Something better than NGOs

Comment on "NGOs get boost from Shenzhen register reforms" (China Daily, Aug 21)

I have always considered a mutual trust company (MTC) a better and more efficient corporate model than nongovernmental organizations (NGOs) for services and products.

An NGO is formed as a nonprofit service provider often with volunteers. As such, NGOs often lack administrative expertise, efficiency, accountability, proper incentives, and active and effective supervision.

An MTC, on the other hand, is a for-profit organization, which has to pay out at least 90 percent of its profit to be eligible for tax exemptions. As such, MTCs have none of the problems that NGOs face.

Moreover, because of their for-profit nature and tax profile, MTCs will be better supervised by the authorities as well as customers.

Though NGOs and MTCs both are eligible for tax exemptions, in the end they are quite different in terms of effectiveness, efficiency and accountability.

F. Wu, on China Daily website

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(China Daily 08/24/2012 page9)