‘Empty donations’ on the rise despite legal consequences

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In 2019, Wu You, a Gen-Y alumnus of China University of Mining and Technology, pledged to donate 11 million yuan ($1.6 million) to support the educational development of his alma mater on its 110th anniversary. 


This was supposed to be a win-win situation for both parties. A large donation from an alumnus shows that the university has been cultivating students who give back to society, as well as helping the university to build and develop.


However, four years later, the donation still has not arrived. In July 2022, a dispute over the donation contract between the two parties came to trial in the city of Xuzhou, Jiangsu Province.


The failure of the donor to comply with his commitment led to a lawsuit. How did what was supposed to be a win-win situation go so badly wrong?


On April 10, 2019, China University of Mining and Technology celebrated its 110th anniversary and alumnus Wu You, Class of 2008, publicly announced a donation of 11 million yuan to his alma mater to support the development of the university. His donation was the largest in the institution’s history.


News reports from the time show that the donation ceremony was followed by a huge amount of positive media coverage about Wu and the company he founded, which benefitted both him and his business.


Over the next four years, the university communicated with Wu several times about the donation, but the money never arrived. Thereafter, the China University of Mining and Technology took Wu to court, demanding that he honor his donation agreement.


In a legal dispute like this, Wu is not the only one being negatively impacted. Alumni communities are valuable resources for higher education institutes. There can be myriads of ways for universities to stay in touch with their former students. This kind of court case may harm the interests of other alumni, ultimately impacting donations for the university’s development.


In response to the phenomenon of “empty donations” in recent years, He Guoke, a lawyer at Beijing Zhicheng Law Firm, suggests that the recipient should have a preliminary understanding of the donor. 


The donor’s business capacity and financial situation are elements that should be considered by the recipient, which is also a basis for measuring whether the donor has the ability and will to fulfill their donation. 


Secondly, the recipient and the donor should stay in contact and regularly exchange feedback and make plans in advance for any unexpected difficulties in fulfilling donation obligations. 


If the situation does occur where the donation will not arrive on time, the donor and the recipient can agree a moratorium on donations within the limits of the law, or file to withdraw the donation to their local civil affairs departments with a thorough explanation.


The Charity Law of China also has a clear statement that when the donor does not fulfill their obligations, the recipient has the right to demand that the donor fulfills their financial promises. Therefore, for NGOs that do not receive the donations they have been promised, using the law to protect their legal rights can be the best way forward.