A Beijing-based children's charity hospital, known for providing both subsidized and free cleft lip and palate surgeries, is facing possible closure after accumulating more than 26 million yuan ($3.5 million) in unpaid rent and related fees, drawing widespread public attention and a surge of donations.

Beijing SmileAngel Children's Hospital was cofounded by actor Li Yapeng and seven others in 2012, following the birth of Li's daughter, Li Yan, who was born with a cleft lip. It is located across the Wangjing SOHO complex. The hospital has long been a pioneer in China's nonprofit pediatric care sector, offering comprehensive medical services beyond cleft lip and palate treatment, including pediatrics, ophthalmology, ENT, oral care, and surgery.

However, the hospital's future was thrown into doubt this month when court notices and a landlord's "demand for payment" appeared on its doors in Wangjing.

According to court documents, the hospital stopped paying its full rent in January 2022 amid pandemic-related financial constraints. By late 2025, the accumulated debt — including rent, property fees, and legal costs — exceeded 26 million yuan.

A Beijing court ruled in March 2025 that the hospital must vacate the premises and pay part of the overdue rent and fees. The hospital appealed, but in July, Beijing's Fourth Intermediate People's Court upheld the original verdict. The landlord has since applied for compulsory enforcement, though the hospital has yet to vacate or settle the debt.

In a social media post on Jan 13,Li Yapeng said, "Even if SmileAngel becomes history one day, we will stand our ground until the end." The statement sparked widespread support, prompting more than 340,000 people to donate over 23 million yuan to the Smile Angel Foundation, a legally separate charitable arm under the China Red Cross Foundation, dedicated to funding cleft lip and palate surgeries.

Donations, however, cannot be used to pay the hospital's rent or operational expenses.

"The foundation is a fundraising body, while the hospital is a separate implementing organization," explained Huang Haoming, dean of the Asia Academy of Philanthropy. "Charitable donations are legally bound to specific purposes and cannot be diverted to cover other debts."

Despite the financial strain, hospital personnel continue to treat children with ongoing surgical needs. Many procedures, such as cleft lip and palate surgeries, require multistage operations. Hospital officials say relocating the facility is complicated due to ongoing patient care and the need for suitable medical infrastructure. Li estimates that establishing a new hospital site would cost at least 30 million yuan, not including ongoing upgrades and staffing needs.

SmileAngel hospital has been operating on a "self-sustaining" model, relying on income from general outpatient services to subsidize free surgeries. But experts caution that such nonprofit models face long-term sustainability challenges without consistent public or government support.

Wang Zhenyao, chairman of the China Philanthropy Research Institute at Beijing Normal University, emphasized the importance of government backing for essential social services, including pediatric care.

"Relying entirely on charity will face sustainability challenges from a global perspective," Wang said.

Yang Guang, a communications adviser to charities, noted that digital platforms have greatly boosted public participation in philanthropy, with some donors shifting from "emotion-driven" to more "rational" engagement.

Yet this often leads to brief spikes of attention rather than sustained support. Yang advised moving away from one-off donations toward sustained, modest monthly contributions, which could provide more stable support to charitable projects.

He suggested the hospital may miss a key opportunity to build public trust if it fails to offer systematic financial transparency — such as clarifying how donations are used separately from other revenues.

Yang said nonprofit private institutions like the hospital usually face high operating costs but receive limited policy support in areas such as tax benefits, operational subsidies, or talent incentives. He called for more differentiated and substantive policies tailored to public-interest organizations, rather than reliance on moral encouragement alone.

In addition to public donations, some companies have offered support. A business in Jiangsu province has pledged a 2,500-square-meter space in Kunshan to host a potential hospital branch or volunteer medical services.

Since its founding in 2012, Smile-Angel hospital has provided more than 7,000 fully funded cleft lip and palate surgeries. Li told the Beijing News last week that the first 9 million yuan donation was enough to fund some 1,000 surgeries and expressed his commitment to continue the hospital's mission.

"The hospital is not just mine,"Li said. "It is built on the support of tens of thousands of donors over more than a decade. We will do everything we can to ensure it continues."

The hospital and its landlord continue to communicate about possible resolutions, though no final decisions regarding relocation or lease renewal have been announced.