Lack of trained professionals and managers obstacle to expansions

BEIJING - For the first year ever, more private foundations are operating in China than public ones.

At the same time, those private foundations are finding that they lack the trained professionals and managers they need to function well, according to a recent research report.

At the Third China Private Foundation Forum on Thursday in Beijing, Beijing Normal University's school of social development and public policy released a report on the development of private foundations.

China Foundation Center, a non-governmental philanthropic information provider, said 1,324 private foundations are now operating in China, 131 more than the number of public foundations that are in existence.

Figures from the Ministry of Civil Affairs, meanwhile, show the number of private foundations increased from 253 in 2005 to 1,065 in 2010. During the same period, public foundations went from being 721 in number to being 1,078.

In 2010, private foundations' revenue increased to more than 10 billion yuan ($1.6 billion). That came mainly from donations, investments and government departments' grants.

The report also said public foundations are better at raising money than private ones. They brought in more than 27 billion yuan this past year.

China began placing charity foundations into two categories in 2004 after issuing its Regulations on Foundation Management.

In China, an individual, a corporation or an academic institution can set up a private foundation using a fund containing a minimum of 2 million yuan. Such foundations are forbidden from raising money from the public.

Private foundations have taken on larger roles in ensuring that money and supplies go to providing relief from disasters, alleviating poverty and protecting the environment, said Sun Weilin, a senior official in charge of the management of non-governmental organizations under the Ministry of Civil Affairs.

The government will continue to simplify the procedures a foundation must go through to be officially registered and introduce favorable tax policies and other incentives to make it easier for the organizations to expand. Private foundations still have difficulty meeting the public's increasing and diverse demands, Sun added.

The report said private foundations have fewer than three full-time employees on average and that their scarcity of qualified workers has impeded their development.

"We've recognized that a majority of private foundations rely heavily on volunteers and part-time workers, a situation that has placed a lot of obstacles before their ability to perform their daily tasks," said Tao Chuanjin, a Beijing Normal University professor and one of the two authors of the report.

Tao said the low pay found at private foundations has proved a large obstacle to their attempts to attract more professionals.

Regulations stipulate that charity foundations' administrative costs and their employees' payments should not exceed 10 percent of their total expenses in a fiscal year.

The report said most private foundations follow that principle strictly, sometimes over-rigidly, keeping those costs within 3 percent of their annual expenses.

In 2010, Horizon Research Consultancy Group published a survey that polled about 450 charities. It showed that 80 percent of the former employees of those organizations quit their jobs because they were receiving what they considered to be low salaries.

"Some foundations worry that high administrative costs will destroy their credibility," Tao said.

"But unreasonably low expenditures on management and on employees ruin their enthusiasm and willingness to stay in the field for a long time."