by Meg Davis

Since March 2010, we’ve received a flurry of calls and emails from reporters, donors and lawyers asking about the new regulations on NGOs in China. Here’s our take on the regulations that have been causing trans-Pacific headaches, and a few thoughts on what this means for Chinese NGOs in the future.

First, a review of some of the basics in regards to nonprofits in China (for more details, see our report on restrictions on AIDS NGOs in Asia or the HRW report, which I actually wrote also, on NGOs in China). China permits NGOs to register as nonprofits only with the sponsorship of a government agency. This gives the government agency control over the activities of the NGO, which is why many outside observers call these registered NGOs “Government-organized NGOs” or GONGOs. Because of the restrictions, many small and independent NGOs in China use a legal loophole to register as commercial enterprises, meaning that they are required to pay taxes.

The new regulations have hit these little grassroots groups, and foreign organizations working in China, especially hard. Here’s why.

The Wire Transfer Regs

In March and April 2010, news hit the wires about new regulations on foreign wire transfers to Chinese “domestic enterprises”. Since it’s the flurry of new little grassroots nonprofits that receive overseas funding lack the capacity to meet these new requirements, the regs have hit them especially hard.

The regulations, actually just a circular published by the State Administration of Foreign Exchange (SAFE), has the following requirements for domestic enterprises that receive donations from overseas institutions:

- Chinese organizations have to open up new, special bank accounts

purely for the purpose of receiving foreign donations;

- In order to open up these bank accounts, organizations need to

provide an application, a copy of their business license, a notarized contract with the overseas donor explaining the purpose of the donation, documents proving that the overseas donor is legally registered in its home country, and (possibly) “other required materials” if the notary deems the above documents to be insufficient;

- Religious organizations receiving more than 1 million RMB in

donations need to have documents showing the approval of the State Religious Affairs Bureau — and in some cases, also the approval of the local government; and

- Banks are required to report “suspicious donations” to SAFE.

On the face of it, this is not too tough. Chinese organizations already had to show banks a copy of their contract with the overseas donor in order to receive wire transfers from foreign donors. But in practice, weak implementation of the new regs has caused the whole system of foreign support for Chinese NGOs to break down in many areas. It’s not clear when, if ever, things will be fixed; before they are, some small groups may suffer so much from the months without funds that they have to shut down entirely.

What Could Possibly Go Wrong?

The first problem has been understandable, from a certain perspective.

Banks are by nature conservative institutions, and no bank wants to be the first to implement the new rules; as the saying goes, the nail that sticks up gets hammered down. Thus, the Global Times reports, “Two months since the regulation came into effect, banks, notary service providers and non-profit outfits are in the dark about how to get a donation agreement ‘notarized’” – and even if they know how to do it, they may be reluctant to follow through.

This leads directly to the second problem: the outlandish process of getting contracts notarized. The circular does not explain this, but in order to obtain the notarization of the contract between donor and grantee, both the donor and the grantee are required to have representatives physically present at the notarization office in person.

How many international donors have representatives in China, ready and able to show up at a notarization office at any time? Let alone staff poised to visit multiple notarization offices around the country, in every town where the donor funds local NGOs? Very few. Not to mention that the notarization offices, we have heard, are often not exactly models of Confucian bureaucracy, and so NGOs have to go back and forth on multiple visits to the notary office, which may be located in another town from the NGO.

This notarization morass leads us to the third problem: requiring this many bureaucrats to stamp this many documents in China simply provides endless opportunity for lethargy, incompetence, red tape, corruption, and plain old meanness if you’re unlucky enough to run into the wrong person across the desk.

To sum up, the wire transfer regs are onerous, but they’re not a sweeping shutdown of all NGOs. The fact that most independent NGOs can only register as commercial enterprises and pay taxes has long left them vulnerable: if the government was serious about conducting a clean sweep of NGOs, they could probably use those regulations to shut the whole sector down in about a week. But that, of course, might actually result in an international outcry.

Creating a chill that shuts some NGOs down, allows others NGOs to survive but limits the overall growth of the sector — and without sparking an international outcry — is a more complex maneuver, and the new foreign exchange regulations accomplish this delicate feat quite neatly. All they do is to create a few minimal bureaucratic hurdles, and then let nature — or in this case, the world’s oldest and grandest bureaucracy — take its due course. The end result is likely to be that a few NGOs will collapse, a few with good government connections will manage to get the new foreign exchange accounts set up, a few donors will throw up their hands and quit funding Chinese NGOs, and a lot of new organizations will never get off the ground…

Meg Davis is the founder and executive director of Asia Catalyst.

Also see post “Chinese Government Promulgated Regulation Regarding Donations from and to Overseas.”

May 10, 2010

I’ve generally been an optimist about the future of NGOs in China, but recent events have gotten me thinking otherwise. In the last few months, we’ve witnessed the Oxfam Hong Kong incident, the SAFE regulations on foreign donations, the closing down of NGOCN’s website, the Beijing University Women’s Legal Aid Center’s losing its Beijing University affiliation, and just today, the news that China’s leading AIDS activist, Wan Yanhai, has left China for the U.S. because he was being harassed by multiple government departments. So what does this all mean?

First of all, let’s get some perspective on these events. Last year (2009), Xu Zhiyong’s legal aid NGO, Gongmeng, was closed down on tax evasion charges, and Yirenping, an anti-discrimination legal aid NGO founded by Lu Jun was raided. The Olympic year saw the Sichuan earthquake, a coming out event for Chinese NGOs which played a visible role in the earthquake relief. The year prior (2007) saw the closure of an Lu Jun’s support group for Hep B carriers, a magazine called Minjian that published stories of NGO development projects, and most notably Nick Young’s China Development Brief.

In addition, the last few years has seen significant growth in grassroots NGOs, persistent rumors of revisions to the NGO registration and management regulations, a new Charity Law, and easing of the registration and management procedures for private foundations.

In short, what we have here is a mixed bag. Some bad news, and some good news. How do we make sense of all this? A few possible explanations come to mind.

One explanation is that the government is of different minds about NGOs and is trying to figure out how to best manage (codeword for control) them. The Chinese government is a very diverse, not always unified collection of agencies and individuals. The Civil Affairs department is only one of the agencies charged with supervising NGOs. In fact, there are hundreds of thousands of NGOs in China that are not registered with Civil Affairs and thus not under their supervision. Because many NGOs are registered as businesses, the Commercial and Industrial department also plays a role, as do tax authorities, and now apparently so does the State Administration of Foreign Exchange (SAFE). And last but not least, there are the security people. It’s not clear to what extent there is a coordinated campaign among all these agencies to regulate NGOs. Civil Affairs seems to be the most supportive. They are encouraging various experiments around the country to make NGO registration easier, and they support a change in the NGO regulations that would make it easier for NGOs to register with Civil Affairs. But other agencies seem to just be interested in controlling NGOs, and not figuring out a way to regulate them in ways that would improve the effectiveness and transparency of NGO work.

If this explanation is right, then we’ll see authorities continue to adopt an ad hoc approach to regulating/controlling NGOs, and continued swings in the government’s attitude to NGOs. We’ll also see further delays in the much-anticipated NGO legislation as debates and deadlock over the value of NGOs continue in policymaking circles.

Another explanation is that government leaders have arrived at a consensus about how to deal with NGOs, and that consensus is not to liberalize the environment or find a smarter way to regulate them, but to continue restricting their development. This means tightening an already restrictive regulatory environment, and cracking down on “illegal” NGOs that are engaged in advocacy and sensitive issues such as migrant worker rights, and are particularly open to foreign influences. What seems to be new here is the way in which the government is cracking down on NGOs. They are doing so not by closing down NGOs as they did with China Development Brief, but by harassing them for improper finances, or fire codes, or not properly registering their website. But they are not doing this across the board, but only targeting selected NGOs. A form of “salami tactics” or “death by a thousand cuts”.

If this explanation is correct, then recent events represent the start of a chilling trend. It means we won’t see revised NGO regulations come out, or if they do come out, they will reaffirm the status quo or be even more restrictive.

Still another explanation is a combination of the previous two explanations. That is, authorities have arrived at a consensus but that consensus represents a compromise whereby certain sectors are encouraged, but NGOs with more foreign connections or engaged in more sensitive work are targeted for harassment.

If this explanation is right, then we should see the revised NGO regulations, and other related legislation, coming out soon. Those revisions will probably represent a gradual change, e.g. liberalization, and their content will give us a better idea of what sectors are being encouraged.

Which of these explanations is closer to the mark of course requires an understanding of what is going on in high-level decision making circles. Unfortunately, that arena is a black box that we can only speculate about.

At this point, I favor the first explanation because I don’t see a consistent line or approach toward NGOs which suggests there is still debate and deadlock over just how to regulate this growing sector. But I may change my view as I get more information. Stay tuned!

( http://ngochina.blogspot.com/2010/05/why-chill-in-air-for-ngos.html  )

Is a lack of transparency driving a wedge between charities and donors, and undermining the charitable spirit? Zhang Yuchen in Beijing reports.

Do you know where your money goes when you donate to charity?

Studies show that many people who support worthy causes in China admit they have absolutely no idea how or where the money is being spent.

As the country has no law requiring aid groups to publish monthly or even annual accounts, experts say the vast majority of donors are in the dark about where funds go due to basic lack of transparency in the sector.

“Charitable organizations seldom respond to donors’ requests for information about financial reports so few donors have a clear understanding of what their money is used for and what effects it brings about,” said Deng Guosheng, an associate professor at Tsinghua University’s school of public policy and management.

The situation has resulted in serious problems when it comes to supervising grassroots charities and non-governmental organizations (NGOs), and threatens to undermine the growing charitable spirit among the Chinese, he said.

Following the 2008 earthquake in Sichuan province, the nation raised record amounts of money to help survivors. Those records have since been broken following the disaster in Qinghai province in April. So amazing was the response that media analysts suggest the disaster triggered an explosion in compassion, which has continued to spread throughout the country.

The amounts being donated have also steadily increased year on year over the last decade, official figures show.

China received 107 billion yuan in donations from home and abroad in 2008, more than three times the amount in 2007, according to the Blue Book on Charity Donation Development in China (2003-07), an independent report sponsored by China Philanthropy Times. For the first time, the money given by individuals on the mainland surpassed donations from corporations – 54 billion yuan ($7.9 billion) given by individuals, compared to 34 billion yuan by corporations.

However, in a recent survey of people who donated to the Sichuan relief efforts, Deng found that less than 5 percent of the 1,684 who responded know exactly how the money is being spent, while more than 60 percent had little or no idea. (Authorities have published financial accounts during the ongoing reconstruction of Sichuan.)

The trend is also typical among people who give regularly to many Chinese charities, said the professor, who added that although the public is growing more aware of how they work, the overall disclosure of information is far from sufficient.

Trust is fundamental to how most charities are run in other nations but “getting all charities in China to be 100-percent transparent has proved virtually impossible”, said Deng, who also works in the university’s NGO Research Center.

About 410,000 charitable organizations were registered to operate by the end of 2008, while another 760,000 were running but still waiting for official documentation, said a report in the Blue Book of Philanthropy 2009, an independent academic evaluation of China’s charity sector.

Very few publish any kind of annual progress or spending reports, and donors rarely think to ask for them, say analysts.

“A lack of professional management, transparency and trust are major problems facing the charity sector in China,” said Yang Tuan, a professor at the Chinese Academy of Social Sciences’ institute of sociology, who co-authored the Blue Book of Philanthropy 2009. “The fact that there is no charity association is the biggest problem, though. There is simply no co-operation that allows these groups to confront and overcome common obstacles, as well as provide mutual supervision.”

Fund-raising problems

China’s first and, as yet, only regulations for charitable NGOs were implemented in 2004 and apply just to the administration of foundations. A draft of the new Charity Law, which is expected to contain stricter legislation over fund management, was submitted to the State Council last year.

Under the current rules, NGOs have to be affiliated with a government department before they can register with the Ministry of Civil Affairs.

Finding one is no easy task, however, and there are some 250,000 grassroots groups that are instead being run illegally with business licenses, the Blue Book of Philanthropy 2009 says.

“Also, only foundations that are affiliated with a government department or have ties with an authority enjoy the luxury of being allowed to raise money in public,” said Deng. “Grassroots organizations always suffer a chronic shortage in donations.”

Of the 943 foundations registered in China that can legally raise funds in public, 83 are government-owned NGOs (otherwise known as GONGOs), said the professor.

Collecting money from the public without the proper authority is illegal and can lead to serious consequences for charity organizers, and the groups will automatically be shut down.

“This is a concern for many of my friends who work for grassroots NGOs,” said Guang Pu, the 30-year-old director of One Heart, a legally registered non-profit orphanage in Xiamen, Fujian province, that publishes monthly financial reports for donors. “The rules effectively stop a lot of grassroots charities from raising awareness of their cause and soliciting public donations.”

The lack of clear governance has led to conflicts between charity organizers and donors.

Sun Village, one of China’s first charities for children of convicts in Beijing, has been well supported for many years, including by several multinational companies.

However, complaints in recent years by donors over its opaque spending habits have cast doubts over its reputation.

The village director, Zhang Shuqin, denied the claims and feels she was unfairly criticized in press. She blamed the charity’s difficulties on the fact that it lost its affiliation with the government in 2003.

When Sun Village lost its link to the local authority, “I begged more than 10 other departments to help us”, said Zhang, who launched Beijing Sun Village Children Education Consultancy in 2003. As none agreed, she opted to register the organization as a business with the capital’s administration for industry and commerce – make it illegal for the village to raise funds publicly.

“My company got involved (with Sun Village) years ago but we’ve started to feel more and more uncomfortable (about its management) in recent years,” said a Beijing-based communications director for a multinational corporation who did not want to be identified. “We’ve usually helped by donating food for the children but recently we’ve continually received calls asking the cash donations, without any explanation of how the money will be used.”

However, the school’s director argues that her critics do not understand how hard it is to run a charity in China.

“Why do (the people criticizing me) not recognize the hardship I’ve been through?” said Zhang, a fast-talking woman who has also been accused of being too aggressive. “I don’t think they have any right to say anything about me or Sun Village.

“We cannot get (affiliated), so why do (donors) think I should publicize our financial records?” she added, before offering to show China Daily the charity’s accounts. “The privacy of the convicts’ children is the only reason why I am reluctant to make my financial report transparent to the public. Issues related to people in jail is very sensitive in China and I don’t want the children to be hurt to any extent.”

Most charities do not offer detailed information about donations and spending unless donors specifically ask to see some, say analysts. The Beijing communications director admitted her company had never formally requested any financial reports from Sun Village.

Regularly publishing accounts can actually be a heavy financial burden for charity minnows.

Dandelion School, a charitable education project targeting the children of migrant workers in Beijing, is consistently praised for its transparency. Yet due to the extra cost of distributing its accounts, the group can only keep donors updated on the specific projects they contribute to.

“That costs less than posting the whole package, such as how the money was spent and what kind of effects it has had,” said Clare Pearson, chief editor of Charitarian, the only English-language philanthropy magazine published in China.

The accounting can also be complicated by the fact charitable NGOs also rely on donations to cover running costs. This can be difficult to break down for people not working in the charity sector, explained Deng.

“The public in China isn’t really familiar with how NGOs are managed and often don’t recognize that the costs of running a charity – people’s wages, transport, etc – often comes from donations,” said the professor. He estimated that, depending on the size of the charity, about 5 to 20 percent of the money raised goes towards administrative costs.

However, grassroots NGOs often do not allocate enough funds towards its management, which can also contribute to the slow disclosure of information to donors, said Li Dajun, program manager for the China Social Research Center affiliated with Peking University.

“They are so busy looking for fund-raising opportunities (to support their cause) that they leave little room for their own development as a charity,” said Li, who worked with several NGOs between 2003 and 2007.

“Ultimately, if trust is built (between a charity and its donors), few will doubt how the money is spent,” added Pearson, who is also a corporate social responsibility manager for the international law firm DLA Piper.

Selection process

Carefully selecting a charity that is run by professionals is key to ensuring any donation will be spent correctly and efficiently.

“Sometimes, when people decide to find a charity to support, their eyes are always caught by the famous or popular ones, although neither of these qualities guarantee professionalism or qualifications,” said Deng at Tsinghua University.

As the charity sector continues to develop, so too does the experience of those working in it. However, the current demand for human resources at NGOs far outweighs supply.

“The first generation of China’s NGO founders knows less about managing charities, so they have stuck to the tradition of being family run and giving relatives jobs in the organization, which creates more suspicion,” said a publicity expert who has studied the development of NGOs in China for more than a decade ago but did not want to be identified.

Sun Village is one of those organizations that have been accused of being “family run” and media reports claimed Zhang employs two daughters and a son-in-law to manage the school.

However, the under-fire director fiercely rejected the allegation, saying: “I have hired professional personnel to work at the village.”

To increase the level of trust in charities, many experts argue they should be made independent of government departments.

“Charity should be independent from authority, while transparency should be realized through social supervision, not regulations,” said Deng, who added that many of the problems charitable NGOs face are caused by the complex registration process.

“The easiest way (to boost the sector and ensure transparency) is to allow more room for these organizations to register. Only by doing this can more charities get the chance to impact society.”

(From http://www.chinadaily.com.cn/cndy/2010-05/27/content_9897275.htm )

Upon Huizeren online hang three slogans: “Equality for all, and all due respect for diversity”, “Your help for others is for yourself as it digs out another side of you”, “Let your life change that of others”. All these resounding mottos come down to one word—humanism. In this context, “humanism” can be outlined as centring around people based on their mental and occupational needs to improve service efficiency. The biggest discovery of my visit to Huizeren is its human-centred principle.

Zhai Yan，an easy-going volunteer trainer, is the executive director of Huizeren. During the interview her silver tones, clear-cut logics and far-stretched vision gripped me tight inside.

Huizeren has a clear priority task—structuring a complete volunteer training system, or in other words, extending training service of all kind to NPO members and volunteers. Actually, such organisations are rare in China and as far as current statistics show, there are no courses on civic education at any education institution. “Teach yourself before teaching others because no one is expert from the beginning,” Zhai put it this way.

In 2003 when SARS waged the dreadful war against the country, Huizeren was set up against the tide. Unlike its NPO counterparts, Huizeren did not hassle with directly confronting the disease. Instead, it adhered to its own judgement—volunteer training and research into NPO mechanism in China.

Despite ups and downs and pressure from all aspects, Huizeren has worked out a seamless system of training courses composed of three layers—“volunteer service concept and basic skills” for volunteers, “volunteer administration and project management” for mid-level managers and “leadership and organisation administration” for top brass. These three courses are so intertwined that they wield separate cells within the organisation into an organic circle. For example, managers that attend volunteer administration courses may affect and teach their volunteer staff (There are over 200 professional volunteer trainers, most of them from colleges and NPOs).

Huizeren has positioned three core services—training, mechanism construction, research and publicity. Guided by such orientations, Huizeren is now clearer about what it is supposed to do at crisis. The best evidence is the recent Wenchuan Earthquake when Huizeren did not rush to forefront but directed its attention to what capabilities were needed in the rescue as well as reconstruction process. By doing that, they insisted, different NPOs could appear where they were most needed. “Currently few organisations can remain sober and independent to supervise the rescue and put forth valuable proposals. They don’t know what their role really is,” said Zhai.

Usually on heels of a catastrophe, a spate of new NPOs would spring up, vying to have place in history. However, as Zhai criticised, everything is twofold. When disasters fall, civic consciousness may be evoked in some people, urging them to voluntarily scrape up an NPO-like rescue team, which is by all measures praiseworthy. But such makeshift gatherings would not sustain. The real sustainable model should be tolerant in the first place, acknowledging the existence of other organisations such as those serving the disadvantaged, the marginalized, AIDS carriers, the homosexual, the disabled and the divorced. Without the diversity of volunteer service, citizens are deprived of rights to choose. And this diversity means everything to Huizeren, a training body built on NPO eco-circle: the more NPOs, the more clients. In this sense, the quake crisis is nonetheless a chance for Huizeren.

But the overheated NPO fever is not immune to side effects. The bubble will be pricked once the fever cools down. Therefore, constant passion, rather than fever, determines the lifespan of an NPO. “That’s what Huizeren is obliged to do—studying varieties of cases and then summing up an empirical guideline for all NPOs,” said Zhai with excitement. As she introduced, rescue work is a grinding test of physical and mental strength. At the time of mental disturbance, men tend to blow it up while women would rather keep silent. As most NPOs are struggling to help others, Huizeren is thinking about how to help them.

Since volunteer culture and volunteer training mechanism have not taken root in China, the ambition always hits the wall to put all volunteers in the right place. A more reliable model lies in the concept of “civic society” where government indirectly rules the society. In this society, enterprises are the first option; they roll out products based on market rules. People that cannot afford market products could appeal to non-profit organisations. Government only plays a coordinator role between profit and non-profit sectors by issuing policies and organising procurement.

If we compare Huizeren to an enterprise in the profit sector, it provides raw materials for the consumer product suppliers (in this analogy NPOs). Its performance is heavyweight to both NPOs and the public. It is the “hero behind the scene”.

The hero now has its long-term plan—three-year “Western V” projects and a five-year inter-provincial project. “Western V” projects, renewed every three years, are aimed at helping citizens in poor areas, especially West China, set up their own NPOs. The inter-provincial project, with duration of five years, is launched to back programmes of training poverty-relieving volunteers across five provinces.

It was nearly six o’clock at the close of the interview. Yet Zhai Yan, given no time to think of supper, had to hurry on to a conference discussing Huizeren’s training service in the 2008 Olympic Games. She’s always been on the run. As she put it in her essay Doing NPO with Faith, “it is our faith or value judgement that decides who we are, and ignites our sense of commitment.”

Why doing NPO? Nothing but driven by faith!

(From NPO Media: http://npomedia.org/en/2008/07 )

(China Elections and Governance has abridged and translated this article on the evolving relationship between Chinese NGOs and the government. It appeared in Nanfeng Chuang Magazine on May 10, 2010. The article focuses on the Chinese Foundation YouChange (China Social Entrepreneurship Foundation 友成）, which has been working closely with the municipal government of Mianzhu to fund and coordinate earthquake recovery efforts, highlighting both the benefits and drawbacks of this cooperation)

Pulished:  May 10, 2010

“It costs a lot to establish an organization. Mianzhu municipal government helped us with work place and basic administrative expenses. They are well-financed,” said Zhai Yan, director of YouChange Volunteer Support Center. “Volunteers assist the government; this is equivalent to working for the government free. So the government should bear the cost.”

YouChange is a Beijing-based, non-profit charitable organization with independent legal status and is officially registered at the Ministry of Civil Affairs. In August 2008, about three months after the 8-magnitude earthquake hit Wenchuan and neighboring areas, YouChange and the Mianzhu government co-founded a program for integrating social resources to help with earthquake relief and recovery.

The program is mainly financed by YouChange, which is also responsible for recruiting and assigning volunteers, while the Administrative Service Center of the Mianzhu government is lead management unit.

“The program has contributed a lot to the earthquake relief and recovery efforts. Although there are only six workers, they have contributed many resources. On average, each worker has helped to introduce 10 million yuan to the stricken area in Mianzhu,” said Peng Zhebin, deputy secretary-general of the Mianzhu municipal government.

It seems that YouChange and the government are still in their honeymoon phase. However, it’s a mismatched, bittersweet marriage.

When the program was established, no government agency wanted to be the lead management unit. It was said that some NGOs, backed by overseas forces, used aid as a pretext for anti-state and anti-government activities. Thus, taking over the platform became a hot potato, as it falls to the head management unit to prevent such organizations from entering Mianzhu. It’s a tough job.

As the program was about to die on the vine, Deputy Secretary-General Peng came forward to take over.  He said one shouldn’t stop eating for fear of choking.

Now, local officials are excited about the program’s achievements – from August 2008 to March 2010, it directly absorbed a total of 10 million yuan worth of funds and materials, as well as 2 billion yuan indirectly.

This demonstrated that earthquake relief and recovery is outside the confines of the government’s capability, especially in poor areas. The government is in need of additional aids.

Some top leaders in the central government also hold a positive attitude toward NGO involvement in supporting the poor. Besides YouChange, Oxfam Hong Kong was introduced to Sichuan Province by the State Council Leading Group Office of Alleviation and Development last year. Two counties separately received 1 million yuan each year from Oxfam Hong Kong, and the county governments also provide supportive poverty relief funds. The local authorities want to explore a new anti-poverty model through the cooperation between government agencies and NGOs.

“It’s a challenge for the government – how to deal with NGOs and build sound relations with them. We do not have prior practical experience,” said Zhu Xiaofang, deputy director of the Administrative Service Center of Mianzhu. “After the earthquake, the government was awakened to the necessity of NGOs.”

In Mianzhu, volunteers working for the project report directly to the governmental Administrative Service Center, and Deputy Secretary-General Peng is in charge of examining and approving their aid plans. Each volunteer needs to sign a tripartite agreement with YouChange and the Administrative Service Center.

According to Zhai, as these volunteers are not registered with any government agencies, their private aid activities would be illegal without government sanction. The tripartite agreement lends legality to their activities.

“It would be hard to operate projects here without the government’s support. It’s a good cooperation model,” said Zhai. For NGOs, the benefit of integrating with the government is that such cooperation can lessen the difficulty of entering certain areas. “There are some places where you are hardly allowed to enter,” said Zhai.

The attitude of local officials toward NGOs has changed a great deal since the 2008 earthquake. Officials admitted that the government could not uncover all of the problems that arise in relief and recovery efforts, that NGOs could serve as a supplemental force, and that NGOs do contribute a lot. The governmental authority no longer rejects NGOs, and relations between the two are “very harmonious” now.

This is in part because the government is certain that the “bad” NGOs have been removed, and that those that remain are reliable.

When a branch volunteer station of the program was set up in January in Bazhong, Sichuan Province, all important officials in Bazhong attended the opening ceremony, and the event made headlines in the local Party newspaper. The government allocated government office space for the station.

When Zhai and her group visited Sichuan on a survey trip in March and April, local officials at all levels treated them as honored guests.  Officials presented different difficulties and needs, expecting that YouChange could lend a hand.

“A little spark kindles a great fire; YouChange’s participation could encourage more social forces to help the poor,” said Zhang Min, deputy secretary-general of Bazhong Municipal Committee of the CPC. “YouChange is a newcomer without administrative functions. Working in the government building will increase its credibility and influence.”

However, each side just takes what it needs. In Mianzhu, the government has made the program resemble an official agency in less than one year. Every volunteer has to wear a card made by the municipal government, and volunteers are a treated like local officials when they travel to counties and villages.

When it comes to characterizing the nature of the program, YouChange calls it a subordinate sector of YouChange, while the Administrative Service Center insists that the program belongs to the government and that YouChange is just a main supporter.

According to Peng, although the program has brought 2 billion yuan worth of funds and materials into Mianzhu, the achievement is not that of YouChange, but should rather be credited to the local Party committee and government, since the program is headed by the governmental authority.

The Local Youth League Committee and the Ministry of Civil Affairs also want a piece of the action. “When the MCA came, they said the program fell within their domain, and when the local Youth League Committee came, they said the program should be the committee’s duty. The program has helped these department a lot.  It’s my contribution, but these department could also take the credit for their work,” Peng sighs.

Now these departments are trying to integrate their other projects with the relief program. “You can never see such close cooperation between NGOs and the government in other places. Now we have deeply merged with the government,” said Tang Rong, a major executive of the program.

However, merging so deeply with the government can damage an NGO’s  independence. Almost all the program volunteers are also employees in government departments and institutions.

Zhai felt ambivalent about the current situation. “Now, our branch volunteer stations are actually working for the government,” said Zhai. “We are totally integrated into the government. It’s out of order. The two sides are inseparable.”

But Zhai’s colleague Tang holds a different opinion. “We should fulfill not only YouChange’s requirements, but also the government’s. We should do whatever the government asks us to do,” said Tang.

The government is obviously the stronger party in such cooperation. Government management is the prerequisite for NGO development. YouChange cannot set up branches independently; the only way is to establish subordinate volunteer stations registered at certain government agencies.

Under such circumstances, these government-backed NGOs are likely to become another government agency. Zhai used to criticize some volunteers for just sitting in the office, rarely traveling to grass-roots units to discover potential demands.

After her survey and investigation in Sichuan, Zhai found that only if a NGO sends its own team to assess demands in grassroots units, and then initiates an independent project, can the NGO avoid being absorbed by the government.

“Our volunteer stations have no ‘roots.’ Our service objective is unclear. Some said the objective is to serve grassroots residents and farmers, but it’s just too vague a group,” said Zhai. “Some other NGOs, like Oxfam Hong Kong, projectized their operations, and their service objective is clear. Their volunteers follow certain projects,” and do not act under the orders of the government

(See the original Chinese article at: http://www.022net.com/2010/5-11/442428212632326.html )

By CARA ANNA (AP) , March 12, 2010

BEIJING — China has surprised thousands of aid groups by stepping in to regulate overseas donations for the first time, complicating efforts to get money from supporters in the United States and elsewhere. Some groups warned that losing the support could force many to shut down.

China’s leaders have only recently realized that outside help is needed on deep social welfare problems, but they worry the work of independent activist groups could turn political. Groups must find a government partner to register as a nonprofit. Many that want to stay independent have set up as a tax-paying business instead.

“I think the new rules will regulate us to death,” said AIDS activist Wan Yanhai, who runs a Beijing-based aid group.

As of this month, China-based aid groups — but not those connected with the government — must show proof that overseas nonprofit donor groups are registered in their home countries. The groups, also known as nongovernmental organizations or NGOs, must strictly follow detailed agreements with foreign donors and not use the money in other ways.

Religious groups also need approval from the State Religious Affairs Bureau for any donation that exceeds 1 million yuan ($146,000).

“I think it’s inevitable that they were going to start tightening the noose on NGOs,” said Meg Davis, executive director of New York-based Asia Catalyst, which works with a number of grassroots groups in China on AIDS-related projects. “There’s a sense at the top that they’re suspicious of NGO powers.”

She spoke by phone from the southern province of Yunnan, where her group works with 90 women with HIV. The new rules are complicating efforts to wire the group money from overseas, she said. Asia Catalyst has been told a representative must be present on a specific day this month to get key paperwork notarized — a day when the group says none of its people will be in China.

“Stopping work is not an option. These women are working with a population that is sick and dying,” Davis said. “The only thing we can attempt to do is comply as best as we can.”

The rules were issued by the State Administration of Foreign Exchange, which normally has little to do with NGOs. They were posted on the administration’s Web site and came into effect March 1.

Phones at the administration rang unanswered Friday.

China never really regulated foreign donations until now, said Deng Guosheng, a lecturer with the NGO Research Center at Tsinghua University in Beijing. “I think most will not face a problem, but for those sensitive NGOs, it will become hard for them to get foreign donations.”

China has struggled to keep up with the growth of aid groups in recent years. The Ministry of Civil Affairs says about 400,000 groups are registered and many more are not. A report published by the Chinese Academy of Social Sciences has estimated the total number could be 3 million.

“No government official knows how to regulate them,” and they don’t know what most aid groups are doing, said Wang Liwei, the CEO of China Charity Media Group, which publishes Charitarian magazine.

His fellow editor, British lawyer Clare Pearson, said other countries long ago made similar moves to watch where money for aid groups comes from.

“Look at this way,” she said. “If I’m in the UK and a bunch of Chinese people come over, build a school and set up a curriculum to start teaching children, I’d be asking a lot of questions.”

But some groups worry that China is checking more for possible political challenges.

Last month, China told schools to sever all ties with the international relief agency Oxfam and bar its campus recruitment efforts, accusing the group’s Hong Kong branch of having a hidden political agenda. Oxfam has operated in mainland China for 20 years and denied that its activities were political.

Associated Press researcher Xi Yue contributed to this report.

Copyright © 2010 The Associated Press. All rights reserved.

Also see post “On the Impacts of China’s SAFE Regulation Regarding Overseas Donations“.

He’s a Chinese government official. She’s a British lawyer. Together they publish a magazine that hopes to lift a veil of illegitimacy clouding a local NGO scene that’s thriving in a gray area of Chinese society.

Edited by Wang Liwei, vice-mayor of Guan County in Shandong Province, and Clare Pearson, a lawyer at the Beijing offices of DLA Piper, The Charitarian wants to encourage the local non-profit sector by informing NGOs about how to operate within government goal and guidelines.

Though there’s a flood of activity in the local NGO scene, reliable information is scarce. Sources of reliable information are even less assured. A crew of Chinese and foreign volunteers under chief-editor Wang is working hard on the March issue.

There are thorny issues to be explained: A recently proposed tax on investments by non-profit organizations has pitted the national Tax Bureau against the Ministry of Civil Affairs, which worries that such a tax will kill off many NGOs which rely on earnings from those investments to run their operations in China.

Different backgrounds, same goal

Wang describes the operation as “Chinese food with a British cook and an African market.” The British cook is clearly Pearson, a corporate lawyer and corporate social responsibility (CSR) expert who put up much of the cost of the first issue of the magazine (helped by adverts bought by companies, including her law firm and Boeing).

In charge of CSR – the voguish but often questioned science of corporations contributing to local communities – across Asia at DLA Piper, Pearson met Wang at a conference. Well connected, she helped put together a 3-week tour of the UK to explore how Western governments regulate and cooperate with NGOs.

Pearson recalls being introduced to Wang by a mutual media friend in Starbucks.

“We immediately hit it off and realized we represented two sides of the same charity coin, the Eastern and Western approach. He interviewed me for the magazine and it turned out to double up as an interview as English language editor. The rest is history.”

The African link is Vimbayi Kajese, the Zimbabwean-born editor who uses time off her anchoring job on CCTV9 news to write for the magazine. Author of a searching article on sexual abuse of women in the workplace, Kajese said the magazine finds stories “as much in what’s not reported as what’s reported [in the national media]. An example is fears of quakes in coal-rich central China, which went unreported due to coal companies’ fears of walk-outs by frightened miners. The human element of the story, workers’ welfare, will be reported in the upcoming Charitarian.”

The magazine is a bridge between government and the non-profit sector: Stories touch on sensitive issues but are written in a constructive manner, explained Wang.

Introducing the magazine at a recent Beijing launch party he explained the magazine’s purpose in three acronyms: CSR, GSR and PSR. “Corporate social responsibility, government social responsibility and public social responsibility.”

Sure enough in the latest issue of the magazine peppered between pieces on local NGOs there’s articles for a corporate readership about CSR budgets getting cut in the recent recession. Some interviews with local CSR heads of multinational companies read like heavily censored corporate copy.

Some of the more interesting copy centers on a trend of CSR among local companies. A relaxed Jin Siyu, head of publicity at the State Owned Assets and Administration Commission talks frankly on why some State-owned firms are giving more money than others to needy causes.

More controversially, there’s two pages on successful water bottler Nongfu Springs suing two government-affiliated entities the Philantrophy Times and the China Association of Social Workers for allegedly defaming the company by raising skepticism on their pledge to donate 0.01 yuan to charity from every bottle sold between January and July 2006. The case has prompted Chinese lawmakers to reshape laws in favor of charities.

Drawing the line

Upbeat and smiling, Wang’s energy is infectiously articulated in language that’s more that of an evangelical preacher than that of a hard-faced bureaucrat. He talks of wanting to influence change, “to bring hope and love to people.”

Yet Wang is a government insider with a duty to implement the government line. His role as a vice-mayor – he divides his time between Beijing and Shandong – means Wang has an insider’s knowledge of what goes in terms of issues open for coverage. Being a government official means he knows “where to draw the line.”

Wang also wants the magazine to increase trust between government, NGOs and the community to ease disaster relief work and charity work. “We want to bring trust and security,” he said.

Yet Wang won’t take sides in intra-government affairs. As the manager of a non-profit firm and a government official Wang finds himself uniquely in the middle, and he’s not taking sides. On the spat between tax officials and Ministry of Civil Affairs, he said: “Time will tell us what is the best solution to this issue.”

As a government official Wang is also au fait with the commercial realities of media in China. Since 75 percent of local publications are losing money, the government wants to reform ownership. “The government wants to own the media but it doesn’t want to operate it.” 

Changing attitudes to have nots

The magazine will take advantage of a recent media preoccupation with charity work and NGOs. Wang recalls last year sharing a TV talk show couch with one of China’s wealthiest men, Chen Guang, who on live TV donated 40 million yuan ($5.8 million) to help underprivileged locals have a better Chinese New Year. The outsized gesture was criticized as the attention-seeking ploy of a man with more money than sense. “But I thought ‘why not?’,” recalls Wang.

Chen’s gesture, said The Charitarian editor, was useful if it encouraged others to similarly share their wealth. The episode convinced Wang that media and charity work depended were interdependent.

“Media is now really interested. And charities really need media [to get their message out].”

The son of a working-class Shenyang family – “we were poor,” he recalls, Wang nonetheless feels he has reached professional as well as personal satisfaction out of caring for others. He recalls a reunion with his university classmates, 15 years after their graduation. With the wealth and responsibility of executive roles some of his classmates had no hair, some had big bellies, were overweight and overstressed.

“Of them all I was the happiest. I make a living in a job I like.”

Competition

There’s plenty of publications, online and off, covering charity in China. They range from the dry, corporate-focused CSRChina to Global Charity, a bilingual monthly published under the umbrella of the China Soong Ching Ling Foundation, a government-affiliated organization.

The Ministry of Civil Affairs meanwhile authorizes its own monthly journal the Philanthropy Times, detailing what’s happening for a mostly political readership.

An earlier publication, China Development Brief, was pithy and well edited but closed several years ago when its reports proved too revealing for certain provincial governments. The Chinese and foreign sides in this partnership were well represented among the healthy turnout at a launch party in a stately Thai club in the city’s business district.

Judging by the plentiful presence at the magazine’s launch party NGOs are keen on the magazine. “Right now it’s only the first issue and there’s a lot of improvements that would make it more reader-friendly, like using less text. But these issues need covering and there’s no one publication that does that as well as this one has managed,” said an NGO spokesperson present.

Pointedly, she didn’t want to be quoted as her NGO remains on shaky legal ground in China.

The Charitarian clearly has a way to go but the thickness of the first tome and the turn-out for its launch suggests there’s a ready readership. The future editorial direction may still be hazy, and funding is less than secured. But Wang is clear about the end vision: “that there will be no Charitarian because there will be no more poverty… I hope that day will come soon.”

gaofumao@globaltimes.com.cn

(Original Title: Charity Cases, published by Global Times, Februrary 1, 2010: http://www.globaltimes.cn/www/english/metro-beijing/community/events/2010-02/502674.html)

(By Wang Hongyi, China Daily)  SHANGHAI: The latest donation of 43.16 million yuan ($6.3 million) by a major philanthropist and 512 other entrepreneurs toward the needy has stirred controversy in the charity sector.

On Friday, Chinese entrepreneur Chen Guangbiao stood behind a wall of banknotes at the Industrial and Commercial Bank’s Jiangsu provincial branch to announce his new charity trip.

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Before next month’s Spring Festival, Chen, with 126 other philanthropists, will visit the remote rural areas of the west and distribute aid to the poor in the Xinjiang Uygur and Tibet autonomous regions, as well as Yunnan, Guizhou and Sichuan provinces.

Still, many in the Chinese online community have questioned Chen’s motives and accused him of generating publicity for his own benefit.

“I have committed myself to philanthropy in the past 10 years, during which many people said I was just concerned with my own reputation,” Chen was quoted by China National Radio as saying yesterday.

“But I really hope more people can follow me and also make a show with their own money, of course,” he said.

“In this way, more people in need can get help.”

Stories of Chen’s generosity abound. After growing up in a small, poor village in Jiangsu, Chen now manages a construction company and is one of the entrepreneurs who received the Charity Award by the Ministry of Civil Affairs. He said he has been committed to charity from the day he started his own business.

After the massive earthquake that hit Sichuan province on May 12, 2008, Chen arrived in the quake-hit area with his rescue team and excavation equipment. He and his colleagues pulled more than 200 people out of the rubble. His team also went on to build roads in the quake-hit areas.

Chen has returned to Sichuan many times, helping the area’s reconstruction with his time and money.

So far, Chen has reportedly donated 1 billion yuan to charitable causes in the country, including the reconstruction of disaster-hit regions and the building of primary schools in remote mountainous areas.

From 2008, Chen said he took his aid directly to the needy.

“Where is our money going to? That is a question that most donors asked,” Chen said.

“An inadequate charity system and lack of openness and transparency on funds are the main reasons that many entrepreneurs choose to donate directly to the poor,” he said.

“This has also restrained the development of China’s philanthropy.”

Tang Jin, a member of the standing committee of the Jiangsu provincial people’s congress, echoed Chen’s views.

Tang said several problems exist in the country’s charity scene.

These include the high management costs of running charity organizations that make people more willing to donate to the needy directly rather than through groups.

Zheng Yuanchang, an official of the social welfare and charity affairs department under the Ministry of Civil Affairs, said regulations and standards were needed to reform the country’s charity sector.

China has seen a rapid development in philanthropy in the past few years. Official statistics show that donations toward charitable causes in the country’s reached 107 billion yuan in 2008, 3.5 times that of the previous year’s figure.

(See oringinal at http://www.chinadaily.com.cn/china/2010-01/25/content_9368782.htm)

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