Red Cross Faces Credibility Crisis

No simple process

The job of collecting, arranging and processing information is difficult and involves many details, according to Yang Peng, secretary-general of Shenzhen One Foundation, a public foundation with registered capital of 50 million yuan.

For example, he said, if a foundation wants to give 100,000-yuan subsidies to 50 poor schoolchildren, it cannot look for the children one by one and give them the money directly. The usual practice is to give the money to the education department of the local government, which will pass it on to schools. The schools will have teachers distribute the money and ask each student to sign for it. In the end, the foundation will receive a written report with signed or stamped receipts.

Sometimes mistakes happen. A donor once volunteered to examine the implementation of such a project by visiting all 50 students. He found that three had not received the money. It turned out their teacher was sick and forgot to give the money to the children after signing receipts for them.

"For many foundations, it is already difficult enough to collect and post the receipts and list the students online," Yang said.

Shenzhen One Foundation and Ufida Software are working together to develop a donation information management system, but the foundation has found the task is filled with tiny details.

Some donors do not leave their information, so foundation staff members have no idea who donated the money or how to reach them. The foundation has to build connections with banks to ask donors to fill in forms and leave their contact information, so it can record each donation and make the information available to the public.

"It's not technically complicated to build an information management system, but it's very expensive to have a highly automated one," Yang said. "How much it will cost depends on which level of transparency you want to reach. If you just want to post bank statements on the Web, it's a piece of cake."

National standards

There are no national standards for information disclosure, so different organizations have different levels of transparency. Among the 1,135 public foundations recorded by China Foundation Center, some publish information from the year before last, and some do not have websites.

"The most pressing demand is to make a set of unified standards in terms of content, format and procedure. Otherwise, it's hard to regulate foundations," said Wang Zhenyao, dean of the Beijing Normal University One Foundation Public Interest Research Institute.

His suggestion is supported by Wang Yiou, founder and director of China-Dolls, a Beijing-based NGO aiming at helping people with osteogenesis imperfecta and other conditions. Every month, the organization posts financial reports on its blog.

"We have to do it in a way that everybody can understand. Nobody wants to read some obscure and complicated professional reports," Wang said.

The reports look much like spreadsheets, with each entry listing the date, donor, amount and use of the donation. For those who don't want their names released, the organization uses the words "the kindhearted" instead.

Wang said the job requires a full-time position. "We hope the government would come up with a standard format that we can follow to release information to the public. Now we are just doing everything on our own."

It's a start

Wang of the public interest research institute believes government supervision departments should be held partially responsible for making vague and general regulations. "Our country has turned information disclosure into ethics, which is not legally binding, while in some other countries, public foundations will be sued if they fail to be transparent."

Chinese regulations for foundation management specify that those who do not perform "the duty of information releasing" or who publish false information will be "warned, ordered to stop all activities, or even revoked of their certificates". However, the regulations are rarely enforced, partly because some nonprofit organizations are quasi-governmental, said USDO, a nonprofit organization that promotes self-discipline within the industry.

The Red Cross, for example, is not a charity organization in the normal sense. It is considered half-governmental because it takes both State money and donations.

"The dual identity is confusing for the public when it comes to accountability," said Yang Tuan, a leading researcher on philanthropic studies and deputy director of the Social Policy Research Center at the Chinese Academy of Social Sciences.

About 439,000 social service groups are registered with China's civil affairs departments of all levels, but the Red Cross Society of China and the 95,000 agencies in its system are not among them, Yang said.

"Now that the society has put its information online, I think it has taken a step toward the nongovernmental, charitable side."