Thread by @MengYe_Emma

Relieved and glad that I finally get to cross off this project. 38,633 Chinese characters(~ equivalent to 20,000 English words). Thanks to the interest of @DrAKWilliamson, I am sharing a very brief English summary/outline of the book chapter. 1/

https://twitter.com/MengYe_Emma/status/1533672044214239232?s=20&t=z4yFD3Cv61kK0AEpGvA06w

Basically, it is an overview and critique of the current (5 years post the promulgation of China’s first Charity Law) legal framework on family philanthropy in China. Family philanthropy is definitely a growing sub-field of charity in China. 2/

Like elsewhere, family philanthropy is not a legally defined category but a practical classification. So discussing laws and regulations on family philanthropy is to discuss how existing *organizational* and *behavioral* laws apply to family philanthropic activities. 3/

Btw, China has a legal system similar to the civil law family. NPOs can't register as companies, instead, they can only take one of the 3 legal forms exclusively designed for NPOs: foundations, social groups, and social service organizations. 4/

My China social enterprise law article, which is in English, briefly touches on this. 5/ tandfonline.com/doi/abs/10.108…

Section 1 discusses possible vehicles/channels to realize family philanthropic goals and analyzes pros & cons for each in terms of 1) flexibility, 2) autonomy, and 3) compliance management costs. And the FIVE vehicles are: 6/

Group A: channels w/o stand-alone entities: 1) direct donation, cash and in-kind, currently in China, in-kind donations are taxed for VAT as equivalent to sales, creating barriers for donors to find the cash to pay that money, especially high-net value families donating stocks 7/

2) internally introduced DAF and the similar indigenous vehicle of "special fund" affiliated to a charity (mostly a foundation) -- and no public charity/private foundation classification in China, but foundations can either have the qualification to publicly fundraise or NOT. 8/

Group B: stand-alone vehicles: 3) family foundation, 4) charitable trust (here it is different in China again, charitable trusts are defined as an activity rather than an entity and regulation is weak and no tax deduction for trustors), 5) complex corporate structures. 9/

Section 2: governance, basically discusses the rights and limitations of rights of family donors; the composition of the family philanthropy board and how the law restricts the ratio of related parties on the board; and most interestingly trustor's rights in charitable trusts 10/

The artificially over-complex charitable trust governance structures are a long story, hard to explain in several sentences. But the gist is people combine trusts with donations to circumvent the no-deductions barrier, a slide from my charitable trust project to give a sense. 11/

Section 3: regulation of family philanthropic activities, focus on family foundations, cause donations and DAFs go through foundations too. Discusses 1) charitable status recognition,2)public fundraising (qualification application and procedural requirements for the activity) 12/

3) expenditures (have both minimum charitable expenditure and admin costs cap), 4) information disclosure and annual report, 5) investments (charities CANNOT directly buy stocks, must use financial institutions as agents) and holding equities of subsidiaries limited to PMI. 13/

Section 4: tax incentives, again the issues are no tax deduction for trustors of charitable trusts and excessive tax burden for in-kind donations. End. 14/
#philanthropy #charity #nonprofitlaw @ICNLAlliance