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China Drafts Measure to Boost Public Trust in Charities

FILE - Spectators watch a charity run for a breast cancer awareness campaign in a park in Shanghai, China, May 10, 2014.

China has prepared a draft law regarding charities' registration with the government, which would make it easier for them to raise funds and gain tax exemptions while allaying public concern over the way they are run.

The draft law, drawn up after some high-profile scandals, underscores official concern about anemic charity donations in the world's second-largest economy, which ranked 133 among 135 countries rated by the World Giving Index, largely because of public mistrust of charities.

The law would give charities more means to raise funds from the public — for example, setting up donation boxes or charity events, according to a translated excerpt of the draft viewed by Reuters. Before the law, charities mostly raised money by going house to house or using the Internet.

The law would allow foreign charities to be registered, though they could do so only "in cooperation with Chinese charities," according to the draft, which did not elaborate.

Aside from the difficulties in raising donations, charities have also been handicapped by a requirement that they have official sponsors. Government-backed bodies have often been reluctant to take on the risk.

If it is passed, the law would allow organizations to register directly with the Ministry of Civil Affairs, according to a scholar and a charity executive involved in the drafting.

"What they are doing is bypassing the need to write national regulations for direct registration because this will be enacted in law," said Karla Simon, a legal scholar and author of "Civil Society in China," who was consulted during the drafting.

Li Meng, a representative from Beijing Huiling Community Services for People with Learning Disabilities, said her group has tried to register unsuccessfully in Beijing since 2000, because the Beijing Disabled Persons Federation has declined to sponsor it.

"Because we aren't registered, we have encountered a lot of difficulties in fundraising and in our financial operations," Li said.

The draft law would exempt charities from taxes and waive taxes for donors, according to Liu Youping, deputy secretary-general of the government-linked China Charity Federation, who has seen the draft.

It is unclear when the law will be passed. The draft has not been made public, but has been circulated among scholars and charitable foundations. The Ministry of Civil Affairs did not respond to a request for comment.

In 2011, donations in China plunged after two major scandals.

One involved a 20-year-old woman who had falsely described herself as the general manager Red Cross Society of China and then caused national outrage by flaunting her wealth on the Internet.

In a second incident, the Henan branch of the China Soong Ching Ling Foundation used donor funds to invest in real estate, according to local media reports.

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