The social capital allocation in the foundation sector in China has been inefficient due to little transparency on use and impact of funds, and monitoring effectiveness.
In 2008, only 16% foundations disclosed annual reports to the public.
The information asymmetry has led to public distrust and decreasing public donation after scandals around a few established public foundations in 2011.
China Foundation Center (founded in July, 2010), since inception, has been working on collecting data and improving transparency.
In order to facilitate efficient social capital allocation, CFC has launched the Foundation Transparency Index (FTI) in August 2012, to rate foundations against the status and professionalism of information disclosure.
Updated weekly, the FTI adopts a transparent weighted average calculation methodology, which was jointly developed with Tsinghua University.
As of 2013, CFC had included basic and financial information of 90% foundations, and project information of over 50% foundations, serving as a key bridge for the spread of information and social capital between donors / investors and the social sector.
The Foundation Transparency Index was expected to revolutionize the foundation sector by making peer comparisons and allowing foundations to improve rankings by disclosing more information.
As an industry platform, CFC had covered all registered foundations (3’608 foundations as of 2013).