Community Benefit Fund: Governance & Legal Architecture
Community benefit is not a one-time charitable donation — it is a structural commitment embedded in the full operational lifecycle.
Core Principle
This framework requires data centers to establish community benefit sharing mechanisms that systematically return a portion of the economic value generated by data center operations to the host community. This is not a voluntary philanthropic act — it is a compliance requirement at Tier 2 (Community Mutual Benefit) and above.
Under China's legal framework, a community benefit fund cannot operate as an independent public fundraising charitable institution — this would violate the Charity Law's strict provisions on public fundraising qualifications. The following three compliant options are provided for operators to select based on local circumstances.
Option A: Special Fund under a Public Fundraising Foundation
Legal Basis
Article 26 of the Charity Law of the People's Republic of China (2023 revision) — charitable organizations with public fundraising qualifications may cooperate with other organizations to conduct public fundraising.
Operating Model
The data center operator partners with a charitable foundation possessing public fundraising qualifications to establish a special fund (non-independent legal entity) under that foundation. The special fund's fundraising, management, and expenditure are subject to the foundation's unified financial management and auditing.
Applicable Scenarios
- Operators seeking to leverage foundation branding to build community trust
- Suitable for larger-scale community benefit investments
- Requires the foundation's professional philanthropic project execution capabilities
Compliance Requirements
- Partner foundation must hold a valid Public Fundraising Qualification Certificate
- The special fund's annual reports must be publicly disclosed per Article 73 of the Charity Law
- The special fund's expenditures must align with the philanthropic purposes defined in the foundation's charter
Option B: Corporate Social Responsibility (CSR) Special Fund
Legal Basis
Article 20 of the Company Law of the People's Republic of China (2023 revision) — companies engaging in business activities shall give full consideration to the interests of stakeholders and the public interest.
Operating Model
The data center operator internally establishes a non-public CSR special fund. Funding sources are a fixed proportion of operating profits (recommended ≥ 1% of annual operating profit or 0.1% of annual revenue, whichever is higher). Funds are disbursed through directed donations to community projects and beneficiaries, with no public fundraising conducted.
Applicable Scenarios
- Operators seeking full autonomy over fund usage
- Suitable for short-to-medium-term projects or specific community needs
- Does not involve public fundraising — no public fundraising qualifications required
Compliance Requirements
- Fund usage must undergo independent third-party annual audit
- Audit reports and relevant financial information must be publicly disclosed to the host community
- Fundraising from the public in any form is prohibited
Option C: Joint Community Development Guiding Fund with Local Government
Legal Basis
Local investment promotion policies and local fiscal special fund management measures.
Operating Model
The data center operator negotiates with the local government (district/county level) of the project site to incorporate community benefit commitments into the investment promotion agreement. The government may match a portion of funds through tax rebates, land transfer revenues, and other channels, forming a joint community development guiding fund.
Applicable Scenarios
- Large-scale data center projects with significant contributions to local fiscal revenues
- Local government willingness to incorporate the data center into regional development planning
- Suitable for long-term (10+ years) community investments
Compliance Requirements
- A formal government cooperation agreement must be signed, clearly specifying each party's contribution ratio and management mechanisms
- Fund usage must comply with local fiscal special fund management regulations
- Must be subject to oversight by the local People's Congress or CPPCC
Three Options Compared
| Dimension | A: Public Foundation Affiliation | B: CSR Special Fund | C: Government Cooperation Guiding Fund |
| Legal Structure | Foundation special fund (non-independent legal entity) | Internal corporate CSR fund | Joint local fiscal fund |
| Autonomy | Medium — negotiated with partner foundation | High — fully independent | Medium — negotiated with government |
| Credibility | High — foundation brand endorsement | Medium — must build trust independently | High — government endorsement |
| Setup Timeline | 1–3 months | Immediate | 3–12 months (agreement negotiation) |
| Applicable Scale | Medium–Large | Any | Large |
| Public Fundraising | Permitted (through foundation) | Prohibited | Prohibited |
Tax Compliance Prerequisites
Before selecting a community benefit fund option, operators must evaluate the following tax implications:
- Pre-tax deduction for public welfare donations: Donation expenditures under Option A (public foundation affiliation) may qualify for pre-tax deduction under Article 9 of the Enterprise Income Tax Law (within 12% of annual profits)
- Tax treatment of CSR expenditures: CSR expenditures under Option B may be classified as operating expenses or donation expenditures; specific tax treatment requires consultation with a professional tax advisor
- Cross-border capital flows: If involving overseas community members or multinational corporate structures, foreign exchange management compliance must be assessed
⚠️ Legal Risk Notice: Under any option, the community benefit fund shall not, under any name, raise funds from unspecified members of the public — unless public fundraising qualifications have been obtained. Unauthorized public fundraising may constitute a violation under Article 101 of the Charity Law, subject to administrative penalties.
Governance & Transparency Requirements
Regardless of the chosen option, the community benefit fund shall satisfy the following governance requirements:
- ✅ Independent third-party annual audit — full audit report publicly disclosed
- ✅ Community representative participation in fund management decision-making (e.g., establishment of a community oversight committee)
- ✅ Annual community impact report — describing the sources, allocation, and effectiveness of funds
- ✅ Complete financial records — retained for no less than 10 years
Eternal Harmony is an AI research and development company. This is part of our public-interest research on technology infrastructure and community impact.
This framework is an independent initiative, not approved or endorsed by any government agency.