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November 14, 2017

After Ten Months, What Do We Still Not Know?

As we approach one year since the Foreign NGO Law went into effect, these are some of the common questions and concerns we’re hearing from legal professionals, scholars, funders, and NGOs themselves—along with any answers we are able to offer. The questions run the gamut from practical to existential. Some of the questions are new, as the foreign NGO community’s collective experience working under the law brings to light additional issues, but some still remain unanswered from earlier in the year.

General Concerns

  • What happens next year? There are many organizations that, despite their best efforts, have yet to complete registration. Will they be allowed to stay in China, even though more than a year will have passed since the Law’s implementation, or will the Public Security Bureau (PSB) begin notifying unregistered groups that they must leave the country? Though some groups have reported that some PSB officials have helped foreign NGOs approach potential Professional Supervisory Units (PSUs), what happens in provinces where Public Security officials have not proven willing to play matchmaker? What about smaller foreign NGOs—will PSBs be less willing to advocate on their behalf, as compared to larger, more well-known organizations?
  • Are there any groups that have been denied registration, or that have had their temporary activities shut down? The China NGO Project is not aware of any groups who have been explicitly denied registration by the Ministry of Public Security (MPS) or by a provincial PSB. Similarly, we are not aware of any groups who have had their temporary activity filings explicitly rejected by a PSB or their activities themselves forcibly shut down while underway. This does not necessarily suggest, however, that all groups will be able to work in China; the quirks of the registration and filing process may in fact make it so that groups are never formally rejected even if they are unable to successfully register or file.
  • Are there any foreign NGOs that have left or are considering leaving? The China NGO Project has not spoken directly with any groups that have definitively decided to discontinue their work in China. (If your group is considering pulling its work out of China, or has done so, please contact us. We will not use your information without your permission.)
  • Is there a trend toward, or an implicit push for, “localization” of foreign NGOs? Are foreign NGOs being pressured by either the PSB or PSUs to hire a Chinese citizen as their chief representative? If so, does this trend have implications for the kind of work foreign NGOs will consider doing?
  • How does the MPS view certain funding sources? Are there certain funding sources that are unofficially verboten? Does having specific international funders, either private or government-affiliated, mean that a foreign NGO will not be able to register? Are there different standards for what sort of funding sources are acceptable for a Representative Office and for a Temporary Activity?
  • What is fundraising? The Foreign NGO Law forbids fundraising within mainland China, but doesn’t forbid accepting donations. The question of what constitutes “fundraising” remains open. For example, what if a Chinese entity invites a foreign NGO employee to give a speech and offers renumeration? What if a Chinese entity approaches a foreign NGO, unbidden, with a donation proposal? Is there a manner in which foreign NGOs can legally accept money or in-kind donations from Chinese entities? If and when relevant guidance is offered, how practicable will enforcement be for such an inherently grey area?
  • How does foreign corporate philanthropy work under the Foreign NGO Law? Are there different rules for corporate giving if it comes from an in-house corporate social responsibility (CSR) division versus from a separately-established corporate foundation? Does it matter if the donations come from the company’s offices in China or abroad? MPS statements from a Q&A last year seem to suggest that in-house CSR giving is acceptable, as corporations do not fall under the ambit of the foreign NGO law. However, confusion on this point remains among both NGOs and funders. In any case, more and more foreign corporations interested in philanthropy in China will need to make decisions about how to structure their corporate giving programs.
  • Will there be additional official guidance on how the Foreign NGO Law relates to academic organizations? Article 53 of the law stipulates that foreign schools, hospitals, natural sciences and engineering technology research institutes, or academic organizations carrying out exchanges with their Chinese counterparts are outside the ambit of the Foreign NGO Law. However, the Article does not define what constitutes an “academic organization,” and a number of NGOs are still unsure whether their group or their Chinese Partners are considered NGOs or “academic organizations.”

Representative Offices

  • How will PSUs’ priorities shape or dictate foreign NGOs’ work? To what extent will PSUs try to direct foreign NGO resources toward their pet projects, either projects they hope to do or are already doing? As a PSU must approve an NGO’s annual work plan, it potentially has considerable influence over NGOs’ programs. Given the concern that foreign NGOs will end up clustering in issue areas that align with national-level strategic plans, such as One Belt, One Road, how much will PSUs’ priorities affect which foreign organizations they choose to sponsor?
  • How should foreign NGOs develop good working relationships with their PSUs if, as in many cases, these PSUs are already overstretched and are not necessarily equipped to manage their sponsees?
  • Does a foreign NGO need to be working in China in some capacity before it can register a representative office? What if a group that wants to open a representative office does not yet have a physical presence in China? The letter of the law says that foreign NGOs must provide “proof of premises” for a representative office before registration will be granted, yet at the same time NGOs cannot conduct any business without a registration. Most of the groups that have registered offices under the new law already had a presence in China, but how will various local PSBs manage this chicken-and-egg conundrum once new registration applications come in from groups who have not worked in China before?
  • How might foreign NGOs better attract and retain local talent in the current environment? A number of NGOs found their finances less secure during the liminal registration process; local hires may choose to pursue more stable and less politically sensitive work. Will foreign NGOs find it more difficult to bring on local hires if they have had a lengthy or otherwise difficult registration process?
  • What exactly are the rules related to hiring foreign staff? Does the apparent four-person limit on foreign employees, as described in Article 29, only apply to individuals designated as “representatives,” or to all employees? May foreign NGOs hire foreign employees locally, through a Chinese human resources firm? If so, does that count against their four-person limit?
  • How will public security offices decide whether or not a wholly-owned foreign entity (WFOE) is conducting “NGO activities”? According to MPS statements in 2016, WFOEs may do some charitable giving as long as they also have a legitimate for-profit business. What constitutes “NGO activities”? Are public security offices actively reviewing various WFOEs’ activities to see if they are complying with the law?
  • How flexible will public security offices be regarding funding and grant changes? Registered foreign NGO representative offices must submit annual activity plans at the end of each year, enumerating their projected work for the next year. Yet, many groups do not know in December whether they will apply for and get a grant in, say, September of the following year. Some foreign NGOs remain concerned that public security officials may be suspicious of large changes to their funding, even if these changes are outside the foreign NGOs’ ability to foresee.

Temporary Activities

  • What constitutes a temporary activity? Does setting up a website aimed at a Chinese readership count as a temporary activity? Does having a closed-door roundtable count as an activity? In particular, many groups are wondering if subsidizing a Chinese citizen’s trip to attend a foreign NGO conference in another country counts as a “temporary activity.” This is not only a common occurrence, but if trips by Chinese citizens outside China to attend NGO events are indeed considered “temporary activities,” it also raises questions about how broad this definition becomes.
  • How actively are Public Security Bureaus monitoring temporary activities? Are police actually physically present for some events?
  • Why can’t for-profit entities serve as Chinese Partner Units? Would the Ministry of Public Security consider changing this rule?
  • Must foreign NGOs have original notarized documents for every activity they implement, even if they have already filed for previous activities? If one province has accepted an NGO’s notarized documents, will other provinces recognize those documents without requesting additional originals? The cost of obtaining notarized original documents for multiple activities might be prohibitive for some foreign NGOs.

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