80 Percent of the Earthquake Relief Donation Went to the Chinese Government

A set of data attracted people’s attentions on the Chinese Internet – after a six month investigation Qinghua university institute of public administration team concluded that, charitable contributions coming from all over the country, a value of up to 76.712 billion Yuan of earthquake relief fund and materials donations, 80% of that may have gone to the Chinese government’s financial accounts, became government’s “extra income”, controlled by the government for disasters. Among the entire contributions, 58% of the donations have gone directly to the government.

At the same time the other 31% of the donation (about 19.9 billion Yuan) went to the Red Cross and other charities, however among these donations, in the end most of them still end up to the government for spending.

Above data came from an famous article called “Who controls the 76 billion earthquake relief donation” from “China Youth Daily” in the influential section “freezing point”.

Who Controls the 76 Billion Earthquake Relief Donation

In Nanjing a beggar named Xu Chao exchanged small bills and changes he got from begging to 100 Yuan bills and put them into the donation box; in Shanghai a white collar worker donated 1000 Yuan from his salary; in Beijing a chief editor of a newspaper donated 10,000 Yuan…

After last year “5.12” Wenchuan earthquake donations similar to these came from all over the country. Up till April 30^th, total of 76.712 billion Yuan (amount witch 65.3 billion cash and materials valued at 11.4 billion Yuan) has set a “new record in China’s donation history”.

As the large number accumulated day by day, some doubts have been repeatedly mentioned, where did the money go?

Recently, Qinghua University Institute of public administration researched this issue. According to their six month investigation, this money coming from the people, 80% of it may have gone to the Chinese government’s financial accounts, became “government’s extra income”, controlled by the government for disasters.

This data, according to Deng Guosheng (邓国胜), the person in charge of the team, is worth pondering. In many western countries during disaster relief the government does not accept private donations. Even if accepted, they will give the money to non-governmental organizations to spend. In China, however, apparently is not like this.

Behind the number 80%, Qinghua University Institute of Public Administration associate professor of NGO research department sees a not optimistic situation. This is troubling, although this has not yet struck a nerve in the public it is closely related to the profound social change that is occurring or about to occur in this country.

Public Resources Monopolized by the Government

Many people use the word “Blowout” to describe a major earthquake last year that inspired an upsurge of public donations. Some numbers showed, only during May and June last year, in Shanghai, Beijing, Chongqing and other cities, every 9 out of 10 people have donated to the earthquake relief.

The money may be donated through companies’ union, or stuffed into a humble roadside donation box established by certain public institutions, or perhaps through a special party membership fee into the Central Organization Department or perhaps through a bank or post office transferred into a public fund-raising account…

The money then flows between numerous accounts in the country. Finally more than half go directly to the government’s account. This includes tens of millions party members’ donation through special membership fee, and from provincial government accepted donations directly and as well as from the special earthquake relief accounts Ministry of Civil Affairs set up.

To be precise, according to the research of Deng GuoSheng and his colleagues, up till the end of November last year, among the entire cash contributions 65.25 billion Yuan 58% of the donations about 37.9 billion have gone directly to the government.

If this is the biggest piece of the “cake”, then the second biggest piece goes to Red Cross and other charities. It is around 31%, about 19.9 billion Yuan.

Although the state council issued a document stating the money could be arranged for use by these local public organizations. However Mr. Deng’s team conducted a sample survey in seven provinces (cities) of the country and found that most of the contributions, in the end still went to the government departments for uses.

How high is the percentage, Deng’s team did not give exact figures. However in this research they got the fact: among the money raised by the local charity organization, except for the small amount which must distributed according to the donors’ will, most of the non-directional funds were transferred to the local government financial accounts.

The fact is: in some provinces, non-directional funds must be transferred to the government’s account. Some provinces, these organizations may have the rights to use some of the donated funds, but usually when it went to the disaster areas the local governments carry out these aid projects. And in some other provinces, even they don’t have to transfer the money; the money is still controlled and used by the government.

The fact is: in some province, even the directional funds were transferred to the government financial accounts, and distributed by the government according to donor’s will.

The fact is: in a few areas when the local government funding the rescue efforts, more than half of the contribution is from the community and less than half is from the government finances. In some provinces, the proportion is even higher.

Right now, this national disaster relief fund “cake” only has a small piece left, goes to Red Cross, China Charity Federation and other 16 national public foundations. What goes onto their plate is only 11% of the total donation. In the table Deng’s team generated, only this section of fund is noted as “to be arranged and used on your own”.

But how is this “arranged and used on your own”?

China Red Cross and China Charity Federation are two dominant disasters relief fundraising “government-run public organization”, they raise a total of about 6.3 billion Yuan. The usual way is two agencies will allocate their funding to the local Red Cross and local charities. But the local Red Cross and charities are not very capable. In some area, it is only a very small team under the local health department. Whether it is for rebuilding victims’ housing, rebuilding schools or hospitals, usually eventually the flow of funds goes to the local governments. The local governments become the actual implementers of these projects.

This is a reverse flow of capital. No wonder the founder of “Hope Project” Xu Yongguan (徐永光) said that in the international community, usually the government buys services form NGO (Non-Governmental Organizations) for example U. S. government buys NGO services, their funding is 1.5 times more than the pubic donation. But China is the opposite. It becomes the NGO “purchases” services from the government. “After the public donates to the community, NGO usually works with the government on projects, but when it comes down to implementation, all the works are done by the civil servants.”

Although there is no precise figures, but according to rough estimates, all donations came from the earthquake relief fund, in the end went to the government and controlled by the government for spending is very likely more than 80%.

No money to spend vs. Worry about how to spend money

In certain degree Deng expresses understanding. Because Red Cross and other charity organizations let local government carry out projects can transfer the cost to the local government, at the same time also transfers risks to the local government, to them “this might not be a bad idea”.

However, “this is not the direction” the scholar said, shaking his head.

How he sees it, the direction should be “small government, big society”, from government monopoly to opening up to moderate. Why not take out these funding and let the public organizations to take care of the projects and liven up the community?

He believes that in terms of the provision of public services, the government has its own limitations, “therefore we have to reform, in the economic sphere introduce market mechanisms; in the social sphere introduce public society organizations.”

"A group of community self-management to self-operation of non-governmental organizations, this is an important aspect of civil society." Deng Guosheng said.

His thinks that the general direction should be after this country achieves “open economy” now that it time to move towards an “open society”.

Many scenes after the “5.12” earthquake made him “very touched and excited.” According to incomplete statistics, there were more than 300 public society organizations participated in the disaster relief and working on the front line. There were 3 million volunteers. Many people believe that China’s volunteers and non-governmental organizations had an unprecedented debut. It displayed the power of people for the first time in this country.

Optimists believe that "in 2008 the first year of China’s civil society." More high-profile research institutions announced that China has entered a civil society.

However Deng did not agree, because things did not seem so optimistic.

Since August, September last year, once active volunteers and non-governmental organizations in the affected areas retreated like the “flood”. In the study, Deng’s team’s data shows, as of April this year, the non-governmental organizations in the affected areas has been estimated less than 50, and there is only less than 50,000 volunteers.

"Lack of resources and funding support, therefore difficult to sustain, this is a very important reason." Deng said.

This earthquake, "like a magnifying glass," displaying the long time issues in the focus. All along, the national grass-roots NGO is almost impossible to obtain the support of local resources, most of their funding are from abroad. After the quake, there is this outbreak of the amazing enthusiasm of society contributions. Working in NGO nearly 20 years, Xu Yongguang thought, "This time the local NGO in China will certainly be able gain resources and support from the local community." But later found that the situation has not significantly changed.

Ultimately, the majority of the donation went to the governments, very few donations went to the local NGO. A project can get 3-5 million in grants is considered "very impressive"; 100000 – 200,000 of funding is already “pretty good."

Therefore, it is not difficult to understand, people will hear two distinct concerns:
A man named Meng Liu operates a grass-root NGO, and is concerned that they are running out of money soon. He used a 100,000 Yuan of his own saving to maintain the team’s expenses. He was in financial trouble that he couldn’t even afford to eat every meal. His wife had to rush back from abroad to give him money. His organization called "psychological assistance to the National Alliance" in Dujiangyan city at one point were up to more than 200 volunteers and now only a small number of people struggling to support.
And an official at the Social Welfare and the Ministry of Civil Affairs is concerned post-disaster and said; now hundreds of billions of contributions is hanging on the Chinese government’s head like a “Landslide Lake”. In some local government, each worker is even averaging 10s of millions, how to spend it?

Not exactly know how many of the grass-roots NGO in the earthquake area is like Liu Meng sustaining by self-financing, out of their own pockets. According to research scholars in the affected areas that "there is quite a few." Moreover, Guo Hong, Sichuan Province Academy of Social Sciences researcher believes that the most important cause of a large number of volunteers and NGO to withdraw from the area is the lack of financial support.

Still a Long Road to China Civil Society

More than 80% of the community of donation fund eventually went to the Chinese government. What does this mean? It looks like the public is as not as worried as Mr. Deng.

In May this year, Deng’s team with a market monitoring company conducted a sample of surveys found that, in more than 2000 valid samples, 60.8% of respondents believe that disaster, the community donated funds should be coordinated by the government to use, only 9 .7% of the people think that should not be, as well as 29.1% said they don’t care.

Scholars have recognized that "Weak is the characteristics of Chinese non-governmental organizations." In the United States a charitable institution called the United Way, for the year 2007 will be able to raise four billion U.S. dollars, and for more than 1300 Chinese Foundations together raised only about 600 million U.S. dollars in the same year.

Scholars have also acknowledged that China’s civil society organizations are not every good at organizing the public and to execute plans. They also recognize that these non-governmental organizations are not very good at keep their financial situation open and transparent. And sometimes there are scandals which reduces their credibility.
However, Mr. Deng said "just because not being capable yet, does not mean they should not give you a chance. Even the government can do a better job, but it is not the direction.”

Otherwise, the government monopolizes, will turn the development of these non-governmental organizations into a vicious circle. "Because you are weak, we do not give you the opportunity; not giving you the opportunity, you will be weaker." Deng said.

Dang’s research results will be published on August 12^th in Beijing’s "Social Organization Action Discussion 5.12 Public Projects and the Exchange of Exhibitions”. Together with the results of other scholars around the non-governmental organizations involved in disaster relief.

After non-governmental forces showed its face in China more than a year ago, “China Helping the poor Foundation”, China Red Cross and 21 other Foundations sponsored this discussion event to reflect on 5.12 China’s earthquake relief and to plan for future actions.

Deng Guosheng is no longer as optimistic as a year ago. Sitting in the office, this skinny scholar signed and said: "There is still a long road to China civil society."