Opinion

Wealthy wary of grand giveaways

By Qian Yanfeng (China Daily)
Updated: 2010-10-20 15:33

Unstable foundations

Shenzhen entrepreneur Yu said he also learned hard lessons some years ago when he found that ambulances he donated to several hospitals in inland provinces had been converted into sedans to chauffeur government officials.

"Very few of China's growing number of charity organizations and foundations tell donors where their money has gone.

"It's easy for local authorities to take advantage of that," said Yu.

Deng agreed and added: "It's not that the wealthy don't want to donate money, they just don't believe in the independence of public foundations in China, which have long been blamed for a lack of transparency and efficiency."

Efforts to operate independent of government agencies is also difficult, such as is the case with the One Foundation, which was launched in 2007 by Chinese movie star Li Lianjie - known in the West as Jet Li - as a project attached to the Red Cross Society of China.

In an interview last month with China Central Television, the State broadcaster, Li said the One Foundation - so called because of the idea that everyone can afford to donate 1 yuan every month - had hit a bottleneck in its development as it could not get approval to register as a public foundation.

The charitable group could be heading for a premature end, Li warned, explaining that once its three-year contract with the Red Cross expires it will be prevented from direct public fundraising.

Even though it is affiliated with the Red Cross, Li said the One Foundation still does not enjoy the full rights to use the donations it receives, and is also hindered by other restrictions.

"Philanthropy must overcome the institutional challenges in order to mature," said Xu Yongguang, secretary-general of the Narada Foundation, a private organization sponsored by Shanghai Narada Group that is committed to public welfare projects.

Meanwhile, China's tax system also works against the development of philanthropic practices, Xu said. As a private foundation, Narada pays income tax if its fund makes a gain, perhaps from an investment, said the secretary-general.

Meanwhile, a company donor is only entitled to a maximum tax reduction equal to 12 percent of its annual profits if the money is not given to a government-backed public foundation, the number of which is very few.

"The government is treating private foundations like profit-driven enterprises, which undoubtedly scares many wealthy people away from establishing private foundations to help the needy," said Xu, who also claimed the lack of professional talents had resulted in most charitable foundations in China being highly inefficient.

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China has only 1,000 public foundations and about 800 private ones, according to official statistics released at the end of last year. The latter has been developing at a fast rate in recent years, said Xu, who urged the government to take the opportunity by tapping further into the private capital of the wealthy class. China also lacks inheritance tax to push the rich to do the good, he added.

For Deng, the country still needs to mobilize the general public if philanthropy is going to mature.

Almost 60 percent of donations in China come from businesses or the wealthy elite (there is much overlap between personal and corporate philanthropy), while in the US more than 70 percent comes from the public, said the professor.

"We should realize that philanthropy is not a privilege of the rich but the responsibility of all," added Deng. "Charity is not just about giving your money away - it can be in the form of any voluntary work, however small."