The development of modern philanthropy in China has gone through several stages. From the founding of the country in 1949 to the start of reform and opening up in 1978, philanthropy was mainly led by the government. The government addressed social issues through charitable projects and welfare measures.
As China’s economy has developed and the middle class has expanded, many social organizations have been established to meet the needs of society.
At the same time, laws and regulations related to charities, including the Regulations on the Administration of Foundations in 2004, the Reform of the Dual Management System of Social Organizations in 2011, and the Charity Law in 2016.
The benefits of developing philanthropy
Promote social harmony
By gathering and redistributing human, material, and financial resources, charitable activities can effectively help disadvantaged groups, shorten the distance between different social groups materially, psychologically, and emotionally, and form positive interactions, thereby broadening the coverage of social security and promoting harmonious social development.
Encourage social innovation and change
Charitable organizations promote the innovative development and transformation of society by investing in scientific research, education and training, and social entrepreneurship.
Current Situation of Chinese Philanthropy
Since entering the 21st century, Chinese philanthropy has undergone rapid development and necessary changes. More and more businesses, foundations, social organizations and individuals have become involved in charitable causes, which is showing a trend of diversification.
The scale of charitable donations has increased year by year
According to the China Charity Development Report in 2022, the total amount of charitable resources in China is predicted to be 446.6 billion yuan in 2021, an increase of 8.57 percent compared with 2020. In 2021, the total number of registered volunteers in China will be 222 million, an increase of 15.63 percent on 2020.
Diversified development
From traditional donations to new forms of financing such as equity, securities, and intellectual property rights, from 2014 to 2015, currency and securities accounted for about 75 percent of the total donations, while from 2016 to 2020, the proportion of currency and securities remained at about 70 percent.
The internal control management and capacity of charitable organizations has improved
With the development of the philanthropy sector, more and more charitable organizations pay attention to improving their management capabilities and professionalism, and charitable organizations are now more aware of relevant legislation.
Gradually moving toward the international stage
Since the establishment of the Belt and Road Initiative, Chinese charitable organizations have increasingly started operations abroad.
Problems
Transparency is still lacking, and the information disclosure system needs to be strengthened
Information transparency is the basis for charitable organizations to communicate with the public and donors, and is also the foundation for the healthy development of the sector.
According to the China-based Transparency Index FTI 2022 Report, the average FTI score in 2022 was 59.07 points, and the median was 55.4 points. After more than a decade of development, the quality of information disclosure of more than half of the foundations has not yet reached an acceptable level.
Information disclosure is either incomplete or lagging, especially when it comes to auditing data. As of June 15, the latest financial data supplied by some charities was from 2021.
Funding channels are limited, and the public lacks a tradition of donating
Many charities rely heavily on corporate donations, which are an erratic source of funding, leaving charities starved of funds when companies stop supporting them.
For example, the COVID-19 pandemic caused difficulties for many businesses, leading to reduced donations for many charities, sometimes with serious consequences.
The investment income earned by social organizations is low
According to data from the Foundation Center Network, in 2020, only 1,762 of the 6,737 charity foundations in the country participated in investment and financial management, accounting for only 21.16 percent of the total number of foundations.
Charities lack the ability to preserve and increase the value of their funds through investment.
Insufficient full-time staff
According to the China Foundation Industry Development Observation 2020-2022 survey of 6,341 samples, 56.8 percent of charitable foundations have only one to three full-time personnel, and most foundations have a low level of professionalism.
Online charity is on the rise, but there are deficiencies
By the end of November 2021, the total amount of donations raised on 30 internet platforms had reached 8.75 billion yuan, with 770 million people participating in donations.
However, fraudulent donations occur from time to time, seriously damaging public trust, hindering public awareness of charity, and leading to a waste of resources.
Suggestions
Facing these problems and challenges, the government, banking system, charitable organizations, and every person in society needs to work together. Participants in the sector are advised to focus on the following aspects:
-Increasing the transparency of information to build public trust.
-Broadening fundraising channels and improving value preservation.
-Strengthening professional management and carrying out internal staff training.
-The government should improve the internet environment and help improve the public’s awareness of fraud.
