More transparency

Li Shufu, Chairman of Geely Automobile Holding Co., a privately-owned carmaker in China occupying fifth place on the 2006 China Philanthropy List with a total donation of 233 million yuan, faced some headaches after he decided to provide financial aid for 1,000 poor students to help them finish college. "The aid money is not a problem. The problem is we have to pay more to find the eligible 1,000 students. We once got duped, as some of the 'poor kids' receiving our aid turned out to be the children of local officials."

For sure this is the last thing that philanthropists want to see. But such things do occur from time to time; as a result, more than half of the philanthropists on the 2006 China Philanthropy List said they didn't trust certain charity organizations and would rather carry out their own direct philanthropy.

"Two things have been overlooked here: philanthropist's rights and the credit of charity organizations. To some degree, they are the two sticking points that have hampered the current development of charity in China," said Chen Xiaozhu, a Master of Sociology in Beijing.

Philanthropist's rights include the right to know and the right to intervene. "The donor is entitled to know where the money is going and how it is used, as well as the right of make suggestions on how to handle the donation," she said. But unfortunately, the accounts of many charity organizations are not made public. "This will leads to poor functioning in finance, and, with an imperfect supervision system, corruption easily occurs. Finally, public distrust is bred."

The company where Chen's husband Fan Wei works has, for years, given donations to the China Foundation For Poverty Alleviation. "We choose the China Foundation For Poverty Alleviation because the organization has a definite object and standard practice," said Fan.

"We need to run the foundation like running a company, thus we can utilize funds more efficiently," said He Daofeng, the foundation's deputy director.

"A company aims at generating maxim profits at minimum cost, while a foundation has to collect money and make full use of it. We design projects to raise money and spend money, where to spend and how to spend it. At the same time, each project will undergo independent accounting, so that the donor will have a clear picture of how the money is being used."