Charity Law FAQs

Below are some FAQs about the new Charity Law[1]. The FAQs reflect my own personal views. I’ll be posting revisions of these FAQs throughout the year as new questions and information arise, new developments take place, or my views change. Comments, criticisms and suggestions are welcome.

What is the Charity Law and when does it go into effect?

The Charity Law does the following: 1) defines the scope of the charity/philanthropy sector sector in China[2]; 2) regulates the establishment and management of charitable organizations and charitable trusts and their assets and activities; and 3) regulates the scope and management of charitable fundraising and donations, including more requirements for information disclosure by charitable organizations in order to promote greater transparency in the sector. 

The Charity Law was passed on March 16, 2016 and will go into effect September 1, 2016.

What is new (and not so new) about the Charity Law?

The Charity Law is the most comprehensive law on charity that has been passed in the history of the PRC. It is not exactly the first of its kind though. An Explanatory Note attached to the first draft of the Charity Law last October notes the existence of earlier, relevant laws such as the Public Welfare Donation Law (PWDL) and Trust Law. The PWDL, passed in 1999, defines the scope of who can make public welfare donations (including overseas donors) and the nonprofit organizations qualified to receive those donations, the responsibilities of donors and recipient organizations, and preferential policies for charitable donations such as tax exemptions. 

How is the Charity Law different from other relevant legislation?

The Charity Law is a much more comprehensive law than the PWDL. It has a section (Chapter 4) on Charitable Donations and articles laying the responsibilities of donors and recipient organizations, and the management and supervision of charitable organizations and services that are more detailed than what can be found in the PWDL.

It also has several new sections. It has an important section (Chapter 2) allowing for the establishment of a new category of nonprofit, public benefit organization – the charitable organization. There is also an important section on Charitable Fundraising (Chapter 3) that broadens the scope for public fundraising and for the first time regulates online fundraising.  After the scandals in the philanthropy sector in 2011, the Charity Law also includes a section (Chapter 7) on Information Disclosure to encourage greater transparency and accountability among charitable organizations in how they carry out their fundraising activities and how donations are used.

The Charity Law also addresses new organizational forms touched on in other legislation such as charitable trusts (Chapter 5). There is a Trust Law that has existed since 2001 that allows for charitable trusts, but none have been established so far to my knowledge. In 2015, Jack Ma of Alibaba made news when he donated around $2.4 billion to set up a charitable trust outside of China, explaining that the regulatory environment for philanthropy in China was not yet mature enough.

What is positive about the Charity Law?

1) Language and intent are always important when we are talking about legislation, and the language and intent of the Charity Law are for the most part supportive of the development of charitable organizations and activities, particularly when compared to drafts of the Overseas NGO Management Law.

2) Compared with the PWDL, Chapter 1 of the Charity Law somewhat broadens the scope of what constitutes public welfare or charity. In defining the scope of charitable activities, it uses language similar to the PWDL, including the last catchall category of “public benefit activities that comply with this law.” How broad this last category is will depend on how the central and local governments implement and enforce this law. Will it include activities such as performance art events advocating against sexual harassment, or lawsuits defending labor activists? Only time will tell.

The Charity Law also broadens the scope of public welfare/charitable organizations and undertakings to include volunteers, charitable organizations and trusts, and urban and rural community organizations, but does not explicitly mention nonprofit public institutions which are a legacy of the planned economy. The PWDL was adopted in an earlier era when China was making the transition from a planned to a market economy and public institutions created during the prereform period were commonplace.

3) The Charity Law contains none of the corporatist language of previous regulations which imposed strict limits on freedom of association. In past regulations, it was common to see clauses that stated that only one social organization working on a particular issue area was allowed to register within a given administrative area, or that a social organization registered in an administrative area could only work within that area, or that a social organization would not be able to establish branches in other localities.

In what is the biggest change, the Law does not require charitable organizations to find a professional supervisory organ to be its sponsor before registering with the Civil Affairs department. The need to find an official sponsor, and thus be under the “dual management” of that sponsor and Civil Affairs, was in the past the biggest obstacle for nonprofits seeking to register.  Under the Charity Law (Chapter 2), organizations can directly register with Civil Affairs.  

Unlike previous regulations, the Law also does not place limits on the number of organizations per sector, on branch organizations, or on the geographic scope of an organization’s work.

4) The Charity Law provides more generous tax incentives, particularly for donors, although we still need to see how the tax departments promote, implement and enforce those incentives. One new addition in the final version of the law, for instance, can be found in Article 80 which states “the amount of charitable donations beyond the amount deductible from income tax for that year is allowed to be carried over into the calculation of taxable income over the next three years.”

5)  The Charity Law lowers barriers for charitable organizations by not requiring a minimum level of capital or assets to register (Article 9), unless those requirements are to be spelled out later in the implementing regulations.

6) The Charity Law lowers barriers for public fundraising organizations by allowing organizations that have been lawfully registered for two years to apply for public fundraising status (Article 22). In the past, public fundraising status has been very difficult to obtain and the criteria needed were never clearly spelled out.

7) The Charity Law does not require the charitable organizations to go through an annual inspection process by which they have to submit reports to their supervisory organs for approval. In previous regulations, nonprofit organizations needed to submit reports to their professional supervisory organ for inspection and approval. Under the Charity Law, charitable organizations no longer need professional supervisory organs and therefore will only be required to submit an annual work and financial report to the Civil Affairs department with which they are registered (Article 13).

8) It encourages the establishment of industry and professional associations of philanthropic organizations to promote self-regulation in the sector (Article 19).

What areas of the Charity Law could be improved?

1)    It could make clearer the relationship between charity and public

      welfare/interest/benefit.

2)    It continues to use vague language in places such as Article 104 which states that charitable organizations engaging in or funding activities that endanger national security or the public interest will be investigated and have their registration revoked.

3)    There is too much emphasis on formal organizational status which discriminates against small, grassroots organizations or groups that are unregistered and informal in nature.

4)    The Law limits management fees to 10% of that year’s total expenses (Article 60). The 10% across-the-board limit is too low, hampers the ability of organizations to hire professional staff or rent appropriate venues for their offices, and does not take into consideration the different needs and expenses of charitable organizations.

5)    The Law still maintains a two-tiered system of public fundraising and non public fundraising organizations in which organizations with public fundraising status are grandfathered into the system generally because of their close ties with the government, not because of their management capacity and professionalism.

6)    The Law does not address the status of fundraising through social media platforms such as Weibo, or Weixin groups. Does the use of these platforms constitute public fundraising?

7)    The Law, in my view, places too much emphasis on transparency in a country where nonprofit, nongovernmental organizations have in the past been punished for being transparent about their work. It also has onerous information disclosure requirements that require staffing and other resources that may be lacking in smaller organizations, and conflicts with the requirement in Article 60 to keep management costs under 10 percent of total expenses.

8)    Article 95 calls for Civil Affairs departments to set up a credit record system for charitable organizations and their responsible persons, yet it does not specify what criteria would be used to assess the credit of the organization and responsible persons. This raises concern about how the organization and responsible person would be evaluated.

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[1] I am using the ChinaLawTranslate’s unofficial, and still ongoing, translation of the Charity Law as a reference in addition to providing my own translation when needed.

[2] The terms charity and philanthropy (慈善) are sometimes used interchangeably with the Chinese term “gongyi” (公益) which is translated variously as “public welfare,” “public benefit” and “public interest.” There has been no official explanation of the distinction between charity and public welfare, and the text of this law treats them as synonymous. For example, Article 3 which defines the scope of charity in China includes poverty alleviation, social assistance, disaster relief, promotion of education, science, culture, health, sports, environmental protection and “other public welfare activities that comply with this law.”

Dr. Timothy Hildebrandt's Summer Course in Beijing on NGOs

 Timothy Hildebrandt, professor at the London School of Economics and author of Social Organizations and the Authoritarian State in China (Cambridge University Press, 2013), will be offering this summer school course for the second year in a row. It will be a great opportunity to learn from one of the leading authorities on civil society in China. Check out the course link below and spread the word!

Course Title: "From NGOs to Social Enterprises: Chinese Social Organisations in Local and Global Governance"

Course Location and Time: Beijing University, August 8-19, 2016.

Course Description:

This course explores the unique context within which NGOs and other social organisations have emerged in China, revealing how they have been able to often coexist with the government. This course does not examine Chinese social organisations in isolation but rather places them in both an historical and comparative context, highlighting the difference in character, activity, and effect of NGOs in China from the rest of the world. In doing so, this course will familiarize students with relevant theories and literatures from a wide variety of fields, including international relations, comparative politics, sociology, and management. Important conceptual issues pertinent to the study of NGOs and social enterprises include: development and management of NGOs, role of transnational activism, views and practices of volunteerism, philanthropy and funding, and the effect of NGOs and civil society on Chinese society and politics.It will also highlight the new role of Chinese NGOs going outside domestic borders to do international work of their own. Throughout the course, empirical cases of NGOs will be discussed, including organisations working in the areas of public health, poverty alleviation, labour rights, environmental protection, and education.

Course link: http://www.lse.ac.uk/study/summerSchools/LSEPKUProgramme/courses/sa301.aspx

Please do not hesitate to contact Dr. Hildebrandt for further information: T.R.Hildebrandt@lse.ac.uk

China's Charity Law Passes, Finally! (Civil Society 2, National Security 2 Halftime)

After more than 10 years in legislative limbo, the Charity Law of the People’s Republic of China was finally passed on March 16 at the 4th full session of the 12^th National People’s Congress (NPC) with 2636 yes votes, 131 no votes, and 83 abstentions. The law will go into force on September 1, 2016. The Charity Law seeks to promote the cause of charity/philanthropy in China by clarifying the scope of charitable activities and regulating the establishment and operation of charitable organizations and the sources and uses of charitable property and services. For more about this law, see the analysis I wrote in this blog back in November when the second draft had come out for public comments.

Using my admittedly less-than-scientific categories, we could count the Charity Law, which is generally viewed positively by those in the Chinese nonprofit sector, as the second piece of legislation over the last year that was the product of significant input from those in the sector. The other piece of legislation was the Anti-Domestic Violence Law that was approved by the NPC Standing Committee last December. Of course, the Overseas NGO Law also concerns civil society, but I put it in the national security camp for now because that law had no input from the NGO sector and is widely viewed as controlling rather than enabling. There's still a chance the next draft of the Overseas NGO Law incorporate suggestions from NGOs and end up being very different and more enabling. If so, there's a chance I may change my mind and put it in the civil society camp.

Now if we're keeping score and treating the legislative process as a game (which doesn't mean I don't think we shouldn't take these laws seriously), then the civil society-related laws matches the number of national security-related laws that have come out over the same period of time (see Tables 1 and 2 below). We're still waiting for two other pieces of national security-related legislation - the Overseas NGO Management Law and the Cybersecurity Law - so if they are passed in close to their current form, then national security will come out on top in terms of the number of laws passed. Stay tuned.

Table 1: Timetable of national security-related NPC legislation

	1st reading	2nd reading	3rd reading	Approved
Counterterrorism Law	November 3, 2014 (public comments)	March, 2015	??	Dec 24, 2015
National Security Law	December 2014 (internal)	May 7, 2015 (public comments)	July 1, 2015	July 1, 2015
Overseas NGO Management Law	December 22, 2014 (internal)	May 5, 2015 (public comments)	N/A	N/A
Cybersecurity Law	July 6, 2015 (public comment)	N/A	N/A	N/A

Table 2: Timetable of other civil society-related NPC legislation

	1st reading	2nd reading	3rd reading	Approved
Anti-Domestic Violence Law	November 25, 2014 (State Council, public comments)	August 2015 (NPC, public comments)	October 2015	December 27, 2015
Charity Law	October 2015 (public comments)	December 2015	March 2016	March 16, 2016

I'll be posting more about the Charity Law in the coming weeks. One thing to note is that the law that passed went through more changes in the third reading and so will be somewhat different from the second draft that was made available last October for public comments. According to China Development Brief's (CDB) summary of a New China News Agency article about the law, as a result of the 4000 comments made concerning the second draft, 110 changes were made to the second Charity Law draft, of which 38 were substantial changes. We'll need to see the text of the law to see how different the final version is from the second draft. CDB says it will have an English translation of the Charity Law by the beginning of April.

Below are some news items concerning the discussion of the draft law during the NPC session:

Charity Law draft limits public fundraising foundations’ management fee to 10% of expenditures
Clarifications provided regarding the Third Draft of the Charity Law
The Draft of the Charity Law specifies regulations concerning fundraising activities 

Josh Chin also has this piece - The Good - and Bad - About China's Charity Law - on the Wall Street Journal's blog.

The Politics of the Overseas NGO Management Law

As the National People’s Congress (NPC) winds to a close today, there’s been more interest in the status of the Overseas NGO Management draft law. The draft law was issued last May for public comments, but since then there has been little word from the NPC about it. During the NPC session, a foreign journalist asked the NPC spokeswoman, Fu Ying, about the draft law and what she said was interesting. She responded that the NPC was still reviewing the comments that had been solicited on the draft, and there was a suggestion in her phrasing that comments were still being solicited. She further stated that no decision had been taken on which NPC Standing Committee meeting (which take place about every two months to review and pass draft laws) the draft law would be sent to for review and adoption.  In other words, it was still unclear when or if this particular draft law would be passed.

Fu Ying’s admission that the draft law is essentially in legislative limbo is revealing in what it tells us about the politics behind the law. I spoke a bit about this to Didi Kirsten Tatlow of the New York Times when she interviewed me for her recent article about the draft law. I said that the delay – it’s now been more than 10 months since the draft law was issued for public comments - suggested that there was some debate over the draft law within the Chinese government. I also made this point in an earlier blog post where I noted that the National Security Law followed almost the same timeline as the Overseas NGO Law, yet passed much more quickly in July of last year.

I think though that we can go one step further and see the protracted passage of the draft law as saying something about the politics of policymaking under Xi Jinping.  The conventional wisdom is that Xi is the one who is calling the shots. He’s the one behind the anti-corruption campaign, the growing nationalist rhetoric and turn against Western values, the slew of national security-related laws, the crackdown on NGOs, lawyers, and labor activists, and the latest visit to state media (the media organs such as the New China News Agency, the People’s Daily and CCTV who are supposed to serve as the party’s mouthpiece) reminding them to serve the Party.

In short, according to this narrative, policymaking under Xi is much more top down and centralized. Whereas under Hu Jintao, power was more fragmented and decentralized and there was more give-and-take and compromise between different factions, departments and localities over policy.

There is something to this contrast between Xi and Hu. Under Hu, there were a number of  ongoing local experiments in the NGO and charity sector with different local regulations emerging in places like Guangdong, but the movement toward a national level Charity Law was slow and halting. Under Xi, these local experiments are no longer in the spotlight and instead we’ve seen a number of national security-related laws come out all in one year, while the Charity Law has emerged from its long hibernation.

I would argue, however, that we can and have taken this contrast too far. Despite our enlarged sense of his power, Xi is still part of a collective leadership (Alice Miller makes this case quite convincingly in his China Leadership Monitor reports) and he still has to work in an immense bureaucracy full of considerable factional, departmental and local interests. The delay in the Overseas NGO Law (and this is only one example) should make us reconsider whether this seemingly outdated framework is still relevant. If Xi is really the one driving all these top-down initiatives, then why is he unable to get the Overseas NGO draft law through the NPC? The answer is that he is not as powerful or secure in his position as many of us think he is.

The delay in the draft law becomes more puzzling if we consider events that have transpired since the draft was issued for public comment.  Dozens of rights lawyers have been detained in the months leading up to the NPC meeting, several labor rights activists in Guangdong were detained and criminally charged in early December 2015, and a Swedish citizen was detained in January and forced to give a televised confession for the rights defense work his NGO carried out in China. A state media smear campaign launched against the labor activists in late December accused them of using foreign funding to stir up workers to engage in strike activity. These recent actions, approved at the highest levels, and carried out by the police and state media apparatus, could be interpreted as lobbying by conservative policy entrepreneurs to strengthen support for passing the Overseas NGO draft law in its current draconian form.

If there is some truth to this interpretation, then it is striking that these “lobbying” efforts have not succeeded in breaking the legislative logjam in the case of this draft law, and suggests considerable debate and discord over this draft law.  Of course, the end result could still be that the draft law passes without significant revisions. But the drawn out process that the draft law has gone through lends more credence to the political narrative that even strong leaders like Xi need to work within a fragmented, bureaucratic system.  More mainstream observers see this system as one in which there are formidable interests seeking to water down Xi’s policy initiatives.  More cynical observers, however, see a system in which there are interests with more nefarious motives who want to go further and bring Xi down.

Remembering the Feminist Five

The Feminist Five was the name given to the five women activists who were detained on March 7, 2015 on the eve of International Women's Day for planning an event in several cities to spread awareness about sexual harassment on public transit in China. Those five are Li Tingting (also known as Li Maizi), Wang Man, Wei Tingting, Wu Rongrong, and Zheng Churan.  They were eventually released after 37 days in detention but the charges against them have yet to be withdrawn.

On the first anniversary of their detention, a number of the Five made public statements about continuing the fight on Facebook and YouTube, accompanied by media articles and events about their cause and expressions of support from the international community. It's encouraging to see their defiant spirit in the face of the repression they've experienced. Below I've collated some of the postings, speeches, articles and events that have taken place in the last week in remembrance of the Feminist Five. I'm sure we'll be hearing more from them soon.

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Here's a Facebook post from Li Tingting dressed as Rosie the Riveter, and her statement on the first anniversary of her detention and its significance for the women's movement in China. She notes rightly that the detention had the ironic but important effect of getting their work to a larger audience both in China and in the international community.

Today is a special day. It's one year anniversary of ‪#‎freethefive‬.

2015 boasts to be a significant for the development of the feminism movement. I’d like to express my gratitude again to our government for pushing the feminist movement in China to another peak. We five sisters suffered a lot in the past, but at last we are free.

What happened to us had enormous impacts in China and overseas. It was actually the first time that the international community knew that there are real feminists in China. Therefore, the connection between the feminists from China and the other countries was enhanced. As a matter of fact, the sisterhood of us five played a key role in the process of the action of anti-sexual harassment.

So why did the Young Feminism Activists emerged in China in 2012? It is because the strategy of the feminists in the academic circle to advocate gender equality in the mild way has been proved ineffective. We thus need a more intense way to break the stereotyped feministm movement. However, since such determination was deficient in the system and the academic circle, the young feminism activists finally stood out.

With the “occupation of the men’s room” as a start, the young feminists who are given the title of “feminism activists” have taken numerous high-profile actions: From the bloody bride, we appeal Chinese ppl to pay close attention to the domestic violence; from the occupation of men’s room, we appeal the public to pay attention to the inequality of the number of the toilet cubicles between the men’s and women’s lavatory. The women group in China thus is given more right of speech. Besides, changes have been taken place in the policies such as the extension of the women’s lavatory.
Surely, what we did was under the rigorous surveillance of the police. The feminists have been under various investigations frequently. On March 7, 2015, after the “Feminism Five Girls” were detained and then released, the street action of us have been forbidden. Now no one dares to appear in the public occasions. At present, the Young Feminism Activist are confronted with new challenges and new missions.

How far can we go in the future? We have made attempts to open up a new path, for example, cooperating with the market and proposing the anti-forced marriage topic. In China, patriarchal system, as one of the forms of paternity, strictly restrains the young people. Every time when the single young people return to their hometown, they would be forced to get married soon by their parents, which confuse them a lot. Aiming at the phenomenon, we initiated anti-forced marriage movement: we funded an advertisement position, promoting that single life could also be happy. We do not have to build up a family and make compromise to the mainstream family values to live a happy life.

Like all the social movements, the Chinese feminist movement has experienced climaxes and bottoms. Although it is greatly restrained at present, we believe that the feminism activists in China will promote it with our wisdom and brave heart.

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YouTube statements by Li Tingting (in English), Wurongrong (in Chinese), and Zheng Churan (in English).

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More postings about the Feminist Five can also be found on the Facebook page, Free Chinese Feminists.

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A great article by Didi Kirsten Tatlow of The New York Times that puts it all in context.

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An event held at Fordham University:

Crackdown on China's Feminist Five: One Year On
March 7, 2016 12:30 PM - 2:30PM
Location: Room 2-01A, Fordham Law School, 150 W. 62nd St. New York, NY 10023

The Leitner Center for International Law and Justice and the Committee to Support Chinese Lawyers are pleased to host a discussion with Chinese women’s rights advocates, U.S. academics and activists. One year after the detention of China’s Feminist Five right before International Women’s Day, join us over lunch for an update on the latest developments in women’s rights and the crackdown on feminist activists and female lawyers in China. The speakers' bios are below. RSVP is required, as space will be limited.

SPEAKERS:

Lu Pin is a Visiting Scholar at the Institute for the Study of Human Rights at Columbia University and Chief Editor of Feminist Voices, the most popular social media account on feminism in Chin. She used to be a senior journalist on women's rights and has been working for NGOs focused in gender equality in China since 1999. She has worked with China's Feminist Five for four years.

Wang Zheng is a Professor of Women's Studies and History, and a Research Scientist at the Institute for Research on Women and Gender at the University of Michigan. Professor Wang's publications focus on feminism in China, both in terms of its historical development and its contemporary activism, as well as changing gender discourses in relation to China's socioeconomic, political and cultural transformations. Wang Zheng is the director of the U.S.-China Gender Studies program that collaborates with Chinese universities on developing women's and gender studies in China. She actively advocated for the Feminist Five’s release last March.

Sharon Hom is the Executive Director of Human Rights In China and Professor of Law Emerita at CUNY School of Law. A participant of Fourth World Conference on Women in Beijing, she was named one of the “50 Women to Watch” by the Wall Street Journal in 2007.

Lu Jun is a Visiting Scholar at the U.S.-Asia Law Institute at New York University School of Law, Co-founder and Executive Director of the Beijing-based anti-discrimination NGO Yirenping Center, and a winner of the Italian Pino Puglisi Prize. Lu Jun initiated Yirenping’s women’s rights program together with three of the Feminist Five.

MODERATOR:

Elisabeth Wickeri is the Executive Director of the Leitner Center for International Law and Justice.