At the end of last year, American billionaires Bill Gates and Warren Buffett invited some Chinese tycoons to dinner to promote philanthropy in China. But in recent months, a series of scandals involving charity organizations have undermined public confidence in philanthropy.

When I arrived in China in 1991, I heard of Project Hope, a branch of China Youth Development Foundation, which was one of the rare non-government organizations (NGOs) in the country then. Through Project Hope, I helped 14 children complete their primary school education. Most of the children were in the Inner Mongolia and Ningxia Hui autonomous regions, and the others in Sichuan and Yunnan provinces.

It is officially known that Project Hope takes 10 percent of the donations as administration fees. Later, that made me think: If I contact the families directly and enquire personally about their financial conditions, the entire amount I donate can be used fruitfully. That was how I started practicing charity independently.

Of late, the media and netizens have been criticizing a young wealthy girl named Guo Meimei for her blog, which discredited the Red Cross Society of China. Though she denied her claim later but found to be the girlfriend of a director of a commercial organization closely linked with the Red Cross, many people decided against donating money to the Red Cross again.

Guo's case reminds us of the a scandal in April in which members of a Shanghai branch of Red Cross ran up a dinner bill of more than 10,000 yuan.

During my long association with charity, I have seen that people, who for some reason don't donate to charity, often use such scandals as an excuse. No wonder, raising people's confidence in charity remains a serious problem.

In my country, Canada, about 80,000 charity organizations are registered with the revenue agency, and the largest part of donations goes to religious organizations, welfare, education, community service and health. The charities employ about 2 million people, discounting the volunteers. And registered charities account for 56 percent of incorporated nonprofit organizations and 63 percent of all revenues reported.

Why is that? The answer is: because they are authorized to issue receipts allowing donors to get tax exemptions on their income.

But each year, about 2,000 charity organizations' registration is cancelled for not filing their returns. And only less than half of them re-apply to be registered. Seventy-seven percent of Canadian charities employ one to five people or no one at all. The majority of the charities are small organizations run by volunteers. And only 1 percent of Canada's 161,000 incorporated nonprofit and voluntary organizations has annual revenue of $10 million or more.

In China, to mark the second anniversary of the May 2008 Sichuan earthquake, kits containing school material were sold for 100 yuan each at post offices last year. Donors could choose a child's name on a list and receive a personal postcard as expression of gratitude for the gift. The plastic kits and their contents would cost 40 yuan each at the most. So where did the extra 60 yuan go? This is what I call "wastage on wrapping".

China has not yet reached developed countries' organizational level in charity, and corruption is still serious in the country, though the phenomenon is not exclusive to China. Since Chinese people are aware of the needs and willing to help, several donors choose to support unregistered groups/individuals that collect funds for charity if they find them to be honest and committed.

I've been helping some people in Qinghai province with Chinese and non-Chinese donors' funds for three years. Some people often say that if I get an NGO registered, more people would donate. To begin with it's not easy to register an NGO. Several rules have to be followed and expenses would increase. NGOs must pay to get their accounts audited and hire at least a couple of people. But I prefer to use the entire amount I receive for charity, without keeping a single penny as administration fees.

Besides, why would more people donate if I run a registered charity? They possibly would have if they got tax exemptions for the money they donated. But now only enterprises - not individuals - enjoy that facility in China. It's still a difficult world out there.

Gates and Buffett said that more than half of those invited to the dinner had their own ideas on how to strengthen philanthropy in China. Perhaps they also have the answer to the question: How can China's charity organizations be made more transparent and easy to monitor?

Once the answers to the basic questions are known, charity can prosper in China.

Since honesty cannot be imposed on organizations, they can be controlled only if it becomes mandatory for them to make their annual budgets public. People have the right to know where their money goes.

The author is a Canadian scholar living in Beijing.

(China Daily 07/05/2011 page9)