A child who was born with a cleft lip and palate in Tibet is cured, thanks to a charity organization

Liang Tao is nothing if not tenacious. The 64-year-old former chairman of the Audiology Development Foundation of China (ADFC), which works for the hearing-impaired, still recalls how difficult it was to register the foundation more than two decades ago. It took him 26 trips from Xuzhou, his hometown in east China’s Jiangsu Province, to Beijing, countless filing of applications and negotiations with government departments at all levels before he was finally granted approval. 

Although the whole process took an entire year, he created a record - registering a charity in China in the shortest time. So when Liang learnt the National People’s Congress (NPC), China’s top legislature, had approved the country’s first Charity Law on March 16, he was elated. 

"It is a long-awaited law for people involved in philanthropy like me. With it, we don’t need such complicated application procedures for charity work and what we do will get legal support," said Liang, who still cares about the charity despite retirement.  

The law, which will take effect in September, streamlines registration procedures, eases restrictions on fundraising and the operation of charity groups, and tightens oversight of their internal management in an aim to improve the efficiency and transparency of philanthropic work. 

With a growing number of affluent Chinese wanting avenues to contribute to society, China’s charity sector has seen rapid growth. Annual donations to registered charities in China soared from less than 10 billion yuan ($1.54 billion) in 2006 to 100 billion yuan ($15.4 billion) in 2014, according to Fu Ying, spokesperson for the Fourth Session of the 12th NPC. 

Streamlined process 

In 1994, when Liang tried to register his charity, he had to get approval from three different government entities: the Ministry of Health, the Ministry of Civil Affairs and the People’s Bank of China. With the enactment of the Charity Law, it now only requires registration with the civil affairs department to establish a charity organization. 

"With a clear demarcation of who the authorized supervisors of charitable organizations are, it gets easier to do charity work. It is a leapfrogging progress in legislation on philanthropy in China and will spearhead a golden period for the development of the charity sector," said Zheng Gongcheng, a professor on social security in Renmin University of China as well as Vice Chairman of China Charity Federation. 

Before the law, only a registered public charity had the right to solicit funds from the public. To avoid the red tape, private charities used to operate as an affiliate of a public foundation. For example, One Foundation, established by Chinese movie star Jet Li in 2007 for disaster relief, children’s welfare and professional training, was run as a private charitable project under the Red Cross Society of China. 

Although it acquired the right to raise funds in this way, the foundation still cannot respond immediately to people in need as it has to first seek permission of the organization it is affiliated to. 

"Charitable organizations [like One Foundation] are not independent legal entities. Their finance, staff and charitable projects are all managed by the organizations they are affiliated to," said Zheng explaining the practice so far. 

But this scenario will change once the Charity Law comes into effect in September. According to the law, any charitable organization can apply to get a certificate to raise public funds after being legally registered for two years. 

"With the law, more charity groups, including private ones, will qualify to solicit donations from the public," said Kan Ke, former Vice Chairman of the NPC Standing Committee’s Legislative Affairs Committee. Kan was involved in drafting the law.  

Greater transparency 

The legislation on charities is also a timely response to frequent scandals that erupted in the past, eroding public trust in the sector. The Guo Meimei incident is a case in point. The 20-year-old blogger claimed to be working with a charity organization while showing off her extravagant lifestyle on social media. The phenomenon caused the public to become wary of corruption in charities and mismanagement of their funds. 

The law aims to increase transparency and tighten the management of charity groups. It says charitable groups should minimize operational costs, keeping their annual operational fee below 10 percent of the total amount they collect from the public in a year. It also requires charity organizations to submit annual reports of their work complete with financial statements, details of projects launched and staff payments and benefits, to the civil affairs departments they are registered with. 

For small foundations like Liang’s, a 10 percent ceiling on operational costs means a lot of pressure. "We managed to limit it below the ceiling by renting small offices and paying our staff less than 4,000 yuan ($616) a month. But how can philanthropy keep the best people if the working environment and wages continue like this?" said He Han, Director General of ADFC. 

Considering the difficulties small charities may face due to their low ceiling, the law gives them some leeway. "Under certain circumstances, when charities cannot keep operational costs under the required 10 percent, they can inform the civil affairs department and disclose the situation to the public," Kan explained. 

Individual fundraising banned 

The Internet has become a popular platform for people in need. Last September, a man in Anhui Province spread a story online, claiming his girlfriend had been badly mauled trying to save a little girl from a dog attack. He won widespread sympathy from netizens and raised about 800,000 yuan ($123,000). But the story turned out to be a fraudulent one. 

Despite such incidents, people still regard the Internet as an effective way to offer help. Therefore, there is widespread concern about a provision in the Charity Law that bans individuals from fundraising. 

Kan clarified the position, saying that individuals seeking financial assistance for themselves, family members or relatives is different from charitable fundraising. "[The former] is actually asking for help and will not be banned by the newly approved law," he said. "Individual fundraising refers to individuals soliciting donations for strangers and that is not going to be allowed."

He added that the law wants to see people working with charitable organizations for philanthropy rather than going directly to the aid of a chosen beneficiary because it is easier to supervise organizations, which are smaller in number, than a large number of individuals. 

"We should let the professionals do the job," Kan remarked.