POLICY BRIEF NO. 2: The Guangdong and Yunnan experiments in 2012

In early 2012, Guangdong province was still in the news as the trailblazer in reforming the registration and management system for nonprofits.

In January, provincial authorities announced that by July 2012, they would eliminate what has been the main obstacle to nonprofit registration: the requirement to find a professional supervisory unit that would sponsor the nonprofit.  They also announced a series of other measures that made Guangdong the most open province with regard to nonprofit registration and management.  This push for a more open environment for nonprofits has been credited to Guangdong’s top leader – provincial party secretary Wang Yang who is also a member of China’s Politburo and possibly may enter the Politburo Standing Committee – China’s most powerful decision making body – in October when the top leadership will be reshuffled.  Wang Yang has come out publicly to state his support for nonprofits and criticize local bureaucrats for not making it easier for nonprofits to register.

Since then, the Minister of Civil Affairs has come out endorsing the Guangdong reforms, raising expectations that the long-awaited national-level revisions to the nonprofit registration and management regulations would incorporate the Guangdong measures.

These recent developments can be seen as a continuation of the CCP’s emphasis on “innovative social management” in the 12th Five Year Plan (2011-2015) issued last year.  Innovative social management refers to the government carrying out innovations in the way it regulates or manages society and social organizations (China’s term for nonprofits).

With regard to the government’s regulation of social organizations, two distinct trends can be observed.  One involves lowering barriers to social organization registration and fundraising.   The other involves standardizing management of social organizations.

We can see the first trend in the local-level experiments in Guangdong and other localities that will allow a social organization to directly register with Civil Affairs without first finding a professional supervising unit (generally a government agency or parastatal organization authorized to serve as a supervising unit) willing to sponsor it. Recently, the city of Guangzhou (the provincial capital of Guangdong) announced it was also going to be removing restrictions on fundraising for social organizations. For most of China, other than the Red Cross and public fundraising foundations, social organizations in general are not allowed to fundraise publicly. The Guangzhou announcement is consistent with what scholars in Guangdong have told me about more planned reforms in line with relaxing restrictions over fundraising and strengthening the tax-exempt status for social organizations. Together with the registration issue, the issues of fundraising and tax-exempt status pose some of the biggest obstacles for China’s social organizations. The Guangzhou announcement shows that Guangdong is clearly taking the lead in lowering barriers for social organizations. Other localities appear to be following Guangdong’s lead. Recently, Shanghai announced it would be carrying out similar experiments with registration this year.

The second trend of standardizing the management system can be seen in Yunnan province’s efforts to standardize management of international NGOs, and the recent information disclosure guidelines issued by the Ministry of Civil Affairs for charitable donations. This standardizing trend is often justified in the name of strengthening and professionalizing the nonprofit sector, but it can also be interpreted as an effort to strengthen government control over social organizations.

Two recent announcements fall into this category. One issued by Beijing Municipality’s Civil Affairs bureau is to establish a human resource system for social organizations. The bureau hopes that this move will help to raise the salaries of social organization staff and promote the professionalization of the nonprofit sector.

The other is a Notice issued by the Ministry of Finance and Ministry of Civil Affairs which calls for major charitable projects to be audited after their completion, and the results of the audit made public. The Notice applies to major projects undertaken by foundations, representative offices of foreign foundations and public welfare social organizations that qualify for tax-exempt charitable donations.   For the news article, see http://chinadevelopmentbrief.cn/news/major-charitable-projects-should-be-audited-and-the-results-made-public/

We should expect both of these trends to continue in the coming months and years, as the government at both central and local levels wrestle with how to better manage social organizations.  One area to watch is whether the second trend will raise more barriers to social organization activity, in the name of standardization, and thereby counteract the first trend which seeks to lower the barriers.

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