The Shanghai Charity Foundation (SCF) has announced that it will change its role from project coordinator to fund manager. The change is part of a nationwide move spurred by the Regulations on the Management of Foundations (RMF) issued by the State Council, which took effect in June.

The RMF is intended to standardize operations and project management of the country’s 1,200-plus charity foundations.

“The regulation protects the interests of all parties concerned: foundations, donors and beneficiaries,” said SCF spokesman Ma Zhongqi.

Shanghai now has 94 charity foundations. The SCF is the first to undertake this reform.

“What we did in the past was receive donations and organize various charity activities. But from now on, we will concentrate on fund management,” said Ma. The SCF will delegate charity project management to other associations, agents or companies.

Fund management includes soliciting donations, increasing their value and verifying qualifications of grant applicants.

“Individuals or organizations like orphanages or old-age homes can apply for grants. We will decide whether and how much will be given by evaluating their qualifications,” said Ma.

Some 70 percent of the donations SCF received last year will be used for charity purposes this year and less than 10 percent will be used for administration, according to Ma.

In adopting market-oriented reforms, the charity foundations will compete with each other for donations. Ma asserts that the sink-or-swim policy will lead to healthier overall development of the foundations.

The SCF plans to solicit bids from financial companies before determining precisely how to invest its surplus funds. “Any profits gained will be put back into the pot,” said Ma.

According to the RMF, charity foundations must take responsibility for investment failures.

The regulations also require foundations to improve the transparency of donation management by making public their annual income statements, balance sheets, expenses for charity projects and audit reports.

In the past 10 years, the SCF has accumulated more than 90 million yuan (US$10.9 million) in donations.

The SCF has also slashed the size of its council, from 259 members to 23. All government employees have left the council, an RMF requirement that is geared toward reducing government influence on charity foundations.

“All council members should be below the age of 70, should love the charity industry and have knowledge and ability concerning foundation management,” said Ma.

(China Daily September 1, 2004)