Charity’s New Track

By+Yuan+Yuan

After more than 10 years of drafts， hearings and revisions， the nations first law on charitable activities reached its final form on March 16， against a backdrop of scandals in philanthropic organizations and an unrelated boom in posts soliciting charity donations on the Internet， especially through social media.

Such adverse conditions were not expected by Wang Ming， President of the NGO Research Institute at Tsinghua University and a member of the National Committee of the Chinese Peoples Political Consultative Conference （CPPCC）， when he took part in the original drafting process of the law more than a decade ago.

“When the Ministry of Civil Affairs for the first time suggested drafting a law on charities in 2004， charity was still an uncommonly thought of concept for many people in China，” Wang told Caixin.com， a Beijing-based finance and business news platform. “Now the image of charity has become more vivid.”

Redefining charity

The laws drafting process， in Wangs opinion， was unprecedented in its transparency to the public. “We invited people from all walks of life to take part in the drafting process and offer their opinions，” Wang said. “It worked pretty well. When we finally unveiled the draft to the public for suggestions last October， there was not much that we needed to modify.”

Jin Jinping， Director of the Center for Nonprofit Organizations Law in Peking University， attended law drafting symposiums 14 times in 2014 alone. At a forum on the Charity Law in Beijing on March 10 this year， Jin recalled that symposium participants included scholars， legislators and government officials， and “we had very heated discussions every time.”

In October last year， the first draft of the new law was submitted to the National Peoples Congress （NPC）， the nations top legislative body， and the second draft was open for public consultation until January 31 this year. On March 16， the last day of the annual national assembly of the NPC， the deputies voted on the final draft， which was passed with 2，636 votes in favor； 131 votes against； and with 83 abstentions.

The Charity Law， according to Jin， expanded the scope of charity from the traditional definition， which was mainly limited to financial and material donations， to including such critical issues like environmental protection and pollution prevention. “It is a very inclusive definition that aims at improving public welfare， and that is enhanced in the articles on charity fundraising， donations， and earning peoples trust，” said Jin.

Online solicitations

As for commentary claiming that the Charity Law will ban individuals efforts to seek online donations， Wang said that is a misinterpretation of the new law. “The Charity Law stipulates that unqualified organizations or individuals can cooperate with qualified ones to raise funds， but unqualified fundraisers may face a fine of up to 200，000 yuan（$30，770），” he said.

Wang clarified that， “the behavior of individuals raising money for the poor or the sick and who give money to beggars falls under the umbrella of ‘help-seeking behavior， which is not banned by the newly approved law and， therefore， is not illegal.”

Wang further explained that the difference is that such donations will go directly to individuals in need， while what the Charity Law banned are fundraising efforts aimed at a specific group， not specific individuals.

Li Sixin， a 17-year-old high school student in Zhaoqing， Guangdong Province， was diagnosed with leukemia and needed 1.2 million yuan （$184，615） for further treatment. In an act of desperation， Li made a post on Weibo， a Twitter-like social media platform in China， asking for help. Within one day， she received donations worth 1.23 mil-lion yuan （$189，230）.

“It was so surprising as we never thought we could get such a large sum of donations so quickly，” Li told Guangzhou Daily. “I feel so grateful for everybody that offered help to us.” Li then had to make another post asking people to stop transferring money to her bank account.

But the booming of online charitable solicitations has become a concern as well. While its use has increased， its difficult for donors to follow up to see how their money was used.

“Last year， we saw such posts on social media， such as WeChat， almost every day，” Hou Yueqi， a Beijing resident， told Beijing Review， referring to the use of the messaging application popular among Chinese citizens.“We were encouraged to donate a small amount of money frequently and it seems that charity has become a ‘new normal in our daily lives.”

Hou donated about 500 yuan（$77） on such platforms in 2015， but never got any feedback from those who were helped as a result， and now wonders whether such channels for donation solicitations are trustworthy or not.

A recent survey conducted by China Youth Daily found that， although 47.4 percent of the 1，737 survey participants used online platforms to make charitable donations， only 28.5 percent said they trusted the charity groups or individuals involved. A staggering 63 percent expressed concerns about the risks of being swindled.

According to a report by Xinhua News Agency， in August 2015， 19-year-old Yang Cailan launched a personal fundraising campaign online， raising 96，576 yuan （$14，814） after fabricating a story that her father had gone missing following the deadly Tianjin blasts.

“Fundraising activities by individuals often lack transparency and proper means of supervision， and are therefore vulnerable to manipulation and fraud，” said Wang Zhenyao， head of the China Philanthropy Research Institute under Beijing Normal University. “This is ruled out in the new law， but we still need some regulations on this aspect.”

“We hope that the public will donate through charitable organizations. If someone wants to donate or asks for help， he or she can be advised to turn to a qualified charitable institute，” said Kan Ke， Deputy Director of the Legislative Affairs Commission under the NPC Standing Committee. “In other words， unqualified organizations with an intention to do the charity， or individuals directly involved， must be combined with qualified ones.”

Gaining public trust

The drafting process of the Charity Law coincided with the ups and downs of Chinese philanthropic activities over the past decade.

In 2008， charitable donations and activities saw a surge following the devastating May 12 earthquake in Sichuan Province. But in 2011， an alleged scandal involving the Red Cross Society of China delivered a crushing blow to philanthropic organizations across the board， despite the organization ultimately being cleared of any wrongdoing.

The scandal involved a 20-year-old woman， Guo Meimei， who claimed to be employed as a manager of an organization associated with the Red Cross Society of China， and posted photos of herself with luxury cars and expensive handbags on Weibo. This soon made national headlines as outraged people criticized what they saw as a misappropriation of donated funds.

Although it was later revealed that Guo had no connection whatsoever to the charity， public trust had already been undermined. This resulted in a severe decline in donations to the Red Cross Society of China， going from 7.36 billion yuan （$1.13 billion） in 2010 to just 2.6 billion yuan （$400 million） in 2014.

“In the charity sector， one bad apple spoils the whole barrel，” Li Jing with the One Foundation told Xinhua News Agency. “Illegal behavior jeopardizes the whole sector， so it is very important that supervision is strengthened to make philanthropy more popular with the general public.”

Li Jing said that she has been most im- pressed by the Charity Laws aim to create a more supportive environment for charitable activities. According to Li Jing， it will simplify the registration procedures and allow people， resources and organizations with the desire to undertake charitable acts to enter the field.

Sticking point

One hotly debated topic of the draft law was about the percentage of the management fee that charitable organizations can spend. Wang Ming explained that while there wasnt a clear percentage depicted in the first two drafts of the legislation， the third draft set a figure of 15 percent. He believes that was already a setback， and was disappointed that the final number was just 10 percent， calling it “a pity.”

Wang Ming thinks that there is misunderstanding among the public about how charitable organizations operate. “We need to at least pay the employees and if we spend too little on this part， there will be fewer people who will work in philanthropic industries，” he said. People expect that 100 percent of all donations should be given to individuals in need， but doing so does not allow for necessary administrative oversight， training or service delivery.

Xu Yongguang， Director of the Narada Foundation， a private foundation approved by the Ministry of Civil Affairs， believes that these unrealistic expectations show that the charity sector in China has not done a good job in communicating with the public， nor showing the public the professional way of running a charitable organization.

Xu said that even if there should be a general percentage to aim for， one strict figure should not be uniformly applied to all charitable organizations. Xu explained that for some large foundations， 10 percent can be a large number， while for many small ones， this could not even cover basic expenses.

“We cant expect a new law to be perfect，” Wang Ming cautioned. “There will be some following regulations as supplementary terms in the following months before its enactment on September 1. But the new law is already a milestone for the charitable industry in China.”