Questions asked over crowdfunding

Management flaws

The crowdfunding sector has seen rapid growth in recent years.

According to the websites of three popular platforms－Shuidichou, Qingsongchou and Aixinchou－the total amount they raised last year reached 40 billion yuan, helping millions of families.

This rapid growth comes in the wake of scandals involving established charities and welfare lotteries.

A case that triggered the erosion of public confidence in charity organizations involved a young woman named Guo Meimei, who in 2011 posted photos of her extravagant lifestyle online and claimed to work for the Red Cross Society of China－the country's main provider of humanitarian assistance.

Although it later emerged that she had nothing to do with the organization, an investigation exposed management flaws and a lack of transparency.

Another case involved the China Welfare Lottery－a major government-approved fund created to help disadvantaged groups.

Last year alone, five senior lottery officials were investigated on corruption charges. They included Wang Suying, former director of the China Welfare Lottery Management Center, who was placed under investigation in September.

The 58-year-old Beijing native was the third of the center's directors to be investigated on such charges since 2017, following Chen Chuanshu and Bao Xuequan.

Huang, with the China Philanthropy Research Institute, said crowdfunding platforms are well-received after they are rolled out because they link donors directly to beneficiaries.

She added that their rapid growth may also be attributed to a knowledge gap among the public, as although legislators do not see crowdfunding as a charity activity in a legal sense, people regard every cent they spend as charitable funding.

"This has led to the public letting its guard down over crowdfunding, raising expectations over platforms' obligations," she said, adding that there is an urgent need to bridge the gap so that people can think twice before rushing to donate.

Gu Yan, a researcher at the National Development and Reform Commission's Academy of Macroeconomic Research, said "imperfect" social security coverage has created demand for such platforms, and is partly accountable for the fast-growing sector.

"In theory, the State benefit policy covers everyone, but the policy is still insufficient when it comes to certain individuals," he said.

Gu added that increased disposable income, higher public awareness of philanthropy, and fastgrowing online technology also contributed to the demand.