Call Summary: China's Draft Law on Management of NGOs and Foundations

On May 27, the Council on Foundations and the International Center for Not-for-Profit Law (ICNL) hosted a conference call on China's Draft Law on Management of Overseas NGOs and its potential impact on U.S. funders and other organizations working in and with China.

More than 130 participants registered to join the conversation, which discussed a range of possible concerns with the proposed Chinese legislation. The call featured non-profit law experts and a funder working in China, as well as Council staff who described the Council’s planned submission of comments on the draft legislation. You can read an English translation of the draft legislation here: http://chinadevelopmentbrief.cn/articles/cdb-english-translation-of-the-overseas-ngo-management-law-second-draft/.

When analyzing the draft legislation, several aspects of the law make it difficult to understand exactly how foreign NGOs operating in China will be affected once the law is implemented. The law as currently written applies to any non-mainland Chinese organization working on nonprofit or charitable activities in China – including foundations, universities, and other types of non-profits – and defines “activities” only fairly generally. Several specific concerns with the draft legislation were discussed, including requirements that:

• Foreign NGOs will be required to register with the Chinese public security authorities before they may conduct activities in China.
• NGOs must be sponsored by professional supervisory organizations, which are either ministries, agencies or other branches of the Chinese national or provincial governments or organizations authorized by the government to serve this function.
• The law gives Chinese public security authorities a wide range of tools and wide discretion to manage and supervise NGOs, in order to ensure compliance with a number of reporting requirements for the activities of the NGOs.
• Throughout the law, it is unclear how specific elements will be implemented, which leaves considerable discretion in public securities authorities at central and provincial levels.
• The law does not discuss regulation for disaster response activities, and the requirements for annual workplans and advance agreement on activities with Chinese authorities could make it difficult for foundations and NGOs to be responsive to situations like natural disasters.

The proposed regulation of foreign organizations could therefore make it more time-consuming and complex for NGOs, foundations and other organizations, including potentially universities, to fund partners, run programs, and or collaborate on projects in China. 

In the past, there have been a number of channels through which foreign NGOs, foundations, universities and other entities have undertaken activities in China, either through registration or through more informal means. The proposed law will centralize control of this process under the Ministry of Public Security. China is also currently working to finalize a new domestic Charity Law, which is not of as much concern to Chinese organizations and takes into account some of the reforms in Chinese domestic charity governance in recent years.

This second draft of the Law on the Management of Overseas NGOs is open for public comment until June 4, 2015. The law may be passed as early as next month, or later in the year, with implementation likely to occur starting in 2016. There have been a significant amount of comments submitted to Chinese authorities to date, and many more are expected before June 4. Comments are useful because they may influence final changes to the draft legislation and/or its implementation once passed.

The Council on Foundations is finalizing comments on the draft legislation, which will be shared with members of the Council for their input before submission. Both ICNL and the Council will be tracking this law moving forward, including conducting extensive research and developing reports about the law and its implementation. Before changing their procedures and/or programs, foundations and other NGOs are encouraged to “wait and see” the final law and the implementation regulations in order to best understand how they may be impacted.

Listen to a recording of the conversation:

You can also download the full conference call recording.

Thanks to our speakers:

• Mark Sidel
  Doyle-Bascom Professor of Law and Public Affairs
  University of Wisconsin-Madison
  Consultant (Asia)
  International Center for Not-for-Profit Law (ICNL)
• Marc Owens
  Partner
  Loeb & Loeb
• Mary Anne Rodgers
  General Counsel
  Packard Foundation
• Opening/Closing Remarks and Moderation by Council on Foundations staff: Natalie Ross and Katherine LaBeau.