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Building up Trust for Donations

When heavy snow devastated the country's southern regions this winter, Wang Ke, a marketing manager in a pharmaceutical company in Beijing, wanted to do her part to help victims.

But she hesitated.

"I didn't know which charity organization to trust, whether the money I wanted to donate would reach those who needed it," the 29-year-old said.

That is one worry Wang and those like her might no longer face, with the authorities putting in place a new rating system for nongovernmental organizations (NGOs).

The move is aimed at strengthening the accountability of NGOs, and to provide references for those who want to contribute to the country's charities.

The grading starts with about 80 charitable foundations in the country and will extend to domestic NGOs.

"Rating charitable foundations is the first step in giving different grades to all domestic NGOs," Sun Weilin, director general of the Ministry of Civil Affairs' bureau of NGOs administration, said in a telephone interview with China Daily Wednesday.

The rating system will see charitable foundations being divided into six grades - 5A to zero or no grade, with 5A being the best and zero the worst.

Four areas of NGOs will be considered in the evaluation: Basic information available, management, appraisal from the public and overall performance.

The ministry issued an initial rating late last month for about 80 charitable foundations.

Six foundations were shortlisted for best practices - the China Youth Development Foundation, China Foundation for Disabled Persons, China Foundation for Poverty Alleviation, China Children and Teenagers' Fund, Chinese Red Cross Foundation and China Charity Federation.

Work on the rating system began in October and is being conducted by a consortium of officials from the Ministry of Civil Affairs, researchers, legal and accounting professionals, and heads of selected NGOs.

It was rolled out after about two years of research on ratings methodology and criteria, officials said.

Civil affairs departments in Shandong Province were involved in a trial phase for the system, while Sichuan Province is expected to start evaluating and rating 50 foundations soon.

Rating NGOs from charitable foundations is useful because, compared to other types of NGOs in the country, foundations receive relatively large amounts of funding from the general public, hence their accountability and transparency is particularly important, Chris Spohr, social sector economist of the Asian Development Bank PRC Resident Mission, said.

The new system comes amid consecutive growth of the country's NGOs in recent years, with civil affairs departments approving about 40,000 such organizations every year, official statistics showed.

Last year, the country saw about 381,000 registered NGOs, including 207,000 social groups, an increase of 11.3 percent from 2006; 172,000 non-enterprise organizations, up 8.2 percent; and 1,369 charitable foundations, up 20.3 percent.

At the same time, about 20,000 NGOs, troubled by ill practices, lack of funding and manpower, cease operations every year, official statistics showed.

The new gradings will serve as an effective reference for donors who are willing to contribute to charity but lack information on the proper channels to do so, Rao Jinxing, director of Huaxia Center for Economic Social Development Research, said.

A good rating system will also meet rising demand from enterprises and the public who have growing interests in corporate social responsibility and philanthropy, Rao, who was also involved in research on the new system, said.

The move will motivate donors to give to charities, he added.

"The government's management of NGOs is in progress and it is in alliance with international practice," Rao said.

"What is more important is ensuring a rating system that is transparent, comprehensive and fair," he said.

"The better the public know about the NGOs, the better they will treat their donations and the more donations well-developed NGOs will raise," Rao said.

"I think there are a lot of good self-initiated thrusts within the NGO community in China," Spohr said.

"More information is better than less."

More participation from the NGOs and other sectors should also be added to the government-initiated rating systems, Rao said.

"The government has annual checks on NGOs. But when it comes to the NGOs' performance such as their finances, it is better to have professional institutions handle that," he said.

A rating system requires more attention being given to smaller-sized or grassroots NGOs as "their situations are in more need of improvement, compared with the more developed foundations", Rao added.

Such domestic NGOs are also in dire need of authoritative appraisals to aid them in the battle for funds, Wang Xingzui, executive director of the China Foundation for Poverty Alleviation, said.

"Many NGOs lack accountability," Wang said. "Without the rating system, it is hard for the public to tell the good NGOs from the bad."

Kang Xiaoguang, a professor at the Renmin University of China and an NGO researcher, had earlier expressed ominous views on the development of the country's NGOs in an interview with China Daily.

"Some NGOs are duping donors under the guise of training staff. Some have no real projects," he said.

"Establishing a government-initiated rating system will enhance NGOs' self-discipline, nurture their development, streamline their legal structure, enhance their capacity building and raise their social accountability," Sun said last April.

(China Daily March 20, 2008)


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