In Depth: Rule Change Leaves Some Chinese Charities Starving for Funding

On January 1, a national assistance program by Love Save Pneumoconiosis, a charity in Beijing, suspended its operations due to an inability to renew its government registration. This program, established 13 years ago, had provided financial assistance up to 10,000 yuan ($1,374) to patients with black lung, approving over 600 applications monthly and helping more than 10,000 individuals since its inception. The charity can now only provide oxygen machines due to the loss of registration, which is unfortunate as winter poses challenges for such patients. This suspension is part of a broader trend where several charities have had to stop public fundraising after their registrations expired. Over 30 public welfare projects in various fields, such as education and healthcare, have halted fundraising due to an inability to secure renewals[para. 1][para. 2][para. 3][para. 4].

Recent changes in China's charity fundraising laws require organizations to have a special license to raise money directly from the public. These are classified as “public” organizations, while “nonpublic” organizations, making up over 85% of China's charities, must partner with licensed ones for fundraising. Although these changes do not restrict registration or joint fundraising directly, each program must now be registered separately, each receiving a unique registration number. This requirement has caused difficulties for both public and nonpublic organizations due to unclear and regionally inconsistent processes. A survey conducted in December 2024 showed about 90% of charities faced re-registration issues, with less than 5% having no trouble. These delays are financially straining charities amid declining fundraising revenues. Donating revenues have dropped by over 50% from peak levels according to industry insiders[para. 5][para. 6][para. 7][para. 8][para. 9].

A scandal involving the China Charities Aid Foundation for Children, which revealed mismanagement and theft of donations by a volunteer, triggered these regulatory changes. Revised regulatory measures were rolled out in September following the investigation. These updates require public charities to assume greater responsibility for fundraising activities and mandates more rigorous evaluations and audits to enhance oversight. Additionally, the new rules demand each public fundraising activity be registered separately with distinct registration numbers, along with disclosure of expected fundraising amounts and project duration. The government aims to strengthen oversight while encouraging continuous charity work through these rules[para. 10][para. 11][para. 12][para. 13].

Organizations face challenges with inconsistent regional enforcement of these regulations, causing financial strain as they cannot raise money until they’ve successfully registered. For instance, a charity in Guangdong, assisting migrant children, faced disruptions due to these new registration rules, which impacted its ability to finance essential costs like rent and staff wages. The organization started with 20 monthly donors and saw incremental growth in donations before its program was unexpectedly discontinued due to expired registration. Concerns linger that ongoing suspensions may hamper frontline organizations’ ability to secure new funding channels[para. 14][para. 15][para. 16][para. 17][para. 18].

Public foundations are now revising their roles due to increased management responsibilities and costs, seeking to offer innovative solutions more selectively than before. Despite tighter measures, concerns about their effectiveness in preventing financial malpractice persist. Experts argue that true prevention lies in monitoring efforts that protect the charity’s intended purpose, advocating for fewer unnecessary restrictions to aid compliance. The charitable sector's low entry barriers and lack of rigorous ethical standards add to the complexities the sector faces amid these regulatory transitions. The lack of effective interaction between charities and administrative bodies continues to compound these issues, indicating a need for balanced regulatory enforcement to support sector growth[para. 19][para. 20][para. 21][para. 22][para. 23][para. 24].