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Monday, August 11, 2008

Giving in China

Lauren Hilgers

When the Sichuan earthquake hit in May, something of a philanthropic mania hit China. In Shanghai, collection cans jingled on street corners, and showed up in shopping malls and on buses; upscale art galleries held benefits; blood banks overflowed. In a week the country had raised 4.185 billion yuan domestically, and the number would soon stretch into the tens of billions.

Now, as the dust settles, many of those donors are starting to wonder where, exactly, their money went. Under China’s current regulations, they may never find out.

Even without a galvanizing disaster, volunteering, charitable giving and civil participation in general, is on the rise in China. It sounds wholesome, but when it comes to private charities, most are operating in a legal gray area. A charity law in the works has been dragging, as China’s government struggles with the role civil society organizations should play in public life. In the meantime, gaps in legislation addressing charities and NGOs leave organizations unsure what their rights and limitations are.


There are currently two laws in China that govern charity organizations; the Red Cross Law of the People’s Republic of China, which was passed in 1993 and relates specifically to establishing an independent chapter of the international organization; and the Public Welfare Donations Law, passed in 1999. In the donations law, the definition of charity donations encompassed all types of charity organizations. Later, tax authorities narrowed down the organizations eligible for tax-exempt donations to around 30.

Under this framework, there are two official charities in China that handle the vast majority of public donations. The Red Cross Society of China and the China Charity Foundation are registered as civilian groups but have close ties to government agencies. The Red Cross Society of China, for example, was until very recently headquartered in China’s Ministry of Health building. Although indispensable in the earthquake relief efforts, these two organizations have been criticized roundly for a lack of transparency; one popular Internet media company, Netease, refused to work with Chinese Red Cross after the organization would not publicize the amount of money it received in donations following the earthquake.

With little guidance for private charity organizations, many are simply not registered. This works fine for some, especially those with good relationships to local government. Others, however, can run into snags. One popular blogger was arrested after distributing funds he had raised through the web to help with earthquake relief.

Others register as social organizations or corporations, each turning to a different set of laws. Under the Regulations for Registration and Management of Social Organizations all NGOs must have 100,000 yuan in funds and are required to seek sponsorship from a government ministry, the securing of which is not always a guarantee. They are then subject to two layers of governmental oversight, one from the sponsoring department and another from the Ministry of Civil Affairs. Registering as a corporation, however, requires that the organization pay taxes.

The situation has also given rise to a contradictory phenomenon known by the charming acronym GONGO, for government-operated NGO (the China Charity Foundation, for example, is considered a GONGO). The GONGO exists somewhere between a communist “mass organization” and an independent NGO. The similarly named CANGOs (China Association of NGOs) is a government-run organization that works closely with all manner of NGOs in China and internationally. Both CANGOs and GONGOs are straddling the divide between government and civil society.

As pressure grows on legislators many have speculated the new charity law will play a similar balancing act. If the new law mirrors the Regulations for Registration and Management of Social Organizations, charities will also be required to seek sponsorship from government departments.

The scrutiny that has followed the Sichuan earthquake, however, could impact the way that the charity law develops. More emphasis is being placed on independence and transparency. There are an increasing number of calls to allow charity organizations to operate outside of the government umbrella.

As civil participation grows, the question has been raised whether or not such close government oversight allows the development of civil society in the true sense of the term. Others argue that a new version of civil society is emerging in the country, one where GONGOs and NGOs co-exist happily and grass-roots organizations are run hand-in-hand with the government.




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