On 1 September 2016, the “People’s Republic of China Charity Law” has come into effect. The comprehensive and detailed law, which consists of 112 articles, is designed to promote charitable engagement and to regulate the third sector. The legislation opens the door to a more participatory and pluralistic society.
Since 2005, China’s third sector has been waiting for the passing of a new charity law. After the government started to draft the law in 2014, there was a process of two years extensive discussion, research and consultation among academia, the NGO community, the public sector and the government.
Until the National People’s Congress passed the law on 16 March 2016, recommendations, forums and workshops influenced the legislation, giving it a cooperative and concordant character.
The new Charity Law sets new standards and regulations for charitable organizations. Among others, the access for registration and the approval to conduct fundraising will be standardized.
Furthermore, charitable organizations must be solely registered at the public affairs department of the county, city, provincial or national level.
Besides their new rights, social organizations will also face new obligations regarding transparency and management requirements, improving their accountability to the donors, the beneficiaries and the society.
The law is expected to boost good governance and the general development of the philanthropic sector, but in particular grass root and community organizations, which will be eligible to apply for fundraising. Up to the present, many small-scale organizations were operating in a legal gray-area due to the lack of a regulatory framework.
Moreover, many had to channel the raising of funds for projects through more experienced and longer established organizations. The Amity Foundation and its partners were such organizations, which provided those services free of charge for many years.
“The law brings many expectations and comprises effective mechanisms to enhance good governance. It is a good law and the key lies in the implementation”, says Shu Peng, the director of the Shanghai Amity Research Center.
Compared to developed countries, China’s third sector is still in an early stage and underdeveloped.
According to the CAF World Giving Index of 2015, China is ranked 144 out of 145 countries. China Daily stated that in 2014, the United States charity sector represented 2 percent of the national GDP compared to China, 0.16% of the GDP.
The measure, along with a number of regulations that followed it, make more charities eligible to raise funds from the public and eliminate the onerous dual registration system under which they had to receive approval from both a supervisory department within a relevant government agency and China’s Ministry of Civil Affairs.
The law does not cover “legal, political, or religious organizations”—the cornerstones of an independent civil society, as that concept is understood in the West.
Its vision of acceptable charitable activity is narrow.