Together with 500 representatives from private and public foundations and grassroots NGOs across China, I participated in the first national private foundation forum, a great endeavor to assess the development of and challenges for private foundations in China. Emerging from the forum was a clear call for increased transparency and stronger cross-sector partnerships.

Five years ago, the Regulations for the Management of Foundations gave Chinese individuals and corporations the opportunity to establish their own private foundations with lower endowment thresholds, less scrutiny from regulatory agencies, and preferable tax deduction policies. Since then, the total number of private foundations has increased by more than 40 percent (between 2007 to 2008), and private foundations have become the main engine of growth for civil society organizations in China.

Before these new regulations, it was difficult to limit government control over the use of donated funds for public benefits. Many of the government-organized public foundations used government office buildings and staff to run the foundations. In these cases, the government, rather than the NGO boards, actually had the control.

To prepare for the two-day forum, a team of the top 10 Chinese experts worked tirelessly to design and unveil the “2008 Development Report of China’s Private Foundations,” an effort to track the development roots, the current statuses, and the future trends of private foundations in China. Surprisingly, the return rate of survey questionnaires was extremely low, demonstrating that few private foundations have the vision or mission to care about their own healthy development, unlike foundations such as the Narada Foundation.

Despite their rapid increase, private foundations are not meeting the needs of society. Some foundations have too few assets to make a real impact, or they lack independence from their founding corporations, while others are hindered by a shortfall of professional staff and ineffective internal governance. Additionally, most private foundations are not accustomed to transparency and disseminating information on a voluntary basis.

While I anticipate the growth of private foundations to continue in the next 10 to 20 years, private foundations need to embrace the best practices of other countries and apply them to the China context in order to move beyond their infant stage of development. By strengthening capacity-building and enhancing cross-sector partnerships, private foundations can become the incubator of new ideas, develop innovative approaches to address social needs, reshape civil society, and define new relations between the state and society in China.