Are the Wealthy Also Healthy? An Empirical Evaluation of the Financial Health of Chinese Foundations

Qun Wang, Lijun He


Since the 2004 Regulations of Administration of Foundations, there has been limited research on Chinese foundations’ financial health. Considering the importance of foundations in the nonprofit sector, this is a needed task. The present paper conducts an empirical evaluation of their financial health using 2,763 foundations with 10,102 observations. Tuckman and Chang (1991), which measures adequacy of equity, revenue diversification, administrative cost ratio and operating margin, reveals that 1) two thirds of the Chinese foundations are financially unhealthy; 2) 2008 to 2013, foundations’ overall financial health saw moderate improvement. Public foundations outperformed private foundations; and 3) new foundations may improve their health at a faster pace than older foundations. However, the financial health scores prove that we should interpret the results conservatively, because the quality of their health improvement is between low to moderate. The decreased number of unhealthy foundations does not mean foundations improved on all measures. Public foundations did not perform better on all measures than private foundations. In the six-year period, recent foundations became better on three measures, while worse on the other measure. 

2004년 재단 관리 기준 이후, 중국 재단의 재정 건전성에 대한 연구가 제한적이었습니다. 비영리 부문에서의 재단의 중요성을 고려할 때, 이것은 필요한 작업입니다. 본 논문은 10,720 건의 관측으로 2,763 개의 기초를 사용하여 재정 건전성에 대한 경험적 평가를 수행합니다. Tuckman과 Chang (1991)은 주식, 수익 다각화, 관리 비용 비율 및 영업 이익의 적정성을 측정 한 결과, 1) 중국 재단의 2/3가 재정적으로 건강에 좋지 않다. 2) 2008 년에서 2013 년까지 재단의 전반적인 재정 건전성은 완만한 개선을 보였습니다. 공공 재단이  개인 재단보다 월등 한 성과를 올렸습니다.  3) 새로운 기초가 이전 재단보다 더 빠른 속도로 건강을 향상시킬 수 있습니다. 그러나 재무 건전성 점수는 결과를 보수적으로 해석해야한다는 것을 증명합니다. 왜냐하면 그들의 건강 개선의 질이 낮은 것에서 보통 사이이기 때문입니다. 건강에 해로운 기초가 줄어들 었다고해서 모든 측정에서 기초가 개선 된 것은 아닙니다. 공공 재단은 개인 재단보다 모든 조치에서 더 잘 수행되지 못했습니다. 6 년의 기간 동안, 최근의 재단은 세 가지 방법으로 나아지는 반면 다른 방법에서는 더 나빠졌다.



Nonprofit Finance;Chinese Foundations;Nonprofit Management

Full Text:



Ashley, S., and Faulk, L. (2010). Nonprofit Competition in the Grants Marketplace. Nonprofit Management and Leadership, 21 (1), 43-57.

Ashley, S., and Faulk, L. (2014). Financial Analysis for Measuring and Comparing Risk in Grantmaking Portfolios. The Foundation Review, 6 (3), 60-68.

Aslam, S., Amin, S. (2015). Impact of Intellectual Capital on Financial Vulnerability of Pharmaceuticals Sector in Pakistan. Pakistan Journal of Commerce and Social Sciences, 9 (1), 171-184.

Bukhori, M. A. M., Othman, R., Aris, N. A., and Omar, N. (2013). Assessing Financial Vulnerability of Cooperative. Journal of Energy Technologies and Policy, 3 (11), 374-381.

Carroll, D. A., and Stater, K. J. (2008). Revenue Diversification in Nonprofit Organizations: Does It Lead to Financial Stability? Journal of Public Administration Research and Theory, 19 (4), 947-966.

Chikoto, G. L., and Neely, D. G. (2014). Building Nonprofit Financial Capacity: The Impact of Revenue Concentration and Overhead Costs. Nonprofit and Voluntary Sector Quarterly, 43 (3), 570-588.

Cordery, C., Sim, D., and Baskerville, R. F. (2013). Three Models, One Goal: Assessing Financial Vulnerability in New Zealand Amateur Sports Clubs. Sports Management Review, 16 (2), 186-199.

Dayson, C. (2013). Understanding Financial Vulnerability in UK Third Sector Organizations: Methodological Considerations and Applications for Policy, Practice and Research. Voluntary Sector Review, 4, (1), 19-38.

De Andres-Alonso, P., and Garcia-Rodriguez, I. (2016). Disentangling the Financial Vulnerability of Nonprofits. Voluntas, 27 (6), 2539-2560.

Estes, R. J. (1998). Emerging Chinese Foundations: The Role of Private Philanthropy in the New China. Regional Development Studies, 4, 165-180.

Fischer, R. L., Wilsker, A., and Young, D. R. (2011). Exploring the Revenue Mix of Nonprofit Organizations: Does It Lead to Publicness? Nonprofit and Voluntary Sector Quarterly, 40 (4), 662-681.

Fisman, R., and Hubbard, R. G. (2005). Precautionary Savings and the Governance of Nonprofit Organizations. Journal of Public Economics, 89, 2231-2243.

Fleishman, J. L. (2007). The Foundation: A Great American Secret; How Private Wealth is Changing the World. New York, NY: Public Affairs.

Frumkin, P., and Keating, E. K. (2011). Diversification Reconsidered: The Risks and Rewards of Revenue Concentration. Journal of Social Entrepreneurship, 2 (2), 151-164.

Gan, D., and Li, X. (2015). The Research on Nonprofit Financial Vulnerability: The Case of Chinese Foundations. Hunan Social Sciences, (4), 123-127.

Greenlee, J. S., and Trussel, J. M. (2000). Predicting the Financial Vulnerability of Charitable Organizations. Nonprofit Management and Leadership, 11 (2), 199-210.

Hager, M. (2001). Financial Vulnerability among Arts Organizations: A Test of the Tuckman-Chang Measures. Nonprofit and Voluntary Sector Quarterly, 30 (2), 376-392.

Hammack, D. C., and Anheier, H. K. (2010). American Foundations: Their Roles and Contributions to Society. In H. K. Anheier & D. C. Hammack (Eds.), American foundations: Roles and contributions, Washington, D.C., US: Brookings Institution Press, 3-27.

Johnson, J. M., and Ni, N. (2015). The Impact of Political Connections on Donations to Chinese NGOs. International Public Management Journal, 18 (4), 514-535.

Keating, E. K., Fischer, M., Gordon, T. P., and Greenlee, J. S. (2005). Assessing Financial Vulnerability in the Nonprofit Sector. Faculty Research Working Paper Series, RWP05-00. The Hauser Center for Nonprofit Organizations.

Kim, M. (2017). The Relationship of Nonprofits’ Financial Health to Program Outcomes: Empirical Evidence from Nonprofit Arts Organizations. Nonprofit and Voluntary Quarterly, 46 (3), 525-548.

Kingma, B. (1993). Portfolio Theory and Nonprofit Financial Stability. Nonprofit and Voluntary Sector Quarterly, 22 (2), 105-119.

Lai, W., Zhu, J., Tao, L., and Spires, A. J. (2015). Bounded by the State: Government Priorities and the Development of Private Philanthropic Foundations in China. The China Quarterly, 224, 1083-1092.

Leat, D. (2016). Philanthropic Foundations, Public Good and Public Policy. London, UK: Palgrave Macmillan.

Ma, J., Wang, Q., Dong, C., and Li, H. (2017). The Research Infrastructure of Chinese Foundations, A Database for Chinese Civil Society Studies. Scientific Data 4: 170094.

Ma, J., and Dedeo, S. (2016). State Power and Elite Autonomy: The Board Interlock Network of Chinese Non-profits. arXiv:1606.08103v1 [cs.SI].

Mayer, W. J., Wang, H. C., Egginton, J. F., and Flint, H. S. (2014). The Impact of Revenue Diversification on Expected Revenue and Volatility for Nonprofit Organizations. Nonprofit and Voluntary Sector Quarterly, 43 (2), 374-392.

McNeal, B. G. (2016). Revisiting the Financial Vulnerability of Nonprofit Business Leagues Post-2007 Recession. Journal of Business & Economic Policy, 3 (1), 1-14.

Ni, N., Chen, Q., Ding, S., and Wu, Z. (2016). Professionalization and Cost Efficiency of Fundraising in Charitable Organizations: The Case of Charitable Foundations in China. Voluntas, 1-25.

Nie, L., Liu, H. K., and Cheng, W. (2016). Exploring Factors that Influence Voluntary Disclosure by Chinese Foundations. Voluntas, 27 (5), 2374-2400.

Ohlson, J. A. (1980). Financial Ratios and the Probabilistic Prediction of Bankruptcy. Journal of Accounting Research, 18 (1), 1009-131.

Prentice, C. R. (2016). Understanding Nonprofit Financial Health Exploring the Effects of Organizational and Environmental Variables. Nonprofit and Voluntary Sector Quarterly, 45 (5) 888-909.

Silva, B., and Burger, R. (2015). Financial Vulnerability: An Empirical Study of Ugandan NGOs. Working Paper CIRIEC N° 2015/15.

Sulaiman, M., and Zakari, M. A. (2015). Efficiency and Effectiveness of waqf Institutions in Malaysia: Toward Financial Sustainability. In Hatem A. El-Karanshawy et al (Ed.), Access to Finance and Human Development – Essays on zakah, awqaf and Microfinance, Doha, Qatar: Bloomsbury Qatar Foundation, 43-53.

Tevel, E., Katz, H., and Brock, D. M. (2014). Nonprofit Financial Vulnerability: Testing Competing Models, Recommended Improvements, and Implications. Voluntas, 26 (6), 2500-2516.

Thomas, R., and Trafford, R. (2013). Were UK Culture, Sports and Recreation Charities Prepared for the 2008 Economic Downturn? An Application of Tuckman and Chang’s Measures of Financial Vulnerability. Voluntas, 24 (3), 630-648.

Trussel, J. M. (2002). Revisiting the Prediction of Financial Vulnerability in Charitable Organizations. Nonprofit Management and Leadership, 13 (1), 17-31.

Trussel, J. M., and Parsons, L. M. (2008). Financial Reporting Factors Affecting Donations to Charitable Organizations. Advance in Accounting, 23, 263-285.

Tuckman, H. P., and Chang, C. F. (1991). A Methodology for Measuring the Financial Vulnerability of Charitable Nonprofit Organizations. Nonprofit and Voluntary Sector Quarterly, 20 (4), 445-460.

Wang, Q. (2015). Understanding Chinese Foundations: Uneven Development and Future Landscape. The Research Infrastructure of Chinese Foundations Working Paper Series #3.

Wang, Q. (2016). Co-Optation or Restriction: The Differentiated Government Control over Foundations in China. The Research Infrastructure of Chinese Foundations Working Paper Series #6.

Watson, A. (2008). Chinese Society in a Transitional State: The Rise of Associations in China. In Jonathan Unger (Ed.), Associations and the Chinese State, Armonk, New York: M.E.Sharpe, 14-47.

Wei, Q. (2016). A Multilevel Analysis of Factors Influencing Chinese Foundations’ Capacity for Resource Mobilization. The Research Infrastructure of Chinese Foundations Working Paper Series #5.

Xu, X., and Liu, R. (2016). Evaluation of Corporate Governance in Chinese Mainland and Taiwan: A Comparative Study of Educational Foundations. Voluntas, 27 (5), 2401-2432.

Yang, T. (2010). A Preliminary Study of Charitable Foundations. Hunan Social Sciences, (1), 53-59.

Zhang, S., and Zhu, X. (2016). The Evaluation of Financial Vulnerability Models for Chinese Nonprofits: The Case of Foundations Registered with the Ministry of Civil Affairs. Social Scientist, (12), 71-77.

Zhao, Q., Zhang, R., and Du, Z. (1997). Obeying the Law and Regulations to Guarantee Proper Foundation Operation: An Investigation of the Foundations in the City of Hangzhou. Zhejiang Finance, (9), 27-28.



  • There are currently no refbacks.

Chinese Public Administration Review (ISSN 1539-6754, Online ISSN 2573-1483)  is published by the Institute for Public Service at Suffolk University - Boston.