China’s charity law ‘needs lower limit’ on management fees or it risks abuse: political advisers
A proposed law to govern charities on the Chinese mainland does not sufficiently limit management fees, according to political advisers who cite concerns over misuse of public funds.
Under the draft charity law, submitted for the third reading at the annual parliamentary conference in Beijing on Wednesday, no more than 15 per cent of any charitable fund could be used to pay its management fee.
But several delegates said this was too high and left the funds at risk of abuse.
Management fees for charities in the West are usually around 3 per cent.
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“It is unreasonable to set 15 per cent as the management fee rate for charities, as the management fee rate for funds [in wealth management products] is only 0.5 to 2 per cent,” Zhu Jianmin, a deputy from Liaoning, said at a panel meeting of social security deputies yesterday.
“Moreover, managing charity funds is much less financially risky than those of commercial funds so I see no reason why it is so high,” Zhu added.
Management fees are used to cover the daily operations of a charity, such as paying staff salaries.
“China’s charity industry is in a special moment right now and the 15 per cent cap is too [high],” said another deputy, Yang Xiangbo, the chairman of Shenzhen Shirble Department Store.
A lack of legislation is seen as partly to blame for a series of high-profile scandals that have hurt the public’s confidence in mainland charities over recent years.
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Li Xueju, the former deputy minister of civil affairs, said the proposed law, once passed, would help to greatly boost donations by the public. He said such donations accounted for only 0.2 per cent of the country’s annual GDP, compared to 3 per cent in the United States.
A record 104.2 billion yuan (HK$124 billion) was donated to mainland charities in 2014, according to the Ministry of Civil Affairs.
“Anyone…defaming the reputation of, or hurting, a charitable organisation will be strictly punished according to the law,” Li told delegates.
But he said the problems facing charities should not be overstated because this would discourage the public from giving.
“If there is always [bad talk about] charities in China, those who want to donate will not dare to,” Li said.
