A debate over a charity’s management fees has been ignited by the case of Hanghang, a 6-month-old baby from Anhui province. On the 26th of January, Hanghang was unfortunately badly burnt by a small electric heater. The accident was caused by a moment’s inattention. Hanghang’s grandmother had put the heater on his bed to make him feel warm and went out. She came back 10 minutes later, only to find that Hanghang had been severely burnt. According to the hospital’s diagnosis, the burns stretched from face to right hand, covering 15% of his body and endangering his life.
Upon hearing the news, Shanghai’s Tree Charity (大树公益服务支持中心) decided to lend a helping hand. After signing a donation agreement with Hanghang’s family the charity, along with the Shanghai Huide Foundation (上海汇德基金会), initiated a fundraising program on Tencent Charity on the 29th of January. 220,000 yuan had been raised by the 1st of February.
While the program captured the public’s attention, people began to question the validity of the budget set by the charity. As explained in the program’s detailed introduction, the aim was to raise 520202 yuan. 500,000 is to be spent on Hanghang’s medical expenses, 15,000 yuan will go to Tree Charity as an executive fee, and the remaining 5202 yuan will be given to the Shanghai Huide Foundation as a management fee.
After noticing this, some donors commented that their donations were meant for the unfortunate baby, not for the charity. One donor also recalled that he questioned Tree Charity about the concrete use of the fees in a WeChat group and on Weibo, but the comments were soon deleted. Others however think it understandable for charities to collect management fees, which are necessary to maintain their operations.
As member of Tree Charity’s staff Yuqi explained, the management fees were actually used to cover the travel expenses for volunteers to visit Hanghang, to look for treatment in Shanghai with his family, and to visit his family after surgery. Yuqi also pointed out that there is a common understanding that charities extract a small management fees when raising funds. Compared to other charities, Tree Charity only sets aside a relatively low proportion of the total donations.
One lawyer from the Beijing Jingshi Law Firm noted that as provided by Article 60 of the Charity Law, annual management fees should not exceed 10% of annual expenditure for foundations with the qualifications for public fundraising. Furthermore if the expenditure and management costs of an individual charitable donation activity are specified in the donation agreement, then the agreement should be followed. The Tree Charity’s management fees are thus valid from a legal perspective.
As an editorial by Qiluwang (齐鲁网) remarks, at present most charities’ management fees are undisclosed and most people are unfamiliar with the concept of management fees. From the perspective of the development of philanthropy, disclosure of the management fees would promote financial transparency. For this reason, every expenditure should be recorded in detail and regularly made public.