Helping out charities with legislation Zong HeChina Daily Updated: 2005-06-13 05:53
There is a lot of potential to develop charities in China, but legislation
needs to improve if that is to happen.
Charities are not an alien concept to China where helping others is a
time-honoured tradition.
But those sorts of charitable activities were mostly carried out among
relatives or neighbours or in a community.
Charities, in the sense of a well-organized sector, developed relatively late
in China.
Only during the late Qing Dynasty (1644-1911) did charitable groups, in the
modern sense, emerge.
But the sector's development in modern day China is slow.
The role that should have been partly played by charities, such as
poverty-alleviation and disaster relief efforts, was virtually taken over by the
government during the planned-economy period. This meant the development of
charities didn't really happen.
When the country began to move towards a market economy in the late 1970s,
the dormant charitable undertakings erupted into life again.
A milestone came in the early 1990s. Severe floods that hit vast areas of
East China in 1991 resulting in major human and property losses sparked
passionate charitable donations both at home and abroad for the disaster
victims.
This moving event sent out a strong message a solid social foundation did
exist to develop the then still embryonic charities.
This episode also vividly promoted the role charities could play in society,
such as disaster relief.
Such roles have now been acknowledged by the government and incorporated into
its overall social planning.
For example, charities have been designated as an important part of the
social security network, a network the government is currently working hard to
establish.
And at a time when the widening income gap is raising serious concerns,
charities as a moderate way of redistributing wealth will help bridge it.
However, if China's charity sector is really to shoulder such tasks, it
should first become well developed, which regrettably is not the case at
present. It is still in its infancy.
According to Ge Daoshun, a research fellow with the Chinese Academy of Social
Sciences (CASS), there are only about 100 or so fully-fledged charitable
organizations in China, while in the United States there were about 1.2 million
in 1998.
In addition, the weak position of charities in China is also revealed by
their inability to raise money. For example, the total cash received by Chinese
charities was 5 billion yuan (US$602 million) in 2004, just 0.05 per cent of the
country's GDP that year.
In the same year, the figures were 2.17 per cent and 0.88 per cent in the
United States and Britain respectively.
Although in China a considerable amount of charitable donations go directly
from donors to recipients meaning they are not included in the above tally the
huge difference between China and the United States and Britain still shows
China's charities are not doing enough to get money.
"Charities in China are also plagued by a lack of public enthusiasm," Ge
said.
And the everyday man, used to the planned-economy-era idea that social
security and social welfare are issues in the government's domain, is often not
motivated to do his "bit," Ge said.
"Although the government should play a leading role in social security and
social welfare issues, the role played by charitable organizations in this
regard should also be greatly encouraged," Li Peilin, a research fellow at CASS,
said.
To this end, in Li's opinion, the government should encourage the development
of charitable NGOs. Efforts in other aspects should also be made to push ahead
the development of China's charities.
"A major hurdle for the growth of China's charities is the lack of a legally
friendly environment," said Zheng Gongcheng, a professor at the Beijing-based
Renmin University of China.
"The fundamental reason for the backwardness of the sector in China is not
the economy and the lack of charitable resources, but the current incomplete
legal framework concerning charitable matters," Zheng said.
According to current laws, only seven charitable organizations in the country
are allowed to give full tax exemption treatment to donors.
Such an arrangement not only greatly narrows the channels for potential
donors, thus turning some of them away, but also increases the costs of doing
charity work.
Under existing laws, many charities are treated as if they were businesses.
They are required to pay the same tax as business ventures, thus curbing their
enthusiasm for charitable undertakings.
So perhaps the government can consider using the tax issue to stimulate the
growth of charities, experts say.
But this hinges on a complete and well-functioning legal framework to
regulate the sector.
There should be legislation for preferential tax policies for charities, for
example.
Speeding up legislation in the sector is an issue of the utmost urgency,
Professor Zheng said.
(China Daily 06/13/2005 page4)
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