China’s charities hit by lack of trust

16  January 2013

Chinese philanthropic organizations have been losing credibility due to a lack of financial transparency, experts said.

Liu Youping, deputy director of the China Charity Information Center, said foundations should disclose information in a timely and accurate manner to regain the public’s trust.

At the center of the trust issue is the case of the China Charities Aid Foundation for Children, which was questioned on Sunday.

After accusing the organization of money laundering and embezzlement, Zhou Xiaoyun, a columnist for several newspapers, told China Central Television the foundation’s 13 special funds have seen no capital flows since their establishment.

Zhou said that the foundation’s 2011 annual financial statement published on its website contains many questionable points.

He said the most suspicious fund was the Zhongshi special health fund for children and teenagers, set up by China International Industry and Commerce Co Ltd with a deposit of 5 million yuan ($802,000) in 2010. The organization says the fund is dedicated to providing free medical checks and healthcare services to children in poverty-stricken areas.

However, the fund was never used for philanthropic actions, said Zhou.

According to the foundation’s 2011 annual report, the revenue of the Zhongshi fund in 2011 was 620,000 yuan and the expenditure was 680,000 yuan, which was purely used for promotion purposes, with no money used to conduct charitable activities.

In response, the foundation told Beijing News on Sunday the information posted online is incomplete because the organization is operating a new website and hasn’t updated all the information.

China International Industry and Commerce Co Ltd declined to disclose further information regarding the fund when contacted by China Daily on Monday.

The loss of trust has led to a lack of public enthusiasm in philanthropy.

Recently, a public foundation belonging to the Guangdong Charity Federation only raised 100 yuan after a monthlong campaign.

The campaign, which started on Nov 15 and ended on Dec 15, was to raise money and goods for underprivileged children in Guangdong’s western mountainous areas.

However, only 100 yuan and about 200 books were donated.

Transparency is the only way out of the crisis, said Liu at the China Charity Information Center.

“Full disclosure of financial information is what the foundations can do to show they are responsible. Only by doing so can they win public trust and get more donations.”