Chinese Charities Ranked by Transparency

China's private foundations are showing evidence that they have made strides toward becoming more transparent, according to a ranking by Forbes China.

On Monday, Forbes released its third list of the Best China Charities, which puts forth a ranking of what the business magazine's online Chinese edition deems the 25 most transparent charity foundations in China.

Occupying its top three spaces were the Shanghai-based foundation Cherished Dream, which builds computer rooms for children in the countryside; the Beijing-based YouChange China Social Entrepreneur Foundation, which gives grants to existing projects; and the Chinese Red Cross Foundation, which is a different legal entity than the Red Cross Society of China.

Of the 25 most transparent charities, eight are private.

"We've been ranking the best charities every year since 2009, but this is the first time we have used transparency as a ranking criteria," said Zhou Jian'gong, chief editor of Forbes Chinese edition and chief editor of the website ForbesChina.com.

In the past two years, the Best China Charities list has ranked organizations according to their efficiency. Zhou said that method sometimes produced distorted results.

"For example, we used to measure the foundations' personnel costs," Zhou said. "But later we found that some government-backed public foundations do not report administrative costs that have been paid for with government subsidies."

Forbes spent about five months gauging the transparency of the top 100 largest public foundations in China and the top 100 largest private foundations. The scoring looked at what information a foundation discloses about fundraising, management, the progress of various projects and the payment of officials, as well as at whether such information was easily accessible.

"Moreover, the need for transparency has been brought to the forefront this year by a string of scandals," Zhou said. "So we believe transparency is now of great importance to China's charities."

In June, a woman named Guo Meimei boasted on her micro blog about her wealth and about having close connections to the Red Cross Society of China, which the organization said was untrue. Her statements raised suspicions that the charity's money was going to keep her in luxury.

"Although the Chinese Red Cross Foundation is an independent legal entity from the Red Cross Society of China, we share the Red Cross name," said Liu Xuanguo, secretary-general of the Chinese Red Cross Foundation, which appeared third on Forbes' list this year.

"So the Guo Meimei incident has also affected our reputation."

Liu said the foundation set itself the goal of becoming China's most transparent charity foundation in 2005. In the same year, it opened a website that enabled it to release information about fundraising, about progress on various projects and about audits. It also developed an online helpdesk and a system that can be used to bid on charity projects.

"After the Guo Meimei scandal, we checked our own system again," Liu said. "And we are currently working on a system that can be used to make inquiries any time about our funds management, which we call a 'project map'."

Wu Chong, secretary-general and founder of the Cherished Dream in Shanghai, which appears at the top of Forbes' list of most transparent charities, said it was important to have various ways of releasing information, each of which was tailored to a different group.

"Besides disclosing information to the general public, we also have special monthly reports for each group that has worked with us, from donors to volunteers," Wu said.

"We are also compiling a standard report. Some other foundations' annual reports talk too much about progress but too little about the issues that they are not doing well with."