Editor’s Note:

The Guidance on Information Disclosure for Public-Welfare and Charitable Donations, published by the Ministry of Civil Affairs (MCA) in late August, has drawn an unexpected amount of public attention following recent scandals in Chinese charity. The case of Guo Meimei, a young woman who boasted online of her ties to the Red Cross Society of China (RCSC) and her personal wealth, has thrown the RCSC, China’s biggest charitable organization, and many other charities into a deep credibility crisis. Does the draft regulation signal plans for reform?  Can Chinese charities survive these crises? The Beijing News (BN) talked to Zheng Yuanchang (Zheng), director of the MCA’s social welfare and charity promotion office and Liang Shuxin (Liang), founder and CEO of the Micro-Foundation and Xu Yongguang (Xu), director of Narada Foundation and founder of Project Hope, on these issues.

BN: Can the release of the draft regulation for public comments be considered as Ministry of Civil Affairs’ official reply to the recent crisis?

Zheng: The draft is not a specific reply, since we had already begun to design it last year. The recent incidents, to some extent, had pushed its publishing.

BN: Is the lack of transparency in the disclosure of charity funds the root of recent criticisms?

Zheng: China’s charity sector has boomed since the mid 1990s but the related government policies are far from perfect. Only those who have received special training can have a deep understanding of how the system works. And there aren’t enough people who can explain this.

Technically speaking, the  lack of transparency is a big factor, but the core problem is that reform in the whole system needs to speed up.

BN: Any updates about the Social Donation Regulations and Charity Law, both drafted in 2009?

Zheng: Frankly speaking, things are not going well, at least for now, for they don’t meet the requirements of many deputies at National People’s Congress, as well as the public.

I believe, in this relatively early stage of the development of the charity sector, it’s not easy for relevant departments to reach agreement, such as the definition of charity organizations and the systems that run and supervise them. We have already asked Tsinghua University to conduct research on the regulations.

The recent crisis has shown that charity organizations must be put under the supervision of a coherent system.

Only those who have received special training can have a deep understanding of how the system works.

BN: Any comments on public skepticism about charity organizations, especially State-linked ones?

Xu: Such organizations are under fire because they’ve been misunderstood. People now prefer to make person-to-person donations, and they believe official organizations don’t deserve trust and therefore should no longer exist.

We hope the reform of the entire system can be made much quicker after all these scandals. Administrative measures must make way for more professional approaches if we are going to commit ourselves to real charity.

Government interference is to be blamed for the growing notoriety of these charities, since it leads to poor transparency and a lack of supervision within the system.

Liang: Nothing is more important than information disclosure and financial transparency. The donations to the Micro-Foundation even rose during the RCSC’s most difficult period, since we made our channels more reliable.

Something like 99 percent of our donations came from the Internet and I believe the reason to choose us is simply because other channels were blocked.

BN: Why do charities charge a management fee?

Xu: The running costs of the charity organizations take up no more than 10 percent of the total donation. Many questioned the validity of such charges, but running charities requires professionals and specialists and they should be fairly paid.

Liang: The concept of “free of charge management” is something that might mislead people and make them believe that it takes nothing to run charity. But it will clearly arouse a public outcry if you use it as the only way to cover management fees – direct donations from enterprises are a better way to cover the costs, and should be encouraged.

Person-to-person donations are probably the best way to help with education costs and tackle poverty.
Liang Shuxin

BN: Who suffered most in this?

Xu: A more rational mind is needed when viewing the whole thing. Such scandals did hit the system and will keep corruption down for a while. But after all, it’s those who are in desperate need of help that will suffer most from it.

BN: What’s the best way to donate?

Xu: It has been more than 100 years since professional overseas organizations began to do charity. It’s the use of agencies that distinguishes traditional and modern charity. It is more efficient for a mature agency to run the process than for people to give directly to the needy.

Liang: Person-to-person donations are probably the best way to help with education costs and tackle poverty.
But in terms of large sums of money, such as the 200,000-300,000 yuan ($31,300-47,000) in cash given by a multi-millionaire to a leukemia patient recently, I suggest that we’d better not transfer these to personal accounts because that might not be that reliable.