New guidelines encourage Chinese charities to be transparent

In the wake of 2011’s high profile charity scandals, the Chinese government introduced new guidelines for how charities and NGOs should report donations and financial statements. The guidelines follow an initial draft created in the summer of 2011, which were posted online for public feedback.

According to China Daily, the guidelines say that NGOs should disclose information on what donations they receive, how they fundraise, how they will use that funding and who benefits from their programs. Specifically NGOs should:

• Publish receipt of a grant within 15 working days and within a month of distributing donations
• Notify the public within 72 hours of donations made for an emergency or natural disaster
• Disclose information every six months or less on programs lasting six months or more so donors and the public can track its progress.

These guidelines are not law yet but are a step closer. A final set of rules is expected later this year.

On the heels of the national guidelines, Shanghai introduced its own draft of regulations on December 20. The city’s Ministry of Civil Affairs said their goal was to create a more “credible, transparent and competitive system,” reported the People’s Daily. With only about 30 percent of Shanghai’s charities online at all, the public has little access to their operations.

The MCA will publish fundraising details from the city’s charities through an online platform. If organizations neglect to publicize their donations or if they publicize false information they face up to 30,000 RMB ($4,730) in fines, which could increase in the final version of the law.

The draft says that charitable groups must:

• Publish an audited financial report every June 30 and publish a bi-annual report on spending and assets
• Return donations collected illegally as well as face fines up to three times that of the donation. (Shanghai daily reported that some students were pressured by school authorities to make donations to the Red Cross Society.)
• Respond to inquiries from donors within 10 business days

Many believe such regulations are necessary for the sector to grow, especially in light of recent surveys that show trust of charities is at an all time low. The Report on Transparency of China’s Charity Work found that only eight percent of those surveyed were satisfied with charitable organizations’ transparency, down from the already dismal nine percent of 2010. Shanghai Normal University found that 44 percent of the people they surveyed were unwilling to donate to charities because they didn’t know how their money would be used.

There is concern, however, that these new rules will burden already understaffed charities and that the added government supervision will prevent organizations from implementing projects using their own methods. Perhaps what is equally needed is education for the public, including the effects of regulation on different types of organizations.

For instance, a small grassroots nonprofit will not be able to process paperwork and donor requests as quickly as a large GONGO with strong government support. The cost of doing so will be much more significant to organizations with small staffs and operating budgets. Moreover, many donors are reluctant to give to salaries and organizational costs.

Transparency is imperative to build integrity in the sector, but supporting organizations through these growing pains is also necessary.

What do you think? Do the benefits outweigh the drawbacks. Leave us your thoughts in the comments.

--Georgia

Comments

[zhang]

Following the incident of GuoMeiMei revealing her personal wealth while working in RedCross, Chinese charities are under pressure to be more transparent. I certainly welcome the new guidelines.