Since the beginning of 2019 charitable trusts have developed rapidly in China. Compared to traditional charities, trust companies enjoy certain advantages when taking part in charitable activities, especially in terms of how they can manage their charitable capital and assets.
As an innovative service within the trust industry, creating a charitable trust has become an important direction of development for more and more trust companies. According to data from the National Charity Information Platform, in 2019 53 charitable trusts belonging to 27 trust companies have been registered so far, with newly added property adding up to over 250 million yuan.
Charitable trusts have been expanding in China for quite some time. According to the 2018 Development Report on Charitable Trusts released by the China Charity Alliance, the capital of newly established charitable trusts amounted to 1.1 billion yuan in 2018, increasing by 84.42% from 2017. From 2016 to 2018, 42 trust companies across the country opened up charitable trusts, representing 61.8% of the country’s total 68 trust companies.
China’s charitable trusts still face many challenges. Many obstacles, such as the difficulty in implementing tax preferences and the low public awareness, are limiting their development. Nevertheless, as the society’s demand for charity is becoming larger and larger, charitable trusts would seem to have good prospects for the future.
As the new choice for many trust companies, charitable trusts are now very attractive. As a senior insider explained to the Securities Daily reporter, charitable trusts inherit the flexibility of the trust system, and can be more flexible in designing charitable projects than traditional charity organizations. In the meanwhile, they can also make use of trust companies’ ability in professional asset management to preserve and expand the value of the charitable assets. In addition, charitable trusts can be combined with the current family trusts to realize the inheritance of family wealth while providing support for the development of philanthropy.