New Law Aims to Bolster Donations in China

Image: Shutterstock

Image: Shutterstock

The National People’s Congress of China recently passed a new charity law, aimed at bolstering charitable donations in the People’s Republic of China, which ranks 144th out of 145 nations for such donations. The law allows registered organizations, which have been in operation for two years, to appeal to the general public for funds, and allows for tax deductions for companies that make donations, up to 12% of their profits.

Although China has seen a significant rise in giving in the last decade, it is still abysmally low. As Xi Jinping has vowed to eradicate poverty in China by 2020, increasing charitable donations will be a necessary step. Charities can help fill in the gaps left by government policies. The law will also build a structure for tighter controls on how charities spend their money, which may sound counter-intuitive, but is a necessary step in the process.

The main reason that donations in China are so low is that the Chinese people have a pretty dim view of charities there. This is well founded, as a string of scandals have left people worrying that money they donate will be used improperly. The Red Cross Society of China, for example, has been exposed several times in the last decade for misallocating funds, while other groups have been found to use donations to fund unrelated investments and other shady activities.

The Chinese people are not necessarily uncharitable, but they have good reason to be wary of nonprofits that might appeal to them. Hopefully, this new law will help improve transparency and bolster trust in nonprofits once again. The last part of the law though, seems less likely. The law also recommends supporting civil society as an “independent voice in public life,” something that likely will not appeal strongly to the government, which has a hard time allowing such things. The law even provides punishments for groups seem as undermining state security.

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