New transparency rules for charities

PUBLISHED : Monday, 30 July, 2012, 12:00am
UPDATED : Monday, 30 July, 2012, 12:00am

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New regulations on the management of the nation's charitable foundations were issued yesterday in an effort to enhance transparency and oversight in a sector whose credibility has suffered considerably following a recent series of scandals involving embezzled funds.

The Ministry of Civil Affairs published the new rules, requiring that charities regularly publish details of donations and expenditures, on its website.

For fund-raising projects that last more than three months, financial reports must be published quarterly, while a comprehensive report should be made public at the end of the drive, according to the regulations.

The new rules also stipulate that charities are not to engage in any profit-making endeavours.

'Foundations should not use their names, images or charity projects for non-charitable purposes,' the statement said.

For emergency-prompted fund-raising, organisations must disclose information such as total donations, details of all donated materials and of costs incurred in the drive.

The regulations make it clear that donors have the right to know how their money is spent, and authorities stressed foundations must 'give truthful answers in a timely manner'.

Charities found during annual appraisals to have violated the rules risk being disqualified or receiving administrative punishments.

The new directives came with public confidence in charities remaining low following several controversies last year involving high-profile organisations.

The most shocking incident revolved around a young woman named Guo Meimei , who falsely claimed to be working for the Red Cross Society of China. She posted pictures of herself online with high-priced handbags and expensive cars, sparking a public outcry.

She eventually admitted making up the story about working for charity, but the damage to the Red Cross's reputation was already done.

Other restrictions introduced in the regulations include prohibiting charities from using public donations to pay administrative expenses, including employees' salaries and other benefits, unless agreed to by the donors.

Operating costs also must not exceed 10 per cent of an organisation's overall spending in any year.

There were about 2,500 registered foundations by the end of last year - almost twice the number from 2005 - and their total assets were valued at more than 60 billion yuan (HK$73.57 billion).

However, donations in 264 major cities took a hit last year from 2010, with revenue falling from 24.2 billion yuan to 21.2 billion yuan, according to figures recently released by the China Charity and Donation Information Centre under the Ministry of Civil Affairs. Authorities attributed the decline to fewer natural disasters last year, but some analysts point to the scandals.