Care package or gift horse? China’s legislature weighs landmark draft law to regulate charities
Proposal aims to encourage philanthropy but critics say it could impose too many restrictions
China’s top legislature began on Wednesday to deliberate its first draft charity law, which spells out for the first time how charity groups would be able to operate in the country.
Despite hopes that such legislation could encourage more charitable activities in the world’s second-largest economy, critics said it put too many restrictions on fundraising and could further restrain the non-profit sector.
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The draft charity law, submitted to the National People’s Congress for its third reading on Wednesday, lays out details on registration, fundraising, and government oversight.
According to the draft, charities would not be allowed to carry out or sponsor activities that endangered national security or the public interest.
It would also prohibit charities from launching public campaigns within two years of being officially registered.
Offline appeals for public donations could only be conducted within the area the organisation was registered.
“These limitations would pose a big challenge for the survival of newly registered charities because public appeals are an essential source of funding for them,” said Zhang Gaorong, assistant director of the China Philanthropy Research Institute.
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The draft, which had been deliberated twice at bi-monthly sessions of the NPC Standing Committee, also includes clauses on protecting the interests of donors, a major concern for the country’s super-rich.
China has the most billionaires in the world, according to wealth-ranking company Hurun Report. Its latest global rich list said the greater China region, including Hong Kong, Macau and Taiwan, had 568 people with over US$1 billion versus the United States with 535.
However, the share of the Chinese billionaires’ wealth dedicated to philanthropy is low by Western standards.
Public trust in charities has also dwindled after a series of high-profile scandals.
Liu Yonghao, chairman of agribusiness New Hope Group, said on the sidelines of annual parliamentary session yesterday that the draft law could help clarify grey areas and encourage more companies to become involved in philanthropy.
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Liu said a lack of legislation had given some the leeway to misuse public funds in the name of charity. “But it’s more often the case that some companies and individuals wanted to be involved in charities but didn’t know how to go about it … A charity law may help generate more charitable behaviour,” he said.
Li Jianguo, deputy head of the NPC Standing Committee, told a parliamentary plenary session that charity groups in China lacked sophisticated management and many were not “operating in line with norms”.
“Self-regulation has yet to develop within the industry. Public enthusiasm for charities has yet to improve. The authorities have yet to strengthen their support,” Li said.
He said that more than 800 NPC delegates had filed dozens of proposals on legislation on charities since 2008.
Additional reporting by Laura Zhou
