The nonprofit sector
According to the latest statistics from the Ministry of Civil Affairs, at the end of December 2015 there were a total of 658,000 social organizations in China. These included 326,000 community organizations, 4,719 foundations, and 327,000 private non-enterprise work units. By way of comparison in 2014 there was a total of 606,000 social organizations, meaning that in 2015 there was an increase of 8.6%.
The number of industry associations and chambers of commerce in China reached 70,000 by the end of 2014, and is currently increasing at an annual rate of 10-15%. Industry associations and chambers of commerce play an active role in areas such as providing government consultation and business development services, improving resource allocation, strengthening the industry’s self-regulation, rethinking social governance and taking on social responsibility.
The China Foundation Center reports that as of December 31st 2015 there were a total of 4,846 charitable foundations in China, representing an increase of 609 from 2014, with an annual rate of growth of 14.37%. Out of these foundations, 1550 (31.99%) were public, and 3296 (68.01%) were private. Only 61 of the newly created foundations in 2015 were public, four less than the number of new public foundations from the previous year. On the other hand there were 648 new private foundations, making up 89.98% of the total amount of newly established foundations in 2015. This increase was about the same as the previous year’s one. The newly created foundations of 2015 were primarily located in Guangdong, Beijing, Shanghai, Jiangsu, and Zhejiang. A total of 330, or 54.19%, of the new foundations of that year were located in these five provinces.
Since the 1990s, international NGOs have been entering China in large numbers. According to statistics, there are currently around 7000 international NGOs operating in China. For quite some time, international NGOs have not only been stable sources of funding for Chinese NGOs, but have also provided assistance in raising their level of professionalism and the development of philanthropy.
In 2015, there were approximately 100 million people registered as volunteers in China (Mainland), accounting for 7.27% of the total population. The number of people who were actually active as volunteers totalled 94.88 million. In 2015, the number of volunteers increased by 6.9%, the number of volunteered hours totalled 1.559 billion, and the net value of volunteer contributions totalled 60 billion Yuan. In comparison to 2014, there were 4,870,000 more active volunteers in 2015, representing a 5.4% increase. The rate of volunteer donations increased by 4.9%, and the total time donated by volunteers increased by 337 million hours, which is a 27.5% increase. The net value of volunteer contributions increased by 15.7 billion Yuan, which represents a growth rate of 29%.
Donations to the nonprofit sector
The total anticipated amount of donations from 2015 is expected to reach 99.2 billion Yuan. Out of this, foundations are expected to receive 37.4 billion Yuan in donations. Charities are expected to receive 36.2 billion Yuan; civil administration programs are expected to receive 5.623 billion Yuan, and other organizations will receive 2 billion Yuan.
Additionally, taking into consideration the monetary value of volunteer time (60 billion Yuan), as well as the estimated value of the public welfare lottery funds used (34 billion Yuan), the total amount of charitable funds is expected to reach 193.2 billion Yuan. (Actual 2015 figures would be released at the Fifth China Charity Fair 2016).
Report of China Charity Donation 2014 is issued at the Fourth China Charity Fair (CCF) by China Charity Information Centre (CCIC). China receives 104.226 billion Yuan of charity donation from home and abroad. Ma Yun and Cai Chongxin, from Alibaba Group, donates 2% equity of Alibaba (valuing 24.5 billion Yuan), which is the largest single donation since 1949. Last year, the total sales volume of China Welfare Lottery and China Sports Lottery is over 382.368 billion Yuan and Lottery Charity Fund raises 104 billion Yuan, which makes history.
The annual China Charity Ranking, supported by China’s Ministry of Civil Affairs and the China Philanthropy Times noted that in 2015, the top ten public-fundraising foundations raised over 3.9 billion Yuan, 1.1 billion Yuan more than the donations raised by the previous year’s top ten foundations. Thirteen foundations raised more than 100 million Yuan each.
Private corporations have been the leading force and education sector the most popular cause. In 2014, private corporations and foreign invested enterprises were the leading donor segment, accounting for respectively 40.4% and 36% of the all year’s donation.
While traditionally the corporate sector have lead the fundraising, 2015 saw funds raised from the public dramatically increased. Funds raised from the public made up nearly 40% of total donations for the China Youth Development Foundation in 2015, 30% for the China Women Development Foundation and 59% for the China Charities Aid Foundation for Children. More than 70% of the funds of the One Foundation have come from donations from the public in the last two years.
Phone Donation has become mainstream and the youth are the leading force of online donation. In 2014, online donation platform of Sina Micro Charity, Tencent Micro Charity and Alipay E Micro Charity raise more than 428 million Yuan, increasing by 42.6%. It is estimated that Alipay charity platform (Taobao and Alipay ) raised 280 million Yuan. And people using Weibo and Wechat accounts for 68%.According to the report, 2014 is an important year in the history of China charity. There are 299 projects by Internet crowdfunding, raising money over 12.72 million Yuan, which is a vital approach of online donation.
To listen to the impact of the Tencent initiated online fundraising campaign, click here.
The 2016 China Charity Ranking, includes 147 philanthropists, who made total donations of 5.263 billion Yuan. Both the number of philanthropists and the amount of donations have clearly dropped compared with the rankings for 2015. Excluding the donations made by Jack Ma, the remaining 198 philanthropists in the 2015 ranking donated 9.502 billion Yuan in total, with each one donating 47.74 million Yuan in average. This average for 2016 is only 35.8 million Yuan per person. This reflects a trend consistent with the economic situation and in stark contrast to the rapid growth of public individual donations.
Guangdong Province tops China Donation List for four successive years. Three most popular causes are education, disaster relief and poverty alleviation. In 2014, twenty provinces received donations over 100 million Yuan, with four of them receiving over 1 billion Yuan, namely, Guangdong, Beijing, Zhejiang and Fujian.
Globalisation of China charities
2015 saw large-scale overseas assistance coming from charities in China. The China Foundation for Poverty Alleviation, the One Foundation, the Amity Foundation and the China Social Welfare Foundation, together with their rescue teams responded to the April 2015 devastating earthquake in Nepal and organized donation drives in China. This overseas assistance was the catalyst that encouraged China nonprofits to go overseas, marking a milestone in the development of China’s charity.
China Foundation for Poverty Alleviation established branch offices in Myanmar and Nepal. The foundation’s internationalization has already moved from the first stage of emergency response to the second stage of organizing international projects and setting up international branches. Some are moving into the third stage, to operate long-term projects and registering overseas offices. The Amity Foundation has set up its African Office in the capital of Ethiopia in July 2015, thus becoming the first Chinese charitable organization to officially set up an office in Africa.
Following the recent earthquake in Ecuador (South America), the China Foundation for Poverty Alleviation, the Amity Foundation and the Zhejiang Ram Union have sent assistance to Ecuador.
China Charity Law
After ten years in the pipeline, the Charity Law, the first national-level legislation of its kind, was passed on March 16th 2016, and took effect on September 1st 2016.
The Charity Law provides a section for charitable donations and articles explaining the responsibilities of donors and recipient organizations, and the management and supervision of charitable organizations and services. It also has new provisions allowing for the establishment of a new category of nonprofit, public benefit organization – the charitable organization. The law broadens the scope for public fundraising and for the first time regulates online fundraising. After the scandals in the philanthropy sector in 2011, the Charity Law also includes a section on information disclosure to encourage greater transparency and accountability among charitable organizations in how they carry out their fundraising activities and how donations are used.
Trust Law has existed since 2001. In 2015 however, Jack Ma of Alibaba made news when he donated around US$2.4 billion to set up a charitable trust outside of China (in Singapore), explaining that the regulatory environment for philanthropy in China was not yet mature enough. The Charity Law now addresses new organizational forms such as charitable trusts.
The Charity Law also provides more generous tax incentives; including the provision that the amount of charitable donations beyond the amount deductible from income tax for a year is allowed to be carried over into the calculation of taxable income over the next three years. Charity Law lowers barriers for public fundraising organizations by allowing organizations that have been lawfully registered for two years to apply for public fundraising status. In the past, public fundraising status has been very difficult to obtain and the criteria needed were never clearly spelled out. The operational details will have to be worked on by the tax departments and other relevant agencies to promote, implement and enforce those incentives.
Some area that may need to be reviewed includes the limits on management fees/ administrative cost to 10% of that year’s total expenses. The 10% across-the-board limit may hampers the ability of organizations to hire professional staff or rent appropriate venues for their offices, and does not take into consideration the different needs and expenses of different charitable organizations. The need to meet information disclosure requirements would require staffing and other resources that may be lacking in smaller organizations and may also conflicts with the requirement to keep management costs under 10 percent of total expenses.
The language and intent of the Charity Law are for the most part supportive of the development of charitable organizations and its activities. The Charity Law does not require charitable organizations to find a professional supervisory organ to be its sponsor before registering with the Civil Affairs department. The need to find an official sponsor, and the oversight of both that sponsor and Civil Affairs, was in the past an obstacle for local nonprofits seeking to register. Unlike previous regulations, the Law also does not place limits on the number of organizations per sector, on branch organizations, or on the geographic scope of an organization’s work. The law encourages the establishment of industry and professional associations of philanthropic organizations to promote self-regulation in the sector.
Read here to get a quick overview of the law: China Charity Law for Dummies!
Inaugural Global Fundraising Conference China
I hope this provides an update of the exciting developments in fundraising and philanthropy in China. As part of the capability building for the nonprofit sector in China the China Charity Fair 2016 will host the inaugural Global Fundraising Conference- China 2016. I am delighted to be the advisor and curator for this path-setting conference. See you in Shenzhen, China (22-25 September 2016)