September 9, 2011
China—Large Number of Recent Scandals in GONGO-type Charities
• In June, netizens raised an outcry after seeing photographs posted online by Ms. Guo Mei Mei, 20, a supposed general manager of the Red Cross’ commercial arm, of her Maserati luxury car and Hermes designer bags. They believe she is the girlfriend of Mr. Wang Jun, who organizes fund-raising drives for the Red Cross. The National Audit Office has since issued a report listing five financial problems it uncovered at the Red Cross.
• Asia News Network reported that when tennis star Li Na wanted to donate half a million yuan (US$78,000) of her Roland Garros championship prize money in July, she decided not to do it through the Red Cross Society. After seeing China's largest charity recently embroiled in the Guo Mei Mei controversy over its management and alleged abuse of donations, she chose to donate the money directly to a home for the elderly in her hometown of Wuhan.
• The China-Africa Hope Project, which raises money to build schools in Africa, came under fire in August when a local newspaper found that it was a private enterprise and was deducting 10 per cent of donations for management fees. The charity is headed by 24-year-old Lu Xingyu, the daughter of a prominent businessman, Mr. Lu Junqing.
• The China Charity Federation was accused in August of issuing receipts for solar panels worth 15 million yuan (HK$18.3 million) to a solar panel company, even though the panels were still in the donor’s warehouse, according to mainland media. The federation received a handling fee of 50,000 yuan. Only large charity funds endorsed by the government can issue such receipts, which allow donors to enjoy tax deductions. Central China Television said the receipts for 15 million yuan would be able to save the donor 2 million yuan in tax. It said the amount was the result of negotiations with the donor - Suntech Silicon Solar Technology in Wuxi, Zhejiang - and that the federation usually charged a 3 per cent handling fee for cash donations.
• In September, a top representative from Henan Soong Ching Ling Foundation (HSCLF) told Caixin Newspaper that HSCLF siphoned off donor funds for real estate investment following local media reports alleging financial misconduct. This is also being investigated by the National Audit Office.
To cap this all off – donations to all charities in China fell by about ninety percent in the wake of the scandals!
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These reports make me leery of donating to organizations. If someone is greedy enough to steal money by defrauding others, that's bad enough. To involve a charitable cause that is supposed to help those in need is especially heartless.
It is scary to imagine how these people live with themselves and are able to sleep at night. My feeling unfortunately, is that they sleep just fine because they lack a conscience.
Posted by: Dana Altman, Esq. | Sep 12, 2011 10:30:35 AM