Charitable giving in China in a new legislative environment

 

Karla Simon and Holly Snape

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China has been faulted for having an extremely low rate of charitable giving. In the Charities Aid Foundation’s 2015 “World Giving Index” China ranked 144th out of 145 – spared a last place finish only by Yemen. Our own research tells a different story. Here we look at characteristics of Chinese charity and what will be important to watch following breakthrough legislation in 2016.

Before the Charity Law, which went into effect in September last year, only a small fraction of China’s public benefit organizations was permitted to raise money from anyone. Others were restricted to specific groups of donors. The former were almost exclusively government affiliated. The new law has changed this, allowing any registered charity—both existing organizations that obtain accreditation and newly registered charities, in operation for over two years—to apply for permission to seek public donations.

This is a major change. In theory, it provides enormous space for NGOs to develop in a more competitive playing field. In practice, both the right to fundraise and accredited online fundraising platforms—the only ones permitted—demand government approval, meaning the space will be significantly shaped by state designs.

It also creates concrete demands for transparency and robust organizational governance. As Wang Ming, Dean of Tsinghua’s School of Philanthropy, put it in a recent interview with Xinhua News for their ‘Internet Plus Philanthropy’ series, ‘from start to finish transparency is the main thread running throughout the Charity Law’.

NGOs will live or die by this. The old hazy legislative environment—some estimates put the number of ‘illegal’ NGOs existing in a gray area at around 3 million—relied unsuccessfully on a prohibitively high initial threshold to legal status to manage the sector. Now these organizations are being brought into the light using big data, public oversight, and third party evaluations to achieve regulation.

This overhaul of the way oversight is achieved is a big step forward but the legislation may still be only just keeping up with practice. Online giving by ordinary people is developing fast.

Last year internet company Tencent held its second ‘9.9 Charity Day’. Over ¥ 300 million was donated by 6,770,000 people in just three days via online platforms. This was a leap up from the 2.05 million members of the public who had donated just short of ¥ 128 million during the first 9.9 Charity Day event in 2015, a year before the Charity Law went into effect.

The amount raised in just days via quasi-private circles on social media platform WeChat by Luo Er, the father of a child suffering with leukemia, before questions began to be asked, demonstrates a tendency in China to give within your own ‘circle.’ The outpouring of anger that followed can tell us much about issues of trust related to giving in China.

On a national level, measures of philanthropy other than aggregate numbers for giving are important. Examples for China can be found in the Hurun reports on wealthy Chinese and the 2016 report from Harvard’s Ash Center on giving by 100 wealthy donors.

Research published recently by Beijing Normal University’s China Philanthropy Research Institute (see)  indicates giving by China’s very wealthy citizens was up in 2016 by a huge factor.

According to this report, the top 100 Chinese philanthropists donated ¥ 37.9 billion yuan ($5.46 billion) in 2016, up nearly 25 per cent from the record ¥ 30.4 billion yuan given in 2014.

The record level of donations from the tycoons listed (such as Jack Ma and Pony Ma) underscores the philanthropic potential in China, said Fu Changbo, assistant director of the China Global Philanthropy Institute in the southern city of Shenzhen, which also contributed to the report. ‘The enormous wealth accumulated by the country’s super-rich over the past four decades has laid the foundation for current and future charitable giving’, said Fu.

Karla Simon is chairperson and director of programs, ICCSL.
Holly Snape
is foreign expert, Central Compilation and Translation Bureau of the Central Committee of the CPC.


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