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Charity Oversight
By Zhang Zhiping | NO. 10 MARCH 10, 2016

Charity concerns everyone in society. Though sadly, in recent years, malpractice in the sector has been prevalent, and has sparked questions about the lack of oversight of charities.

For instance, Guo Meimei, who claimed to have connections with the Red Cross Society of China and showed off her extravagant lifestyle online in 2011, greatly tarnished the reputation of the organization, despite the fact that her allegations proved to be totally false. Still, to a large extent, charity scandals in China have stemmed from the lack of laws governing the sector.

That is why the draft of China's first Charity Law is expected to be reviewed and passed at the ongoing full session of the National People's Congress (NPC), the country's top legislature.

Already the charity legislation has undergone a lot of twists and turns. In 2005, the Ministry of Civil Affairs put forward the proposals of drafting a charity promotion law to the NPC Standing Committee and the State Council. Four years later, the ministry submitted the draft law to the Legislative Affairs Office of the State Council, marking the beginning of the legislative process. However, in the years that followed, disagreement and controversy surrounding the draft law stalled its momentum.

The legislative process resumed in 2013, when the oversight of the charity sector was listed as one of the top priorities of the 12th NPC Standing Committee and the NPC Internal and Judicial Affairs Committee was charged with playing a leading role in the drafting of the Charity Law. The draft law was deliberated by the NPC Standing Committee on October 30, 2014 and published on the official website of the NPC to solicit public opinion from October 31 to November 30 that year. Members of the NPC Standing Committee then reviewed and discussed the draft for the second time at their 18th plenary session at the end of last year.

China's charity sector has developed rapidly in recent years, with the amount of donations and number of charity organizations growing and new charity strategies such as better utilizing the Internet and social media are constantly emerging. According to China's 2014 Charity Donations Report published by the China Charity Information Center, donations of money and items amounted to 104.226 billion yuan ($15.9 billion) in 2014. Nevertheless, the industry is still plagued by a variety of issues.

Most charity organizations in China are related to the government, while many non-governmental organizations (NGOs) engaged in charity have found it difficult to obtain a legitimate status. They have to meet strict requirements for funding and staff and hand in a certain amount of registration fees in order to register at civil affairs departments. In addition, they are required to be affiliated with a government department. Although the government has lowered the threshold for charity NGOs to get registered, many still remain unregistered.

On the one hand, without competition from NGOs, government-backed charity organizations almost enjoy a monopoly and therefore lack the motivation and pressure to improve their performance and be transparent. On the other hand, the lack of legitimate status has hampered NGOs from expanding their services. The draft Charity Law has clear stipulations for developing the charity sector, regulating activities, and strengthening supervision.

One highlight of the draft is that the charity concept has become broader. Now charity doesn't just incorporate social assistance but also public services, so the new charity concept will help define the course of the charity sector for the next decades. The proposed legislation has also eased access to fundraising so that organizations can be qualified as fundraisers as long as they meet certain requirements. As a result, more competition will be introduced to the sector to boost its development. In addition, the draft has addressed new issues such as whether individuals can raise funds online and proposes to setting up a "charity day."

Perhaps a charity law alone cannot solve all the problems involved in the industry at once. Nevertheless, the adoption of the new rules will greatly promote the healthy development of China's charity sector.

Copyedited by Mara Lee Durrell

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