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March 17, 2016

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Charity Law seeks to make donating easier

Source: Xinhua | March 17, 2016, Thursday | Print Edition

A CHARITY law which will make fundraising easier but tighten supervision on how charities are run was passed overwhelmingly by national legislators yesterday.

Only a handful of charities are currently free to raise money from anyone, while others are restricted to specific groups of donors.

Taking effect in September, the Charity Law promises fewer restrictions on charity activities and tax benefits for the sector.

It addresses a common complaint that businesses making large donations do not get enough tax concessions.

There were 2,636 votes in favor of the new law, 92.49 percent of the total available, when it was adopted at the annual legislative session in Beijing.

There have been concerns on the part of both the public and the authorities of corruption and mismanagement in the charity sector, the reputation of which took a hit after several scandals in recent years.

The new law defines how charities should be registered, giving approved charities more freedom than is the case at present.

It also stipulates that registered charities operating for at least two years can apply to the civil affairs department for permission to raise funds from the general public.

On tax concessions, the government currently waives corporate income tax on donations made by companies from profits, but this only applies to companies donating 12 percent of profits or less.

The new law stipulates that if a company’s donations exceed 12 percent in one year, the balance can be deducted from taxable income over the following two years.

That provision is a major step and will encourage more enterprises and wealthy people to donate to charity projects, said Xu Yongguang, chairman of the Narada Foundation, a private organization that helps the children of migrant workers access education.

“The new law is like building a large reservoir of charity money,” Xu said.

Recognizing that Internet fundraising is popular but also an easy platform for fraud, the law requires that charities post clear information either on their own websites or on gateways designated by the Ministry of Civil Affairs.

Groups or individuals raising funds from the public without a license will have to return donations and may face a fine of up to 200,000 yuan.

Charities may have their registrations revoked if they engage in or sponsor activity deemed to undermine state security or public interests. They may also face punishment from other law enforce agencies.

The law asks charities to publish their articles of association and information on their executives and supervisory bodies. They should also give annual reports complete with financial statements, details of projects launched as well as staff pay and benefits.

Ending rural poverty

A charity with permission to gather donations from the public should have its financial reports audited. It should also minimize operational costs, keeping them below 10 percent of the amount raised.

The sector is set to play a significant role in the government’s ongoing poverty alleviation campaign, which aims to lift all rural residents above the poverty line by 2020.

At the end of last year, 55.75 million rural Chinese had been classed as impoverished, with a per capita net income of under 2,800 yuan a year.

Annual donations to registered charities in China have soared from 10 billion yuan (US$1.5 billion) to 100 billion yuan over the past decade.

As one way of redistributing wealth, charities can support areas overlooked by market and government investment, said Cao Yisun, of the China University of Political Science and Law who is also a national political adviser.

The bill was submitted for its third reading at the annual session of the National People’s Congress that concluded yesterday, after two readings at the bimonthly sessions of the NPC Standing Committee.

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