The Draft Regulation for Registration and Management of Social Organizations

On the first week of this month, the Ministry of Civil Affairs (MCA) issued an important draft regulation governing the registration and management of social organizations (the official Chinese term for nonprofits) for public comment. The draft Regulation for Registration and Management of Social Organizations, and instructions for sending in comments, can be accessed using the links below. The deadline for sending in comments in September 1.

http://www.mca.gov.cn/article/xw/tzgg/201808/20180800010466.shtml

https://mp.weixin.qq.com/s/ASZYh7SoiVsOUPp6MnRrjA

ChinaLawTranslate has an English-language translation of the regulation here.

At this writing, the word is that the MCA has received only around 100 comments, so if you know any Chinese NGOs, encourage them to submit their comments in the next few days.

Some Background

This draft regulation will replace the three previous regulations that formed the core of the regulatory system for social organizations: the "Regulations for the Registration and Management of Social Groups" issued on October 25, 1998; the "Provisional Regulations on the Registration and Management of Civil Non-enterprise Units" issued on October 25, 1998; and the "Foundation Management Regulations" issued on March 8, 2004. Note: The draft regulation has replaced the term "civil, non-enterprise units" with the much improved "social service organizations".

Given the rapid changes in the NGO sector in China, including the passage of the Charity Law in 2016, these regulations were seen by many observers as outdated and in serious need of revision. In the last half of 2016, we finally saw drafts of revisions to all three regulations issued for public comment, but then silence for two years before this draft regulation appeared this month.

Given the very short time frame allowed for public comments, the draft regulation has already stimulated quite a bit of discussion in the sector, including calls to slow down the drafting process to ensure that different views are heard.

For those interested, NGOCN has two posts here with feedback on the draft regulation:

http://www.ngocn.net/news/2018-08-08-bb087c670a740041.html

http://www.ngocn.net/news/2018-08-06-070063a1db16d6ed.html

CDB has also collated a number of posts about the draft regulation here in Chinese, http://www.chinadevelopmentbrief.org.cn/service/action/topicc.php?topic_id=157

There have also been some forums organized about the draft regulation. Here's a Weixin post that has been getting quite a bit of attention citing the views of Yang Tuan, a long-time and respected observer of the sector, and other analysts and observers of the sector.

Some Impressions and Comments

I've only had the chance to skim through the regulation, and the various discussions, but here are some quick impressions and comments based on what I've been reading.

First of all, I'm surprised they came out so quickly. I was on record that I didn't think we'd see a draft this year, so now I'm going to eat my words. I’m also surprised that MCA is only allowing about four weeks for public comment given the importance of the draft regulation.

Second, the draft regulation is going in the right direction in terms of creating a more enabling environment for NGOs, but the details of the regulation are fraught with a number of problems, including inconsistencies with the Charity Law. Below are some problems that have been raised:

The draft allows direct registration (e.g. registering with Civil Affairs without needing a PSU) for four categories of social organizations: 1) chambers of commerce and trade associations; 2) science and technology groups; 3) charitable, public welfare organizations; and 4) rural and urban community organizations. One complaint is that the definition of the third category- charitable, public welfare organizations – is overly narrow, even more so than the definition of charity and public welfare spelled out in the Charity Law, and that the definition should be broadened.

Another problem is Article 4 which prohibits social organizations from engaging in “for-profit business activities. This seems to be overly restrictive and not in line with the Charity Law which has a more expansive view of the activities social organizations can engage in. Article 9 of the Charity Law states that charitable organizations may not have a “profit-making purpose,” which implies that profit-making activities would be acceptable as long as they support a charitable purpose.

In another improvement, the draft regulation allows social organizations to set up branches, but not “regional branches” so apparently branches can only be set up in the administrative area in which that social organization is registered, but this is not clearly stated.

The draft regulation makes it more difficult for smaller foundations to register. The minimum registered capital for foundations of 8 million RMB was raised above the 2 million RMB amount required in the previous regulations, and the 2016 draft regulations. Also the 2016 draft regulations allowed foundations to register below the provincial level, a move that would have helped smaller, community foundations. This draft regulation now states that foundations can only register at or above the provincial level.

There is quite a bit of language in the draft regulation about the need for social organizations to establish Communist Party organizations, and carry out Party activities. Social organizations are required to prepare the conditions, and provide a workplan, for setting up party organizations. None of this language requiring Party organizations was in the Charity Law or in the previous regulations.

The draft regulation also spells out very specific, and onerous, penalties for social organizations that violate their legal responsibilities, and allows law enforcement wide discretion in investigating violations. Language clarifying limits on law enforcement investigative powers should be included to protect the legal rights of social organizations and their staff.

Draft Regulations for Social Service Organzations and Foundations Posted for Public Comment (deadline: June 26, 2016)

This has been an incredibly busy year when it comes to nonprofit, NGO regulation in China.

Following the passage of the Charity Law in April and the Overseas NGO Law in May, the Ministry of Civil Affairs is now issuing draft revisions of the regulations for management of Social Service Organizations (formerly called Civil Non-Enterprise Institutions), and for management of Foundations.

The draft regulations for Social Service Organizations （shehui fuwu jigou, 社会服务机构）can be found here, and for Foundations （jijinhui, 基金会）can be found here. The deadline for your comments is June 26, 2016.

1) Comments can be submitted via the website http://www.mca.gov.cn.

2) Comments can be sent as emails to zcfgs@mca.gov.cn.

3) Comments can also be posted to the following address:

Department of Policies and Laws of the Ministry of Civil Affairs, No.147 North Heyan Street, Docheng District, Beijing, Zip: 100721. (On the envelope please indicate ‘Comments on the Draft Regulation on the Registration and Management of Civil Non-Enterprise Units’) (北京市东城区北河沿大街147号民政部政策法规司,邮政编码：100721, 并请在信封上注明“民非条例征求意见”字样)

A View from the Top: will upcoming policy changes make it easier for NGOs?

Recently, CDB (English) has created a special section, A View from the Top, that monitors changes in official thinking and actions on China's civil society.  For the section, I scan media reports and select reports that I think are significant and give us some insight into what is going on in the black box that we call the Chinese government. 

Just looking over the reports listed, you can see that over this past year there have been multiple reports suggesting that new policies are forthcoming making it easier for NGOs to register and fundraise.  But there are also reports showing that many difficulties remain.  One of them is an interview with Zheng Gongcheng of the National People's Congress Standing Committee.  Mr. Zheng discusses the obstacles holding up the Charity Law which was originally expected to be passed in 2009.  I made some comments on this article in another listserve, and am posting them here.

 "I don't think there's much that is new in this interview with Zheng Gongcheng.   What he does confirm is that there are multiple reasons holding up the Charity Law, as well as other regulations being revised by MOCA like the registration and management regs for social organizations. 

One of these is disagreement among policymakers over the content of these regulations.  One contentious issue that Zheng touches on is whether charity organizations (he seems to use this term instead of social organization) should have to get a supervising unit (yewu zhuguan bumen) in order to register.  This is an old issue that has been debated for at least the last 10 years, and raises concerns among more conservative, security-minded policymakers who don't want to give charity organizations too long of a leash.  Zheng interestingly takes a clear stand on this by saying he thinks a supervising unit violates the independent legal nature of a charity organization. 

This disagreement becomes particularly intense when the laws/regs are sent to the NPC and State Council where other departmental interests insert themselves.  I think MOCA realizes the regulatory environment for charity organizations is far from perfect and is committed to improving the environment, as we can see from the various initiatives they've taken in the past few years to revise the regs, and issue various other measures including the approval of local experiments in Beijing and other parts of the country.  And I think the debates over issues like the nature of charity, fundraising and registration that were renewed after the 2008 earthquake, and the most recent media reports on problems in the Red Cross and other GONGOs, have put more pressure on MOCA to improve the regulatory environment.

But MOCA is a relatively weak ministry and when other departments raise concerns, it lacks the clout to get the necessary support.  MOCA's case would be helped if a powerful leader took an interest in their cause and championed it, but I don't see this happening, especially in the run up to the 18th Party Congress next year.  Wen Jiabao perhaps, but he seems to be relegated to the sidelines?  So I'm not hopeful at least for the short term. 

Another reason for the delay has to do with consideration of how these laws and regs may affect other laws and regs in the pipeline. Zheng mentions the laws related to social security and social assistance and says that they might have to precede the Charity Law.  MOCA also has to coordinate and get the support of other departments that would be involved in the implementation of these laws and regs.  So in addition to security concerns, there are concerns about the timing and implementation of the laws and regs.  This is also tied to the local experiments going on in various areas of registration and fundraising.  Zheng alludes to this and implies that allowing local experiments and regulations to move ahead of the national level ones may be the preferred and realistic course of action given the logjam at the national level. 

I'm interested to see if the recent debates and revelations of scandals in various GONGOs will get the attention of the leadership.  It seems the debate over fundraising, charity and other related issues is being ratcheted up, as exemplified by the media scrutiny in the last few months.  I'm struck by all the reports of charity scandals that have come out recently, and can't recall this level of scrutiny in the past.  We'll have to see if anything comes out of this growing public awareness and scrutiny."

Why the chill in the air for NGOs?

May 10, 2010

I’ve generally been an optimist about the future of NGOs in China, but recent events have gotten me thinking otherwise. In the last few months, we’ve witnessed the Oxfam Hong Kong incident, the SAFE regulations on foreign donations, the closing down of NGOCN’s website, the Beijing University Women’s Legal Aid Center’s losing its Beijing University affiliation, and just today, the news that China’s leading AIDS activist, Wan Yanhai, has left China for the U.S. because he was being harassed by multiple government departments. So what does this all mean?

First of all, let’s get some perspective on these events. Last year (2009), Xu Zhiyong’s legal aid NGO, Gongmeng, was closed down on tax evasion charges, and Yirenping, an anti-discrimination legal aid NGO founded by Lu Jun was raided. The Olympic year saw the Sichuan earthquake, a coming out event for Chinese NGOs which played a visible role in the earthquake relief. The year prior (2007) saw the closure of an Lu Jun’s support group for Hep B carriers, a magazine called Minjian that published stories of NGO development projects, and most notably Nick Young’s China Development Brief.

In addition, the last few years has seen significant growth in grassroots NGOs, persistent rumors of revisions to the NGO registration and management regulations, a new Charity Law, and easing of the registration and management procedures for private foundations.

In short, what we have here is a mixed bag. Some bad news, and some good news. How do we make sense of all this? A few possible explanations come to mind.

One explanation is that the government is of different minds about NGOs and is trying to figure out how to best manage (codeword for control) them. The Chinese government is a very diverse, not always unified collection of agencies and individuals. The Civil Affairs department is only one of the agencies charged with supervising NGOs. In fact, there are hundreds of thousands of NGOs in China that are not registered with Civil Affairs and thus not under their supervision. Because many NGOs are registered as businesses, the Commercial and Industrial department also plays a role, as do tax authorities, and now apparently so does the State Administration of Foreign Exchange (SAFE). And last but not least, there are the security people. It’s not clear to what extent there is a coordinated campaign among all these agencies to regulate NGOs. Civil Affairs seems to be the most supportive. They are encouraging various experiments around the country to make NGO registration easier, and they support a change in the NGO regulations that would make it easier for NGOs to register with Civil Affairs. But other agencies seem to just be interested in controlling NGOs, and not figuring out a way to regulate them in ways that would improve the effectiveness and transparency of NGO work.

If this explanation is right, then we’ll see authorities continue to adopt an ad hoc approach to regulating/controlling NGOs, and continued swings in the government’s attitude to NGOs. We’ll also see further delays in the much-anticipated NGO legislation as debates and deadlock over the value of NGOs continue in policymaking circles.

Another explanation is that government leaders have arrived at a consensus about how to deal with NGOs, and that consensus is not to liberalize the environment or find a smarter way to regulate them, but to continue restricting their development. This means tightening an already restrictive regulatory environment, and cracking down on “illegal” NGOs that are engaged in advocacy and sensitive issues such as migrant worker rights, and are particularly open to foreign influences. What seems to be new here is the way in which the government is cracking down on NGOs. They are doing so not by closing down NGOs as they did with China Development Brief, but by harassing them for improper finances, or fire codes, or not properly registering their website. But they are not doing this across the board, but only targeting selected NGOs. A form of “salami tactics” or “death by a thousand cuts”.

If this explanation is correct, then recent events represent the start of a chilling trend. It means we won’t see revised NGO regulations come out, or if they do come out, they will reaffirm the status quo or be even more restrictive.

Still another explanation is a combination of the previous two explanations. That is, authorities have arrived at a consensus but that consensus represents a compromise whereby certain sectors are encouraged, but NGOs with more foreign connections or engaged in more sensitive work are targeted for harassment.

If this explanation is right, then we should see the revised NGO regulations, and other related legislation, coming out soon. Those revisions will probably represent a gradual change, e.g. liberalization, and their content will give us a better idea of what sectors are being encouraged.

Which of these explanations is closer to the mark of course requires an understanding of what is going on in high-level decision making circles. Unfortunately, that arena is a black box that we can only speculate about.

At this point, I favor the first explanation because I don’t see a consistent line or approach toward NGOs which suggests there is still debate and deadlock over just how to regulate this growing sector. But I may change my view as I get more information. Stay tuned!