Introduction

As China advances its agenda for common prosperity and society-wide participation in philanthropy, corporate foundations have become increasingly important vehicles for redistributing social resources. Their ability to draw on enterprise expertise and operational tools positions them as key intermediaries in social governance, especially as fiscal pressures create space for social organisations to fill public-service gaps.

Corporate foundations integrate for-profit market mechanisms with nonprofit, public-welfare objectives. This dual nature, however, generates inherent tensions, including unclear governance structures, heavy dependence on the founding company for funding and personnel, and challenges in maintaining operational independence.

The journal article “The Current Situation, Challenges, and Transformative Pathways of Chinese Corporate Foundations: An Analysis Based on Independence, Governance Capabilities, and Policy Environment” featured in the Philanthropy Studies (公益研究) examines these structural issues and offers potential pathways for reform.

Definition: Legal Status and Practical Reality

Under Chinese law, corporate foundations are charitable organisations initiated and primarily funded—typically more than 50% of their original capital—by enterprises or entrepreneurs. According to the Charity Law and the Regulations on Foundation Administration, they must operate on a nonprofit basis, pursue public-welfare goals, and avoid direct commercial ties to  In principle, they are independent legal entities.

In practice, however, maintaining independence is challenging.

Most corporate foundations remain closely tied to their “mother enterprise,” which provide initial capital, ongoing donations, board members and supplies staff, even technology and materials. This high level of reliance creates a mutual influential relationship:

• For corporations, the foundation is often used as a tool for strategic philanthropy and CSR, promoting brand visibility, market performance, and public trust.
• For foundations, dependence on corporate funding and enables the company to act like an “invisible shareholder,” shaping decision-making and embedding corporate interests into philanthropic operations.

Current State and key Challenges

Despite increasing visibility, corporate foundations remain a smal fraction of Chinese enterprises. By the end of 2023, only 1,850 corporate foundations existed among 52.826 million registered enterprises—a mere 0.004%.

Three major patterns characterise their current development:

1. Structural imbalance: Corporate foundations are heavily concentrated in economically advanced regions. Guangdong. Beijing, Shanghai, Zhejiang, and Jiangsu together account for nearly 40% of all corporate foundations. Large foundations also dominate total assets and influence, leaving small and medium foundations struggling to survival.

2. Low professionalization and talent-bottlenecks: Many foundations are managed by retired executives whose salaries are still paid by the founding firm. Limited incentives exist to recruit or cultivate younger, professional philanthropic talent, hindering organisational development and innovation.

3. Field concentration, path dependence and low innovation. Foundations tend to focus on highly visible, reputation-enhancing fields. In 2021:

• Education: 31%
• Rural revitalisation: 28%
• Public services: 16%

Together these accounted for 75% of all expenditure. Meanwhile, environment, culture, and research each received less than 5%. This narrow focus leads to homogenised competition and constrains strategic creativity.

Systemic Constraints

Beyond operational tendencies, corporate foundations face three systemic barriers:

• Macro level: Insufficient policy and institutional guarantees. Compared with more mature regulatory systems in the US or Germany, China’s Charity Law lacks specialized, operational policies tailored to corporate foundations. Registration can be burdensome, yet external supervision remains weak, contributing to the persistence of “zombie foundations” that occupy resources and erode sector credibility.
• Sectorial level: Limited industry collaboration. There’s a shortage of platforms dedicated to the professional exchange of corporate-foundation practices. Existing social organization networks do not focus on their specific needs, making it difficult to disseminate innovative models or improve operational capacity.
• Internal governance: Overreliance on mother-company Dependence on corporate funding and personnel compromises independence, transparency, strategic clarity, and long-term planning. It also expresses foundations to business-cycle risks, weakening their resilience and ability to pursue sustained public-benefit goals.

Proposed strategies for breakthrough

The article proposes a multilayered reform agenda addressing policy, sectoral coordination, and internal governance.

• Policy Enhancement

Government agencies should:

• Streamline registration processes
• Strengthen external supervision and refine tax incentives
• Establish clear accountability systems and legal responsibilities
• Set enforceable information-disclosure standards with defined penalties

These reforms would improve transparency, public trust, and overall regulatory effectiveness.

• Strengthening Sectoral Coordination

Corporate foundations should:

• Build or join platforms for peer exchange and shared learning
• Collaborate with universities, research institutions, NGOs, and government partners
• Promote sector-wide research, industry standards, and vocational training

Such collaboration can elevate the professionalization and maturity of the field.

• Internal Governance Reform

Foundations should:

• Appoint independent board members
• Recruit full-time professional staff
• Establish mechanisms to ensure operational autonomy from the mother company
• Break path dependency by investing in underfunded fields such as arts and culture, industry development, and digital transformation

Diverse strategic portfolios can increase social value and encourage innovation.

Conclusion

As unique social organizations bridging market mechanisms with public-welfare objectives, corporate foundations play an indispensable role in China’s pursuit of common-prosperity. Current trends, including structural imbalance, low professionalisation and field concentration, reflect both operational patterns and deeper systemic constraints.

Weak external oversight, limited peer support networks, and over-reliance on founding companies continue to limit the sector’s developmental potential. Through policy enhancement, collaborative ecosystem-building, and strengthened internal governance, corporate foundations can unlock greater autonomy, innovation, and public impact potential.