Experience and Reference About the Development of Charity

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Experience and Reference About the Development of Charity
Enterprises in the United States∗
ZHANG Yanli
School of Public Management, Shandong Institute of Business and Technology, Yantai, Shandong,
China, 264005
Abstract: Philanthropy has an important value of social development. Although there are a large
number of charitable organizations in China, their functions are little. And they are lack of independence.
There are such problems such as the charitable idea dim, the donation confused and lack of supervision
and so on in Chinese charity. Through the study of American philanthropy, we find that American
philanthropy concept is strong; individuals donate enthusiastically; charitable organizations diverse with
high independence; its supervision system is complete and a comprehensive legislative and policy
framework for charitable causes promotes the development of American philanthropy. Therefore, we
must improve the charitable legislation, the development mechanism for charity, charity awareness to
develop Chinese charity enterprises.
Keywords: U.S, Charity enterprises, Development experience
1 Introduction
Charity has always been the traditional Chinese virtues. Confucius has the thought of that “Expend the
respect of the aged in one’s family to that of other families and expend the love of the young ones in
one’s family to that of other families", which is the embodiment of the charity concept of Chinese
People. Along with the development of time, the original scattered, individual, occasional and random
individual charity has developed into an organized, large-scale, standardized and regular charity.
As it is an inevitably natural phenomenon that birth, old age, illness, death. The natural phenomena,
sudden disasters, social changes generate the objective reasons, which inevitably require that the relative
powerhouse provides the essential rescue for the relative weak to maintain balanced and harmonious
society. In this process, there is always the giver and the recipient of two main oppositions, and there are
always the various forms of charitable acts (such as contributions, donations, volunteer services, etc.).
These factors combined behavior that the formation of a charitable cause.
The so-called charity is usually refers to the numerous members of different social classes who are
engaged in the rescue act for the unfortunate people on a voluntary basis with a free of charge. Through
legitimate social organization, it gathers together the wealth by the way of social contributions,
according to the specific needs to get rid of danger for recipients through legal means. This is a form of
the third distribution of society as the supplementary of social security system [1].
The existence of charity is one essential method for solves “Market Failure” and “Government Failure”.
Although the market may effectively adjust the disposition of the resources to realize social balance, the
market rule inevitably has the monopoly concentration to have a "market failure”. “Government Failure"
is referred to the resources at the government’s hand, which is extremely limited as the general public is
concerned. It can not meet the general requirements of the community. In this case, "government
failure" is inevitable. Both states will undermine the balance and harmony of society. It will cause the
opposition of extreme wealth and extreme poverty. And if a bad disposal is made, it will cause a great
social unrest. Charity is the rescue act on a voluntary basis with a free of charge for the unfortunate
people. In a sense point of view, it can effectively avoid a series of social problems brought by the
"market failure" and "government failure". To study the learning of the U.S. charity can effectively
∗
This article is gradual research achievement for Research on Social Organization Theory for MCA in 2008 (project
No. 2008MZACR001-027) and Soft Sciences Project in Shandong Province (2009RKB408).
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improve the level of development of philanthropy in China.
2 Analysis on Present Situation of the Development of Philanthropy in China
2.1 Although charitable organizations are numerous, their effect is limited and most of them are
lack of independence
By the end of the year 2004, nearly 290,000 folk charity organizations have already been registered, of
which including more than 153,000 associations, more than 135,000 private non-enterprise units , 936
foundations, of which more than 80 nationwide involving economic , culture, education, health, social
welfare and other fields[2]. However, compared with developed countries of mature social development,
Chinese foundations are few in quantities, small in the scale, limited in the function is. According to the
People's Bank of China statistics, 48% of the Fund assets are 10 million Yuan less, 38.5% of the assets
are 1,000 million Yuan to 1 billion. Only 13.5% of the Fund assets are more than 1 billion, who annually
provide funding of 40 billion Yuan to the community. In the United States, the Foundation had reached
56,600 in 2000, more than total assets of 486 billion U.S. dollars, who provide an annual subsidy about
290 billion dollars to the community.
Most of a large number and limited role of charitable organizations are as an adjunct of government
departments the functions. Even they hold a concurrent post by the government personnel. Thus for the
philanthropy this is the folk enterprise essentially, which has smeared the thick administrative color in
some kind of degree into government's enterprise. Take “Act of Foundation Administration" as the
example, although the present stipulation encourages the development of folk philanthropy, it still has
set up the high threshold to the foundation, particularly implemented dual management stipulations to
the foundation of the business agency and the registration department.
If a person wants to set up a foundation, he must firstly find a master unit before going to Ministry of
Civil Affairs to register. Otherwise the foundation can only be registered to be an enterprise. So it is
unable to enjoy the policy preferential benefit to the charity organization. It can be said that
philanthropy's development cannot leave government's guidance and the policy support, but the
guidance does not equate in the control. We must give the philanthropy by the true itself, independence
for the charity organization to play its proper role possibly.
2.2 The concept of charity is faint. The number of individual donations, especially wealthy
donations is small, so individual donation still could not become the main body of philanthropy
There are 5.63% from corporate donations in the income of Chinese associations and foundations in
1998.
By 2002, this proportion had risen to 6.44%. In 1998, there are 4.16% from individual donations in the
income of Chinese associations and foundations. In 2002, this proportion dropped to 3.19%. In 2002
individual donations accounted for 2.1% of GDP in the U.S., while Chinese individual donations
account for less than 0.01% of GDP[3]. Warren Buffett U.S. investor of 75-year-old decided officially to
donate more than 85% of his wealth about 375 billion U.S. dollars to Mr. and Mrs. Gates Charity
Foundation in June 2006, which sets the record of world in the money sum of individual charity. Mr. and
Mrs. Gates have already contributed more than 300 hundred million US dollars at present, and decided
to donate more than 99% his property to the society after his death. But indication from China Charity
Federation's statistical data shows that the donation from the rich and powerful people in mainland
China is less than 15%, they have actually more than 80% of public wealth. Only 1% of more than 10
million industrial and commercial enterprises registered in domestic participated in the charity
donation[4]. During the period of “SARS” in 2003, the China Charity Federation only received 770
million Yuan donations altogether. Only then a rich person contributed 200,000 RMB by a personal
name, but at the same time more than 230,000 rich people have surpassed 1,000,000 US dollars[5].
The above data shows that individual donations, especially the number of wealthy donors is too small in
China. Of course, due to differences in national circumstances, the charity enterprises in the United
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States are on an individual subject, and the ones in China are based on corporate. But even giving
enterprise as the main body of corporate donations the number of donors is too small to maintain further
development of Chinese philanthropy. This fully shows that whether individuals or businesses,
charitable concepts of both are relatively indifferent in China.
2.3 The chaotic donation behavior and the lack of the supervision in donation fund and
commodity all cause the philanthropy to lose its credibility gradually
There are some unregulated donation behaviors in the existing ones. Results obtained are inevitably that
the fund is either slowly to arrive; either is diverted, even fallen into somebody’s pockets. The
emergence of these behaviors and results damage the charity credibility among the population, so that
the enthusiasm of people in charity donations can not be raised. "Human Li" is not the highlight event of
the "American Mom" sense of responsibility, but a sacrilege in the absence of norms and the lack of
supervision of charity donation to “Mother of China". Philanthropy is based on love. The main reason
that people refused to donate lies to worrying about the flow of commodity. The large number of similar
events like "Human Li" incident recurring have made charity lose its credibility and become a
bottleneck restricting the development of charity.
3 Inspection of American Charity
3.1 Christian culture derived from a strong sense of charity. Individual and non-governmental
organizations are the main body of charity. And the donations are larger in the U.S.
Although the history of the United States is relatively short, the undertaking of the Western civilization
has been more honored. The Christian culture in the U.S. is mainstream culture. Christianity originated
in the social weak sustenance of God. The doctrine of Christianity advocated equality, fraternity, charity
and mutual aid. The "The Bibles" and other classic works of the church manifested the contributions
spirit of philanthropy. Contributions have not only raised American's compassion, but also have raised
people's public-spirited, made the behavior that caring and helping others become the custom by chance
and slowly form the charitable consciousness to became the tradition in the end.
The Christianity culture has constructed westerner's soul, simultaneously has laid West's ethics
foundation as one system culture, and has accomplished westerner's behavior way. This tradition passes
to Americas by Europe, and has established the American philanthropy's foundation. The Christianity
culture causes the US's philanthropy's development model not from the very beginning the top-down
pattern leaded by the government, but the pattern from bottom to top leaded by individual, the civil
society organizations. Therefore, individual, civil society organizations become into the leading force of
philanthropy.
3.2 Charity organizations are pluralistic and independent in the U.S.
In brief, the US's charity organizations mainly divide into four kinds: neighborhood organizations,
religious bodies, foundations, joint fund-raising and fund-raising organizations[6]. Pluralistic charity
organizations make a wide range of charities and aid coverage. At the same time, pluralistic charity
organizations may give help to different methods and the operation ways of work. As the US's
philanthropy takes the folk as the leading, the government only undertakes the responsibility of
guidance, the drive and the supervision at the philanthropy. The charity organizations often act and
develop according to their own different characteristic independently, and they are controlled few by
government and very independently. So they adapt to the needs of modern market economy.
3.3 Operation supervision system of charity is comprehensive, and philanthropy is with strong
credibility in the U.S.
In the U.S., operation supervision include government, society, the inner and exterior has passed through
the philanthropy, which throughout from the set up and operation to obtaining fund, using fund, the flow
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and so on. The powerful operation supervision system caused the populace to fill the trust to the
philanthropy and greatly enhanced the credibility of philanthropy. Specifically speaking, the American
philanthropy operation supervision system mainly includes the government supervision, social
supervision and internal supervision.
In the US, it is very explicit that the government takes main body status of philanthropy's supervision.
The related departments of government legally carry on the management to the non-profit organizations
including the charity organizations and the foundations. Social supervision mainly includes the
supervision of mass media, peer and the donor. The popularity and influence of mass media in western
society continues to strengthen the supervision of charity. The explosion of mass media becomes the
main source of information to the government's judicature. Internal supervision is an important line of
defense of charity self-monitoring. In the American society, the internal supervision mainly carries on by
the way of the autonomy for the organizations and the professions.
3.4 The legislation and policy of philanthropy are complete and reasonable those have formed the
legal policy system which drives philanthropy to develop
The US government has formulated the preferential policy of tax affairs to encourage the social
participation for public in charity. The charity organizations have created the public interest mainly
based on that they receive the advantageous tax revenue treatment. This, in turn, reduces the burden of
government in creating these public interests. In the US, not only the majority of charity organizations
are tax-free without need of the tax payment. Moreover the contributor enjoys deduction tax revenue
treatment according to the legal rule quota.
4 Reference About the Development Experience of Charity Enterprises in the U.S.
Through the development of the U.S. experience in philanthropy, we can get that there is a certain gap in
Chinese philanthropy in the legal framework, the institutional framework and the charitable idea with
the United States. Firstly, charity legislation in China is lag, incomplete, and unreasonable. So we can
not form a guiding, motivating, monitoring the development of charity legal system. Secondly, the
existing system and supervision system of charitable organizations is not complete. So charity plays a
less role. Again, the Chinese traditional ethics standard and acquaintances society is not conducive to the
formation of charity consciousness, limiting the further development of philanthropy. So we must learn
from the useful experience of the United States and improve the existing situation based on the situation
of China in order to make the further development of our charity.
4.1 Perfect charity legislation
Firstly, formulate the Charity Act as soon as possible. Charity Act should clearly clear the legal status of
charitable organizations, charitable donation’s subject, the monitoring mechanism of charity, the
program of philanthropy. And it should clear the rights and obligations among the donor, recipient and
beneficiary. And it should also clear the charity acts in access, assessment, monitoring, public define
property rights and transfer, investment, exit and so on.
Secondly, improve the relevant procedural law of charity to form the charity's credibility. In Charity Act
and related laws, we should pay attention to procedural law through open, fair, equitable, transparent
and democratic process to increase the charity's credibility among the people.
Last but not least, we should revise present philanthropy related law to form a guiding, motivating,
monitoring the development of charity legal system. We should give a more preferential reduction to tax
of philanthropy to form the economy incentive mechanism of donation. We should cancel the provision
that the charity organizations should have responsible department for the guarantees of charitable
organization's independence to expedite more charitable organizations. We should actively introduce
third-party evaluation of civil non-profit organization in the supervision of charitable organization and
its fund's operations. The supervision mechanism of charity includes supervisors, supervision content,
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mode of supervision, acceptance authority. Supervisors include every social citizen, industry
organizations, news media, as well as some non-profit rating agencies. Through the above laws and
regulations, we shall form legal system of motive, guidance, monitoring the development of charity.
4.2 Establish a sound development mechanism for charity
Firstly, we should expand the main participation of the charity to broaden the fund-raising channels.
We must expand the main participation of the charity so as to broaden the financing channels for charity.
We should adopt a gradual approach in the choice of funding sources and primarily gradually transform
from base at the current business, organizations and government to base at individuals to evolve a
development model of participatory philanthropy.
Next, establish the perfect the operation mechanism of charitable fund. We may adopt many kinds of
ways including the fund management and targeted fund-raising donations and so on to the charitable
fund management and operation. But we must avoid the congenial tendency of the charitable fund in the
concrete operation process. Charity operations should mainly buy government and corporate bonds
adhere to the low-risk, high-reward principle. The government should implement its investment
protection when investment time is short, and the effect of the project is quick.
At last, establish a perfect supervision mechanism of philanthropy.
Social behavior of donation should be regulated. Improve the management of social donated funds and
materials. And establish a social public system, regularly to publish the source and flow of donated
funds and goods. Establish a fully transparent public inquiry system to ensure that the wish of donor will
be effectively implemented. Especially, strengthen the supervision mechanism of charitable fund by two
ways of t internal supervision and external supervision. On the one hand set up the special fund
management institution and monitoring agency by the charitable organization. Carry on a full range of
supervision on the raising of capital, management, use and other activities. On the other hand, we must
establish the supervision from relevant government departments such as auditing and finance. And we
should carry on the outside supervision by accepting the donor to inquire and regular feedback to the
community and other systems.
4.3 Vigorously strengthen the publicity to foster public awareness of the charity
We should expand the social network of the charity in using a variety of information channels,
especially taking advantage of the power of media to further strengthen the media coverage of
philanthropy. And we should expand philanthropy's social impact and promote the charitable idea to
build the necessary atmosphere for the philanthropy. We should fully understand that public charitable
awareness is the basis of the development of charity.
5 Conclusion
Through the study of American philanthropy, we find that American philanthropy concept is strong;
individuals donate enthusiastically; charitable organizations diverse with high independence; its
supervision system is complete and a comprehensive legislative and policy framework for charitable
causes promotes the development of American philanthropy. Therefore, we must improve the charitable
legislation, the development mechanism for charity, charity awareness to develop Chinese charity
enterprises. Specifically speaking, in the development of philanthropy in China, government's function
should be explicitly positioned in the guidance, the safeguard, the supervision, but cannot be taken on all
things. What’s more, each function must be distinguished between the government and charities, which
can display proper value for the philanthropy in the sustainable development.
Author in brief:
Zhang Yanli (1978-), male, Heilongjiang, School of Public Management, Shandong Institute of Business
and Technology, lecturer, master, the main research directions for social security, E-mail:yanlizh6565@
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yahoo.com.cn
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[3]. Deng Guosheng, Individual donations are the cornerstone of the development of charity, Academic
Journal of Zhongzhou, 2007 1 :133 134(in Chinese).
[4]. Wu Zhiru, Torture that the regal in China is cold on charity, Legal Weekly, 2006 09 04(in
Chinese).
[5]. Si Jin, The problem of Chinese Charity, Government Legality,2006 10 : 20-22(in Chinese).
[6]. Ren Yanxia, Reflection and Comparison between U.S and China in philanthropy, Theory Horizon,
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