Money & Business

Nonprofits Assessing Impact of China's Foreign NGO Law

By / May 9, 2016 (moodboard/Thinkstock)

What are the practical implications of China’s new law regulating foreign nongovernmental organizations operating in the country? The final version of the legislation clarified some issues but left many murky. A legal alert from a firm with expertise in association law offered some guidance last week.

U.S.-based associations and nonprofit organizations are still assessing the impact of a law approved last month by China’s National People’s Congress to police the activities of foreign nongovernmental organizations in China.

China’s Foreign NGO Law formalizes legal requirements for foreign NGOs conducting activities in China. Chinese officials have said the new law is intended to clarify uncertainties as to how foreign nonprofits can operate in the country, but the nation’s leaders have also expressed security concerns and wariness of nonprofits with an advocacy or civil liberties agenda.

While the law exempts universities, hospitals, and scientific research organizations, many industry and trade associations will find themselves subject to the law’s registration and reporting requirements, effective January 1, 2017.

Under the new law, foreign NGOs will need to register with China’s Ministry of Public Security and submit to a review of their operations, including their finances. Such groups will also have to report on planned activities each year and be sponsored by a Chinese partner organization.

The law firm Pillsbury Winthrop Shaw Pittman LLP, which serves as ASAE’s general counsel, has prepared a client alert detailing the law’s provisions and implications for foreign-based organizations that conduct activities in China.

“Foreign NGOs will need to understand the new law’s tighter policing provisions, reporting requirements (including annual reports on planned activities for the coming year), and restrictions on fundraising and recruiting within China, among other changes,” the alert says. “The new law does clarify some uncertainties regarding how foreign NGOs in China can operate, but it also engenders new questions about how the relevant authorities will apply its provisions.”

The law lists the sectors in which foreign organizations are welcome to engage: economics, education, science and technology, health, culture, sports, environmental protection, charity, and disaster relief.

“Foreign NGOs engaging in one of these sectors may find it easier to apply than those engaging in sectors that are deemed to be sensitive by the Chinese authorities, such as human rights, civil liberties, etc.,” the alert says. “The Foreign NGO Law requires an ‘area of activities and catalogue of projects’ to be published by the [Public Security Bureau] … but it is unclear at this stage how this document will be drafted and whether activities outside of the scope of this document will be prohibited in China.”

While the law provides a legal framework, questions about implementation remain, Pillsbury notes in the alert, and nonprofits should watch for more documents to be published by Chinese authorities in the coming months. Meanwhile, “foreign NGOs ought to maintain close cooperation with their Chinese partners in efforts to comply with the new rules.”

Chris Vest, CAE

Chris Vest, CAE is director of public policy at ASAE. More »

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