China is expected to have its first charity law within two years as the Ministry of Civil Affairs reported the draft law to the State Council last month, an official said.

"In no more than one or two years, the law will hopefully be passed after the State Council and the National People's Congress, the top legislature, complete all legislative procedures," Wang Zhenyao, director of the social welfare and charity promotion department under the Ministry of Civil Affairs, said Wednesday.

"The mechanism, system and idea of China's charity sector has lagged far behind citizens' demand," he said.

At an appropriate time, authorities will make public the draft law to solicit opinions, he said, without elaborating.

Wang made the remarks Wednesday at a seminar when the Chinese Academy of Social Sciences (CASS) released the annual report on China's philanthropy development, which is also the country's first blue book of philanthropy.

Experts and practitioners suggested at the seminar that the future charity law should clearly define the nature of charity organizations, as well as standardize the preferential tax policy, registration and internal governance of charity organizations.

China has only about 54,000 registered charity organizations. According to relevant regulations and administrative laws, the country merely has two kinds of charity organizations - those providing social service and those protecting environment, said Yang Tuan, researcher with the social policy research center under CASS.

"I hope the definition of charity organizations can be broader in the charity law - with goals of serving the public interest or common good, all kinds of social organizations taking part in activities like poverty alleviating, educational, medical or cultural activities should be included in," said Yang, who is also the blue book's chief editor.

From this broad sense, the country now has about 1 million charity organizations, among which 410,000 are registered, she said.

"The law also should formulate that charity organizations can be registered as non-profit organizations. Presently they only can be registered as profit-seeking organizations, which is ridiculous and maybe one reason of the large number of unregistered such organizations," she said.

Deng Guosheng, professor with NGO research center with Tsinghua University, said authorities should standardize the preferential tax policy in the law.

"The law should clearly formulate tax relief or exemption policies for philanthropic organizations or activities like charitable donation, which could encourage individuals and enterprises to donate more money," he said.

"Law or regulations also should require these organizations not be affiliated to any government department and should run independently," said Fan Baojun, president of China's largest philanthropic organization, the China Charity Federation.

A great amount of donated money organizations received have been handed in to local finance. In the end, few citizens have idea about how local governments spend the money they donated, he said.

(China Daily September 17, 2009)