Thursday, April 13, 2017

ICNL's Philanthropy Law Reports for China and 8 other countries now available

The International Center for Not-for-Profit Law (ICNL) recently released Philanthropy Law Reports (http://www.icnl.org/research/Philanthropy%20Law.html) for China and eight other countries. This is good news for those looking for a single source providing a comprehensive, up-to-date and accessible guide to the legal framework for foreign and domestic philanthropic, nonprofit organizations and activities in China. The China report covers the most recent legal changes including implementation of the Charity Law and Overseas NGO Law up to January 2017. ICNL plans to keep the reports updated and plans to develop more concise and accessible ways of highlighting key information in the reports. Below is the table of contents for the China Report.

Contents

I.       Introduction.........................................................................................1

II.  Recent Developments.................................................................................3

III. Relevant Laws...........................................................................................6
     Constitutional Framework..........................................................................6
     National Laws and Regulations Affecting Philanthropic Giving...............6

IV. Analysis....................................................................................................11
     Organizational Forms for Nonprofit Organizations..................................11
     Registration of Domestic Nonprofit Organizations..................................13
     Registration of Foreign Nonprofit Organizations.....................................15
     Nonprofit Organization Activities............................................................15
          Political Activities and Lobbying........................................................19
          Economic Activities.............................................................................20
          Prohibition on Distribution of Income or Assets/Private Inurement...20
          Expenditures and Administrative Expenses.........................................21
          Government Supervision......................................................................22
          Termination, Dissolution, and Sanctions..............................................22
          Charitable or Public Benefit Status.......................................................23
          Local and Cross-Border Funding..........................................................24
          Tax Law................................................................................................26

V. New and Events.........................................................................................29

Sunday, April 2, 2017

My Voluntas article on Divergent Pathways of Chinese Foundations and Grassroots NGOs

About two years ago, I wrote a paper for the China Philanthropy Initiative titled, "Same Bed, Different Dreams: The Divergent Pathways of Foundations and Grassroots NGOs in China." After several revisions, that paper was recently accepted for publication by Voluntas: the International Journal for Voluntary and Nonprofit Organizations, and is now available here for viewing but not for downloading.

I'm particularly proud of this article because it addresses what I felt was a very important practical and political issue if China's civil society was to maintain its rapid development, and that is to find creative ways to tap into local funding and resources. This issue has become even more pressing now with the Overseas NGO Law which will make it more difficult than ever for foreign funding to support the work of grassroots NGOs, particularly those doing more sensitive work.

Here is the paper abstract: 

The rapid rise of high-wealth individuals and foundations in China should be good news for China’s grassroots NGOs whose continued growth depends critically on their ability to mobilize domestic resources. As a number of Chinese philanthropy practitioners have noted, Chinese foundations and NGOs should be natural allies and strategic partners. Yet the reality is very different as foundations currently provide very little support to NGOs, particularly the more independent, grassroots NGOs that have few ties with the government. This paper examines the disconnect between Chinese foundations and grassroots NGOs, and whether progress is being made in closing the gap betwee n them. It argues that one of the main reasons for the gap has to do with their very different development paths, which have engendered signicant structural and cultural differences between the two. It also highlights some cases of promising foundation-NGO collaboration.

Sunday, March 12, 2017

Putting the Overseas NGO Law in Perspective


There hasn't been much news since the announcements in January of 32 foreign NGOs registering in Shanghai, Beijing and Guangdong. In the meantime, several in-depth articles have appeared on the Overseas NGO Law and its implementation.

One article, The Origins of China's New Law on Foreign NGOs, was written by yours truly and was published in ChinaFile in early January as a more polished version of an earlier blogpost.

Another article, Overseas NGOs in China: Left in Legal Limbo, was published in the Diplomat in early March by Kristin Shi-Kupfer and Bertram Lang, two China experts, at the Mecator Institute for China Studies, a private think-tank based in Berlin.

Soon after, Jia Xijing, a well-respected expert on Chinese civil society at Tsinghua University's NGO Research Center and a strong supporter of an independent civil society in China, published a long, very detailed article, China's Implementation of the Overseas NGO Law, in the Southern Weekly (南方周某(the English-language and Chinese-language version of the article can be found on China Development Brief's website).

These articles are valuable because they give us some much needed perspective on how the law came to be, and its historical and political significance. This perspective is particularly important given the perception of mutual mistrust between the Chinese government and NGOs, and the lack of detailed information and guidance about the law's implementation from Chinese authorities. It's an environment ripe for misperception and misunderstanding, short-term thinking and behavior. Reports of foreign NGOs closing their offices and leaving China, Chinese NGO partners withdrawing from projects, and directives from local authorities seeking to implement the law in their jurisdictions, can easily lead NGOs to make judgements based on misinformation or misconceptions. The easy conclusion to draw is that a crackdown on NGOs in imminent. 

I think we should resist the temptation to draw that conclusion without first seeking more information and analysis, and to keep the long view in mind, which is why these articles serve an important purpose. The Overseas NGO Law does not mean the end of an independent civil society in China. It does mean another period of adaptation in which both foreign and Chinese NGOs will have to figure out how to operate in this new environment. Moreover, we should remember that the long view cuts both ways. It is not just about NGOs adapting, it is also about Chinese authorities adapting to the new law and finding a way to make it workable. As my article, and Professor Jia's, both point out, we need to remember that the law is part and parcel of a larger, ambitious, long-term project announced in the 4th Plenum in 2014 to build a socialist rule of law in China. This "rule of law" is not the rule of law that we know in liberal democracies; rather as various commentators note,[1] it is an instrument that Chinese leaders see as necessary if they want to reduce local government discretion, push through reforms and strengthen governance with the goal of maintaining sustainable growth and social stability. In other words, Chinese leaders will take the implementation of this law and other laws seriously because they see building a socialist rule of law as the path to a more prosperous, just and stable society.

To return to the challenges facing NGOs, my experience working with Chinese and foreign NGOs in China is that both are quite creative and persistent and as long as there are pressing social needs for their work, they will find ways to work through or around the NGO Law. When we hear of a foreign NGO closing its office, or a Chinese NGO partner declaring its withdrawal, we should not assume that is the end of the story. Or to put it another way, we should not, to paraphrase Mark Twain's words, greatly exaggerate their death.


[1] See Randall Peremboom, “Fly High the Banner of Socialist Rule of Law with Chinese Characteristics: What Does the 4th Plenum Decision Mean for Legal Reforms in China?,” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2519917, and Zachary Keck, “4th Plenum: Rule of Law with Chinese Characteristics,” The Diplomat, October 20, 2014, http://thediplomat.com/2014/10/4th-plenum-rule-of-law-with-chinese-characteristics/.

Wednesday, January 25, 2017

Implementing the Overseas NGO Law - 26 NGOs register in Beijing and Guangdong


According to the Ministry of Public Security’s website, the first group of overseas NGOs have successfully registered in Beijing and Guangdong. The MPS notice dated January 24 states that 20 NGOs in Beijing, and six NGOs in Guangdong, received their registration certificate this month.  The MPS Overseas NGO Service and Management platform shows pictures of the undoubtedly relieved NGO representatives on a stage holding their certificates, along with MPS officials.

The Beijing NGOs include familiar names like the World Economic Forum, Save the Children, the Bill and Melinda Gates Foundation, and the Paulson Foundation. The Guangdong NGOs include the Hong Kong Chinese General Chamber of Commerce (Guangzhou), the Federation of Hong Kong Industries (Shenzhen), and the Taiwan Trade Center (Guangzhou).

As I noted in earlier posts, the first group of overseas NGOs to get registered would most likely include those that had already been registered as representative offices of foundations under the Ministry of Civil Affairs. That seems to be the case when reading the names of the Beijing NGOs. The World Economic Forum, Save the Children and the Gates Foundation had all been registered as a representative office of a foundation prior to the Overseas NGO Law taking effect. The main difference is that they are now registered with Public Security, and not Civil Affairs.

Tuesday, January 24, 2017

Implementing the Overseas NGO Law - Six NGOs Register in Shanghai

The Overseas NGO Law went into effect on January 1 without so much as a whimper. Slowly, we’re beginning to see signs of the implementation machinery and process being rolled out in various provinces.  Shanghai is taking the lead, which is no surprise given that the first news conferences about the law’s implementation took place in Shanghai. The website (http://ngo.police.sh.cn:8081/xxfb/f) of the Shanghai Public Security Bureau’s Overseas NGO Management Office also seems to be the furthest along with both Chinese and English content.  Even the Ministry of Public Security’s Overseas NGO Service and Management Platform (http://ngo.mps.gov.cn/ngo/portal/index.do) is as of this writing still only in Chinese.

In addition, according to a January 17 news report, the first six overseas NGOs registering a representative office under the new law did so in Shanghai (http://www.shobserver.com/news/detail?id=42540 (Chinese only)). Those six NGOs were Project HOPE (美国世界健康基金会), the Hong Kong Yin Shin Leung Charitable Foundation(香港应善良基金会), the U.S.-China Business Council (美国美中贸易全国委员会), the Canada China Business Council (加拿大加中贸易理事会), the Russian Federation Chamber of Commerce and Industry (俄罗斯联邦工商会), and the Confederation of Indian Industry (上海代表处和印度工业联合会).

Guangdong is another province that has set up its Overseas NGO Management Office and a website (http://www.gdga.gov.cn/ngos/#sthash.qBX8HO7W.dpuf) still in Chinese at this writing.

Conventus Law’s website (http://www.conventuslaw.com/report/china-ngo-provincial-directories-gradually/) has a useful announcement about the implementation of the law, including information that provinces are now coming up with their own directories of PSUs, and fields of activity.  They also note that Shanghai and Shenzhen have been designated by the MPS as the two cities piloting implementation of the law, although I have not see this confirmed yet elsewhere.

Sunday, January 8, 2017

More FAQs on the Overseas NGO Law: Reading the Fine Print

The more I speak to people about the Overseas NGO Law, the more I realize how much misunderstanding there is about the law. I think it is safe to say that this misunderstanding exists both among NGOs and among the Public Security officials who are charged with implementing this law.

One source of misunderstanding comes from confusion about what different terms mean. Another source comes from the law itself being unclear on some points. This series of FAQs seeks to provide some clarity on these areas.


What is the difference between the Professional Supervisory Unit (PSU) and a Chinese Partner?

As I've written in a previous post, the Law only provides overseas NGOs with two ways to operate in China. One is for the NGO to register a representative office with the provincial Public Security Bureau (PSB). The second, for NGOs that do not need or want to establish an office in China, is for them to "file documents" on their "temporary activities" with the provincial PSB. (It's still unclear how the PSB defines "temporary activities," whether an "activity" can encompass an entire program or project that consists of a set of smaller activities, or whether the NGO needs to file paperwork on each small activity that makes up a larger program or project.)

To register a representative office, an NGO needs to get the approval of a Professional Supervisory Unit (PSU) (or what the official English-language translation calls "organizations in charge of operations") in its main field or area, before it can register with the PSB. In other words, it comes under what the Chinese call a "dual management system" needing to get approval from both the PSU and the PSB.

To "file documents" for "temporary activities," an NGO only needs to find a Chinese Partner who can get the necessary approvals for those activities, and file the necessary paperwork with the PSB.  In theory, this means that the NGO only needs to inform the PSB about its activities, and does not need approval.

Some people have confused the PSU with the Chinese Partner but they are two very different concepts.

The PSU is generally a government agency in the NGO's main field or area. For example, if the NGO mainly works in the commercial or trade area, then it's PSU will most likely be the Commerce Bureau. If the NGO mainly works on environmental issues, then the PSU will most likely be the Environmental Protection Bureau. The PSU also has supervisory authority over the NGO which is required to get approval from the PSU for its operations and send annual work reports to the PSU.
The Ministry of Public Security has just issued a catalogue of the government agencies that are eligible to serve as PSUs for different fields/areas, so NGOs will need to consult that catalogue for the eligible PSUs in their field. However, be aware that just because the government agency is listed in the catalogue does not mean that it is obligated to serve as a PSU.

In contrast to the PSU, the Chinese Partner can come from a much larger pool of organizations. Article 16 of the Overseas NGO Law states that the Chinese Partner can be a government agency, a people's organization (e.g. Women's Federation, Communist Youth League, etc.), public institution (e.g. universities and research institutes), and social organizations (e.g. NGOs). The Chinese Partner also has no supervisory authority over the NGO. The NGO enjoys more of an equal relationship with the Chinese Partner. The Chinese Partner, however, does play an important role in getting the necessary approvals for "temporary activities" and filing the necessary documents with the PSB.


Is there any fine print in the law?

There is no fine print in the law itself, but there are problems with the official English translation, and there are also subtle omissions in the law that require a close reading to understand what the law allows and does not allow.

First of all, anyone working with the official English translation of the law on the Ministry of Public Security website (http://www.mps.gov.cn/n2254314/n2254409/n4904353/c5548987/content.html), should be aware that there some mistakes in the translation.  

One particularly egregious mistake is in the second paragraph of Article 9 of the law. Here's the Chinese original:

境外非政府组织未登记设立代表机构、开展临时活动未经备案的,不得在中国境内开展或者变相开展活动,不得委托、资助或者变相委托、资助中国境内任何单位和个人在中国境内开展活动。

Here's the official translation:

"...Where an overseas NGO has not registered an established representative office, nor submitted documents for the record stating that it intends to carry out temporary activities, it shall not carry out or covertly engage in any activities, nor shall it entrust or finance, or covertly entrust or finance, any organization or individual to carry out activities in the mainland of China on its behalf. "

This translation states that overseas NGOs shall not entrust or finance, or covertly entrust or finance, any organization or individual to carry out activities in mainland China. This suggests that overseas NGOs cannot contract services to, or fund, another organization outside of China to carry out their activities inside China.

Yet the Chinese original is much more narrow. It states that overseas NGOs shall not entrust or finance, or covertly entrust or finance, an organization or individual in mainland China (those last three words were left out of the official translation) to carry out activities within mainland China.


Another problem with the translation occurs in Article 17 which discusses the procedures for NGOs carrying out "temporary activities".  The official translation of the last part of that article reads:

"In emergency situations, such as disaster relief and rescue operations, where an overseas NGO needs to carry out temporary activities in the mainland of China, the time frame for filing records mentioned in the preceding article shall not apply; however, the duration of temporary activities shall not exceed 1 (one) year. Where there is a need to extend this deadline, documentation and information shall be re-submitted for the record."

This translation makes it sound as if the one-year limit for temporary activities applies only for disaster relief activities, but in fact the one-year limit is meant to apply to all temporary activities. The official translation's mistake is to place the phrase (in italics) starting with "however, the duration of temporary activities...." right after the preceding sentence on disaster relief activities, which suggests that this phrase only applies to disaster relief. Yet in the Chinese original, the part about the duration not exceeding one year is set off in a separate paragraph to show that it applies to all “temporary activities”. Here is the correct translation:


"In emergency situations, such as disaster relief and rescue operations, where an overseas NGO needs to carry out temporary activities in the mainland of China, the time frame for filing records mentioned in the preceding article shall not apply." 

The duration of temporary activities shall not exceed 1 (one) year. Where there is a need to extend this deadline, documentation and information shall be re-submitted for the record."


There are also parts of the law where certain changes were made during the drafting process that were not made clear. Two important examples come to mind:

1) Article 10 of the second draft of the law specifically stated that an overseas NGO could register no more than one representative office. In the final version of the law, that was removed, yet there was no language explicitly stating that more than one representative office would be allowed. This question came up in one of the MPS briefings in Shanghai and was clarified by the MPS spokeman. In addition, language allowing more than one representative office was included in the final version of the Guidelines.

2) Article 26 of the second draft of the law stated that overseas NGOs could not fundraise or accept donations in China.  In the final version of the law, the language about accepting donations was removed (see Article 21), but here again no language was inserted stating that overseas NGO could accept donations.


The lesson we can learn from these two examples is that it pays to do a close comparison of the final version of the law with earlier drafts because when changes were made to the draft laws, the intent behind those changes was implied rather than made explicit. The intent only becomes clear when comparisons are made with previous drafts.