Safeguarding Charity with Law
After 11 years of preparations, China’s first charity law was finally passed at the fourth session of the 12th National People’s Congress (NPC), the country’s top legislation body, with 2,636 votes in favor, 131 against, and 83 abstentions, on March 16, 2016. Chinese President Xi Jinping then signed a presidential decree on the law, which will take effect on September 1 this year.
As China’s first fundamental and comprehensive law concerning charity, it will undoubtedly help clarify relations between the state, society, and citizens in philanthropic fields, regulate charitable affairs via constitutional standardization, and enhance public creditability of charitable organizations, thus promoting the development of the country’s philanthropy.
A Decade of Preparation
The legislative history of the charity law can be traced back to 2005. In September of that year, the Ministry of Civil Affairs of China submitted a proposal to the NPC and the State Council, suggesting formulation of a law to promote philanthropy. In 2007, the ministry completed an initial draft of the law. The final draft was submitted to the Legislative Affairs Office of the State Council in 2009, marking the beginning of formal legislation. Due to disagreements on various related issues, however, the draft wasn’t submitted to the NPC Standing Committee for discussion.
Over the following several years, various disagreements continued casting a cloud over China’s philanthropic legislation. According to Yang Tuan, vice president of the Social Policies Research Center under the Chinese Academy of Social Sciences (CASS), most of the issues surrounded the legal definition of philanthropy and the relationship between philanthropy and public welfare.
Despite such problems, charity has witnessed rapid development over the past decade in China. Statistics released by the Ministry of Civil Affairs show that annual donations have increased exponentially from 10 billion yuan in 2006 to 100 billion yuan. Presently, China is home to about 200,000 registered charitable organizations, but many estimate as many as a million organizations participating in charity. Moreover, new types of philanthropy such as private charity and internet charity have emerged, with donors and donation methods becoming more diverse with each passing day. At the same time, however, scandals such as the Guo Meimei Incident and donation fraud committed by Tong Chao (screen name Tong Yao on Zhihu.com) discouraged citizens from actively participating in charity and even damaged the credibility of some charity organizations. In this context, voices calling for charity legislation became louder and louder – whether at the government level or the public.
“Over the past decade, China witnessed rapid development of charitable undertakings,” remarks Wang Ming, president of Institute for Philanthropy at Tsinghua University who participated in the drafting of the Charity Law since its inception. “However, the lack of relevant laws and regulations caused some problems, especially at a time when China was witnessing social transformation.” He points out that the purpose of the law is to regulate charity activities while promoting and boosting rapidly-growing charitable endeavors in China.
China’s charity legislation saw a major breakthrough in 2013. In November of that year, the Charity Law was given top priority by the NPC Standing Committee, and the Internal and Judicial Affairs Committee (IJAC) of the NPC took the lead in drafting the law. According to Wang Zhenyao, president of China Philanthropy
Research Institute (CPRI) under Beijing Normal University, the Npc-led legislation would dissolve contradictions between various administrative departments and facilitate participation of both government departments and social organizations.
In the year that followed, the IJAC organized a dozen symposiums to discuss the formulation of the Charity Law, attracting participation of representatives from civil affairs departments, local people’s congresses, and charity organizations as well as experts and scholars. At the end of 2014, research institutions and think-tanks including the Center for NPO Law of Peking University (PKU), the NGO Research Center of Tsinghua University, the Institute of Law under CASS, and CPRI promulgated five drafts of the Charity Law.
The NPC Standing Committee examined the draft twice in October and December 2015, respectively. Afterwards, the draft law was published to solicit suggestions from the public. The final draft was eventually passed at this year’s NPC annual session.
Legal Charity
The passing of the Charity Law heralds China’s entry into an era of law-based philanthropy. The law adopts a broad concept of philanthropy, which includes not only aid for the poor and the needy, but also charitable efforts aimed at promoting the develop- ment of education, science, culture, public health, and environmental protection. This expands space for future charitable endeavors in China.
More importantly, the Charity Law clarifies a series of charityrelated issues of wide concern, including supervision of charity organizations, punishment for failure in delivering donations to the destination they publicly promised, whether individuals have the right to launch donation campaigns, and what tax incentives donors can enjoy.
The law creates registration and authentication systems for charity organizations. “For a long time, it wasn’t easy to register a charity organization in China,” explains Jin Jinping, president of the PKU Center for NPO Law. “The Charity Law allows direct registration of charity organizations, which is needed to facilitate greater participation in philanthropic campaigns through charity organizations.”
Moreover, the law stipulates that charitable organizations must disclose their annual work reports and financial accounting reports, and that charity organizations with the right to public fundraising shall have their annual financial statements audited. Such stipulations emphasize charity organizations’ obligation of information disclosure. There are also stipulations concerning donation fraud, such as “charity organizations or beneficiaries shall have right to request payment or file a lawsuit to the court if donors refuse to fulfill the donations they publicly promised.”
The Charity Law also sets rules for hotly-debated internet charity. It stipulates that charity organizations must publish donation solicitation information on the websites designated by the civil affairs departments of the State Council as well as their own websites. In the eyes of Kan Ke, vice chairman of the Legislative Affairs Commission of the NPC Standing Committee, this stipulation doesn’t prevent individuals in need from asking for help on the internet. “The Charity Law doesn’t prohibit individuals from soliciting donations if they themselves, as well as their family members and close relatives, are in need,” he explains.
“The ultimate intention of charity legislation is to create a social ambience that encourages philanthropy by constructing a constitutional environment where everyone can participate in charity,” declares Zheng Gongcheng, a member of the IJAC.
Of course, legislation is merely the first step along the road to developing charity through laws. “We don’t expect the country’s first charity law to solve every problem,” opines Wang Ming. Constitutional legislation in many other fields is still required to improve the Charity Law before it will play a substantive role in promoting philanthropy.