In May, we wrote about China’s new Charity Law (official Chinese version available here; unofficial English translation available here) and its establishment of a comprehensive framework for revamping the government’s management of the social sector. For decades, charities, social organizations, and civil society groups have operated in a quasi-legal environment where enforcement has been unpredictable and inconsistent. For some organizations, legal uncertainty has been a source of operational freedom, while for others, it has been perceived as a hammer waiting to drop. Social organizations working on noncontroversial or government-endorsed issues, such as poverty alleviation or healthcare, have enjoyed a wider berth than those involved with minority rights, religion, or other controversial issues. Observers of the new Charity Law are hopeful that it will facilitate an expansion of the social sector, but are aware that much depends on the details of implementation. (Note that the Charity Law’s provisions affect not only domestic and foreign non-profits, but also a wide range of companies and corporate social responsibility initiatives and should be distinguished from the Foreign NGO Law, which applies only to foreign NGOs).

Effective as of September 1, the Charity Law includes an expanded definition of “charitable activities,” tax incentives for qualifying organizations, new registration procedures, and rules for donation and volunteer management. As is common in Chinese lawmaking, the Charity Law only provides a high-level blueprint for intended reforms, with greater detail to be provided later through measures designed to clarify the specifics of implementation and enforcement. As of late October, the Charity Law has been followed by seven accompanying regulations that clarify new rules regarding registration, public fundraising, establishing trusts, and more.

A few key highlights:

All seven accompanying regulations are now in effect. New measures may be released in the future.  As a result, all interested or affected parties should follow this issue closely.

Zhijing Yu of Covington & Burling LLP assisted with the research and preparation of this article.