The reputation of Jackie Chan Charitable Foundation has taken another hit.

On Dec. 24, internet whistleblower Zhou Xiaoyun claimed that the Jackie Chan Charitable Foundation received 18 million yuan from another charity. Zhou alleged that 10 percent of this money was pocketed by staff as “management fees.”

Jackie Chan has denied the allegations, writing on his microblog that “My charitable foundation does not charge any management fees. All operating costs are borne by me alone.”

The 18 million yuan originated from the China Charities Aid Foundation for Children (CCAFC). The organization alloted over 19 million yuan to its “Hope to Return Home” project, which aimed to provide assistance in rescuing abducted children in China.

Yet according to the CCAFC’s 2011 annual report, the charity used less than 1 million yuan on the abducted children campaign. Instead it transfered 18 million yuan of the project money to the Jackie Chan Foundation, where the money was to benefit sick and poor children. Other small amounts of money, ranging from 50,000 to 200,000 yuan were alloted toward other charitable organizations.

The staff at the Jackie Chan Charitable Foundation claimed the report’s figures were only rough estimates. But economist Frank Tian Xie says estimation is unacceptable.

[Frank Tian Xie, Professor of Economics University of South Carolina Aiken Business School]:
“If the money was misappropriated, using a rough chart as an excuse is unacceptable. In any international community, any normal society and country, there will be a very strict financial regulatory system. If there are mistakes in the chart, and let alone mistakes in such a huge sum of money, an accountant or the CPA will discover it.”

Professor Frank Tian Xie says that if the China Charities Aid Foundation for Children loses money due to misappropriation or theft, it will lose its credibility. It damages not only the foundation but also other associated businesses.

[Frank Tian Xie, Professor of Economics University of South Carolina Aiken Business School]:
“In fact, we found that in a normal society, some directors of charitable organizations may misuse funds, but it is typically on a small-scale. However, events of this magnitude happen in China. It explaining the unsupervised checks and balances of our country. In a country that doesn’t allow public opinion as supervision, donations from Chinese people out of good intention are destined to be misappropriated.”

Chinese scholar Chen Yongmiao takes that thought further and says charity in China is a money laundering tool for communist officials.

[Chen Yongmiao, Scholar]:
“Charity in China belongs to the officials. Actually, no matter what legislation we have, its aim is for money laundering, or as a tool of corruption. As long as the existing monopoly mechanism does not change, everything will remain the same.”

As to how to avoid similar problems in the future, a JCCF staff member answered “I can only say that the donors need to watch their own contributions.”

Earlier in December Zhou Xiaoyun brought to public attention the CCAFC paying out 4.84 billion yuan for a “one time, business related expense. That amount of money was far more than the 80 million they received from donations. That same night the CCAFC said in a statement that they made a mistake in their figures. The charity clarified that the 4.75 billion yuan should have been reported as 475 million yuan.

In 2012, a China Foundation Transparency Index report showed that out of the 2,213 Chinese foundations operating in China the average score for transparency was only 45.79 points of a total possible score of 129.4 points.
With only a 35 percent mark, charities in China fail to make a passing grade.