Advertisement
Advertisement
China's 'Two Sessions' 2016
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
China’s top legislators will weigh up a proposal for the country’s first charity law. Photo: SCMP Pictures

Needy clauses: Would China’s proposed charity law be a gift to the disadvantaged?

One number speaks volumes about the present state of the “traditional Chinese virtue” of helping the poor.

Last year China ranked 144 among 145 countries for charitable behaviour in a survey by non-government organisation Charities Aid Foundation.

That’s despite the stellar growth in wealth across the country, to the point where China has world’s highest number of billionaires – 596 according to wealth-ranking Hurun Report – and the biggest middle class on the planet – 109 million according to financial service company Credit Suisse.

China’s top legislative body will on Wednesday begin deliberating the country’s first charity law, which some observers say could go some way to reversing that reluctance to give.

But others suggest that much more than a new law is needed to bring life to the third sector and unleash funds for needy causes.

And there’s no doubt that the need for charities is huge. China has more than 85 million disabled people who require help. Civil Affairs Minister Li Liguo said there were also 70 million rural people in poverty and 160 million elderly and “left-behind” children trying to survive on their own.

More money is being channelled to fill the social gaps – National People’s Congress spokeswoman Fu Ying said about 100 billion yuan in domestic and overseas donations was spent on these kinds of causes in 2014, 10 times the total in 2006.

But it’s still far from enough.

READ MORE: 80 per cent of Chinese philanthropists donations last year went to institutions outside mainland China, says survey

Part of the problem is the administrative barriers to setting up a charity on the mainland. At the moment all charitable groups must be affiliated with a government organisation before being registered with the Ministry of Civil Affairs. If passed, the law would scrap that requirement.

Another issue is the lack of public trust in charities.

The reputation of the sector as a whole took a battering five years ago with the Guo Meimei saga. Guo, a young woman, falsely claimed to work for the state-backed Red Cross Society of China and openly flaunted her wealth and extravagant lifestyle on social media. In the aftermath, the organisation was criticised for poor management and misuse of donations.

Zhang Gaorong, assistant director of China Philanthropy Research Institute, said that in the past donation drives were usually organised by employers. This approach had been phased out “but we have yet to build enough other channels that people trust”, he said.

Xue Gang, who has helped care for second world war veterans for more than a decade, said misappropriation was a big problem and non-government charities were in chaos.

“Misused of donations has always been a serious issue,” Xue said.

“I believe most people start their projects with a kind heart, but in reality, when these groups grow and begin receiving large sums of money, the ugly side of human nature arises.”

He said some organisations simply neglected essential procedures, leaving themselves unable to account for their activities.

READ MORE: Who’s China’s most generous billionaire? Well, it’s not who you might think ...

A third problem is the example being set at the top. China’s richest man, Wang Jianlin, and billionaire Jack Ma both donated less than 0.3 per cent of their total net worth last year, according to a report by the Ash Centre for Democratic Governance at Harvard Kennedy School.

China’s most generous billionaire, Zhejiang businessman Wang Miaotong, donated 5.6 per cent, which was still not high by Western standards.

Wahaha Group chairman Zong Qinghou, who also numbers among the mainland’s super-rich, said the proposed charity law could loosen more of those purse strings.

“The charity law could encourage more involvement in charity by individuals and corporates. It would help to narrow the wealth gap,” Zong said.

Under existing rules, corporate contributions of up to 12 per cent of a company’s total profit in the year of the donation are tax free.

The draft law would allow contributions beyond the cap to be carried over to the following two years.

But Zong says all donations should be exempt from tax, no matter how big or small.

“[Above all] the donations should be truly used on charity,” he said.

China ranked 144 among 145 countries for charitable behaviour in a survey by non-government organisation Charities Aid Foundation. Photo: SCMP Pictures

Zhang said another key controversy in the draft law was that charity organisations could only launch online public donation appeals on websites designated by local governments.

“The selection of websites by the government apparently gives room for power rent seeking,” he warned. “Also, the internet is changing fast. Will governments be able to keep up?”

An additional barrier would be the ban on organisations launching public donation drives within two years of registration. “For most charity groups, public donations are an important source of funding. Without the right to do so in the first two years, they could hardly develop,” Zhang said.

For Wang Qicheng, a 36-year-old self-made billionaire from Zhejiang, charity is a long-term commitment – with or without a law.

“Celebrities need to be involved in philanthropy because they can influence more people,” Wang said.

“But with more incentives, I believe more people would be willing to give money to the needy. It’s especially the case with those who hesitate because they’re worried whether their money would be used as they wanted.”

Additional reporting by Daniel Ren and Kwong Man-ki

Post