Opinion / Op-Ed Contributors

Charity cleanup leads tycoons to donate more

By Xin Zhiming (China Daily) Updated: 2014-11-05 07:54

Rich people may have many reasons for maintaining a low profile. By being open about their donations, they could, for instance, receive requests from both government agencies and ordinary people demanding more donations or face stricter tax scrutiny.

Therefore, policymakers should find ways to encourage billionaires as well as those not so rich to donate to charity if they want the trend of rising donations to continue. Although it could take years for the tradition of keeping one's wealth away from public spotlight to give way to the new trend, there are many things policymakers can do to encourage donation. To start with, they could remove the "gray areas" from, and strictly enforce, the regulations that state donations are exempt from taxation.

Moreover, there are no applicable rules governing donations using real estate and equities. And the lack of unified deduction standards for different types of charity organizations leads to de facto discrimination against private charity foundations.

This necessitates that legislators clarify and/or amend the laws and regulations on charity to facilitate donation and have uniform rules for all types of charity foundations. At the same time, the operation of charity organizations, especially information on how they use the donations, must be open to public supervision to restore public confidence in charities.

Such institutional build-up is crucial for the healthy growth of charity organizations in China. According to the World Giving Index, compiled by the Charities Aid Foundation, China figures somewhere toward the bottom of the list of people's donating for charity to help others. And a report released by China Charity Information Center in September shows that despite improvements, the charity transparency index remains low, at 44.1 (on a scale up to 100), and only 28 percent of those surveyed were satisfied with the information disclosure by charity organizations.

But this should not be seen as a sign of Chinese people's reluctance to donate for charity, because there are also people like Jack Ma, who has donated about one-tenth of his total wealth, and Cao Dewang, another Chinese billionaire who has gifted as much as 5 billion yuan to charity since 1983. The need obviously is to promote charity, for which we have to build a more favorable system that encourages donations.

The author is a senior writer with China Daily.

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