After last year's May 12 Sichuan earthquake, China's central and local governments took charge of distributing about 80 percent of 70 billion yuan in charitable donations from the public for reconstruction, according to a report from the School of Public Policy and Management at Tsinghua University.

The huge volume of charitable donations posed a challenge to China's officials to examine the entire decision-making and management process to distribute and then track the funds to be able to show donors how each contribution was used.

"Indeed, it is not good news to China's charity industry," said Wang Zhenyao, director of the social welfare and charity promotion department under the Ministry of Civil Affairs.

Wang told the 21st Century Business Herald that there still are a lot of problems to be resolved regarding the mechanism and goals of the country's charity sector.

Common sense would suggest that government and non-profit organizations work together to share the burden of responsibility in providing public services to residents.

But currently, the country's philanthropic organizations cannot play a significant role in this arena.

They are affiliated with government departments and not running independently, according to Fan Baojun, president of China's largest philanthropic organization, the China Charity Federation.

"The mechanism and system of China's charitable organizations probably have lagged far behind people's demands," Fan said.

China has about 54,000 registered charity organizations, with less than 20,000 people working in these organizations. By comparison, US philanthropic organizations employ as many as 1 million people.

In addition, few citizens know how their donations are used in China's social welfare system.

Fortunately, China's central and local governments are catching up with ongoing work on a draft of what will become China's first charity law to establish a more integrated social welfare management system.

"In my opinion, the coming three years will be a special period for speeding up the establishment of China's social welfare management system," Wang told China Business Weekly during a previous interview.

Wang added that in addition to strengthening charitable organizations, it is also necessary to improve the country's social insurance, social relief and social welfare systems to provide public services to children, seniors and disabled people in the healthcare and education sectors.

The country's ongoing work to draft the first charity law could also be another driving force to establish China's social welfare system, Wang said.

"In no more than one or two years, the law will hopefully be passed after approval from the State Council and the National People's Congress, the top legislature," Wang said.

Financial support is one of the key elements for safeguarding the establishment of the national social welfare system, he said.

Khalid Malik, the United Nations resident coordinator and UNDP (United Nations Development Program) resident representative in China, estimated that China might need a total of 600 billion yuan to establish an integrated social welfare system.

An official from Shaanxi province estimated that China would need another 520 billion yuan to achieve a free healthcare system that would provide each citizen about 400 yuan in annual healthcare services.

Wang also pointed out that, according to a senior official from China's social welfare industry, China should establish a fund of about 300 billion yuan for basic care of the country's large number of elderly people.

"Adding together these figures, the country may need nearly 1.5 trillion yuan in national financial support," Wang said.

Such a system would require more than 10 million employees to provide basic services for the country, he added.

Wang suggested that China's government and philanthropic organizations should work together to investigate how to better meet all people's expectations of China's charity industry.

(China Daily 10/26/2009 page10)