The Lump Sum Grant (LSG) aims to give NGOs flexibility and greater autonomy to deploy resources and re-engineer services to meet changing community needs
During the financial year of 2022/23, the government subsidized over HK$20 Billion to 170 NGOs
However, a significant concern is that the LSG reserve has exceeded
Surpassing 25% of the Social Welfare Department's (SWD) subvention. Some organizations have even accumulated LSG reserves of more than HK$0.3 billion
In 2021/22, 47 NGOs recorded a reserve balance exceeding the 25% threshold
resulting in a total refund of HK$80 million to the SWD. This highlights the importance of effectively utilizing the grant to avoid unnecessary financial burdens and ensure optimal resource allocation.
Can organizations effectively utilize the Lump Sum Grant (LSG) considering the growing severity of frontline staff turnover, given that the largest expense covered by the LSG is personal enrolments of staff?
Utilization of LSG
Proportion of expense
Factors affecting LSG income
Composite Consumer Price Index
Civil Service Salary Adjustment
New Service Units
Financial Budget of the Government
Patterns and corresponding effects of using LSG
Max. Salary Point = Mid Point of MPS
Limited Employee Benefits
Max. Salary Point = Last Point of MPS
Competitive Employee Benefits
Challenges in retaining talents and hiring new staff
Increased risk of a high turnover rate
Potential compromise on service quality
Refunding of excess reserve (>25%) to the government
Challenges in forecasting the organization's financial sustainability
Risk of facing deficit, or even a negative reserve
Potential impact on long-term commitments and obligations
The necessity for additional funding
Does Lump Sum Grant (LSG) usage lead to talent outflow?
The issue is less about the LSG itself, and more about how it's managed.Ineffective financial planning can cause talent loss and impact service quality.
The Social Welfare Department promotes actuarial studies to guide NGOs in effective LSG management, enhancing decision-making and preventing excessive reserve clawbacks.
This ensures sustainable talent retention and service delivery. The LSG is not the problem, poor financial management is - let's change this narrative together.
Unlocking Success for Organizations with Actuarial Studies: A Simplified Guide