China's 'Two Sessions' 2016

China’s new charity law provides much-needed clarity and transparency

Legislation will make it easier for philanthropists to share their wealth without worrying about abuse of their donations

PUBLISHED : Monday, 21 March, 2016, 12:28am
UPDATED : Monday, 21 March, 2016, 12:28am

For centuries wealthy Chinese were known for philanthropy, such as gifts to schools and temples. But it dried up after state ownership displaced private ownership. More than 35 years after the opening up and reform that have made people rich and minted hundreds of billionaires, the tradition of sharing wealth has failed to take off again. It remains grounded in a legal void, plagued with suspicion, scepticism and scandal. The nation is poorer as a result, materially and spiritually.

As the wealth gap has grown and the mainland’s economic growth has slowed, rising public sentiment that the newly rich should contribute more to society has become a clamour that could not be ignored. Giving back to society would often be a more appropriate term, since a lot of the nouveau riche profited from the transfer of national assets, the right connections or policy changes.

Legislation to revive philanthropy is therefore a landmark social reform, even if it was overshadowed at the annual session of the National People’s Congress by the 13th five-year plan and economic policy.

The passing of the mainland’s first charity law promises to unblock untold potential for giving and sharing.

The law has been 10 years in the making, but the dire need for a modern legal framework and regulation was defined five years ago by loss of public confidence in the internationally respected Red Cross, following microblog boasts of a young woman who appeared to be an employee with extravagant tastes. The damage was compounded by perceptions that it mishandled donations. This was typical of abuses attributable to the lack of regulation, transparency and accountability of non-government organisations raising funds from the public, prompting scepticism even of good causes.

The new law recognises the value of civil society in helping to address social issues that stretch government resources – such as disability, care for the aged, rural education and drug abuse, to name a few. It is a welcome change from tightening restrictions on non-profit groups aimed at countering perceived foreign influence. It also seeks to address lack of trust and clarity by making it easier to register charities and charitable trusts for the purpose of raising money from the public.

The enhancement of tax incentives for private and corporate donors is welcome, subject to rigorous enforcement of a mandatory annual accounting report on how donations are used.