Social Welfare Department has proposed a special one-off grant and measures to facilitate non-governmental organisations to achieve financial viability and streamline cost structures after the Tide-Over Grant ceases in 2006-07.

In a Legislative Council paper, the department said the grant, introduced alongside the Lump Sum Grant subventions system in January 2001, has enabled NGOs to honour their contractual commitments in paying salary increments to staff during the five-year transitional period.

Among the 163 firms which have been switched to the Lump Sum Grant subventions mode, 125 are receiving the Tide-Over Grant. The amounts allocated for the five transitional years total $1.47 billion.

The department said some NGOs operating on the Lump Sum Grant subventions have already made preparations for the Tide-Over Grant cessation through organisation restructuring and service reengineering. However, some are not yet prepared.

No extension

As the Tide-Over Grant will not be extended, the Social Welfare Department proposes offering a special one-off grant to NGOs to give them greater flexibility and more time to make adjustments to meet their financial or staff commitments. For details, click here.

The department also recommends to withhold the clawback of the Lump Sum Grant Reserve above the 25% cap for 2004-07, and postpone the planned annual 2% cut of the salary portion of the Lump Sum Grant to the benchmark salary for two years to 2008-09.

Moreover, NGOs may be allowed to utilise their own resources, Lump Sum Grant Reserve or special one-off grant to implement a voluntary retirement scheme for staff to enhance efficiency.

The department estimates the potential commitment for the proposed grant will be at a maximum of $826 million which is to be funded by the Lotteries Fund. The financial implication for the two-year postponement of annual 2% cut will be at a total of around $191 million.