Is a lack of transparency driving a wedge between charities and donors, and undermining the charitable spirit? Zhang Yuchen in Beijing reports.

Do you know where your money goes when you donate to charity?

Studies show that many people who support worthy causes in China admit they have absolutely no idea how or where the money is being spent.

As the country has no law requiring aid groups to publish monthly or even annual accounts, experts say the vast majority of donors are in the dark about where funds go due to basic lack of transparency in the sector.

“Charitable organizations seldom respond to donors’ requests for information about financial reports so few donors have a clear understanding of what their money is used for and what effects it brings about,” said Deng Guosheng, an associate professor at Tsinghua University’s school of public policy and management.

The situation has resulted in serious problems when it comes to supervising grassroots charities and non-governmental organizations (NGOs), and threatens to undermine the growing charitable spirit among the Chinese, he said.

Following the 2008 earthquake in Sichuan province, the nation raised record amounts of money to help survivors. Those records have since been broken following the disaster in Qinghai province in April. So amazing was the response that media analysts suggest the disaster triggered an explosion in compassion, which has continued to spread throughout the country.

The amounts being donated have also steadily increased year on year over the last decade, official figures show.

China received 107 billion yuan in donations from home and abroad in 2008, more than three times the amount in 2007, according to the Blue Book on Charity Donation Development in China (2003-07), an independent report sponsored by China Philanthropy Times. For the first time, the money given by individuals on the mainland surpassed donations from corporations – 54 billion yuan ($7.9 billion) given by individuals, compared to 34 billion yuan by corporations.

However, in a recent survey of people who donated to the Sichuan relief efforts, Deng found that less than 5 percent of the 1,684 who responded know exactly how the money is being spent, while more than 60 percent had little or no idea. (Authorities have published financial accounts during the ongoing reconstruction of Sichuan.)

The trend is also typical among people who give regularly to many Chinese charities, said the professor, who added that although the public is growing more aware of how they work, the overall disclosure of information is far from sufficient.

Trust is fundamental to how most charities are run in other nations but “getting all charities in China to be 100-percent transparent has proved virtually impossible”, said Deng, who also works in the university’s NGO Research Center.

About 410,000 charitable organizations were registered to operate by the end of 2008, while another 760,000 were running but still waiting for official documentation, said a report in the Blue Book of Philanthropy 2009, an independent academic evaluation of China’s charity sector.

Very few publish any kind of annual progress or spending reports, and donors rarely think to ask for them, say analysts.

“A lack of professional management, transparency and trust are major problems facing the charity sector in China,” said Yang Tuan, a professor at the Chinese Academy of Social Sciences’ institute of sociology, who co-authored the Blue Book of Philanthropy 2009. “The fact that there is no charity association is the biggest problem, though. There is simply no co-operation that allows these groups to confront and overcome common obstacles, as well as provide mutual supervision.”

Fund-raising problems

China’s first and, as yet, only regulations for charitable NGOs were implemented in 2004 and apply just to the administration of foundations. A draft of the new Charity Law, which is expected to contain stricter legislation over fund management, was submitted to the State Council last year.

Under the current rules, NGOs have to be affiliated with a government department before they can register with the Ministry of Civil Affairs.

Finding one is no easy task, however, and there are some 250,000 grassroots groups that are instead being run illegally with business licenses, the Blue Book of Philanthropy 2009 says.

“Also, only foundations that are affiliated with a government department or have ties with an authority enjoy the luxury of being allowed to raise money in public,” said Deng. “Grassroots organizations always suffer a chronic shortage in donations.”

Of the 943 foundations registered in China that can legally raise funds in public, 83 are government-owned NGOs (otherwise known as GONGOs), said the professor.

Collecting money from the public without the proper authority is illegal and can lead to serious consequences for charity organizers, and the groups will automatically be shut down.

“This is a concern for many of my friends who work for grassroots NGOs,” said Guang Pu, the 30-year-old director of One Heart, a legally registered non-profit orphanage in Xiamen, Fujian province, that publishes monthly financial reports for donors. “The rules effectively stop a lot of grassroots charities from raising awareness of their cause and soliciting public donations.”

The lack of clear governance has led to conflicts between charity organizers and donors.

Sun Village, one of China’s first charities for children of convicts in Beijing, has been well supported for many years, including by several multinational companies.

However, complaints in recent years by donors over its opaque spending habits have cast doubts over its reputation.

The village director, Zhang Shuqin, denied the claims and feels she was unfairly criticized in press. She blamed the charity’s difficulties on the fact that it lost its affiliation with the government in 2003.

When Sun Village lost its link to the local authority, “I begged more than 10 other departments to help us”, said Zhang, who launched Beijing Sun Village Children Education Consultancy in 2003. As none agreed, she opted to register the organization as a business with the capital’s administration for industry and commerce – make it illegal for the village to raise funds publicly.

“My company got involved (with Sun Village) years ago but we’ve started to feel more and more uncomfortable (about its management) in recent years,” said a Beijing-based communications director for a multinational corporation who did not want to be identified. “We’ve usually helped by donating food for the children but recently we’ve continually received calls asking the cash donations, without any explanation of how the money will be used.”

However, the school’s director argues that her critics do not understand how hard it is to run a charity in China.

“Why do (the people criticizing me) not recognize the hardship I’ve been through?” said Zhang, a fast-talking woman who has also been accused of being too aggressive. “I don’t think they have any right to say anything about me or Sun Village.

“We cannot get (affiliated), so why do (donors) think I should publicize our financial records?” she added, before offering to show China Daily the charity’s accounts. “The privacy of the convicts’ children is the only reason why I am reluctant to make my financial report transparent to the public. Issues related to people in jail is very sensitive in China and I don’t want the children to be hurt to any extent.”

Most charities do not offer detailed information about donations and spending unless donors specifically ask to see some, say analysts. The Beijing communications director admitted her company had never formally requested any financial reports from Sun Village.

Regularly publishing accounts can actually be a heavy financial burden for charity minnows.

Dandelion School, a charitable education project targeting the children of migrant workers in Beijing, is consistently praised for its transparency. Yet due to the extra cost of distributing its accounts, the group can only keep donors updated on the specific projects they contribute to.

“That costs less than posting the whole package, such as how the money was spent and what kind of effects it has had,” said Clare Pearson, chief editor of Charitarian, the only English-language philanthropy magazine published in China.

The accounting can also be complicated by the fact charitable NGOs also rely on donations to cover running costs. This can be difficult to break down for people not working in the charity sector, explained Deng.

“The public in China isn’t really familiar with how NGOs are managed and often don’t recognize that the costs of running a charity – people’s wages, transport, etc – often comes from donations,” said the professor. He estimated that, depending on the size of the charity, about 5 to 20 percent of the money raised goes towards administrative costs.

However, grassroots NGOs often do not allocate enough funds towards its management, which can also contribute to the slow disclosure of information to donors, said Li Dajun, program manager for the China Social Research Center affiliated with Peking University.

“They are so busy looking for fund-raising opportunities (to support their cause) that they leave little room for their own development as a charity,” said Li, who worked with several NGOs between 2003 and 2007.

“Ultimately, if trust is built (between a charity and its donors), few will doubt how the money is spent,” added Pearson, who is also a corporate social responsibility manager for the international law firm DLA Piper.

Selection process

Carefully selecting a charity that is run by professionals is key to ensuring any donation will be spent correctly and efficiently.

“Sometimes, when people decide to find a charity to support, their eyes are always caught by the famous or popular ones, although neither of these qualities guarantee professionalism or qualifications,” said Deng at Tsinghua University.

As the charity sector continues to develop, so too does the experience of those working in it. However, the current demand for human resources at NGOs far outweighs supply.

“The first generation of China’s NGO founders knows less about managing charities, so they have stuck to the tradition of being family run and giving relatives jobs in the organization, which creates more suspicion,” said a publicity expert who has studied the development of NGOs in China for more than a decade ago but did not want to be identified.

Sun Village is one of those organizations that have been accused of being “family run” and media reports claimed Zhang employs two daughters and a son-in-law to manage the school.

However, the under-fire director fiercely rejected the allegation, saying: “I have hired professional personnel to work at the village.”

To increase the level of trust in charities, many experts argue they should be made independent of government departments.

“Charity should be independent from authority, while transparency should be realized through social supervision, not regulations,” said Deng, who added that many of the problems charitable NGOs face are caused by the complex registration process.

“The easiest way (to boost the sector and ensure transparency) is to allow more room for these organizations to register. Only by doing this can more charities get the chance to impact society.”

(From http://www.chinadaily.com.cn/cndy/2010-05/27/content_9897275.htm )

He’s a Chinese government official. She’s a British lawyer. Together they publish a magazine that hopes to lift a veil of illegitimacy clouding a local NGO scene that’s thriving in a gray area of Chinese society.

Edited by Wang Liwei, vice-mayor of Guan County in Shandong Province, and Clare Pearson, a lawyer at the Beijing offices of DLA Piper, The Charitarian wants to encourage the local non-profit sector by informing NGOs about how to operate within government goal and guidelines.

Though there’s a flood of activity in the local NGO scene, reliable information is scarce. Sources of reliable information are even less assured. A crew of Chinese and foreign volunteers under chief-editor Wang is working hard on the March issue.

There are thorny issues to be explained: A recently proposed tax on investments by non-profit organizations has pitted the national Tax Bureau against the Ministry of Civil Affairs, which worries that such a tax will kill off many NGOs which rely on earnings from those investments to run their operations in China.

Different backgrounds, same goal

Wang describes the operation as “Chinese food with a British cook and an African market.” The British cook is clearly Pearson, a corporate lawyer and corporate social responsibility (CSR) expert who put up much of the cost of the first issue of the magazine (helped by adverts bought by companies, including her law firm and Boeing).

In charge of CSR – the voguish but often questioned science of corporations contributing to local communities – across Asia at DLA Piper, Pearson met Wang at a conference. Well connected, she helped put together a 3-week tour of the UK to explore how Western governments regulate and cooperate with NGOs.

Pearson recalls being introduced to Wang by a mutual media friend in Starbucks.

“We immediately hit it off and realized we represented two sides of the same charity coin, the Eastern and Western approach. He interviewed me for the magazine and it turned out to double up as an interview as English language editor. The rest is history.”

The African link is Vimbayi Kajese, the Zimbabwean-born editor who uses time off her anchoring job on CCTV9 news to write for the magazine. Author of a searching article on sexual abuse of women in the workplace, Kajese said the magazine finds stories “as much in what’s not reported as what’s reported [in the national media]. An example is fears of quakes in coal-rich central China, which went unreported due to coal companies’ fears of walk-outs by frightened miners. The human element of the story, workers’ welfare, will be reported in the upcoming Charitarian.”

The magazine is a bridge between government and the non-profit sector: Stories touch on sensitive issues but are written in a constructive manner, explained Wang.

Introducing the magazine at a recent Beijing launch party he explained the magazine’s purpose in three acronyms: CSR, GSR and PSR. “Corporate social responsibility, government social responsibility and public social responsibility.”

Sure enough in the latest issue of the magazine peppered between pieces on local NGOs there’s articles for a corporate readership about CSR budgets getting cut in the recent recession. Some interviews with local CSR heads of multinational companies read like heavily censored corporate copy.

Some of the more interesting copy centers on a trend of CSR among local companies. A relaxed Jin Siyu, head of publicity at the State Owned Assets and Administration Commission talks frankly on why some State-owned firms are giving more money than others to needy causes.

More controversially, there’s two pages on successful water bottler Nongfu Springs suing two government-affiliated entities the Philantrophy Times and the China Association of Social Workers for allegedly defaming the company by raising skepticism on their pledge to donate 0.01 yuan to charity from every bottle sold between January and July 2006. The case has prompted Chinese lawmakers to reshape laws in favor of charities.

Drawing the line

Upbeat and smiling, Wang’s energy is infectiously articulated in language that’s more that of an evangelical preacher than that of a hard-faced bureaucrat. He talks of wanting to influence change, “to bring hope and love to people.”

Yet Wang is a government insider with a duty to implement the government line. His role as a vice-mayor – he divides his time between Beijing and Shandong – means Wang has an insider’s knowledge of what goes in terms of issues open for coverage. Being a government official means he knows “where to draw the line.”

Wang also wants the magazine to increase trust between government, NGOs and the community to ease disaster relief work and charity work. “We want to bring trust and security,” he said.

Yet Wang won’t take sides in intra-government affairs. As the manager of a non-profit firm and a government official Wang finds himself uniquely in the middle, and he’s not taking sides. On the spat between tax officials and Ministry of Civil Affairs, he said: “Time will tell us what is the best solution to this issue.”

As a government official Wang is also au fait with the commercial realities of media in China. Since 75 percent of local publications are losing money, the government wants to reform ownership. “The government wants to own the media but it doesn’t want to operate it.” 

Changing attitudes to have nots

The magazine will take advantage of a recent media preoccupation with charity work and NGOs. Wang recalls last year sharing a TV talk show couch with one of China’s wealthiest men, Chen Guang, who on live TV donated 40 million yuan ($5.8 million) to help underprivileged locals have a better Chinese New Year. The outsized gesture was criticized as the attention-seeking ploy of a man with more money than sense. “But I thought ‘why not?’,” recalls Wang.

Chen’s gesture, said The Charitarian editor, was useful if it encouraged others to similarly share their wealth. The episode convinced Wang that media and charity work depended were interdependent.

“Media is now really interested. And charities really need media [to get their message out].”

The son of a working-class Shenyang family – “we were poor,” he recalls, Wang nonetheless feels he has reached professional as well as personal satisfaction out of caring for others. He recalls a reunion with his university classmates, 15 years after their graduation. With the wealth and responsibility of executive roles some of his classmates had no hair, some had big bellies, were overweight and overstressed.

“Of them all I was the happiest. I make a living in a job I like.”

Competition

There’s plenty of publications, online and off, covering charity in China. They range from the dry, corporate-focused CSRChina to Global Charity, a bilingual monthly published under the umbrella of the China Soong Ching Ling Foundation, a government-affiliated organization.

The Ministry of Civil Affairs meanwhile authorizes its own monthly journal the Philanthropy Times, detailing what’s happening for a mostly political readership.

An earlier publication, China Development Brief, was pithy and well edited but closed several years ago when its reports proved too revealing for certain provincial governments. The Chinese and foreign sides in this partnership were well represented among the healthy turnout at a launch party in a stately Thai club in the city’s business district.

Judging by the plentiful presence at the magazine’s launch party NGOs are keen on the magazine. “Right now it’s only the first issue and there’s a lot of improvements that would make it more reader-friendly, like using less text. But these issues need covering and there’s no one publication that does that as well as this one has managed,” said an NGO spokesperson present.

Pointedly, she didn’t want to be quoted as her NGO remains on shaky legal ground in China.

The Charitarian clearly has a way to go but the thickness of the first tome and the turn-out for its launch suggests there’s a ready readership. The future editorial direction may still be hazy, and funding is less than secured. But Wang is clear about the end vision: “that there will be no Charitarian because there will be no more poverty… I hope that day will come soon.”

gaofumao@globaltimes.com.cn

(Original Title: Charity Cases, published by Global Times, Februrary 1, 2010: http://www.globaltimes.cn/www/english/metro-beijing/community/events/2010-02/502674.html)

(By Wang Hongyi, China Daily)  SHANGHAI: The latest donation of 43.16 million yuan ($6.3 million) by a major philanthropist and 512 other entrepreneurs toward the needy has stirred controversy in the charity sector.

On Friday, Chinese entrepreneur Chen Guangbiao stood behind a wall of banknotes at the Industrial and Commercial Bank’s Jiangsu provincial branch to announce his new charity trip.

Related readings:  Philanthropists donate to the poor in Tibet, Xinjiang  Love cannot be measured with money  The most inspiring Charitarian in China  Nation’s ‘First Charitarian’ touts his deeds  Charity in any way welcome

Before next month’s Spring Festival, Chen, with 126 other philanthropists, will visit the remote rural areas of the west and distribute aid to the poor in the Xinjiang Uygur and Tibet autonomous regions, as well as Yunnan, Guizhou and Sichuan provinces.

Still, many in the Chinese online community have questioned Chen’s motives and accused him of generating publicity for his own benefit.

“I have committed myself to philanthropy in the past 10 years, during which many people said I was just concerned with my own reputation,” Chen was quoted by China National Radio as saying yesterday.

“But I really hope more people can follow me and also make a show with their own money, of course,” he said.

“In this way, more people in need can get help.”

Stories of Chen’s generosity abound. After growing up in a small, poor village in Jiangsu, Chen now manages a construction company and is one of the entrepreneurs who received the Charity Award by the Ministry of Civil Affairs. He said he has been committed to charity from the day he started his own business.

After the massive earthquake that hit Sichuan province on May 12, 2008, Chen arrived in the quake-hit area with his rescue team and excavation equipment. He and his colleagues pulled more than 200 people out of the rubble. His team also went on to build roads in the quake-hit areas.

Chen has returned to Sichuan many times, helping the area’s reconstruction with his time and money.

So far, Chen has reportedly donated 1 billion yuan to charitable causes in the country, including the reconstruction of disaster-hit regions and the building of primary schools in remote mountainous areas.

From 2008, Chen said he took his aid directly to the needy.

“Where is our money going to? That is a question that most donors asked,” Chen said.

“An inadequate charity system and lack of openness and transparency on funds are the main reasons that many entrepreneurs choose to donate directly to the poor,” he said.

“This has also restrained the development of China’s philanthropy.”

Tang Jin, a member of the standing committee of the Jiangsu provincial people’s congress, echoed Chen’s views.

Tang said several problems exist in the country’s charity scene.

These include the high management costs of running charity organizations that make people more willing to donate to the needy directly rather than through groups.

Zheng Yuanchang, an official of the social welfare and charity affairs department under the Ministry of Civil Affairs, said regulations and standards were needed to reform the country’s charity sector.

China has seen a rapid development in philanthropy in the past few years. Official statistics show that donations toward charitable causes in the country’s reached 107 billion yuan in 2008, 3.5 times that of the previous year’s figure.

(See oringinal at http://www.chinadaily.com.cn/china/2010-01/25/content_9368782.htm)

Jet Li:

I am a survivor of the Indonesian Tsunami. My family was on vacation in the Maldives the day when Tsunami came. The Maldives are composed of islands that are less than 1.8 meters high. During the 30 seconds of the Tsunami, sea water flooded the whole island we stayed. My little daughter was washed away; I was holding the hand of my elder daughter standing in the water with water above my ears. I felt the despair of death… Afterwards, I thought with introspection: in face of disaster, money and names are meaningless; lives are all equal. What should we – the lives that survived, do to live a meaningful life?

“Public Charity” (公业)

With the idea to set up a charity foundation, I visited and researched the NGOs and charity operations in Taiwan, India, Thailand and America. Then a special idea came to me: I wanted to set up a sustainable foundation. Why?

Perhaps you’ve noticed, the most popular response in the world to a disaster is a business/economic model, or a fashionable model. Mainstream media and newspapers start to report, people express their emotion and love in a very short time intensively. Emotions explode with intensity and foundations start to raise funds for relief. But after two weeks’, people are become more ignorant to issues relating to the disaster. In two months, people are no longer talking about the disaster. For example, we don’t know what happened to the people suffered in the snow disaster in early 2008. We don’t know if those people really get any help today.

My model is different–it is a kind of “Public Charity.” My ideal foundation is a fundamental charity facility much like the water and electricity utilities to a city. It can support a relief of a disaster for two or three years. The “public charity” is not driven by the influence of trends, but is driven by a custom of giving.

Eggs without Chicken 没有鸡也生蛋

I didn’t find the right model even after research into the current foundation models in the world. I would like to talk about my preliminary impression on global foundations. I grouped them into two types. One is “big foundation.” It uses the interest (investment income) of the fund’s endowment to provide for annual program funding. These foundations are more popular in US and usually have over hundred years’ history. They are like chicken that can lay eggs each year. The other type is regional foundations, such as Tzu Chi Foundation (慈济) from Taiwan and Christian foundations in the world. People’s religion believes are the basis of these foundations.

But both models are not going to work in China. I don’t want to complain about the regulations. Maybe the Chinese government is also considering if people will accept public foundations. I am willing to think in the shoes of the government. Anyway, the reality is: there are very few public foundations. And according to regulation, 70% of the funds must be used for relief annually, only 10% is allowed to use for profitable investment; otherwise, the legal person (法人) must pay back the loss himself/herself. As a result, the rate of growth of foundations in China is highly constrained. The regional foundations have very limited coverage in China.

My question is: can I have eggs without chicken?

One Yuan starts to spread the disease of LOVE 壹元钱启动爱的传染病

I have found this model: all from ONE.

One, is a mysterious number in China. “The Tao begot one. One begot two.”(道生一，一生二)

One Foundation is oriental.

One Foundation, One Family. The Earth is a family, the Earth is one

One foundation is beyond religion, politics, culture and language. If an alien visited the Earth, he/she would not see a specific person, but Humanity as One. So the Earth is one family. We are one, not two. We are global.

One means “from zero to one”. If “zero” is doing nothing, “one” is doing something. It is a fundamental difference. So, we are advocating each person to donate one yuan every month:

One Person + One Yuan/Month = One Family

Assume that we have 500 million cell phone users among 1.3 billion population in China. If everyone gives away 1 yuan per month, we will have 6 billion a year. If each Chinese gives away one yuan a month, we will have 15 billion a year. One yuan is not an economic liability to anyone, but it reflects the liability as a citizen to the sociality.

We don’t need money from big corporations. For example, when I visited Microsoft, they felt very relieved when I told them, “we don’t need your money.” But then I would ask them to give away 1 yuan from each employee’s monthly salary, or donate 1 percentage, or .1 percentage of the profit of selling one product.

That’s right; we are starting a movement to spread the disease of love, as a Harvard economic Professor said.

This is not an easy step in China. We want to change “do a good deed a day”(日行一善) in Chinese traditional culture into “do a good deed a month”. Of course, we won’t disagree if you want to donate 1,000 Yuan at once, but we don’t encourage it. We hope you can do it every month.

Why 1 Yuan? It is the easiest step from psychological research. Once a donor makes the first movement, he/she will be rewarded psychologically. Thus, it can cultivate our own Chinese charity culture and our citizen consciousness. We don’t want enterprises to donate too much cash each time there is a disaster. It is not sustainable.

Root in China, Help the World 立足中国, 救助全球

One foundation’s model is 1 person + 1 dollar/yuan + 1 month = 1 big family. We have invested 2 million in two years to research the right model.

During the research, we found four problems:

1. There are no NGOs with high credibility in China.
2. There is not a very transparent system in operation.
3. There is no a clear and long term vision for most NGOs.
4. There is too much hassle for a Chinese to donate.

Every step in our operation is designed to address the above problems. We have Deloitte as our global auditor. We enable donation via cellphone. We set our goal to help the global one family thus to build our credibility in public.

You are the best judge on this model. According to our research: the potential donation capability is 34 RMB/year for high school graduates, 400 RMB/year for college graduates. In the past one year, we accepted donations from 710,000 individuals of total amount 47.6 million RMB, i.e. average 65 RMB/person.

We have partners around the world. BBDO, Ogilvy, Disney…are all our partners. Our consulting firm suggested that it is acceptable for business to donate 0.1 percentages of profits psychologically. Since One Foundation was founded on April 17, 2007,there were five major disaster in the world, and we have helped them all. Root in China but help the globe, One Foundation is the only one.

Our own Rules

Maybe some people don’t understand Chinese charity system, but One Foundation is not coming (to you) to complain. We never suggest anything, never complain or criticize. We only do what need to be done. We work under the current system, that’s why we found Jet Li One Foundation Project under the name of China Red Cross. Any donation to One Foundation via Red Cross are managed by One Foundation, Red Cross can’t use a penny. But we have to get Red Cross’s consents and approval whenever we want to use the fund. It is a two-way surveillance which is designed under China’s current system. We want to cooperate with Red Cross and maintain a platform to work together.

We have 15 full time workers (13 before the earth quake). We raised 63 million RMB from over 700,000 individual and get links from over 100,000 web pages to our website. A dozen major portals, such as Tecent.com, Taobao.com and MSN Live are our partners.

In the meanwhile, One Foundation has provided a platform for 70+ grassroots NGOs to work together. We leverage our legal identity (under China Red Cross) in China to aggregate grassroots strength. Therefore, One Foundation is organized under western style rules – hard ware, but operated in Chinese style management arts – software.

What can a grassroots NGO do?

My biggest learning in Sichuan earthquake rescue on what ONE Foundation or other grassroots NGOs can do is: Helping the government in the blind spots. Governmental relief is not always detailed oriented. For example, the government might only responsible for shipping the relief materials to towns with a certain population, but not to remote smaller villages. So we organized people to carriage food and water to the remote villages. We need helps from local grassroots NGOs to accomplish this mission and they made it. I was moved by them.

Grassroots NGOs have their unique features: independent and allying. A grassroots NGO can’t be as big as giant government organization or cooperation, but need to be flexible and located wide-spread. They should not be merged. Once merged, they are no different from governmental organizations. One foundation’s role is an assistant to the government, who makes public’s voice heard as a coordinator, but not a trouble maker.

Problem in Relief 

As China has special regions for economy development (such as Shenzhen), there should be some “special regions” for commonweal. One Foundation wants to be one of these special regions. During the Sichuan earthquake relief, One foundations Project’s relationship with China Red Cross is a special case. We are under the China Red Cross HQ directly. The leaders in Red Cross are very wise and open. They accepted some of our suggestions very quickly. A privated owned foundation changed state-owned  Red Cross. But  regional Red Cross chapters are usually under double supervisions from: local government and China Red Cross HQ, which will create conflicts. For instance, China Red Cross HQ wanted to ship a batch of important relief materials to Shifang(什邡), but the province government wanted to ship them to Jiangyou (江油). At the end, local Red Cross had to follow the lead of local government. Another problem is not enough man power. For example, the traffic to our website and Red Cross website  increased 10 times on the first day after earthquake. We have the support to solve the server overload problem very quickly. But Red Cross doesn’t have the right resource to fix it,  rumor saying the site was hacked very soon.

So One Foundation never rants. If complaining helps, we will do it. Have you ever seen a situation where rants can change the system and regulation?  Rants about China have never stopped, but there are still plenty of enterprises thriving in such a problematic environment. Why some people can achieve their goals in such hard conditions?

A Global Family

The total amount of charity fund raised in China is RMB 2 billion in 2002, 10 billion in 2006 and 30 billion in 2008. But it only accounts for 0.075% of our GDP. In US, the number is several hundred billion USD, 2.75% of US GDP. Differ from other NGOs in China; we want to build a healthy recycle of fund raising and relief, we committ to a long term charity, a sustainable and responsible model.

Currently, natural disaster relief is still our number one focus. We also focus environmental protection, medical treatment, education, poverty problems. We will hold an annual global charity forum in BoAo Asia Forun forwww.boaoforum.org/. It will be like a temple fair, or a trade show, or a speed date. All we want to do is allow NGOs from the world to share their visions, and let Politian’s, entrepreneurs, managers and NGOs to meet up.

One foundation, one family. This is our vision. Not just what we say, but what we do.

 (END)

(For original Chinese interview see: http://www.1bao.org/?p=530 This English translation is adopted fromhttp://cnreviews.com/life/charity-donations/jet_li_one_foundation_chinese_ngo_spreading_the_disease_of_love_20080611.html)

Self-Discipline Declaration of China Private Foundations

（July 3rd, 2009. Beijing）

Under the direction of China Social Organizations Management Bureau of the Ministry of Civil Affairs,  China Social Organization Promoting Association, Narada Foundation, China Social Entrepreneur Foundation, Peking University Education Foundation, Sun Yefang Foundation, Beijing Vantone Foundation, Beijing Western Sunshine Rural Development Foundation co-organized the first Forum of China Private  Foundation on September 1st, 2008.

July 2-3,2009, with the participation of more than 110 domestic foundations，the 2009 annual conference of ” China Private Foundation Forum ” was held in Beijing. This meeting with “The Growing China Private Foundation” as its theme has discussed the issues on “Ways to Giving”, “Ways to Management” and “Ways to Conduct Self-discipline”, which fully demonstrated the great development China private foundation has achieved ever since “Foundation Management Ordinance” has been officially implemented on June 1st, 2004, especially after we involved in 5.12 earthquake relief work. In this annual meeting, we have shared work experience with each other, and also had a wide range of dialogue with government departments, academic institutions, and the media as well.

During the meeting, the forum organizing committee held a “China Private Foundation Leaders Roundtables”. The leaders of private foundation agreed that the conditions are favorable enough for us to do a good job of internal governance, professional management, and by means of its capital, we could contribute a lot in optimizing the ecological environment for social charity and then guide and promote the social charity to healthy, standardized and sustainable development.

To this end, forum organizing committee issued Self-discipline Declaration of China Private Foundation in accordance with “The Outline of The Eleventh Five-Year Plan for National Economic and Social Development of People’s Republic of China” and “Decisions of CPC Central Committee on major issues including building a harmonious socialist society ” ：

First, private foundation shall comply with the “Foundation Management Ordinance” and the provisions of relevant state laws, and consciously regulate the organization and activities of the Foundation, maintain the legitimate rights and interests of donors and beneficiaries, play an exemplary role in guiding and promoting the social forces to participate in public welfare.

Second, private foundation take serving the public interest as its mission and objectives, make strategic planning and conduct work in accordance with its missions and goals.

Third, the personal interests of private foundation council and execution team members should not be a potential conflict of the interest of foundation. When the personal interest of the foundation council members or other members is associated with the interest of foundation, they shall not participate in matters relating to the decision-making; foundation council, supervisors and their close relatives may not trade in the Foundation where they work with. Transactions and related business should be done in conformity with the best interests of the foundation.

Fourth, private foundation charter should prescribe that the foundation council is the decision-making bodies, and should explicitly stated the establishment of the Council , the appointment and removal of members, their responsibilities, and operational procedures. Members of the Council should ensure the normal and effective operation of foundation and the operation is in accordance with the quorum.

Foundation Council should have the power to decide the appointment and removal of the executive team members, and should make periodic assessment on the performance of team leaders to ensure that the strategic planning is conducted on the basis of the mission of the Foundation.

Private foundation council should audit foundation’s annual budget and final accounts and decide whether to pass them or not.

Fifth, financing of fund sources and ways of financing should be consistent with the private foundation’s missions and values. Relevant information and data provided by financing activities should be authentic and reliable. Private foundation will not raise funds publicly from non-specific objects. Financing should respect the legitimate interests of donors, including donor wishes, privacy and the right to know.

Private foundation should use funds in accordance with the wishes of the donor, special fund for special use. The use of contributions should be recorded, and foundation should regularly inform donors about that, and provide donation receipts to donors.

Sixth，the use of the funds in private foundation should be in line with the foundation’ missions and goals, foundation should carry out the work according to the annual budget adopted by the council.

Private foundation should implement the State Accounting System, carry out accounting job legally, establish a sound system of internal accounting controls and conduct internal audit in order to improve financial management within the organization.

The financial sector should provide a financial statement which can clearly reflected the financial information in every work.

Private foundation should accept the audit which is done by the independent audit institutions. The selection criteria of an audit institution should be formulated by the Council. No qualified opinion in audit reports should be involved in matters of principle.

Every year, private foundation should announce the annual financial accounting report, accept monitoring and questioning from the public.

Seventh, the project design and feasibility studies of private foundation should comply with the foundation’s missions and objectives, and should have a complete project program (or project proposal), which will point out the objective of the project, the audiences, plans, outputs and budgets. Private foundation should have open and complete procedures in funding a project.

Private foundation should have self-monitoring and evaluation on its projects. Project evaluation should be based on the views of beneficiary groups, and also reflect comments and suggestions of other stakeholders.

In accordance with the needs of the project，Private foundation could determine whether to invite external assessment, or third-party assessment. Project evaluation and monitoring process should be open, transparent and fair.

Eighth, Private foundation should establish standardized personnel and human resources management system, in order to attract, manage, nurture and inspire talents, so that they can provide high-quality and efficient services. Employment should be conducted in the principles that are open, equitable and without conflict of interest.

Private foundation should sign a standardized contract with their employees. At the same time, the Foundation should have an open, realistic assessment on staff performance and incentive mechanisms.

Foundation should carry out the recruitment and management of volunteers on the basis of mutual respect and mutual benefit, and should have the foundation’s missions and values accurately and clearly understood by volunteers. Foundation should let volunteers be well aware of their work, skill requirements, time investment, working environment (including hardware and software environment), as well as the possible risks involved, and clearly show that the voluntary nature of this work as well as the possible subsidies.

Ninth, Private foundation should establish a good partnership with other philanthropic organizations, especially with those who share common areas of concern with them.

Private foundation respect and uphold the reputation, intellectual property rights and trademark rights of peers. The logos, trademarks and achievements protected by IPR from other philanthropic organizations should not be used without permission.

Tenth, Private foundation should disclose authentic information of the foundation to the public in an appropriate way, which should include: mission, services; the council membership and their background; financial information, including complete audited annual financial report and financial information that is promised to be displayed to the public ; project information, in addition to the respect for the wishes of donors and the protection of intellectual property right, projects information (including project evaluation report) should be shown in an open and transparent way, and supervised by the public and the media.

Eleventh, Private foundation is willing to be supervised and managed by the Registration and Management Authorities and the Business Departments in charge of Supervision and Management, and accept the supervision, management and annual inspection.

Supplementary Provisions:

This declaration rests on the achievements of the “Self-discipline Guidelines of  China’s Non-profit Organizations” , co-developed by China Foundation For Poverty Alleviation, China Youth Development Foundation, Amity Foundation and China NPO Network.

(Translation at the courtesy of the Organizing Committee of China’s Private Foundation Forum. For original Chinese version, see http://www.chinadevelopmentbrief.org.cn/newsview.php?id=773)

At the Forum, leaders from China’s Private Foundations will gather for the first time, to review the achievement of China’s private foundations since China’s promulgation of Regulation of Foundations in 2004, share experiences, and have conversations with the governmental agencies, academia, and the media.

The agenda items of the forum include:

1. Keynote speeches
2. Unveiling 2008 Development Report of China’s Private Foundations
3. Publishing the China Private Foundation Self-Discipline Vow
4. An round table for leaders of private foundations
5. An exhibition of the philanthropic activities of China’s private foundations
6. An fair of philanthropic projects and grants

For more details see (in Chinese) http://www.cpff.org.cn/Default.html.

According to statistics, the total charitable donation in China in 2008 reached 107 billion RMB (15.7 billion US dollars), three times what it was in 2007, with an annual growth rate of 246%. Much of this increase was in response to disasters such as the snow storms and the May 12 earthquake in Wenchuan.

On April 24th, 2009, the China Philanthropist Tally 2009 was issued, sponsored by Ministry of Civil Affairs, All China Federation of Trade Unions, and twenty other NGOs. This list is a comprehensive summary of the donations given in China last year. According to the list there are 900 charitable enterprises that gave donations of more than 1 million RMB ($146,500 US), twice as many as in 2008. Among them twenty enterprises have donated over 100 million RMB (14.6 million USD), and 313 enterprises over 10 million (1.46 million USD), with a total donation fund of 12.1 billion RMB (1.77 billion USD). There are 118 entrepreneurs on the list, around the same number as last year. Four entrepreneurs have donated over 100 million RMB (14.6 million USD), twenty-eight entrepreneurs over 10 million (1.46 million USD), with a total donation fund of nearly 1.7 billion RMB (250 million USD).

Distribution of Main Donors

The list demonstrates that developed areas in China are helping the underdeveloped areas. Most donors recognized on the China Philanthropist Tally came from economically developed provinces. Among the 900 enterprises that gave donations, 210 of them had their headquarters in Beijing, accounting for 23.3% of the total, far more than most other eastern coastal cities. There were 87 enterprises with headquarters in Shanghai, 56 in the Jiangsu-Zhejiang area, and 54 in Guangzhou province. Donations from private enterprises accounted for 42.7%, or around 5 billion RMB (730 million USD), much higher than the donations from state-owned and foreign-invested enterprises.

At present, private enterprise accounts for over 50% of the national GDP. Domestic private investment has increased nearly 30% over the last five years. This huge growth has made an impact on public charities. Private enterprises in China have become an important force to promote the development of charity in the country.

The charity level of a city depends on two factors: one is its level of economic development, the other is the value that the city places on charity. The eastern coastal provinces and cities have frequently been the territories most supportive of charitable enterprises. For example Guangdong province has a large population of overseas Chinese. The returned Chinese have not only brought back wealth but also the concept of charitable giving. The Jiangsu-Zhejiang area has a rich history of entrepreneurship and is the birthplace of many private enterprises. Grateful for favors they received, many enterprises began to give back after they became established firms.

Donation Channels are Relatively Few

Analysis of the China Philanthropist Tally 2009 demonstrates that, except a few enterprises donating funds directly to private foundations, most of the entrepreneurs choose the “trinity” of institutions: civil affairs departments, the Red Cross, and charity federations. According to related data, this “trinity” of fund-raisers have received 95.55 billion RMB (14 Billion US) worth of funds both directly and indirectly, accounting for 89.2% of the country’s total donations. Such centralized donations result in some organizations having a significant amount of funds with no clear purpose for them and leaves other public institutions in need of public support. Of course there is a problem with brand popularity and awareness but, at the same time, the public needs to diversify their support and begin donating to a variety of channels.

Awareness and Supervision of Charitable Funds

The Wenchun Earthquake has aroused the enthusiasm of the public for donations and has tested the credibility of government sectors and charitable organizations. A Beijing survey shows that 95% of citizens have participated in donation activities of various kinds but over 50% worry about the misappropriation of their donations.

In order to make the disaster relief and reconstruction efforts work, leaders of Chinese government have made several important instructions about the use and regulation of charitable funds. Related government sectors have issued “Information Disclosure on the Management and Use of Wenchuan Earthquake Disaster Relief Funds”, “Notice on Enhancing Supervision of Disaster Relief Funds and Materials”, “Guide to the Use of Wenchuan Earthquake Disaster Relief Funds” and so on. The national audit sectors even performed audits of the enterprises receiving funds and issued audit reports. Sichuan province also collected 208 social supervisors to oversee the distribution of disaster relief fund and materials.

Under the requirements of related sectors and responding to public opinion, some charities have published information about the funds they have received on their official websites or in local media. Serious problems have not been found yet by auditors.

(Adopted from http://www.nautilus.org/fora/security/09040XijinZhou.html)

Below are notes of his talk.

Given the shortage of time, I will focus my remarks on the subset of US foundations that make grants directly to grantees in China, whether or not they have resident staff in China. Not included are US foundations that grant funds to international intermediaries (such as Oxfam or World Resources Council), which in turn fund activities in China, or support the study of or exchanges with China (such as Luce and Freeman).  In excluding these groups as well as those in other countries (such as Volkswagen, Adenauer and Ebert in Germany or Toyota, Nippon and Sasakawa in Japan) I do not mean to denigrate in anyway their important contributions.

Direct Grantmaking by US Foundations in China has evolved over the past 100 or so years – 3 broad periods

(1) Pre-1950 – Rockefeller Foundation (public health and higher education – physics bldg at Nankai University), China Medical Board (Peking Union Medical College), Harvard Yanching Insitute (six Christian universities during 1930’s and 40’s )

(2) 1950-1978 – support to  major centers of  Chinese studies in US, UK, Australia, HK, India, Taiwan + library collections, pre- and post-doc research.  In mid 1970s efforts toward normalization of relations (National Committee on US-China Relations, CSCPR (initial exchanges)

(3) 1979-2009 – As China began to reform and opening to the non-communist world, US foundations began tentative explorations to see what they might do.  Ford Foundation (FF) and The Asia Foundation were among the first to put their toe in the water or, like Deng Xiaoping, to search for the stones to cross the stream.  Others followed and the field has continued to evolve.

Since 1979, 3 successive stages using Ford Foundation (FF) as an example:

- 1979 special appropriation of $200k. Mutual access and understanding (China Academy of Social Sciences, The Committee on Scholarly Communication with The People’s Republic of China, US-China Arts Exchange Center, Winrock International) visits, conferences, workshops

- Early 1980s, shift from exchanges to capacity building in three fields – economics education and research (Harvard Professor Dwight Perkins was involved), law and legal reform (Harvard Professor Bill Alford was involved), and international relations including area studies. These fields were ones that were important to China’s reform and opening, in which FF had experience elsewhere, and could be managed by a part-time program officer working from NY and using joint committees for decision making.

Enabled FF to broadened institutional connections beyond CASS and CAAS to include leading universities, State Council and/or ministry related research institutes. Also enabled FF, the case of area studies, to expand its geographic reach beyond US to include Africa, Middle East, LA.

- 1988 with the opening of the office in Beijing, three Program Officers plus the Rep on the ground – new programs in poor area development, RHP, and higher education &community colleges; greater outreach within China; broader range of institutions GONGOs and NGOs. Direct Grantmaking by US Foundations in China has grown significantly in recent years.

Statistics: Indebted to Foundation Center – Interactive map of direct grants by US grantmakers to non-US recipients (2003-09). During the period 2003-9 US foundations grants to Chinese recipients increased from $26m in 2003 to a peak of $58m in 2007, then declined to $40m in 2008 and to only $5m so far in 2009 (presumably reflecting primarily the state of the US economy). The number of grants has ranged from a low of 176 in 2004 to a high of 364 in2006. The number of recipients has ranged from 161 in 2003 to 260 in 2004 and to some 200 in each of the past three years. Unfortunately, for our purposes, the IFC data does not total the number of US  grantors.)

Y            $        G       R

2003 26m 286 161

2004 30m 176 260

2005 36m 252 137

2006 40m 364 202

2007 58m 322 192

2008 40m 322 192

2009 5m 33 24

Nature of Grantmaking since 1979 (as indicated earlier) has changed in 3 significant ways:

   1. Increasingly diverse range of recipients: National to provincial, urban/rural, ministries, research institutes, universities, ministries, GONGOs and NGOs
   2. Growing number of grantors: private foundations (FF, TAF plus Trace, Energy, Gates, Clinton + diaspora Cyrus Tang); corporate (Intel, Caterpillar, Eastman Kodak, Merck, Agilent Technology, GE, UPS, BP)
   3. Broader range of issues: environment, poverty alleviation, children’s and women’s rights, legal aid, RHP

Why the Changes?

In US

    * Growth in US economy, increased foundation endowments and in wealth of diaspora
    * Major new foundations
    * Energy, Gates and Clinton- Greater societal engagement with China – governmental, academic, commercial, nonprofits
    * Increasing appreciation of China’s growing international importance

In China

    * Reform and opening. Shift from all embracing party-state. Disaggregation
    * Changing roles and responsibilities vertically and among different sectors of society. Big Government, small Society to big Society, small Government. Greater space for NGOs. Tensions: reform vs. control. Relaxation vs. restriction. Cyclical vs. secular
    * Evolution in fiscal and regulatory framework governing nonprofits and foreign foundations 1999, 2004 regs
    * Growth in local NGOs, emergence of intermediary organizations, and now private foundations.Looking ahead

Six Challenges Facing US Grantmakers in China (half full vs. half empty)

(1) Still undeveloped legal and regulatory framework for the NPOs including foundations. Framework continues to evolve, with the timing and specific outcomes difficult to predict. Various laws and regulations beginning with 1989 Law on Registration of Civil Organizations, with primary objective of restriction and control. More are in the works.  Ministry of Civil Affairs (MOCA) is promoting a Charity Law. Others prefer a foundation law for public welfare, and still others argue for a basic NPO law.   Latest estimate is that draft Charity Law will go from the drafting committee to MOCA in June, from MOCA to SC LAO in July, and to NPCs sometime in the indefinite future. Lack of clarity makes both outside funders and local NGOs uneasy and less active than they might otherwise be.

(2) Achieving scale – linking local with national – is as difficult in China as it is elsewhere. National government has limited ability to assure its policies are implemented at provincial level and below. Challenge for those seeking national impact is embody local experimentation locally within an institutional framework capable of extending the lessons learned.

(3) Local civil society still relatively weak, but the number of registered and non-registered NPOs continues to grow rapidly. Up to 400,000 civil organizations (independent social organizations, foundations, and private nonprofit enterprises) are now said to be registered with MOCA, others with bureaus of commerce and industry, and with some 2 million still unregistered.

Growth reflects increasing recognition that government no longer has all the resources – human and financial – to meet China’s rapidly changing needs. Growth also reflects the lessons learned from crises such as SARS and AIDS. The combination has markedly increased the space of nongovernmental activity.  Has also led MOCA to be active in encouraging growth in the NPOs.  Local NPOs are finding it easier to register and some are now receiving government support for local service delivery in fields such as AIDS and poverty alleviation.

A part of this environment is the recent and rapid growth in the number of Chinese private foundations. Since the 2004 foundation law was passed, some 1531 are said to have registered including some 500 at the national level.  Increased wealth generally and the Sichuan Earthquake in particular help to explain the increase.  Potential for further growth in private foundations is huge; only 1-2% of private individuals who could afford to do so have set up private foundations.  The 2004 law also permitted foreign foundations to register and several of the largest, Gates and Clinton, have recently opened offices in Beijing, and other such as MacArthur have been exploring that possibility.

(4) Coordination among funding bodies (foreign and domestic) is generally lacking; more information exchange is needed as is greater transparency and accountability. Also need to foster ties between groups in China and counterparts elsewhere in Asia and the West.

(5) More attention is needed to developing indigenous support for the NPOs. The future of the sector will increasingly depend – not on foreign governments or foundations – but on funding from within China. This argues for more attention to the generic needs of the sector (a more supportive fiscal and regulatory framework, accounting of contribution of the sector by Center Statistical Office, encouraging public interest and attention, support for intermediaries – training, representation in policy making circles, facilitating exchange of experience – and greater transparency and accountability).  These activities have received relatively little attention from US grantmakers, which prefer to focus on particular sectors or problems.

(6)Finally, need for humility. Grantmakers may sometimes be a necessary but rarely, if even, a sufficient condition for something of significance happening.  Foundations are fortunate if given the opportunity to be associated with activities that improve human welfare, but the outcome – and the credit –belongs primarily to the grantees. Foundations need to be modest about successes as well as failures.