NKF Short Of Money Again?

The main source of donations for the National Kidney Foundation (NKF) is from the LifeDrops programme, whereby a set amount is deducted every month from donors through Inter Bank Giro or credit card. Compared to the 280,000 donors just before the NKF saga broke in 2005, currently there are about 180,000 donors who are still loyal to the programme. In dollar terms, donations and grants fell from $62.4 million in 2005 to $26.7 million in 2006 in the aftermath of the TT Durai revelations. Chairman Gerard Ee is adamant the drop "definitely" has nothing to do with the 2005 scandal.

So, is NKF is short of money, as Chairman Ee appears to claim? The NKF had $269.5 million in its reserves in 2008, compared to $262.8 million in Dec 2005, the year when the scandal broke. In 2009, the figure was $277.7 million. The average expenditure for the last 3 years was $50 million per annum. Ratio of reserves to annual operating expenditure is 5.08 for FY2009, meaning NKF has financial reserves to last more than 5 years, even if the donation tap is turned off tomorrow.

NKF also has a revenue stream from the deed of settlement made with TT Durai on 21 June 2007. NKF will receive from Durai a total sum of $4.95m. This is settled by way of an initial payment of $500,000 on 4 July 2007 and the balance payable in 11 instalments of $300,000 each (commencing 4 November 2007) plus 1 final payment of $250,000 (on 4 July 2011). Others on the old board of directors have also contributed to the kitty.

Since 2008, after setting aside $50 million in cash, some $200 million are parked in investments, which unfortunately resulted in losses of $2.551 million (FY2007/2008) and $5.765 million (FY2008/2009). Also, despite the reduction in manpower (annualised manpower cost was reduced from $4.8m in FY2005 to $1.2m in FY 2006), total employee costs have gone up by 8%. The NKF financial reports do not state the compensation of top management or remuneration paid out to current directors, but rest assured they are not paid peanuts.

What is really curious are the comments made by CEO Eunice Tay, on her failure to recruit registered nurses from India where they are paid only $130 a month, to work in Singapore for $1,750 plus allowances. She even has problems getting retired nurses to work for her, "I will take them on half time, part time, any time they are willing to give me." Do we have a Foxconn here, the Apple-Factory in China where workers keep killing themselves, is it just another slate of bad management? They can't pin the investment loss on her as Eunice Tay was in legal practice from 1986 to 1990 before joining the healthcare industry in 1991, financial expertise in handling hundreds of millions is not exactly her forte. Maybe she'll do a better job when the reserves drop to a more manageable amount.