China has issued new regulations on the administration of public welfare foundations, hoping to encourage more wealthy people to commit to public welfare and thus foster new foundations, a senior official said in Beijing Friday.  

"We still need more foundations to participate in public welfare as we have inadequate non-profit organizations to meet the demand," Jiang Li, vice minister of civil affairs, told a press conference sponsored by the State Council Information Office.

China had registered 1,200 foundations committed to public welfare by making use of the assets donated by individuals or organizations by the end of 2003, according to statistics released by the ministry Friday.

The regulations, which will take effect as of June 1, have for the first time divided foundations into two types: publicly-funded foundations, which could raise funds from the public, and non-publicly-funded foundations, which are not allowed to raise funds from the public.

Jiang said such divisions were to mobilize more people to participate in charitable activities and help utilize to the maximum the public's social resources, especially those wealthy groups.

"The introduction of non-publicly-funded foundations will provide channels for people and enterprises who have gotten rich to pay back society," said Jiang.

"More standardized social welfare activities by foundations will help China resolve the problem of the widening gap between the rich and poor," she said.

She said the Ministry of Finance and the State Administration of Taxation are still discussing the specific preferential tax policies for those individual or enterprise donors.

Meanwhile, overseas foundations win the go-ahead to establish representative offices on the Chinese mainland but are not allowed to solicit or receive donations on the Chinese mainland, according to the new regulations.

"We have to protect the limited charity resources by regulating the publicly-funded foundations on a certain scale," Jiang said, adding such restrictions won't hinder overseas donors' enthusiasm.

The national publicly-funded foundations are required to raise at least 8 million yuan (about US$964,000) before registration while individuals and enterprises hoping to establish non-publicly-funded foundations are required to donate at least 2 million yuan (US$241,000).

Doors open to international foundations

The Ministry of Civil Affairs on Friday announced that overseas groups or individuals will be allowed to establish foundations in China, along with representative offices.

As of June 1, the ministry will begin registration of overseas foundations that used to have no official identity, or were operating without proper designation.

"Basically, overseas foundations will be treated the same way domestic organizations are handled as long as they abide by our rules," said Li Bengong, director of the ministry's Department of NGO Administration at the press conference on Friday.

Overseas foundations' activities in China must be consistent with the country's public welfare rules. In the meantime, they should be responsible for what they do according to Chinese laws, he said.

The new regulation issued by the ministry is winning wide approval from the representatives from overseas foundations in China.

"It's such good news," said Wang Chao, deputy director of World Vision (China). "We've been expecting it for years."

The international organization, founded in the United States, has spent a total of 460 million yuan (US$55.4 million) on poverty relief in China for two decades.

But without legal status, the organization has been encountering difficulties whenever it tried to launch a project to help those in need, especially in the less developed western regions.

"We had problems even when opening a bank account or employing people," said Wang.

The Ford Foundation, which was luckier to avoid difficulties by registering under the Chinese Academy of Social Sciences, or host organization, also welcomes publication of the new regulation.

"It's very important to have a clear legal framework for international foundations so they will be able to carry out their work legally and properly in China," said Andrew Watson, representative of the China Office of the US$10.5-billion global foundation.

In the new regulation issued by the ministry, foundations are for the first time divided into publicly funded and non-publicly funded foundations. Overseas foundations are included into the latter category.

(Sources including Xinhua News Agency and China Daily, March 20, 2004)