Caixin
Feb 13, 2020 06:28 AM
SOCIETY & CULTURE

Government Takeover of $387 Million of Coronavirus Donations Challenged

The Wuhan government said it is acting only as a “custodian” for donated funds. Photo: VCG
The Wuhan government said it is acting only as a “custodian” for donated funds. Photo: VCG

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Wuhan hospitals’ desperate medical supply shortages have inspired an outpouring of hundreds of millions of dollars in private donations to help fight the coronavirus epidemic. But the transfer of 2.7 billion yuan ($387 million) of charity funds to city coffers is raising questions about where the money will actually go.

As of Feb. 2, the Wuhan Charity Federation, branch of China Charity Federation and one the main organizations accepting donations, received more than 3 billion yuan of private contributions. Since Jan. 27, the federation transferred 2.7 billion yuan in four batches to the Wuhan Municipal Government’s finance department, according to a state-run newspaper.

China’s charity organizations, including the Red Cross, are already under fire for failing to get supplies to the frontline hospitals quickly enough even after collecting millions of dollars in donations. If Wuhan Charity doesn’t use the money for the epidemic fight and simply turns it over to the government, that would violate the wishes of donors, said a private donor with the last name Wu.

Chinese President Xi Jinping emphasized in a meeting last week that all donations should be used in a timely way for epidemic prevention and control, and giving and receiving of donations should be regulated according to law. China’s charity organizations and governments have long been criticized for lack of transparency in the use of donations for disaster and other emergency relief.

Wuhan Charity Federation transferred the money to the government in response to a notice from Wuhan Epidemic Prevention and Control Headquarters, the charity said Wednesday in a statement. The headquarters will set up a special account and guide the use of the money for emergency relief in a more accurate and timely way, the charity said.

The money has been put into use at Wuhan Jinyintan Hospital and Wuhan Pulmonary Hospital ― the two key hospitals treating coronavirus patients ― and two newly built makeshift hospitals, the charity said. Details on use of the money are available on its website, the charity said, but so far the data wasn’t visible on the site.

According to a staffer at the epidemic control agency, the city finance department will act only as a “custodian” for the funds, putting them into a special account. The money in the special account is not actually in the government’s fiscal system, the person said.

The finance department hasn’t disclosed how the money is being used. In response to an inquiry from Caixin, Wuhan Epidemic Prevention and Control Headquarters said the finance department is in the process of making disclosures.

Under Chinese law, charitable organizations can’t simply turn donations over to the government, said Ma Jianyin, director of China Philanthropy Research Institute at Beijing Normal University. The epidemic control agency could apply to use donated funds by submitting a detailed plan to the charity, Ma said, but disbursements should be well documented.

Chinese charities and governments have a track record for opaque spending of charitable donations for disaster and emergency relief, Ma said.

During the SARS outbreak in 2003 and the Wenchuan earthquake in 2008, the government also took over some charity donations for centralized planning purposes. Some research showed that about 80% of private donations were transferred into government accounts, but use of the money was never disclosed, Ma said.

After the major 2010 earthquake in Yushu, Qinghai province, the local government tried to step in to administer private donations but failed to do so under pressure of public opposition, Ma said.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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