Charity from Fidelity: The Dual Effects of Party Embedding on Chinese Philanthropy

Under China's "Two Coverages" policy, the Chinese Communist Party requires registered charitable foundations to establish Party branches and conduct routine Party-building activities. This study disentangles two dimensions of Party embeddedness—structural leadership embeddedness (whether the Party branch secretary concurrently serves as board chairman or director) and proactive Party-building spending—and estimates their effects on charitable program spending and government subsidy allocation. Using a panel dataset of 199 registered charities (over 1,000 organization-year observations) from the Ministry of Civil Affairs, I apply two-way fixed effects and an instrumental variables approach with staff size as an exogenous instrument. Findings reveal the dual effects of Party-state integration: political embeddedness simultaneously shapes resource acquisition and public welfare delivery, providing nuanced evidence on state-society relations and public goods provision in China's third sector.