China is experiencing rapid growth both economically and socially. Being the second biggest economy in the world and having elevated 300 million people out of poverty in the past three decades, China is racing fast in its economic development and at the same time struggling with pressing social issues. As a result, the third sector is facing great challenges in the community that we have never seen before. As the Chinese word challenge suggests, challenges always come with opportunities. While the Chinese third sector is challenged by increasing social issues, there is also a world of opportunities for the third sector to grow and develop. There is increasing civic engagement in Chinese society, and the government is recognizing the roles of the third sector and opening up space for its existence and growth. With more acceptance and expectations from society, there is a need for a strong third sector. The third sector is in a critical period of building trust and demonstrating leadership. Community foundations have proved to be an effective philanthropic model in community development and tackling social issues in North America and other countries. This paper explores how community foundations are taking on a leadership role and how the best practices can be applied towards a stronger third sector development in China.