Press Room

Foundations less than charitable with disclosure


Majority lack transparency as slew of scandals erode public trust


The majority of charitable foundations do not disclose information to the public, although they are legally mandated to do so, according to a report on Wednesday.


The report came a day after an official from the Ministry of Civil Affairs, the top watchdog for non-governmental organizations, vowed to make charities more transparent.


The report said more than 1,380 charitable foundations, about 60 percent, have not made public their annual reports that would reveal their financial status.


The report was jointly released by the China Foundation Center, an organization that examines the work of the foundations and their transparency, and Tsinghua University's School of Public Policy and Management.


It marked and rated foundations based on information collected from their websites and other open sources.


The center has drawn up a transparency index, composed of 60 indicators, to evaluate information disclosure.


The full picture makes for even bleaker reading. The index has a top mark of 129.4. This would indicate that the charitable foundation was fully transparent. However, the average mark for foundations was less than 46.


The report disclosed a number of malpractices.


The Hubei Provincial Wetland Protection Foundation had a surplus of about 1.57 million yuan ($252,000) at the beginning of 2011 but only donated about 15 percent of it to other charities at the end of that year, it said. The foundation did not meet the legal quota - 70 percent of the previous year's surplus.


"Charitable foundations should have treated information transparency as a lifeline as they are in charge of huge donations from the public," Cheng Wenhao, professor at Tsinghua University's School of Public Policy and Management and one of the drafters of the report, said at a news conference on Wednesday.


"We could not access any information, except their names, from about 20 foundations, and 46 foundations did not give any contact information during our research," he said.


Li Chengyan, a professor who specializes in anti-corruption studies at Peking University's School of Government, said that the government should keep a close eye on charities.


"Trust can't replace supervision," he said and criticized the foundations for not giving more information.


He proposed that the government introduce incentives and punishment.


It can consider withdrawing the qualification of foundations that come at the bottom of the transparency list for three consecutive years and giving more tax incentives to those that top the ranking, he said.


Zhan Chengfu, director of the Ministry of Civil Affairs' department of social welfare and charity promotion, told China Daily on Tuesday that the ministry has attached great importance to boosting information disclosure by charities.


Zhan said the ministry plans to issue regulations with more "binding force" but refused to reveal more details.


He also urged charities to improve their self-discipline.


A crisis of confidence hit charities last year after a series of scandals.


In one scandal, a woman showed off the trappings of an extravagant lifestyle on the Internet while falsely claiming to be an official of the Red Cross Society of China.


An investigation later found out that the society allowed a company to profit from running a charity project.


Lynn Tang, director of the philanthropy development department of One Foundation, said that it takes massive investment of human and financial resources to be transparent. One Foundation, based in Shenzhen, achieved a perfect score of 129.4.


"Most donors are not willing to give money to help charities improve management, so our operation capital is so limited that sometimes we have to sacrifice employees' welfare to invest in updating information," she said.


The report revealed that 25 of the 100 foundations with the largest net assets by the end of 2011 ranked below 1,000.