New law to give more charities access to funds
Print Edition
THE Shanghai Youth Service Center for AIDS Prevention raised over 200,000 yuan (US$30,800) through a joint fund with the government-backed Shanghai Charity Foundation, but not every organization of Good Samaritans is that lucky.
The number of philanthropic groups eligible to tap public fundraising has been restricted by law. That is about to change.
The National People’s Congress, meeting in Beijing, is poised to pass a new law allowing any legally registered charitable group to qualify for public fundraising.
Bu Jiaqing, who established Youth Service Center for AIDS Prevention six years ago, welcomes the reform.
“Some of my philanthropic peers used to get the cold shoulder because foundations weren’t willing to cooperate with them for fear of taking on responsibilities that could lead to problems,” Bu said.
The law change comes as charities are mushrooming across the country. Donations to groups doing good public work has multiplied 10-fold in the past decade, even when access to public fundraising was restricted to a small number of groups, such as the Red Cross Society of China.
In Shanghai, the number of charitable groups that qualified for fundraising stood at 56 at the end of last year, according to the Shanghai Civil Affairs Bureau. That was a fraction of the estimated 7,000 groups involved in charity work in the city. Those not qualified for public fundraising get their donations through private canvassing in neighborhoods, business communities and from online appeals.
The new law stipulates that registered charities can apply for fundraising status after they have operated for two years and been officially certified for sound internal governance.
Currently, most charity groups in China are registered as private organizations by civil affairs administrations. That lumps them in with institutions like private schools and hospitals.
The new law also stipulates that donations made to legal charities will be eligible for tax deductions, something Samaritans have been fighting to achieve.
“We’re struggling to survive,” said Bu. “We have to pay higher taxes on donations than the taxes on some small startup businesses. Some registered institutions doing the same sort of work as us enjoy tax breaks.”
Charitable groups fill a void as governments grapple with tight budgets and social obligations to care for the handicapped, sick, elderly and poor mount.
Hu Zengqi, executive vice secretary-general of the Shanghai Charity Foundation, said the new provisions will make goodwill “less awkward.”
Indeed, it was a trying time for the relatives of Shanghai resident Li Qingquan, who wanted to donate his apartment to charity after his death. The foundation had to tell them that about a quarter of the value of the home in the Xuhui District would have to be paid in taxes.
“After much ado, we managed to get the Real Estate Bureau and the Public Notary Office to exempt us from certain fees,” Hu said. “We were lucky because we are government-backed. Other charity organizations don’t have access to such ‘green tunnels’ like we do.”
The reform regulations will prohibit individuals and non-registered groups from raising funds from the public on their own. That provision is intended to safeguard donors from falling prey to fraudulent charity appeals, but some say that it could hurt legitimate grassroots projects.
One that will feel the brunt is the ad-hoc campaign organized by a group of local ophthalmologists. The eye doctors have been raising funds among themselves and from the public to offer free cataract surgeries for old people in remote villages in China.
However, the campaign does not have a recognized umbrella group as a fundraiser, which would make it illegal under the new legislation.
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