Ｔｒａｎｓｐａｒｅｎｔ Ｇｉｖｉｎｇ

ＴＡＮＧ　ＹＵＡＮＫＡＩ

Public trust in charities generally remains low, but the government is taking steps to improve their accountability

Chen Xiaozhu, a civil servant in Beijing, follows the development of Chinas charities and enthusiastically participates in different charitable activities. But she cannot forget an incident at Shanghais Fudan University last year. In October, a man from Malaysia donated money to the universitys Philosophy Department, but the funds were transferred to the universitys law school.

“The Welfare Donations Law stipulates that the use of donated assets ought to be based on the will of the donor, but there is no clear explanation of what actions are considered a violation,” Chen said.

This is one of the factors that have hindered the development of charitable institutions in China, as a murky legal situation and lack of transparency created a low level of public trust in charities.

Chen agreed that the main sticking point in developing Chinas charitable institutions is that the rights of donors and public trust in charitable organizations largely have been ignored. Chen said donors should know how their money is being used. “Donors have the right to give specific suggestions on the use of their assets, and charitable organizations have no right to violate donors wishes.”

Chen has been a consistent supporter of Project Hope, organized by the China Youth Development Foundation, which raises money to help educate children in rural areas. She can see the effect of her actions through its one-to-one model, and it is precisely this method that has made more and more Chinese accept projects of this kind.

Through Project Hope, Chen aided a poor student from a mountainous area. “Every month I can receive a letter from the boy, and sometimes he voluntarily mails his school report card to me. I feel very happy and satisfied that I can see my charitable action has had an impact,” she said.

Chinese people currently depend on government organizations and enterprises for donations. The media also play an important role, reporting on those who need help and organizing charitable activities. But these do not provide effective supervision over donations.

“The absence of donors rights is also related to the transparency of charitable organizations,” Chen said. “The accounts of many Chinese charities are not open to the public, leading to low efficiency in the use of the donated funds. Added to the underdevelopment of the supervisory system, it is easy for those charitable groups to become involved in corruption and a crisis of trust.”

Charitable activities should be managed and controlled by special charitable organizations. Charity should be transparent and open to public scrutiny, stressed Chen.

The hand of government

Currently, there are 289,000 non-governmental organizations and over 1,000 foundations registered with Chinas civil affairs authorities, including some 700 charitable organizations and more than 70,000 Red Cross associations.

In China, charitable organizations are managed as social groups. According to the Regulations of the Peoples Republic of China on the Management Over the Registration of Social Groups, which was published in 1989 and revised in 1998, social groups must be led by government-run or government-authorized institutions. This has subjected charitable organizations to administrative supervision only.

“Audit departments check the accounts of charitable groups every year and the institutions in charge mainly handle the daily management and supervision of these charitable groups,” said Lu Shijie, Vice Secretary-General of the China National Conditions Research Association. “Once problems appear, prosecutors take action on behalf of the public.”

However, the power of the audit department is limited and audits only cover large charitable organizations, such as the China Charity Federation.

Zheng Gongcheng, Vice Dean of the School of Labor Relations and Human Resources of Renmin University of China, said, “At present, the relationship between the government and charitable groups is a matter of management, departing from the legal status of charitable groups as independent corporate bodies, so that they cannot form their own disciplinary systems.”

Zheng suggested China create a special law for charitable groups to guarantee their status as independent corporate entities and to legally clarify their characteristics, missions, operating procedures, basic rules and management and supervisory systems. He also recommended the government abolish the regulation that subjects charitable groups to government management, a way to make them truly independent.

Li Xueju, Minister of Civil Affairs, said China lacks a law to regulate, protect and promote the development of charitable affairs. “Our country still has no special promotion law for charitable affairs, but many aspects, such as evaluation, supervision and investment, need to be regulated urgently,” Li said.

“The Committee for Internal and Judicial Affairs of the National Peoples Congress plans to revise the current Welfare Donations Law, and concerned departments are looking into the matter,” said Xu Anbiao, an official with the Commission of Legislative Affairs of the National Peoples Congress, Chinas top legislature.

The Ministry of Finance has issued accounting standards for Chinas non-governmental organizations. “These standards are integrated with international standards. The current issue is carrying out these standards and making all charitable groups follow these standards,” said Yang Tuan, Director of the Social Policy Research Office of the Institute of Sociology of the Chinese Academy of Social Sciences. Yang previously served as administrative vice secretary-general of the China Charity Federation.

According to the Regulations on Foundation Administration promulgated by the State Council, Chinas cabinet, the positions of director general, vice director general and secretary general of a foundation must be full-time ones, and cannot be held by staff members of the government institution overseeing the charity. In addition, the number of directors must be between five and 25. In accordance with this reform, the Shanghai Charity Foundation has reduced the number of its directors to 23 from more than 200.

Some charitable groups have begun to act on their own to improve public trust. The Beijing Charity Association publicly pledges that it is always ready to be scrutinized by investors and will publish its income and expenditure accounts in the media.

Such groups as the China Charity Federation and Shanghai Charity Foundation have set up committees in charge of internal audits and financial supervision, and have invited internationally known consulting firms to conduct annual audits and issue public reports.

Modern management

Chen Xiaozhus husband Fan Wei has consistently donated money to projects of the China Foundation for Poverty Alleviation, along with his colleagues, in recent years. “Its the regular management that makes us trust the projects of the foundation,” he said.

“Foundations should exercise enterprise management,” which aims to make their operations more efficient, said He Daofeng, vice chairman of the foundation. “The goal of an enterprise is to make more money with the minimum cost, while that of a foundation is to raise money and spend more in a rational way,” he said. “We make it clear who can receive the money and how it can be spent in one project after another. Each project has a separate account, through which donors can see and understand where and how their money goes.”

Yang Qinghai, vice secretary-general of the foundation, said, “Our foundation is the first one to use modern management methods in poverty-alleviation projects. This helps enhance the trust among local governments and enterprises, and public trust enables us to achieve success in these projects.”

In September 2000, the China Foundation for Poverty Alleviation initiated the Action 120: Maternal and Infant Project. The project began to be put into practice in Yulong County in Lijiang, Yunnan Province. Yulong, located in mountainous areas, has poor transport facilities, so most local women had to give birth in their own homes. This resulted in the death of many women and infants each year.

Over the past five years, the project, with more than 15 million yuan ($1.85 million) in funds and about 10 million yuan ($1.23 million) worthy of medical equipment received, has successfully saved hundreds of pregnant women living in poverty.

Huang Luchuan, project head, said the project has gained the trust of donors. “Its the modern scientific management system that makes the project operation more transparent,” Huang said.

According to Huang, a scientific operating system was established based on careful investigation and planning during the preparation phase, which puts the project under the supervision of all donors.

“For example, every woman accepting a subsidy has a detailed file. Those who have donated to women in designated areas can get feedback from the data bank. The data will also be published on the Internet for the public to consult and supervise the operation of the project,” Huang said.

At present, administrative expenses of such charitable projects as Project Hope still depend on interests of working capital in banks. “Today, interests of banks have been turned lower so that it is difficult for those charitable projects to depend on bank interests any more,” said Yang Lan, who owns the Hong Kong-based Sun Media Group. “Its time we thought about how to scientifically operate charitable organizations.”

Yang is also the “charity ambassador” for the China Charity Federation. She has donated 51 percent of the rights and interests of the Sun Media Group to charity. However, after participating in charitable activities for many years, she said she has found that the quality of staff members of charities cannot keep up with the demand for the development of the charitable sector.

“All charitable activities must be in accordance with the requirements of the market. A successful charitable group must have a set of scientific and rational management system and an effective commercial operation mode,” she said. “In all links of the operation process from raising money to consigning trust companies, the maintenance and appreciation of asset value must follow commercial rules.”