target in the system, the government must introduce funding, service agreements, and other standards in which units should be subvented.
The performance standard for the subvention system in Hong Kong is measured based on the form of output and outcome, which are both quantitative. However, the outcome standards for the system are measured on the calculative view of the efficiency of services provided. In other instances, the service quality standard for the system must show the same quality in which the Hong Kong NGOs were subjected to the effect of service units as proposed in various changes. Hong Kong NGOs should strive for continuous improvement and efficient changes in their service delivery, an issue that allows for a positive outcome in set systems (Dai et al., 2022).
Hong Kong can withdraw this subvention if the organization fails to improve its service delivery mechanism. To standardize on this matter, the level of funding for the non-profit organization and the NGOs must be held in the same type of service unit. It is an issue to avoid incurring more alterations on the benchmark level introduced to calculate personal funding per the subvention.
The Support System from the Hong Kong Government
Various support systems are introduced in the subvention mechanism for the different non-profit organizations, with some creating a gap of change in their influence level to the local organizations. Some of this is the tide-over grant, the LSGSS steering committee, and different training levels. In addition, the nation provides support for an efficient implementation, an issue that the lump sum grant committee has set to monitor the LSGSS implementation on autonomy flow and flexibility (Aspalter, 2021). The committee consists of representatives of staff unions and other consumer services offered by the non-profit organization and social welfare department. Their primary function in the system settings is to oversee the Lump Sum Grant (LSG) use and create new solutions to arising problems.
Moreover, Hong Kong provides a tide over graft which guarantees the NGOs funds required to meet commitment contracts based on the retrieval mechanism set. For the subvention system of an organization to work out, the Tide over Draft (TOG) must be involved, enabling the organization to meet salary requirements more so for the staff level and other groups within local organizations. In addition, the TOG provides conformity gaps, allowing for new funding through restructuring its organization and re-engineering new services (Tse, 2020). Lastly is the provision of training for the system mechanism, which covers staff members on the non-profit organization’s board, an aspect that improves governance skills.
Implications of Lump Sum Grant on Different Stakeholders
Financial Management
The subvention system for the nation allows NGOs to keep unspent funds at a perfect and reserved level. Most set funds enable non-profit organizations to settle any form of liabilities that might occur in the future. However, local organizations in the nation are mostly disallowed from this management as they cannot retain their reserve, significantly when it exceeds 25% of their savings and grants (Dai et al., 2022). Any capital above the set limit must be returned to the government, an issue illustrated in a financial year. The Hong Kong NGOs can retain more than 25% if there is permission from the directors involved, who have the discretion to use set funds in any recognized services (Dai et al., 2022). Reserves set in the provident funds are solely intricate due to their manner of use and review level.
Manpower Planning
Hong Kong has set strict conditions on managing the organization’s funds and planning the effect of making the system receive lump sum grants. The NGOs and other users have made profound changes in their management which is an issue that creates an improved staff recruitment level, more so in new organizations. Manpower planning, as set in the subvention mechanism, is done transparently with its outcome creating varied changes which are put in place to ensure autonomy and flexibility works. Rewarding high-performance sectors in the nation enables Hong Kong NGOs to improve the services offered.
The provision of LSGSS in the nation on the subvention mechanism encourages different organizations to look for alternative sources of funding used to fund their services (Dai et al., 2022). Most set collaboration in LSG reduces over-dependence on government funds, enabling more private sectors to engage in the provision of social services, and creating changes in the general population.
Improvement in the Quality of Services Offered
Implementing the subvention mechanism in service offered through various NGOs must be effective and improve financial views that work out externally. The outcome of this matter promotes a sound management gap in the organization, which allows for changes in corporate governance (Dai et al., 2022). Furthermore, since the grant system requires service users to provide a report on improvement, there is a need to create alterations to the service provision.
Conclusion
The current economic and financial crisis in Hong Kong has forced the subvention mechanism of the different organizations to cut their expenses. Most of the expenses presented in the mechanism targeted by the government are based on current social service expenditures. As a result, different implications critique the implementation level and ensure that private enterprises are scarcer. Different organizations are willing to provide funds, an issue that forces Hong Kong NGOs to rely more on the lumpsum grant subvention system. With a more resilience level set, there is a need for the LSG to introduce more significant restrictions and supervision, which works out on results sets and accumulates reserves set on unavoidable expenses.
References
Aspalter, C. (Ed.). (2021). Financing welfare state systems in Asia. Routledge.
Cheung, J. C. S. (2018). A social worker with two watches: Synchronizing the left and right ideologies. International Social Work, 61(2), 234-246. Web.
Dai, H., Jiang, N., & Li, R. (2022). Social worker turnover under the lump sum grant subvention system in Hong Kong: Organization-level analyses. The British Journal of Social Work, 52(3), 1683-1702. Web.
Dai, H., Jiang, N., & Li, R. (2022). The myth of organization autonomy: Social workers’ salary under the lump sum grant subvention system in Hong Kong. Asian Social Work and Policy Review, 16(1), 22-32. Web.
Food Angel. (2022). Hunger not. Web.
Tse, T. K. C. (2020). Who and what projects have been funded by the government? Non-governmental organizations in Hong Kong’s civic education from 1986 to 2016. Social Transformations in Chinese Societies, 16 (1), 39-55. Web.