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China - NGO Law Monitor - Research Center - ICNL http://www.icnl.org/research/monitor/china.html[11/9/2012 4:19:31 PM] According to Article 10 of the Public Welfare Donations Law, “public benefit social organizations” are legally established foundations, charitable organizations, and other social organizations founded to promote public benefit undertakings. Article 3 lists which activities qualify as “public benefit undertakings" [6]: 1. Disaster relief, poverty alleviation, assistance to the handicapped, and assistance to social organizations in needy circumstances; 2. Education, scientific, cultural, public health, and athletic undertakings; 3. Environmental protection and construction of public facilities; and 4. Other public benefit undertakings promoting social development and progress. “Public benefit nonprofit institutions” are legally established educational institutions, scientific research institutions, health institutions, cultural institutions, public sports institutions, social welfare institutions and others that carry out public benefit undertakings and are not-for-profit. It appears that all foundations, some social organizations, and most public institutions have public benefit status. CNIs can also obtain public benefit status and accept donations under the Public Welfare Donations Law. However, informal non-profits that are registered as businesses or unregistered are not eligible for tax exemption even though operationally, they are nonprofit and have a public benefit purpose. Some of China’s best-known independent, public benefit CSOs fall into this category. Barriers to Entry There are extensive barriers to entry based in policy, practice, and regulation. Registration procedures are complex and cumbersome, with extensive documentation and approval requirements. Organizations are required to operate under a system of “dual management” in which they must generally first obtain the sponsorship of a “professional leading agency” such as a government ministry or provincial government agency, then seek registration and approval from the Ministry of Civil Affairs in Beijing or a local civil affairs bureau, and remain under the dual control of both agencies throughout their organizational life. In practice, it is not easy to obtain such sponsorship, particularly if a social organization lacks good connections in the government or is operating in sensitive sectors such as advocacy, legal aid, labor, religion and ethnic minority affairs. Broad prohibition clauses bar the registration of groups that are perceived to oppose the state and/or Party. For example, the Regulations on the Registration and Management of Social Organizations (1999) prohibit registration of organizations that fail any part of this test: “Social organisations must observe the constitution, state laws, regulations and state policy; must not oppose the basic principles of the constitution, harm the unity, security or ethnic harmony of the state, or interests of the state and society, or the lawful interests of other organisations or citizens, or offend social morality.”[4] Other broad provisions give the state wide discretion over which organizations are allowed to register. The “dual management” requirements and broad prohibition clauses apply to all types of organizations, including social organizations, foundations, and other groups. But the barriers to entry do not end there. For example, the Regulations on the Registration and Management of Social Organizations (1999), the governing document for the largest subsector of Chinese nonprofits, also stipulate that applicant organizations must comply with a wide range of other requirements and undergo a lengthy application and approval process. Such applicants must have at least fifty individual members or thirty institutional members; a fixed location; staff with qualifications appropriate to the professional activities of the organisation; minimum assets of 100,000 RMB (currently US$9,500) for national organizations and 30,000 RMB ($2,800) for local organizations; and must supply the registration and management agency with a wide array of organizational documents. Government agencies may rely on a wide array of reasons to deny registration. Furthermore, the Regulations on the Registration and Management of Social Organizations (1999) and the Interim Regulations on the Registration and Administration of Civil Non-Enterprise Institutions (1998) both stipulate that SOs and CNIs cannot establish branch organizations or offices in other regions. SOs and CNIs get around this provision by registering their branch office as a separate organization. After registration, organizations may seek approval in a separate process for an official seal and to open a bank account. Separate permissions must be sought from the relevant government management agencies to establish a branch or subsidiary of the group; to modify their registration or to amend their charter; to change their legal representative, and for other purposes. The government is provided with broad discretionary authority to close social organizations. In the face of the “dual management” system, the difficulties in negotiating registration and approval, onerous reporting requirements and the opportunity for frequent government intrusion into organizational matters, many Chinese social organizations of various kinds either register as a for-profit business, or operate without formal registration. According to the Interim Measures for Banning Illegal Non-Governmental Organizations,
China - NGO Law Monitor - Research Center - ICNL http://www.icnl.org/research/monitor/china.html[11/9/2012 4:19:31 PM] these informal nonprofits are formally illegal, making them even more subject to state discretion and control. [4] Regulations on the Registration and Management of Social Organizations (1999), Art. 4, available here. [5] Regulations on the Registration and Management of Social Organizations (1999) Barriers to Operational Activity Barriers to operational activities can be raised or lowered by the authorities at their discretion, depending in large part on how their activities are viewed by the party-state. Generally, nonprofits engaged in social services and philanthropy tend to be viewed more favorably than nonprofits engaged in advocacy and legal aid. For some forms of organizations, such as social organizations or civil non-enterprise organizations, the government has authority under relevant regulations to bar the establishment of more than one such organization in its field in any particular locality as a way to prevent what is viewed as duplication, overlap, and competition and to maintain ties between such groups and their governmental sponsors. [6] The government may also intervene in the appointment of directors, trustees or senior staff; narrow the boundaries of the work that organizations may engage in by reference to the government-approved original organizational application or charter; govern the banking arrangements of various kinds of charitable groups in detailed ways; undertake investigations of operational activities and terminate organizational activities through application of tax laws; and undertake other restrictions on operational activities. Even for registered organizations that have no issues with the state, reporting requirements can be quite burdensome, particularly for small organizations. The regulatory framework allows for significant government intervention and interference. Strong security forces, such as the Ministry of Public Security and other groups, intensively monitor organizations of particular sensitivity for the Party and state. In 2009 and 2010, a number of methods have been used to restrict and control the operational activities of certain nonprofit groups. For example, the Open Constitution Initiative (Gongmeng), a Beijing-based public interest law research and advocacy group, was placed under tax investigation arising from a donation from an American organization, several of its core personnel detained, and eventually closed as a result of the alleged violations of tax regulations. [6] See, e.g., the Regulations on the Registration and Management of Social Organizations (1999), Art. 13(2). Barriers to Speech / Advocacy A gap between constitutional freedoms for speech and assembly and the more restrictive provisions of special regulations and legal frameworks provides the state with significant discretion to limit speech and advocacy for specific organizations and types of organizations. The government can also prohibit advocacy, and actions such as lawsuits, in cases that it deems harmful to national security. Such barriers are implemented through administrative decrees (such as the regulations governing social organizations and other kinds of groups), as well as criminal and administrative regulation and barriers to participation in policy debate and formulation that may favor government-affiliated groups or may restrict policy advocacy by defining it as outside the organization’s ambit of approval or its charter. Direct barriers to organizational activity, such as those discussed above, may also restrict speech and advocacy. Barriers to International Contact There appear to be relatively few barriers to international contact in the regulatory framework for particular kinds of organizations, such as the regulations governing social organizations (shehui tuanti), foundations (jijinhui), civil non-enterprise institutions (minban fei qiye danwei), and quasi-governmental public institutions (shiye danwei). However, particularly at the provincial and sub-provincial levels, organizations of all kinds are often required to report international contacts to authorities and, in some cases, to seek approval for certain kinds of visits, international cooperation, foreign donations, and other contact with foreign organizations or donors. They are also discouraged from working with or receiving funding from overseas organizations which are engaged in “democracy promotion”. These include the National Endowment for Democracy (NED), the Open Society Institute (OSI), and the International Republican Institute (IRI). Multiple written or unwritten rules can affect international contacts, and they may emerge relatively suddenly. Barriers to Resources In general terms Chinese organizations seeking external resources (such as foundation grants, direct gifts, and other resources) must obtain approval from their appropriate regulatory agency (such as a bureau of civil affairs at the provincial level) for such transactions. Organizations may also need approval to establish bank accounts in some cases. The laws and regulations governing the key forms of nonprofit and social organizations do not address issues of foreign funding in detail but other law and regulation makes such
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