Transparency of foundations in China

Abstract

In China, foundations are fast-growing nonprofit organizations. By operating projects and making grants, foundations play a vital role in nonprofit and social development. Due to a series of charity scandals since the 2000s, the government and the public are demanding increased transparency by nonprofit organizations in China. The foundations, as a result, have to conduct transparency practices in order to survive and develop. In practice, however, the extent of transparency varies greatly among foundations. Few studies have looked at the transparency of Chinese organizations, and fewer still have examined transparency practices at the individual organization level. This research seeks to fill this gap by exploring the transparency practices of foundations in China. Specifically, it frames the transparency of foundations by identifying the state and non-state actors’ transparency practices, detects the general pattern of transparency by analyzing the forces that drive or hinder the transparency practices of foundations, and examines the mechanisms of transparency practices by individual foundations. This research employs both quantitative data analysis and qualitative case studies. Data analysis utilizes a sample of 2,074 foundations and case studies analyze six representative Chinese foundations. The empirical findings show that three forces form the general pattern of foundations’ transparency: Resource dependence, governance and institution. Dependence on external resources, board governance and strategies, and government institutions significantly determine transparency practices by foundations. The case analysis further demonstrates that individual foundations’ transparency practices are in line with the general pattern at the sectoral level. Due to their particular backing and experience, each foundation has a unique transparency mechanism. Stability of resources, leadership style, government backing, operating strategy and fundraising strategy are the main factors that shape individual organizations’ uniqueness in developing transparency measures. This research contributes to the existing literature by developing organization theories in the Chinese context, and enriching transparency studies by shedding light on the transparency mechanism by individual organizations.