Charity Law (Draft)

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A more current Second Draft of this Law has now been released and translated, and is available here.

Source: China National People's Congress Online; October 31, 2015 http://www.npc.gov.cn/npc/xinwen/lfgz/2015-10/31/content_1949152.htm

Bilingual Version:http://chinalawtranslate.com/bilingual-charity-law-draft/?lang=en

In October 2015, the 17th Session of the 12th NPC Standing Committee conducted the first reading of the "PRC Charity Law (Draft)". The "PRC Charity Law (Draft)" is now published on the website of the NPC and is open to the public for comments. The public can directly log in to the NPC website ((www.npc.gov.cn))and provide comments; and may also mail comments to the Legislative Affairs Committee of the Standing Committee of the National People's Congress, (1 West Qianmen Avenue, Xicheng District, Beijing 100805) [in Chinese: 北京市西城区前门西大街1号,邮编:100805. Please indicate on the envelope "Solicitation of Comments for the Draft Charity Law".) The deadline for the submission of comments is November 30, 2015.

CONTENTS

  Chapter I: General Provisions

Chapter II: Charitable Organizations

Chapter III: Charitable Fundraising

Chapter IV: Charitable Donations

Chapter V: Charitable Trusts

Chapter VI: Charitable Services

Chapter VII: Information Disclosure

Chapter VIII: Promotion Measures

Chapter IX: Supervision and Management

Chapter X: Legal Responsibility

Chapter XI: Supplementary Provisions

Explanation Regarding the "Charity Law of the People's Republic of China (Draft)"

Charity Law of the People's Republic of China (Draft)

Chapter I: General Provisions

Article 1: This law is drafted so as to develop the charity field, to promote a culture of charity, to regulate charitable activities; to protect the legal rights and interests of those such as charitable organizations, their donors, volunteers, and beneficiaries; and to promote social progress.

Article 2: This law applies to natural persons, legal persons or other organizations carrying out charitable activities or activities related to charities. Where other laws have special provisions, follow those provisions.

Article 3: "Charitable activity" as used in this law indicates initiation of the following non-profit activities on a voluntary basis by natural persons, legal persons or other organizations through means such as donating property or providing volunteer services:

(1) poverty relief and helping the elderly, young, disabled or other disadvantaged groups;

(2) relief from damage caused by natural disasters and other emergencies;

(3) promotion of the development of areas such as education, science, culture, health, and sports;

(4) prevention and control of pollution and other public harms, and protection and improvement of the environment;

(5) other activities consistent with the societal public interest.

Article 4: Natural persons, legal persons, or other organizations carrying out charitable activities shall follow the principles of lawfulness, voluntariness, integrity, and non-compensation; and must not violate social morals, and must not harm the societal public interest or the lawful rights and interests of others.

Article 5: The State encourages and supports natural persons, legal persons, or other organization conducting charitable activities according to law.

Article 6: The civil affairs department under the State Council oversees charity work nationwide; civil affairs departments of the people's governments at or above the county level oversee the charity work within their respective administrative jurisdictions.

The relevant departments of people's governments at the county level or above do work on charities well in accordance with their own duties.

Article 7: March 5 of every year is"China Charity Day".

Chapter II: Charitable Organizations

Article 8: "Charitable organizations" as used in this Law refers to lawfully registered non-profit organizations whose main purpose is carrying out charitable activities.

Article 9: Charitable organizations shall comply with the following requirements:

(1) Have carrying out charitable activities as its main purpose;

(2) It does not have a profit-making motive;

(3) Have its own name and location;

(4) Have an organizational charter;

(5) Have necessary assets;

(6) Have institutional framework and responsible parties meeting requirements;

(7) other requirements provided for by laws and administrative regulations.

Article 10: Establishment of charitable organizations shall be by application for registration to the civil affairs department of a people's government at the county level or above. Where the requirements provided by this law are met, civil affairs departments shall issue a decision to authorize registration within 30 days of receiving the application; where the requirements of this law are not met, registration is not provided and the reason is explained in writing.

Already established social organizations that meet the requirements for charitable organizations may apply to the civil affairs department that they registered with to modify the registration to that of a charitable organizations, and the civil affairs department shall make a decision on modification of the registration within 20 days of accepting the application.

Article 11: Charitable organizations may adopt models of social organization such as foundations, social groups (社会团体), or social service organizations.

Article 12: Charitable organizations' charters shall contain the following:

(1) Name and domicile;

(2) Organizational model;

(3) the purpose of establishment and scope of operations;

(4) Asset sources and composition;

(5) the composition and duties of the decision-making and implementation bodies;

(6) internal oversight mechanisms;

(7) asset management and utilization systems;

(8) project management systems;

(9) conditions for termination and disposition of assets after termination;

(10) other important matters.

Article 13: Charitable organizations shall follow laws and administrative regulations and their charter to establish sound internal governance structures, and clarify responsibility and powers for areas such as major decisions, implementation and supervision.

Charitable organizations shall implement a unified national accounting system, shall undertake accounting according to law, shall establish a sound accounting supervision system, and shall accept the supervision and management of relevant government departments.

Article 14: The assets of charitable organizations include:

(1) Start-up assets;

(2) Donations;

(3) Other lawful assets.

Article 15: The assets of charitable organizations may only be used for charitable purposes in accordance with a charter or the contribution agreement, and must not be distributed to the founders, donors or members of the charitable organizations.

Charitable assets must not be privately divided, embezzled or misappropriated by any organization or individual.

Article 16: Charitable organizations shall create records for registration and conduct proper management of raised assets, and shall earmark funds for specified purposes,.

Donors' donated materials that are not easy to store, transport or are difficult to use for charitable purposes, may be auction or sold in accordance with the law by the charity organizations, and the proceeds after deducting costs and other necessary expenses, shall be used exclusively for the purpose of the donation agreement .

Article 17: Charitable organizations shall carry out charitable activities in accordance with charitable purpose set forth in the charter.

Where donation agreements stipulate the proportion of expenditures that charitable organizations will spend on charitable activities as well as standards for management costs, follow those stipulations; where there are no stipulations in the donation agreement, follow the relevant provisions of the department of civil affairs under the state council.

Article 18: Charitable organizations shall follow the principles of lawfulness, safety and effectiveness in order acting to preserve property values and appreciate current investments. Investment programs shall be agreed to by two-thirds or more of the members of the decision-making body, but assets given under government funding or a donation agreement that stipulates it must not be in must not be used for investment, must not be used for investment.

Article 19: The founders, major donors and managers of charitable organizations must not use their association to harm the interests of charitable organizations or the public interest.

The founders, major donors and managers who partake in transactions with the charitable organization must not participate in the decision process about these transactions and conditions related to the transactions must be made public.

Article 20: Charitable organizations must not engage in or fund activities that endanger national security or social public interests, and must not accept gifts that have conditions attached which violate laws and regulations.

Article 21: Higher level management of a charitable organization shall abide by the Constitution, the laws and social morality [社会公德]; a person may not hold a higher level management position in a charitable organization in any of the following circumstances:

(1) where they lack or have limited civil capacity;

(2) Where they have been convicted of a crime, and 5 years have not yet elapsed since the conclusion of his or her criminal sentence;

(3) Where she or he has held a position of responsibility at an organization whose certificate of registration has been suspended or cancelled, and 5 years have not yet elapsed since the date upon which the organization's certificate of registration was suspended or cancelled;

(4) Other situations provided for by law or administrative regulations.

Article 22: Charitable organizations shall be terminated in any of the following circumstances:

(1) where termination is required due to division or merger;

(2) Conditions for termination provided for in the charter manifest;

(3) Have not engaged in charitable activities for three consecutive years;

(4) have been deregistered or the registration certificate revoked in accordance with law.

(5) other circumstances where laws or administrative regulations provide they shall be terminated.

Where charitable organizations are terminated, cancellation of registration shall be effected.

Article 23: A liquidation shall be conducted of terminated charitable organizations.

The decision-making body of a charitable organization shall establish a liquidation team to conduct liquidation 30 days after the civil affairs department announces the termination of its services and activities. Where a liquidation team is not formed or it does not carry out its responsibilities, the civil affairs departments may ask the people's courts to appoint relevant personnel to form a liquidation team and to conduct liquidation.

After liquidation, as presided over by civil affairs departments, the residual assets are transferred to charitable organizations with the same or similar purposes, which shall be announced to the public.

Article 24: Charitable organizations may establish industry organizations according to law.

Charity industry organizations shall reflect the demands of the industry, push for industry-wide communication, strengthen industry self-regulation, improve the credibility of the industry, and promote the development of charities.

Chapter III: Charitable Fundraising

Article 25: "Charitable fundraising" as used in this law refers to eligible charitable organizations activities to collect assets based on their charitable purpose.

Charitable fundraising, includes public fundraising and non-public fundraising aimed at specific targets.

Article 26: Charitable organizations may begin conducting non-public fundraising of specified targets from the day on which they are registered.

Charitable organizations that have been lawfully registered for two years and have regular activities may apply to the civil affairs department at which they registered for a public fundraising certificate. Where upon review, civil affairs departments have not discovered the receipt of any administrative punishments provided for by this Law, they shall issue a public fundraising qualification certificate.

Where charitable organizations are eligible for public fundraising since the day of registration as provided for by laws or administrative regulations, civil affairs departments shall issue public fundraising qualification certificates.

Article 27: Charitable organizations carrying out public fundraising shall do so within the administrative region administered by the civil affairs departments with whom they have registered, but there is no geographic limitation on donors' donations.

Public fundraising may adopt the following means:

(1) Set up donation boxes in local public places;

(2) Hold local charity events such as charity performances, charity competitions, charity exhibitions, charity auctions, and charity galas;

(3) Publish fundraising information through media such as local radio, television, and press;

(4) Other public fundraising means.

Article 28: Charitable organizations eligible for public fundraising can conduct fundraising on the Internet.

Charitable organization that have registered at civil affairs departments at or above the provincial level can conduct fundraising through the websites of said departments or through other websites. Charitable organizations that have registered at the civil affairs departments of cities with districts or at the county level can conduct Internet fundraising on the charity information platforms designated or established by the civil affairs departments at which they have registered.

Article 29: Charitable organizations to conduct public fundraising shall formulate fundraising plans. Fundraising plans shall include information such as the purpose of fundraising, the starting and ending time, geographical regions, the names and business addresses of the responsible personnel, the methods of accepting donations, bank accounts, beneficiaries, the purposes of the funds and materials raised, the cost of fundraising, and the methods of disposing of the residual assets.

Article 30: Where charitable organizations conduct public fundraising, they shall post information such as the name of the fundraising organization, the public fundraising qualification certificate, the fundraising plan, contact information, and methods of inquiring about fundraising information at the sites of fundraising activities or on the carriers of fundraising activities.

Article 31:Organizations or persons not eligible for public fundraising must not conduct public fundraising. However, they can cooperate with charitable organizations eligible for public fundraising to conduct public fundraising. The funds and materials raised are to be managed by the charitable organizations eligible for public fundraising.

Article 32: Radio, television, press and also network service providers and telecom operators shall verify the the registration certificates and the public fundraising qualification certificates of the charitable organizations that utilize their platforms to conduct public fundraising.

Article 33: Urban and rural community organizations and work units can conduct fundraising activities within their own organizations and work units.

Article 34: When major natural disasters, accidents and disasters, public health incident or social security incidents happen, relevant people's governments shall establish coordination mechanisms to provide demand information and to orderly guide fundraising and rescue operations.

Article 35: When conducting fundraising activities, forcible apportionment or covert forced apportionment [trans. note '摊派' occurs where members of an organization are each compelled to pay a set portion of a donation] is not permitted, and obstructing/hindering public order, industrial production and people's lives is not permitted.

Article 36:It is prohibited for any organization or individual to defraud assets in the name of false charity.

Chapter IV: Charitable Donations

Article 37:"Charitable donations" as used in this Law refers to the activities of voluntary or gratis donations of assets by natural persons, legal persons, and other organization based on charitable purposes.

Article 38: Donors can donate through charitable organizations and can also donate directly to beneficiaries.

Assets donated by donors shall be lawful assets for which they have the right to dispose of. Charitable donations of property, include tangible and intangible assets such as funds, physical goods, marketable securities, equities, and including intellectual property income.

Article 39:The material objects donated by donors shall have value in use, and shall comply with safety, health and other requirements.

Where the donor donates a product of its own enterprise, it shall provide a certificate of product approval or product quality inspection certificate.

Article 40:Where natural persons, legal persons or other organizations, in the course of conducting a business activity such as show, a competition, a sale or an auction etc., undertake to give part or all of the proceeds to charity, shall sign a donor agreement with the charitable organization or other recipient of the gift prior to the commencement of the activity, and shall perform the gift pursuant to that donor agreement, and shall disclose the outcome of the donation publicly.

Article 41:Charitable organizations accepting donations shall issue to the donors public welfare donation receipts uniformly printed by or under the supervision of treasury departments. Donation receipts shall state clearly the donor, the types and amount of assets donated, the name of the charitable organization, the name of the responsible person, the date of the receipt, and other information. Where the donors are anonymous or decline to accept the donations receipts, charitable organization shall keep relevant records.

Article 42:Where a charitable organization receives a comparatively large donation, it shall sign a written donor agreement with the donor, except where donors state that they won't sign.

Where a charitable organization receives a comparatively small donation, and the donor requests a written donor agreement, the charitable organization shall enter into a written agreement with the donor.

Written donor agreements include: the names of the donor and the charitable organization, the type of asset being donated, the volume, the quality, its application, and the time of delivery, etc.

Article 43:When agreeing on the purposes and the beneficiaries of donated assets, donors and charitable organizations shall not appoint interested parties as beneficiaries in contrary to charity purposes.

Organizations and individuals must not use charitable donations to publicize tobacco products or the manufacturers or vendors thereof, or other matters prohibited from being publicized by laws and regulations.

Article 44:Donors shall fulfill their obligations to donate. Where, in breach of the donation agreement, donors fail to deliver donated assets exceeding the time limit, and where one of the following circumstances exists, charitable organizations or other persons accepting the donations can request delivery; where the donors refuse to deliver, [charitable organizations and other persons accepting donations] can apply to the people's courts for orders of payment or sue:

(1) Donated assets are used in the charitable activities stipulated by Items 1 and 2 of Article 3 of this Law, and a written donor agreement is made;

(2) Donors have publicly promised to donate through radio, television, press, the Internet, and other means.

Where the financial situation of a donor considerably deteriorates after the donor has entered into a written donor agreement or has publicly promised to donate, so as to gravely affect its production or management or his/her family life, the donor is released from fulfilling the duty to donate.

Article 45:A donor has the right to inquire about or make copies of relevant data on the management and the use of his donated assets; where the the value of donated assets is comparatively high, the charitable organization shall proactively give feedbacks to the donor on relevant situations.

Where charitable organizations abuse the donated assets in violation of the purposes agreed upon in donor agreements or by other means, the donors have the right to demand rectification; where rectification is refused, the donors can sue in the people's courts.

Chapter V: Charitable Trusts

Article 46:Charitable trusts are conduct by which the trustors lawfully entrust a trustee with their assets, and the trustees carries out management and distribution in the trustees' own name according to the wishes of the trustor, to initiate charitable activities.

Article 47:The establishment of a charitable trust and the designation of the trustee, shall be done in writing. Where the trust deed needs to be filed, the trustee shall file it with the department of civil affairs of the people's government at the county level or above.

Article 48:The trustee of a charitable trust may be a charitable organization or a financial institution which the trustor has confidence in, or may also be a natural person having full civil capacity.

Article 49: Trustees, in managing or handling the assets of the trust, shall perform their duties in accordance with the charity's purposes, with dedication to duty , integrity in performance and prudent management.

The trustee shall promptly report on the status of the handling of the affairs of the trust, and the status of the management and use of trust assets according to the requirements of the trust deed and the trustor. For trustees of charitable trusts recorded with the department of civil affairs, the status of the handling of the affairs of the trust and state of financial affairs shall be reported to that civil affairs department at least once per year, and shall be made public.

Article 50:Where trustees violate the obligations of the trust or have difficulty performing their duties, the trustor may change the trustee.

Article 51:Charitable trusts may, as needed, establish a trust supervisor by providing for this under the trust deed. The trustee and [any] other persons carrying out matters under the trust are not permitted to serve as the trust supervisor at the same time.

The trust supervisor supervises the actions of the trustee, safeguarding the rights and interests of the trustor/settlor and the beneficiary according to law. Where trust supervisors discover that trustees have violated their obligations under the trust or are having difficulty performing their duties, they shall submit it to the trustor and also have the right to bring a lawsuit in their own name.

Article 52:Beneficiaries of charitable trusts are determined according to trust documents.

Article 53:The assets and the proceeds thereof of charitable trusts shall not be used for non-charitable purposes.

Article 54:The remuneration of trustees and the trust supervisors, and expenses required for performance of duties, are to be paid out of the trust assets according to the provisions of the trust deed, and are to be made public.

The specific standards for the cost of administering a charitable trust, where not provided for in the trust deed, follow the relevant provisions of the department of civil affairs under the State Council.

Article 55:In the termination of charitable trusts recorded with the department of civil affairs, except where otherwise provided for under the trust deed, trustees shall,report the cause and date of the termination to the department of civil affairs and shall lawfully settle accounts within 15 days from the date on which the cause of termination of the trust occurs.

Article 56:With respect to remaining assets left over after the accounts of a charitable trust have been settled, where the trust deed has provisions follow its provisions; if the trust deed does not has provisions, then the remaining assets shall be given to a charitable organization or other charitable trust with the same or similar charitable purpose.

Chapter VI: Charitable Services

Article 57:"Charitable services" as used in this Law refer to the non-profit services provided to others or to the society by charitable organizations and other organization or individuals based on charitable purposes.

Article 58:Charitable services carried out by charitable organizations may be provided themselves, or may also be entrusted to another organization with service expertise, or may recruit volunteers to provide them.

Article 59:Charitable services provided by charitable organizations shall be in accordance with the provisions of laws, regulations and the charter, and shall follow the fundraising plan or donation agreement in utilizing donated assets. Where it is truly necessary to modify items such as agreements on use of donated assets in the fundraising plan or donation agreement, the consent of the donor shall be obtained.

Article 60:Charitable organizations shall reasonably design charitable projects, optimize their course of implementation, minimize operational costs, and raise the efficiency of using charitable assets.

Charitable organizations shall establish project management systems, and conduct follow up supervision of projects' implementation.

Article 61:Charitable organizations determination of beneficiaries shall adhere to the principles of openness, fairness and justness; and must not violate the charitable purpose by designating relatives of the charitable organization's managers as beneficiaries.

Article 62:Charitable organizations may sign agreements with beneficiaries as needed, clarifying the rights and obligations of both sides, stipulating the use and amount of funding, the content and method of services, and so forth.

Where beneficiaries do not follow the agreement in using funding assets, or otherwise seriously violate the agreement, the charitable organization has the right to request they make corrections; where they refuse to make corrections, the charitable organization has the right to end the agreement.

Article 63:The implementation of charitable services shall respect the individual dignity of beneficiaries and must not encroach on beneficiaries' privacy.

Article 64:The implementation of charitable services that have specialized skills, such as medical rehabilitation, care-giving and nursing, education and training, or social work; shall carry out the standards and regulations formulated by the state or industry associations.

Article 65: Charitable organizations may recruit volunteers to participate in charitable services. Recruitment of volunteers shall publicly announce all information related to the charitable service, and inform volunteers of risks that might occur in the course of volunteer service.

Charitable organizations may sign agreements with volunteers as needed, clarifying the rights and obligations of both parties, stipulating the content, method, and time of volunteer service.

Article 66:Charitable organizations shall make real name registration of volunteers, and record the time, content, and appraisal of volunteers' service. As requested by volunteers, charitable organizations shall issue free and accurate proofs of volunteer service records.

Article 67:Charitable organizations shall arrange for volunteers to engage in charitable service appropriate to their age, education level, skills and physical condition; and carry out related training as needed.

Article 68:Volunteers accepting charitable organizations' arrangements to participate in charitable services shall abide by the charitable organizations' management and accept necessary training.

Article 69:Charitable organizations shall provide volunteers with necessary capacity to carry out the charitable services, and safeguard volunteers' lawful rights and interests.

Before charitable organizations arrange for volunteers to participate in charitable service where personal injury might occur, they shall purchase accidental personal injury insurance for the volunteers.

Article 70:Where after charitable projects conclude, there are remaining donated assets, it is handled in accordance with the fundraising plan or donation agreement; where there is no stipulation in the fundraising plan or donation agreement, the charitable organization shall use the remaining assets in a charitable project with the same or similar goals, and make this public.

Article 71:People's governments at the county level or above and relevant departments shall establish coordination mechanisms providing necessary information and convenience, guiding and supporting the charitable organizations and other organizations and individuals to orderly carry out charitable services.

Chapter VII: Information Disclosure

Article 72:Charitable organizations and relevant departments shall carry out the duty of information disclosure according to law. Charity information disclosure shall be authentic, complete, and timely, and shall not contain false records and misleading statements.

Article 73:People's governments at the county level or above establish and improve systems for gathering and releasing charity information.

The civil affairs department of the State Council shall establish a unified charity information system. The civil affairs departments of the people's governments at or above the county level shall establish or designate charity information platforms, timely release charity information to the public, and provide charity information release services for free.

Charitable organizations and the trustees of charitable trusts shall release charity information on the platforms stipulated by the preceding paragraph, and shall be responsible for the authenticity of the information.

Article 74:The civil affairs departments and other relevant departments of the people's governments at or above the county level shall timely disclose to the public the following charity information:

(1) the registration of charitable organizations;

(2) charitable trusts filing matters;

(3) the list of charitable organizations with public fundraising credentials;

(4) the list of charitable organizations qualified to tax deductions for public interest donations;

(5) Measures for promoting charitable activities such as preferential tax treatment and funding subsidies;

(6) Information on purchasing of services from charitable organizations;

(7) Outcomes of investigations into charitable organizations and charitable trusts;

(8) The outcome of commendations and punishments of charitable organizations, other organizations and individuals;

(9) Other information that laws and regulations provide shall be disclosed.

Article 75:Charitable organizations shall annually disclose to the public the following information:

(1) The organization charter, and registration information such as the unified social credit code and the number of the registration certificate;

(2) Information on the members of their decision-making, implementation, and supervision bodies;

(3) Annual work report, including audited financial accounting report, annual situations of conducting fundraisings, accepting donations, and the situations of carrying out charity programs.

(4) Other information required to be disclosed by the civil affairs department of the State Council.

Where they are major changes to the information abovementioned, charitable organization shall timely disclose them to the public.

Article 76:Charitable organizations shall promptly disclose the circumstances of fundraising from the public and of charitable projects' operations.

Where the period of public fundraising is greater than 6 months, the specific circumstances of the fundraising should be disclosed at least once every 3 months; after the public fund raising activity concludes, the overall circumstances of the public fundraising shall be disclosed within 3 months.

Where charitable projects' operations period exceed 6 months, the specific circumstances of project operations should be reported at least once every 3 months, and after the project operations have concluded, the overall circumstances of operations and of collected funds and property shall be disclosed within 3 months.

Article 77:Where charitable organizations fundraise from specified targets, they shall promptly inform donors of the fundraising circumstances, and the circumstances of the management and use of donated funds and property.

Article 78:Charitable organizations shall inform beneficiaries of information such their funding standards, work process and work regulations.

Article 79:Where urban and rural community organizations or work units conduct internal charitable fundraisings, the raised funds and materials and the situations of usage shall be timely made public inside their own communities or work units.

Article 80:Information related to state secrets, personal privacy, or business secrets and other information not to be made public as stipulated by laws and administrative regulations must not be made public.

Where donors or beneficiaries do not consent to disclosure of their names, titles, address or other information, it must not be disclosed.

Chapter VIII: Promotion Measures

Article 81:The people's governments at or above the county level shall, in accordance with this Law and local economic and social development statuses, formulate plans, policies and measures to promote of the development of charities.

People's government at or above the county level and the relevant departments thereof shall, within their own duties, provide charity demand information to charitable organizations or the trustees of charitable trusts, and provide guidance and help to charitable activities.

Article 82:The civil affairs departments of the people's governments at or above the county level shall establish mechanisms of sharing charity information with other departments.

Article 83:Charitable organizations and the income thereof enjoy tax benefits according to law.

Article 84:Where natural persons, legal persons or other organizations donate assets for use in charitable activities, they receive tax benefits in accordance with law.

Overseas donations to be used for charitable activities are lawfully entitled to a reduction or exemption from import duties and also from import VAT.

Article 85:Where beneficiaries accept charitable donations or charitable services, they are entitled to tax benefits according to law.

Article 86:Where charitable organizations, donors, or beneficiaries enjoy tax benefits in accordance with law, relevant departments shall promptly handle the relevant procedures.

Article 87:Where donors donate physical objects, securities, equity, or intellectual property to charitably organizations, administrative fees related to transferring rights are waived in accordance with law.

Article 88:Where charitable organizations carrying out poverty relief, financial assistance, assistance for the disabled, eldercare, or aid for orphans require land for charitable service facilities, they may use state-owned allocated land or rural collective construction land. The use of land for charitable services must not be altered except through legally prescribed procedures.

Article 89:The government provides financial policy support for charitable endeavors, encouraging financial establishments to provide financial services such as financing and bill keeping to charitable organizations and charitable trusts.

Article 90:All levels of people's government and their relevant departments may lawfully use methods such as purchasing services to support charitable organizations in providing service to the public, and follow the relevant laws and regulations on government procurement to report this circumstance to the public.

Article 91:The State employs measures to promote a culture of charity and to foster citizens' awareness of charity.

Schools and other educational institutions shall include philanthropic culture in educational content, and the State encourages institutions of higher learning to set up schools specialized curricula in charities, cultivate talent in charitable enterprises, supports institutions of higher learning and research institutions to carry out theoretical research on charities.

Media such as radio, television, press, and websites shall actively conduct charity publicization activities, popularize charity knowledge, and spread a culture of charity.

Article 92:The State encourages enterprises, public institutions, and other organizations to provide venues and other facilitation of charitable activities.

Article 93:Donors may put a commemorative name on charitable projects to which they have donated, but where provisions of law or regulations require approvals, follow those provisions.

Article 94:The State establishes volunteer registration, volunteer service recording and evaluation systems, and encourages enterprises, public institutions and other organizations to give preferential treatment to volunteers with good service records.

The State encourages charitable organizations to purchase insurance for volunteers and encourages insurance companies got provide it.

Article 95:Charitable organizations carrying out charitable activities shall give priority assistance to natural persons who have made contributions to the development of charitable enterprises and their families who have encountered harships.

Article 96:Following relevant national provisions, establish a commendation system for charities, and give commendations to natural persons, legal persons or other organizations that make outstanding contributions in charitable endeavors.

Chapter IX: Supervision and Management

Article 97:Civil affairs departments of people's governments at the county level or above shall perform the following duties:

(1) Formulate rules on the supervision and management of charity according to law;

(2) Supervise and manage charitable activities;

(3) Guide and supervise charity industry organizations;

(4) Other duties provided by laws and administrative regulations.

Article 98:The civil affairs departments of the people's governments at or above the county level have the authority to take the following measures against charitable organizations suspected of unlawful actions:

(1) Conduct on-site inspections of charitable organizations' locations or the sites where charitable activities occurred;

(2) Demand that charitable organizations give explanations, access or copy accounting books, electronic data and other relevant data, obtain evidences related to supervision and management through methods such audio and video recording;

(3) Conduct investigations with relevant work units and individuals regarding situations related to supervision and management;

(4) Can inquire about [charitable organizations'] bank and other financial accounts, with the approval of the principal responsible persons of the civil affairs departments at or above the county level.

(5) Other measures provided for by laws and administrative regulations.

Article 99:Where civil affairs department conduct inspections or investigations of charitable organizations or relevant units or individuals, there shall be no fewer than two inspectors or investigators, and they shall present lawful documents and inspection or investigation notices.

Article 100:Each year, a charitable organization shall submit to civil affairs departments its annual work report, including audited financial accounting report, annual situations of conducting fundraisings, accepting donations, and the situations of carrying out charity programs.

Article 101:The civil affairs departments of people's governments at the county level and above shall establish credit record systems for charitable organizations and their responsible persons, and shall make these public.

Civil affairs departments shall establish evaluation systems for charitable organizations. Third-party institutions are encouraged and supported to conduct evaluations of charitable organizations and to release the evaluation results to the public.

Article 102:Charity industry organizations shall establish sound industry standards and disciplinary rules, and shall exercise supervision over charitable organizations and charitable trusts.

Article 103: Any unit or individual who discovers that a charitable organization or a charitable trust has violated the law may complain about or report it to the civilian affairs etc. relevant department or the charitable industry organization. A civilian affairs etc. relevant department or charitable industry organization shall, upon receipt of a complaint or report, promptly investigate and handle it.

The State encourages the public and the media to exercise supervision over charitable activities, and to expose the obtaining of assets by deception in the name of a false charity or violations of the law and regulations by charitable organizations and trusts, giving full play to public opinion and social supervision.

Chapter X: Legal Responsibility

Article 104:Where charitable organizations have any of the following situations, the civil affairs departments give a warning and order corrections or temporarily suspend activities; and where circumstances are serious, revoke registration documents:

(1) not carrying out charitable activities in accordance with the charitable purpose and scope of operations;

(2) violations of information disclosure obligations or disclosing untrue information;

(3) not conducting an annual report in accordance with provisions;

(4) Leaking donors', volunteers', or beneficiaries' private information.

Article 105: Where charitable organizations have any of the following situations, the civil affairs departments give a warning and order corrections or temporarily suspend activities; and where circumstances are serious, revoke registration documents. Where there are unlawful gains, the civil affairs departments collect them and transfer them to charitable organizations with the same or similar purpose, and may also fine the persons who are directly in charge and other directly responsible personnel between 10,000 and 100,000 yuan; and where a crime is constituted, pursue criminal responsibility in accordance with law:

(1) Secretly dividing, embezzling or misappropriating charity assets;

(2) Violating article 19 of this law, causing losses of charitable assets;

(3) changing the use of donated property of one's own accord;

(4) Using assets that must not be used for investment for investments;

(5) Accepting gifts with attached conditions that violate laws and regulations.

Article 106: Where the initiation of fundraising activities has any of the following circumstances, the civil affairs departments gives a warning and orders temporary suspension of fundraising activities; unlawfully solicited assets are ordered returned to the donor, and where there is difficulty in returning them, the civil affairs departments collect them and transfer them to charitable organizations with the same or similar charitable purposes and may also fine the persons who are directly in charge and other directly responsible personnel between 10,000 and 100,000 yuan; and where there is a violation of the public security administrative punishments law, the public security organs give public security administrative sanctions in accordance with law:

(1) an organization or individual not qualified to openly fundraise, openly fund-raises of its own accord;

(2) Radio, television, newspaper and network service providers or telecom operators did not perform their verification duties in accordance with article 32 of this law;

(3) Putting quotas or indirect quotas on units or individuals;

(4) Obstructing the public order, business and production, or the people's lives.

Article 107:Where charitable organizations fail to issue donors with a public welfare donation receipt in accordance with law, fail to issue a record showing volunteer service in accordance with law or do not respond to donors' inquiries regarding the use of their donated assets, the civil affairs departments give a warning and order corrections.

Article 108:Where charitable organizations obtain preferential tax treatment through fraud, the taxation departments investigate in accordance with law, and where the circumstances are serious, the civil affairs departments revoke registration certificates; where a crime is constituted, pursue criminal responsibility in accordance with law.

Article 109:Where charitable organizations engage in or fund activities that endanger national security or the public interest, the relevant organs investigate in accordance with law, and where the circumstances are serious, the civil affairs departments revoke registration certificates; where a crime is constituted, pursue criminal responsibility in accordance with law.

Article 110:Where charitable trusts have any of the following situations, the civil affairs departments give a warning and order a stop of the unlawful activities; where there are unlawful gains, the civil affairs departments collect them and transfer them to charitable organizations or another charitable trust with the same or similar purpose, and may also fine the persons who are directly in charge and other directly responsible personnel between 10,000 and 50,000 yuan:

(1) the trust property and its proceeds are used for non-charitable purposes;

(2) Failure to report on the handling of trust operations and financial positions to the civil affairs departments or to make disclosures to the public.

Article 111:Where in the course of charitable service beneficiaries or third parties suffer harms caused by the negligence of charitable organizations or volunteers, the charitable organizations bear responsibility for compensation in accordance with law; and where the harm is intentionally caused by a volunteer or their gross negligence, the charitable organizations may seek compensation from them.

Where in the course of participating in charitable service volunteers suffer harms caused by the negligence of charitable organizations, the charitable organizations bear responsibility for compensation in accordance with law; and where the harm is caused by force majeure, the charitable organizations shall give appropriate subsidies.

Article 112:Where natural persons, legal persons or other organizations defraud assets falsely in the name of charity, the public security organs investigate in accordance with law, and where a crime is constituted pursue criminal responsibility in accordance with law.

Article 113:Where relevant departments of people's governments at the county level or above that have responsibility for oversight of charitable activities have any of the following situations, the relevant departments at the level above or the supervisory organ order corrections; where a punishment should be given, the organ for hiring and terminations, or the supervisory organ, gives sanctions in accordance with law to the persons who are directly in charge and other directly responsible personnel; where a crime is constituted, pursue criminal responsibility in accordance with law:

(1) Violations of information disclosure obligations;

(2) Giving quotas or indirect quotas for fundraising tasks, forcibly appointing volunteers or charitable organizations to provide sources;

(3) Not performing oversight and management duties;

(4) Unlawfully implementing administrative compulsory measures or administrative punishments;

(5) privately dividing, embezzling or misappropriating, charitable property;

(6) Other abuses of professional powers, dereliction of duties, or improper conduct for personal gain.

 

Chapter XI: Supplementary Provisions

Article 114:Even when a non-profit organization with the purpose of conducting charitable activities is not registered, it may still conduct charitable activities within its limits, but shall comply with the relevant provisions of this Law and benefit from relevant rights and interests according to law.

Article 115: This Law shall take effect on xx-xx-xxxx.

 

Explanation Regarding the "Charity Law of the People's Republic of China (Draft)"

Charity is an important part of social construction, and plays an important role in encouraging the kindness and charitableness of citizens and enterprises, in relieving poverty, in mutual help and protection, in supporting the development of services to the public, and in promoting social harmony and stability. Our Contract Law, Public Welfare Donations Law, Trust law have made provisions on the issue of charity, having played an active role. Following the development of the cause of philanthropy, in the field of philanthropy many new circumstances and new problems have appeared, and the need to enact a specific Charity Law, and perfect the legislative system on philanthropy has arisen to stimulate the vitality of philanthropic organizations, raise social awareness of philanthropy, regulate philanthropic activities, promote a healthy development of the philanthropic sector.

Since 2008, a total of 800 delegates to the National People's Congress have proposed 27 bills to enact a charity law, and all sectors of the society have anticipated the enactment of a charity law for years. In February 2014, based on the legislative agenda and the legislative work plan of the Standing Committee of the National People's Congress, the Committee for Internal and Judicial affairs established a drafting leading group on the Charity Law, chaired by Chairwoman Ma Wen, which started research on the drafting of the Charity Law. Drafting work stressed the following requests: first, to be based on the reality of our country. The making on rules on the legal system of philanthropy had to suitably borrow from advantageous foreign experiences, on the basis of the actual circumstances of the economic development of our country, and on the requests posed by innovation of the system of social governance, but it could not be a word-for-word copy. Second, persist in being problem oriented. Diligently solve outstanding problems in the field of philanthropy, push forward the healthy development of the philanthropy sector, increase the timeliness, systematicity, purposiveness and operationality of the Charity Law. Third, establish basic rules. In order to create law basis upon for the activities of charitable organizations and related entities, the Charity Law shall make provisions on charitable and organizations, charitable fundraising, charitable services, information disclosure, promotional measures, oversight and management, and other fundamental content. Fourth, persist in scientific and democratic legislation. After having widely solicited the opinions of all sectors of the society such as delegates to the National People's Congress, charitable organizations, experts, and scholars, and after having communicated with and consulted the Legislative Affairs Commission of the NPC Standing Committee, the Office of Legislative Affairs of the State Council, the Ministry of Civil Affairs, the State Administration of Taxation, and other relevant departments, on the basis of having achieved basic consense, the Internal and Judicial Affairs Committee held a plenary session on September 6, 2015, deliberated and approved the Charity Law of the People's Republic of China (Draft). The Draft is comprised of 11 chapters totalling 115 articles, and the main content of the Draft is explained as follows:

I. Development of charitable enterprise

Over the last ten years, charitable enterprises in China have made considerable progress, total donations have increased from less than 10 billion yuan in 2005 to the current 100 billion yuan, but the potential for development is still huge. The development of charitable enterprises is the primary goal of drafting the Law. The draft makes the following provisions on how to promote the healthy development of charitable enterprises:

1.Clarifying legislative intent. The first article of the draft has "development of charitable enterprises' as this law's legislative purpose.

2. Precisely defining the meaning of charity. Charity has both a broad and narrow meaning, "small charity' refers to poverty assistance and disaster relief, while the meaning of 'big charity' includes promoting the development of education, science, culture, health, and sports, environmental protection and so forth; all activities that benefit the societal public interest fall within charity. Following the development of economic society, especially the increase of social security, 'small charity' has gradually developed into 'big charity'. Article 3 of this defines 'charitable activities' as used in this law. This provision, based on China's practices in charitable activities, makes poverty relief and disaster assistance the focus of charitable activities, but at the same time also expands space for the further development of charitable enterprises, fundamentally in line with the international development trend on charitable activities.

3. Giving full play to social forces from all quarters actively initiating charitable activities. (1) Article 5 of the Draft stipulates that "The State encourages and supports natural persons, legal persons, or other organization conducting charitable activities according to law." (2) Charitable organizations are an important level for initiating charitable activities, and the draft makes quite complete provisions for charitable organizations' establishment, internal management, conduct regulation and other such areas. (3) Volunteers providing services being an important part of conducting charitable activities, the Draft provides for the means in which volunteers provide charitable services and their rights and responsibilities (Articles 57, 58, 65-69 of the Draft). (4) Article 33 of the Draft stipulates that "Urban and rural community organizations and work units can conduct fundraising activities within their own organizations and work units." (5) Article 114 of the Draft stipulates that "Even when a non-profit organization with the purpose of conducting charitable activities is not registered, it can still conduct charitable activities within its limits, but shall comply with the relevant provisions of this Law and benefit from relevant rights and interests according to law. "

4. Special Chapter on Promotion Measures for developing charitable enterprises. (1) People's governments at the county level or above shall draft a plan, policies and measures for promoting the development of charitable enterprises on the basis of this law and the local economic and social development situation. (2) After consultation with the State Administration of Taxation, the draft makes provisions to the extent possible regarding issues of preferential tax treatment for charitable organizations, donors, and beneficiaries, and at the same time, on the basis of the spirit of the 3rd Plenary Session of the 18th Party Central Committee and the provisions of the Legislation Law, specific provisions on the requirements for preferential taxation, types of taxes and tax rates should be made by specialized laws on taxation. (3) Where charitable organizations carrying out poverty relief, financial assistance, assistance for the disabled, eldercare, or aid for orphans require land for charitable service facilities, they may use state-owned allocated land or rural collective construction land, and at the same time it is provided that the use of land for charitable services must not be altered except through legally prescribed procedures. (4) The state adopts measures to carry forward charitable culture and foster citizen awareness of charity. (5) The State establishes a commendation system for charities, commending natural persons, legal persons or other organizations that make outstanding contributions to the development of charitable endeavors.

II. Regulating Charitable Conduct

Regulating Charitable conduct and the development of charitable enterprises are complementary; only through increasing the credibility of charitable organizations and increasing transparency in charitable activities, can the healthy development of charitable enterprises be ensured. The draft makes the following provisions on how to regulate charitable conduct:

1. Strengthening information disclosure. Information disclosure is an important measure for regulating charitable conduct, the draft distinguishes between different entities and phases, to make special provisions on information disclosure as well as corresponding legal responsibility. (1) Article 72 of the draft provides that charity information disclosures shall be truthful, complete and prompt, and must not have misrepresentations or misleading descriptions. (2) Article 73 of the Draft provides that the Civil Affairs Department under the State Council shall establish an integrated charity information system, and that civil affairs departments for people's governments at the county level or above shall establish or designate platforms for charity information. (3) The draft sets out the specific content of the information to be released to the public by authorities and charitable organizations. (Articles 74, 75). (4) The Draft differentiates between different fundraising situations, clearly providing the target, content and procedures for information disclosure. For example, the Draft article 76 provides"Charitable organizations shall promptly disclose the circumstances of fundraising from the public and of charitable projects' operations. Where the period of public fundraising is greater than 6 months, the specific circumstances of the fundraising should be disclosed at least once every 3 months; after the public fund raising activity concludes, the overall circumstances of the public fundraising shall be disclosed within 3 months. Where charitable projects' operations period exceed 6 months, the specific circumstances of project operations should be reported at least once every 3 months, and after the project operations have concluded, the overall circumstances of operations and of collected funds and property shall be disclosed within 3 months."

2. Strengthening internal governance of charitable organizations. The draft provides that charitable organizations, based on the provisions of laws, administrative organizations, and their charters, establish and complete the internal governance structure and clarify the duty and scope of authority for decision-making, implementation and supervision; and shall implement the national uniform accounting system. The draft also puts forward provisions on specific circumstances of persons who must not serve as high-level managers of charitable organizations. (Draft articles 13, 21)

3. Regulating the management and use of charitable assets. (1) draft article 16 provides that assets raised by charitable organizations should be properly managed and earmarked for its specific purpose. (2) Draft Article 15 clarifies requirements on the basis of the nature of charitable assets: "The assets of charitable organizations may only be used for charitable purposes in accordance with a charter or the contribution agreement, and must not be distributed to the founders, donors or members of the charitable organizations. Charitable assets must not be privately divided, embezzled or misappropriated by any organization or individual." (3) Aiming at issues of association between the use and management of charitable organizations' assets, article 19 of the draft provides: "The founders, major donors and managers of charitable organizations must not use their association to harm the interests of charitable organizations or the public interest. The founders, major donors and managers who partake in transactions with the charitable organization must not participate in the decision process about these transactions and conditions related to the transactions must be made public. "

4. Charitable fundraising is the main source of charitable assets, and is the important component of charitable activities. The draft distinguishes between fundraising by different types of entities and different types of fundraising, making separate provisions on fundraising credentials, methods and procedures, especially making more specific provisions fro public fundraising. As to internet fundraising, for example, on the basis of the need for and feasibility of internet fundraising, but also trying to avoid repetitive solicitation and even fraud to the extent possible, article 28 of the draft provides: "Charitable organizations eligible for public fundraising can conduct fundraising on the Internet. Charitable organization that have registered at civil affairs departments at or above the provincial level can conduct fundraising through the websites of said departments or through other websites. Charitable organizations that have registered at the civil affairs departments of cities with districts or at the county level can conduct Internet fundraising on the charity information platforms designated or established by the civil affairs departments at which they have registered. ”这样规定的考虑是,在省级以上民政部门登记的慈善组织规模较大,初步估算已有数千家,基本能够满足我国开展互联网募捐的需要;省级以下民政部门登记的慈善组织数量众多,大多数从事的是慈善服务业务,要求其在民政部门建立或者指定的慈善信息平台开展互联网募捐,有利于互联网募捐的规范化。 The draft also has provisions on other methods of carrying out public fundraising as well as procedures for public fundraising (draft articles 27, 29, and 30).

III. Strengthening supervision and oversight of charity

To promote the regularization of the activities of charities one should rely first on self-regulation, and second on strict management. The fundamental meaning of strict management is strict law enforcement. The draft makes a special chapter of provisions on strengthening oversight and management:

1. Regulatory bodies. Article 6 of the draft provides: "The civil affairs department under the State Council oversees charity work nationwide; civil affairs departments of the people's governments at or above the county level oversee the charity work within their respective administrative jurisdictions. The relevant departments of people's governments at the county level or above do work on charities well in accordance with their own duties. " Articles 97-99 of the draft provide for the civil affairs departments' supervision duties, supervision measures, and supervision procedures.

2. Annual reports. At present, civil affairs departments employ an annual inspection system for the management of social organizations, but according to the requirements of decentralization, after consultation and consensus with the Ministry of Civil Affairs, the draft provides for an annual reporting system and does not provide for an annual inspection system. Article 100 of the draft provides: Each year, a charitable organization shall submit to civil affairs departments its annual work report, including audited financial accounting report, annual situations of conducting fundraising, accepting donations, and the situations of carrying out charity programs. "

3. Industry supervision. Article 102 of the draft provides: "Charity industry organizations shall establish sound industry standards and disciplinary rules, and shall exercise supervision over charitable organizations and charitable trusts." "

4. Public Supervision. Article 103 of the draft provides that "Any unit or individual who discovers that a charitable organization or a charitable trust has violated the law may complain about or report it to the civilian affairs etc. relevant department or the charitable industry organization. A civilian affairs etc. relevant department or charitable industry organization shall, upon receipt of a complaint or report, promptly investigate and handle it. The State encourages the public and the media to exercise supervision over charitable activities, and to expose the obtaining of assets by deception in the name of a false charity or violations of the law and regulations by charitable organizations and trusts, giving full play to public opinion and social supervision. "

IV. Legal Responsibility [Liability]

Legal responsibility is the assurance of the law's binding force. The draft provides distinct legal responsibility for different situations of charitable activities violating legal provisions:

1. Legal responsibility of charitable organizations. For example, in situations where charitable organizations violate information disclosure obligations, do not follow provisions for conducting annual reports, publicly fund-raise without authorization, modify the use of charitable assets without authorization or privately divide, embezzle or misappropriate charitable assets; the draft provides that where there are unlawful gains, the civil affairs departments will take them and transfer them to a charitable organization with the same or similar purpose, and may also fine the persons directly in charge and other directly responsible persons; and where the circumstance are serious, revoke registration certificates; and where a crime is constituted, pursue criminal responsibility in accordance with law. (Article 104-106 of the Draft)

2. Directed at the social phenomenon of fake charity being used to defraud assets, article 112 of the draft provides:“Where natural persons, legal persons or other organizations defraud assets falsely in the name of charity, the public security organs investigate in accordance with law, and where a crime is constituted pursue criminal responsibility in accordance with law. "

3. The legal responsibility of supervisory departments and their staff. Article 113 of the draft provides that where personnel of relevant departments of people's governments at the county level or above that have responsibility for supervising and managing charitable activities do not perform their supervision and management duties, violate information disclosure obligations, set direct or indirect quotas in fundraising tasks or privately divide, embezzle or misappropriate charitable assets, as well as abusing authority, dereliction of duty, or twisting the law for personal gain; the organ at the level above or the supervising organ will order corrections; where punishments should be given, the organ for hiring and firing or the supervisory organ will give sanctions to the persons directly in charge and other responsible persons; where a crime is constituted, criminal liability is pursued in accordance with law.

 

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