Charity law provides legal basis for charitable activities such as poverty relief.

 

Chinese lawmakers approved the country’s first charity law on March 16 at the closing meeting of the annual session of the National People’s Congress. The law, which will come into effect in September, is a fruit of reform and a step toward modern social governance.

Since 2002, the number of social organizations has increased rapidly in China. As of the end of 2015, the nation had 657,000 legal social organizations, according to official estimates. The growth of this sector has prompted policymakers to address regulatory challenges related to the role, internal management and legal status of social organizations while formulating policies for registration reform and preferential taxation.

As the nation enters the new five-year period, the charity law offers a timely measure that promotes social participation in philanthropy and optimizes social governance models.

Above all, the charity law provides a legal basis for the management of charitable organizations and service reform. It facilitates the process of application to be certified as a charity, which was previously subject to approval from registration and administrative authorities.
 

Under the law, an organization that intends to operate as charity should register with civil affairs authorities higher than the county level. Charity organizations that meet statutory conditions, including foundations, social groups and social service agencies as well as scientific institutions, associations, chambers of commerce and urban and rural communities, can be registered in local civil affairs departments.

The law requires charity organizations to make out an invoice uniformly printed by financial departments to donors upon receipt of donations. A notice recently released by the Ministry of Finance and the Ministry of Civil Affairs explicitly states that registered social groups, foundations and private non-enterprise organizations can apply to local financial departments for donation invoices. Preferential tax policies for charities are also incorporated in the law.
 

In addition, the charity law can better guide the development of social organizations. There will be a drastic increase in the number of social organizations engaged in public welfare for disadvantaged groups, such as the poor, the elderly, orphans, persons with disabilities, and victims of natural disasters and other crises. There will also be a growing number of groups promoting education, science, culture, health, sports and environmental awareness.
 

Moreover, the law will make charity activities a new economic growth point. It eases restrictions on the establishment of charity groups. A charity organization that has been registered for more than two years can apply for a certificate of public donation to the civil affairs authority it has registered with, if it wants to collect donations from the public. This lays the legal basis to establish grassroots fundraising foundations, which can unleash the potential of charity resources and enhance the efficiency of public service through market competition. Also, the charitable trust will activate a huge amount of idle assets.
 

The law will also create countless employment opportunities. Government sources estimate that the law will affect more than 55 million poor people, 137 million people over the age of 65 and more than 520,000 orphans. Covering various fields, such as ecology, education and science, the sector has great potential for employment. The charity law will promote the mobilization and integration of social resources to continually generate wealth.
 

Furthermore, the law clarifies that the government should not directly raise and appropriate donations. And charity organizations are required to tighten supervision of their internal management and disclose related information.
 

These rules, together with rules on fundraising and the use of donations, will guide the sound development of social organizations and charity groups, and foster good political and social relations while promoting progress in social governance.

 

Ma Qingyu is a professor from the Chinese Academy of Governance.