The “Charity Law” and the Recognition of Charitable Organizations

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On September 9th, 2016, the Beijing Civil Affairs Bureau issued registration certificates indicating charitable status to the first group of 21 approved organizations.

More than a month has passed since the “Charity Law” officially came into force, and various supporting documents elaborating on and supplementing the law in its implementation have been released in quick succession. However a perfect piece of legislation cannot be created in one stroke, and continuous fine-tuning and polishing during the process of implementation is necessary.

In the last few days, the China Philanthropy Times has become aware that many non-profits have encountered difficulties when seeking identification as charitable organisations and that there has been confusion among officials in the civil affairs bureaucracy when handling related issues. Furthermore, many local civil affairs departments have yet to even begin work on identifying charitable organisations.

Therefore, the China Philanthropy Times decided to visit civil affairs departments in Chengdu to better understand the situation on the ground, and has invited experts and scholars to provide their analysis on the confusion surrounding the initial implementation of the Charity Law.

Inconsistencies in identifying charitable organisations

“The definition of charitable activities in article three of the Charity Law, released in March 2016, does not match the definition of charitable organisations eligible for direct registration in the “Comments on Reforming the Management System for Social Organisations to Promote their Healthy and Orderly Development” (referred to as the “Comments” below), published on August 28th by the Central Office of the CPC and the General Office of the State Council. This will not only create difficulties for the work of the authorities in charge, but will leave many social organisations unsure of what to do when registering or seeking charitable status”, says Ma Jianyin, lecturer at the Legal Studies Institute of Beijing Normal University, while discussing the Charity Law.

According to Ma Jianyin, “the Charity Law contains many innovations and highlights, for instance: it establishes a foundational legal framework for the charity sector; it makes open law-making a model for democratic legislating; it broadens the right to publicly fundraise; it promotes charitable trusts, etc… But its deficiencies, with regard to tax benefits, for instance, are also clear. While the Charity Law states that tax benefits are available, it does not explain how to claim these benefits in practice; in addition, while ‘professional leading units’ were not mentioned anywhere in the law, many social organisations are still influenced by the dual management system in practice, though its legal status remains unclear; also, many contradictions remain between the definition of charitable organisations in the Charity Law and the one in the supporting documents. To address the doubts regarding a number of provisions in the law, something like a document containing ‘Further Elaborations on the Charity Law’ is urgently needed”.

Article three of the Charity Law states: “‘Charitable activities’ in this law refers to the following public interest activities voluntarily carried out by natural persons, legal persons and other organisations through the donation of property, the provision of services or other means:

(1) Helping the poor and the needy;

(2) Assisting the elderly, orphans, the ill, the disabled, and providing special care;

(3) Alleviating losses incurred by natural disasters, accidents, public health incidents and other emergencies;

(4) Promoting the development of education, science, culture, health, sports and other causes;

(5) Preventing and alleviating pollution and other public hazards, protecting and improving the eco-environment;

(6) Other public interest activities in accordance with this law.

According to the “Comments”, the following are the charitable organisations eligible for direct registration: public interest and charitable social organisations providing services to help the poor and the needy, to assist the elderly, orphans, the ill, the disabled and disaster victims, or to contribute to health and education.

Regarding the discrepancy between the two, Ma Jianyin believes that the definition of charitable activities in the Charity Law is broader and more comprehensive than the more restrictive definition of public interest and charitable social associations eligible for direct registration under the “Regulations for the Registration and Management of Social Service Institutions” (the “Temporary Regulations on the Registration and Management of Civil Non-Enterprise Work Units” revised draft for public consultation), the “Regulations for the Registration and Management of Social Associations (revised draft for public consultation)” and the “Comments”. Releasing a series of supporting documents at a time when the Charity Law, a foundational law for China’s charity sector, has already been established and is about to be implemented, is bound to create contradictions and lead to difficulties during the implementation of the law.

An effective mechanism is needed to solve problems

Yang Tuan, researcher and deputy director of the Social Policy Research Center at the Chinese Academy of Social Sciences, gives the following example: “when applying for charitable status, an NGO active in education, which has always engaged in charitable activities, was told that its activities do not meet the requirements for direct registration and that it needs to obtain the approval of a professional supervisory unit prior to registration. According to the definition of charitable activities in the Charity Law, however, the activities of the organisation do qualify as being charitable and thus, the organisation itself should be recognised as a charity. The head of the organisation finds this disturbing: ‘We’re a charitable organisation according to the Charity Law and now these supportive documents want to apply a different definition to us.’”

Yang Tuan provides the following advice: “when facing this type of problem, my advice to the head of the organisation is to first prepare all the materials needed for registration according to the regulations. Then, submit a formal statement to the civil affairs department pointing out that, according to the provisions of the Charity Law, the organisation’s activities fall under the scope of charitable activities and should be identified as such. Throughout this process, vigorously provide feedback on the situation to society.”

The scholar further states: “providing feedback to society in real-time is a way to draw attention to an individual case, presenting it to the public and the media. It was inevitable that the series of legal documents released immediately after the Charity Law would lead to problems during the implementation of the law. Currently, I think the most effective way of solving these problems is to work on a case by case basis, with the public and the media paying close attention to the problems surrounding each case, finding the fundamental causes of the problems, and engaging in the revision and optimisation of the legislation together with the relevant departments, thereby creating an effective problem-solving mechanism.”

Frustration on both sides

Ma Jianyin believes the difficulties that have arisen following the release of the Charity Law and the various supporting documents do not only affect social organisations. Confusion is also present among officials on the frontline of the civil affairs bureaucracy, who are responsible for recognising charitable organisations. On the one hand, there is the recently released foundational law for the charity sector, while on the other, there are the administrative regulations that support its implementation. The contradictions between the two mean that officials don’t know how to give an explanation; furthermore, the newly released Charity Law has given the civil affairs departments of the county level people’s governments the authority to register social organisations, recognise charitable organisations, supervise the right to fundraise publicly and manage the documentation of public fundraising activities. Previously however, many of these civil affairs authorities, for instance those at the county level, had not had to take on these kinds of responsibilities.

Given this situation, the “China Philanthropy Times” sought further information from a charity sector expert who clarified that “recognising charitable organisations” is necessary because charitable organisations were defined as a completely new type of organisation, separate from other social organisations. This is relevant for tax benefits, obtaining donation receipts and a host of other issues. Therefore, their recognition must be unified. One reason for the difference between the definition of charitable organisations eligible for direct registration in the “Comments” and the “Measures on the Identification of Charitable Organisations”, and the definition of charitable activities in the Charity Law, is that the Charity Law is a foundational charity sector law, meaning that it was drafted in broad terms, while supportive documents like the “Measures on the Identification of Charitable Organisations” are more detailed legal documents meant for implementation; another reason is that some of the organisations engaging in charitable activities, such as foundations, as well as social service institutions and social associations, fail to meet the requirements of the “Measures on the Identification of Charitable Organisations” and must go through the recognition procedure.

When it comes to social organisations that now need to look for governing units for permission before they can be recognised as charity organisations, our counterpart said that at present when China’s social organisations register, they all have to first find a governing unit, and only then can they go to the Ministry of Civil Affairs to register. As far as social organisations that are unable to find a governing unit are concerned, all of them have to pass through a thorough auditing from the Ministry of Civil Affairs, which at the same time also acts as their governing unit. Basically the Civil Affairs department has to play both roles at the same time. However, when it comes to the relevant work being delegated to the county-level civil administration system, the expert also honestly says that “the county-level civil administrations did not used to participate in the registration and supervision of social organisations’ work. Now there is a sudden increase in professional work of a kind that they previously had no contact with, and it really is a challenge.”

From this perspective, the question of whether or not it is possible for civil administrators across the nation to truly understand the Charity Law and its related supporting documents appears to be especially important; and the success in raising awareness on the law relies directly on the law’s actual implementation.

The essentials of educating people about the law

The Deputy Director of the State Administration of Social Organisations, An Ning, replied to a question posed by a “China Philanthropy Times” reporter on the plans to educate people regarding the law. He said that the Ministry of Civil Affairs is currently only in charge of making provincial-level civil administrations throughout the country study the “Charity Law” and supporting documents. The study at the county and municipality levels will be organised by the provincial-level Civil Affairs departments. As far as the actual operations of grassroots civil administrators go, the official says, the Ministry of Civil Affairs has already launched a work confirmation flowchart. In practice, most work will be based on the social organisations filling in the forms, and staff members will be able to carry out the work of recognising them in accordance with the forms. This will simplify operational difficulties and speeds up work efficiency.

Concerning this matter, the reporter from the “China Philanthropy Times” also interviewed the Director of the Civil Affairs Bureau of the Chengdu Civil Administration Department, Liu Chuanyun. He said that the Chengdu Civil Administration Department quickly launched an internal study on the Charity Law and its supporting documents as they were launched nationally. “In such a short period of time a large quantity of legal documents were launched, and all civil administrations nationally have to study them on their own. Really grasping them is a great challenge”, says the official. When the journalist asked about Chengdu’s plans for educating people on the Charity Law and its supporting documents, Liu Chuanyun replied quite honestly that “at the moment we still don’t have a clear and specific plan for this. If you want to educate people about the law, this requires you to first of all be knowledgeable about it and master the relevant regulations. But still, I personally feel that the national civil administration system is itself only in the learning stage regarding this law. So, in this first stage, we should focus on how to make the functional departments comprehensively understand, master, and use the relevant laws.”

As for the delegation of authority to the county-level civil administration system, when asked whether or not it will cause problems for members of staff who have never had contact with such things before, Liu Chuanyun says “it could initially be a real challenge for a civil administration system that has never participated in or had contact with social organisations and their related work prior to this delegation of authority. However, on the one hand it will take a while for the law to actually be implemented, and there are many areas in which the relevant work has yet to be started, so it is still early to say what kind of concrete issues may appear. On the other hand, it is still necessary for some front-line civil administrators to study the law thoroughly and earnestly master the relevant laws.”

It is worth mentioning that on October 19th, the Chengdu Charity Development Office conducted a training session on the Charity Law. According to Ma Jianyin, there were over a hundred people present ranging from members of regional social organisations and civil administrators to private individuals. When asked if they had a thorough understanding of the Charity Law and its supporting documents, almost no one of those present raised their hand.

Many places have not yet started to carry out the work of recognising charity organisations

Yang Tuan says that “the launch of the Charity Law and its supporting documents in quick succession has been a sort of test for the Ministry of Civil Affair’s departments nationwide, which have had to deal with a lot of details and an important task in a short period of time. What’s more, in comparison to the small number of first-tier developed cities, China’s overwhelming majority of second, third, and fourth-tier cities have a public welfare sector that is not very developed at all. Undoubtedly, the important point of the plan for educating people on the Charity Law should be to follow the lead of the Ministry of Civil Affairs, and handle the rest jointly with the relevant departments in a top-down execution of the related activities.

The activities also shouldn’t stay at the provincial level, only to then have the provinces fight with each other. Such a method might not be in line with the spirit of the law, its bylaws, and its meaning, and the results won’t be as effective. This time, we have got together with the Chengdu Charity Development Office and the Chengdu Charity Federation to carry out “2016 Charity Law interpretation” activities. We hope to popularise the law and its supporting policies in every region. Chengdu is our first stop, and then we will also carry out public explanations in nine other cities across the country.”

As one of the organisers of this event, the Chengdu Charity Federation’s Secretary General Rong Daoqing says the following: “Seeing that the Charity Law has already been proclaimed and implemented on a regional level regardless of whether organisations’ members or government administrators really understand the unclear areas, we are cooperating to carry out these educational activities. In addition to this, we will also launch other kinds of publicity exercises, in anticipation that this will allow everyone to have an even better comprehension of the substance of the Charity Law as well as its origin.

However, I believe that awareness and publicity activities carried out by NGOs are merely supplementary work. The major effort for the spreading of awareness on the law should come from the government. But this is not to say that this is solely the responsibility of the Ministry of Civil Affairs. It takes only one department to launch a law, but implementation is only accomplished with mutual cooperation between many departments. This also true of the Charity Law, which merely places the Ministry of Civil Affairs in a position of responsibility for the philanthropic and charity spheres, and functions as the main leading department to guide and supervise implementation. However, if the Charity Law is to have a real impact on the people, this will take the collaboration on all levels of the Propaganda Department, the Legal Departments and other organs as well as the Ministry of Civil Affairs, in order to promote awareness of the law”.

Regarding how to view the impact that the implementation of the Charity Law will have on philanthropic institutions, Rong Qingdao has this to say: “the Chengdu Charity Federation still hasn’t applied for recognition as a charity organisations, mainly because Chengdu’s Civil Affairs Bureau still hasn’t even begun to carry out charity recognition work. We are still actively preparing to carry everything out in accordance with the related supporting documents. Besides, we are in close contact with the relevant departments.

I believe the law’s implementation has to go through a process, and during this process both the implementing departments and the social organisations all need to conduct adjustments and perfect themselves. This inevitably will demand a period of labor pains. The Chengdu Charity Federation has actually already begun to adjust its own operational patterns starting in 2013. This includes opening public investment rights by using our own public investing platform as a base; gathering even more social resources together for charitable organisations; pushing for organisations to openly publish their information; promoting the collection of funds using a variety of established methods, all involving service-type projects; we cooperate with specialised social organisations, we provide the funds and the service organisations provide specialised services.”

All the same, Shenzhen Social Relief Foundation Office Director Li Yaoxing claims that “currently, we still haven’t carried out the charity recognition work because the Shenzhen Social Relief Foundation is registered with the Guangzhou Civil Affairs Bureau, and we still have not received any notification on this issue at the present time. On August 26-27 we already carried out a unified training in Guangzhou. The main aim was to study the Charity Law and its relevant supporting documents.”

According to Yang Tuan, “the launch of the Charity Law is an important milestone for the development of China’s public welfare sector. Even though it still has its imperfections, it creates a clear path to follow for the development of the sector. A process is needed for any kind of progress or improvement. The Charity Law has barely even started to be carried out. At this stage we need to do several things. Firstly, we must work together to promote the “Charity Law” across the country for a better awareness and implementation. Secondly, we need to find out what the problems are and discover the reasons behind them, so we can push the Charity Law to improve faster and better.”

In Brief

Since being officially implemented in September, China’s new Charity Law has had a great impact on the philanthropic sector. This article from the China Philanthropy Times describes some of the difficulties that have beset the law’s implementation over the last few months, particularly in the area of the official recognition of charity organisations.
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