Article source: China Foundation Center
Introduction: On the morning of December 12, “2018 China Foundation Transparency Index (FTI) Launch Event and Foundation Transparency Seminar” sponsored by China Foundation Center was held in Beijing. The meeting released 2018 China Foundation Transparency Index (FTI) Report, introduced the development history and current status of FTI and interpreted the findings in the latest FTI. Leaders from Beijing Federation of Social Science Circles, experts and scholars from Tsinghua University, Peking University and Renmin University of China, and representatives from international organizations and media witnessed the release of FTI and conducted in-depth discussion on self-discipline and transparency of the industry.
Experience of the Transparency of Family Foundation
Lei Yongsheng, Director General of Lao Niu Foundation
“Transparency has two levels of meaning: one is the transparency in legal sense, namely to disclose everything perfectly according to laws and regulations, rules and industry practices; the other is transparency of the society and public stereotypes and I call them ‘impression transparency’ and ‘brand transparency’. Although the transparency in legal sense is important, public stereotypes and brand transparency should not be ignored.”
“The transparency of family foundation is relatively simple. First of all, I think it’s “inborn”; secondly, it’s something ‘conscious’; furthermore, operation mode will also lead to different public impression. For families with all family members engaged in foundation, it’s better to have the family members participate in the activities and hire professional management team to run the foundation. In this way, the foundation will be more transparent among the public.”
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I am not a scholar and I haven’t conducted any systematic research on the concept of family foundation. From the perspective of a practitioner, my intuitive feeling is that the “family foundation in its full sense” must be equipped with three conditions:
● The first is financial independence. The money comes from the family, not from enterprise (even for a 100% family holding enterprise, we cannot say the money comes purely from the family because of the taxes and costs); when Mr. Niu Gensheng established the foundation, we the team thought that we should also provide some along with our boss. But Mr. Niu said no and insisted on the financial independence of family foundation.
● The second is the participation of family members. Family members need to participate in the operation and management of the foundation. They mainly control the strategic planning, cultural concept and business direction of the foundation.
● The third is the inheritance of family wealth/concept. There must be inherence, which comes in two aspects. One is the inheritance of wealth and the other one is the inheritance of the culture and concept hidden under wealth. A 100% family foundation inherits not only wealth, but also excellent cultural concept of the family.
As for transparency, I think transparency has two levels of meaning:
One is the transparency in legal sense, namely to disclose everything perfectly according to laws and regulations, rules and industry practices; the other is transparency of the society and public stereotypes and I call them “impression transparency” and “brand transparency”. If you ask someone: “Which of these foundations do you think have the highest transparency?” They will tell you based on impression and feeling, rather than ratings.
If it’s special investigation or research or evaluation of the transparency of a certain foundation, then it is the legal sense of transparency. However, this rarely occurs, unless you’ve really got into some troubles; what we feel at ordinary times is usually the “stereotypes”, which will bring pressure on transparency for foundations.
Therefore, I think the transparency of family foundation is relatively simple:
Therefore, I think it’s “inborn”. Family foundations are born with transparency. There is no logic and necessity to play tricks after making the donation. Someone once asked me: “What’s going on with Mr. Niu’s donation of shares? Is it for fame?” I didn’t reply with straight answer and asked in return: “Which one do you think is more famous, Lao Niu Foundation or Mengniu?” He said: “Mengniu is more famous.” Then he asked again: “Is it for tax evasion?” I asked: “Is it worth to donate 3.6 Billion in order to evade 0.9 Billion tax?”
Secondly, it’s “conscious”. In the same example, family foundation fear that others might say it’s not transparent and, therefore, it will consciously maintain its transparency. In addition, its operation mode might lead to different public impression. For foundations with whole family participation, like the husband is the founder, the wife is the Director General and the child is Secretary General, the public might think it’s not transparent even though it’s very transparent in legal sense. The other mode is to have family participation and hire professional management team for operation, which will leave a better impression among the public.
Therefore, my conclusion is: there’s no doubt that the transparency in legal sense is important, but public stereotypes and brand transparency should not be ignored. My suggestion is: based on the operation mode of family operation, for the sake of scientific operation and eliminating public concerns, we’d better hire professional managers to run the operation. Maybe this is more suitable for family foundation.