NPOs marred by legal loopholes

Puongpun Sananikone (left), chairman of the East-West Center Board of Governors, talks with participants at the EWC 15th biennial international alumni conference in Beijing on Saturday. [Photo/China Daily]

China is speeding up legislation for the rapidly growing philanthropic sector, including setting clear rules for foreign organizations, an expert from the legislation team said in Beijing on Saturday.

There are loopholes in the existing legal system, which has failed to set do's and don'ts for international non-profit organizations and provided only sketchy information for foundations' operations, Jin Jinping, director of the non-profit Organization Law Research Center at Peking University, said at an international symposium on building a supportive legal framework for philanthropy in China.

Jin,who has participated in amending the management regulations for three categories of NPOs (foundations, non-enterprise work units and social associations), said the amended regulations are expected to better manage the activities of international NPOs in China. However, she did not reveal more details about the latest amendments, which are waiting for approval by the State Council.

"We have no legal article or regulation to comply with when overseas non-profit organizations (non-foundation) want to register a branch in China," Jin said.

The incomplete legal system has resulted in a low registration rate of international NPOs in China.

A report published in April by the China Charity and Donation Information Center affiliated with the Ministry of Civil Affairs showed that less than 3 percent of 1,000 US-based NPOs operating in China had registered with Chinese civil affairs authorities.

Jin added that even registered, international charitable organizations are not allowed to raise funds on the Chinese mainland under current regulations.

"It's a pity that we cannot access charitable resources on the mainland especially given that the growing middle class is becoming more enthusiastic in donating," said a project officer from a charitable organization in Hong Kong who declined to be named.

"The ban on international charities raising funds on the mainland also restrains China's influence and voice in international NPOs, because China is usually a recipient rather than a donor country for them," he said.

China received 84.5 billion yuan ($13.3 billion) in donated money and materials in 2011, according to the statistics from the China Charity and Donation Information Center.

Management flaws and a lack of transparency at some well-known organizations, including the Red Cross Society of China, have triggered a public trust crisis in the philanthropic sector and more cries for a dedicated law on charity.

The Ministry of Civil Affairs announced plans to draft a charity law in 2005, but the draft law is still under discussion by legislators and government departments, Minister Li Liguo said in March.

Mark Sidel, a professor on law and public affairs at the University of Wisconsin-Madison, said given the tremendous changes in China's civil society and growth in the non-profit sector within a short period of time, many issues such as registration, tax exemption policies, transparency and fundraising are exposed almost at the same time.

hedan@chinadaily.com.cn