BEIJING - Research by a charity information center is forecasting private foundations in China will overtake government and non-governmental organizations to become the main source of charity in the country.

Sponsored jointly by the Ministry of Civil Affairs and other charity groups, the China Charity Information Center said in its newly-released report that as the number of private charity foundations increases, they will play an indispensable role in the country's charity activities.

With the advent of a new enterprise income tax law, enterprises' charity donations of less than 12 percent of its total annual earnings will be tax free, instead of the three percent under the former provisional regulation.

The great acceleration of the increased percentage will encourage more enterprises to dabble in charity, such as the Narada Foundation, set up in May with a initial capital of 100 million yuan (US$13.8 million).

In five years, the most influential foundations in China will be private foundations, the report quoted an expert as saying.

Also, because of a national joint promotion from governments across the country and keen media publicity, citizens' charity enthusiasm is highly motivated; more people, such as artists or celebrities, tend to donate money or establish their own foundations.

In 2006, Chinese pop diva Faye Wong and her husband, Li Yapeng, launched the Yan Ran Angel Foundation. It was named after their daughter and aimed to help children with cleft palate under 14 years. The couple donated one million yuan to start the foundation in collaboration with the Red Cross Society of China (RCSC).

In the next three to five years, as government control on the private foundation enrollment loosens, a large number of private foundations will be established with capital of millions.

Also, as more favorable and convenient policies are made in local areas, the number of local foundations will increase.

In the eastern Jiangsu Province, there were 81 foundations at the end of 2006, up 92.9 percent compared with 2005. In addition, some foundations in Shanghai and Jiangsu have capital exceeding hundreds of millions.

In recent years, private foundations have expanded quickly. By the end of 2006, China had 795 public foundations, up 3.1 percent year-on-year and 349 private foundations, up 71.1 percent year-on year.

In addition, the number of private foundations has exceeded that of public ones in Beijing, Tianjin, Jiangsu, Gansu, Fujian and Hainan.

Launched in 2007 and lasting for three months, the research was based on 2006 statistics about the operation of China's 204 charity foundations. The spot check included 51 nationwide charity foundations and 153 local ones, with 92 private and 112 public foundations.

In China, foundations are divided into two types: public foundations, which can raise funds from the public, and private foundations, which may not take public donations but rely entirely on funding from individuals or organizations.

According to the newest China Charity Information Center data, at the end of September, the country has 1,245 foundations with total capital exceeding 10 billion yuan and annual capital collection of more than eight billion yuan.