Sky-high building costs hit charities hard

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Source : Straits Times - 23 Jun 2008

RISING construction costs are not only making condominiums and malls here more expensive to build, but they are also putting the squeeze on charity organisations.

At least three local charities have seen the costs of their building projects, from dementia centres to youth facilities, rise steeply over the past six months. In one case, costs have even doubled.

These increases, driven by a shortage of contractors and rising raw material prices, have left the organisations working harder to raise cash.

Those affected include:

Yong-en Care Centre, which saw the price of a new wing for seniors with early dementia jump to $370,000 from $300,000;

Thye Hua Kuan Moral Society, which will have to spend $850,000 on a centre for 170 special-needs children, almost double the original estimate; and

Muhammadiyah Welfare Home, which is building a youth centre in Bedok and has seen costs rise to $1.6 million from $1.1 million.

The charities have been walloped by a construction boom that drove costs up by at least 13 per cent between last October and March this year, according to earlier reports.

‘We are caught in a market that’s rising very quickly due to the ongoing construction boom,’ said Mr Benjamin Chan, executive director of Yong-en Care Centre.

Some charities plan to ramp up fund-raising activities. But some think Singaporeans, who have recently been hit by record-high costs for things such as food and petrol, will choose to hold on to their money.

‘I think the rising cost of living and the uncertain economy will make people reluctant to donate,’ said Muhammadiyah Welfare Home general-secretary Mohd Gazali Alistar.

Other charities will ask for help from organisations such as the National Council of Social Services (NCSS), which said it has tried to ease tough times for charities.

In some cases, for instance, the NCSS has approved bigger building funds for charities facing rising costs, thus increasing the amount of money people can donate tax-free to help build new facilities.

‘We have received requests from several voluntary welfare organisations over the past six months to raise the cap as there has been a significant increase in construction costs,’ said an NCSS spokesman.

Some of the charities now face the prospect of digging into the kitty to finance their new projects.

Said Mr Chan: ‘We very much hope to raise enough funds for the extension wing, but there is the possibility of dipping into the centre’s reserves.’

That is something Thye Hua Kuan Moral Society also hopes to avoid.

‘We’ll have to look at fund-raising efforts to make up the the rest of the costs,’ said its executive director Agatha Tan.