I Background
A Development of the Social Welfare System in China over the Past Six Decades
In China, charitable activities played a critical role in social welfare delivery in both the Imperial EraFootnote 1 and the Republican Era (1911–49).Footnote 2 However, after the establishment of the People’s Republic of China (PRC) by the Communist Party of China (CCP or ‘party’), due to the socialist ideology held by the leadership at that time, charity was considered part of the capitalist regime and ‘an instrument of the ruling class that was used to control, denigrate, and mark off as different the poorer classes of society’.Footnote 3 Accordingly, after the establishment of the PRC, in conjunction with the implementation of a planned economy (jihua jingji 计划经济), China established a socialist social welfare system for the general public.Footnote 4 All independent charities were either prohibited as unlawful organizations or incorporated into the government (for example, the Red Cross Society of China).Footnote 5 Since the implementation of the ‘Reform and Opening Up’ (gaige kaifang 改革开放) policy in 1978, China has faced severe pressure to deliver social welfare services. Hundreds of millions of the needy and disenfranchised remain in dire need of healthcare, education, and financial support. Although China is presently the largest developing country in the world, the Chinese government struggles to satisfy the general welfare needs of the majority of its citizens; the government’s public finance expenditure in the foregoing areas is far from sufficient and cannot meet the increasing demand for public welfare.
Confronted with these problems, the Chinese government has gradually realized the necessity of providing a supportive social welfare system while developing a market economy.Footnote 6 It believes that this kind of social welfare system cannot be the same as the traditional planned economy model.Footnote 7 As a compromise, ‘a new multilevel system’Footnote 8 involving the government, market, and non-profits was established. In this system, although the government still plays a role in public welfare provision, the non-governmental sector – including markets, NGOs, households, and individuals – is expected to finance and provide the majority of social welfare delivery.Footnote 9 In the 2000s, the Chinese government at different levels launched a series of initiatives, clearly identifying NGOs as important partners in their efforts to address pressing social needs.Footnote 10 The basic model of public welfare service in China was, thus, established. On the one hand, the state further increased its public expenditure on social welfare to enhance the well-being of its citizens. On the other hand, it gradually promoted the involvement of charities and other social organizations in public welfare provision.Footnote 11 This model provided a platform for charities to participate in the provision of social welfare.
B Tight Governmental Control and the Lack of Public Trust
The loosening of control over the charity sector has contributed to the growth and development of charitable organizations. According to the recent official statement on the development of registered social organizations (shehui zuzhi 社会组织), there were around 662,000 registered social organizations by the end of 2015, which received donations of about RMB 6.1 billion and mainly conducted activities in areas such as education, social services, health, culture, sports, and environmental protection.Footnote 12 However, it is worth noting that, under the legal framework before 2016, the government monopolized charitable resources and controlled the majority of charities recognized by law, and most independent charities could not be registered and were therefore regarded as illegal organizations. The government’s tight control over the charitable sector is achieved through the application of a registration procedure (dengji zhi 登记制). This procedure is specified in the law regulating charities,Footnote 13 which empowers regulators to conduct a substantive examination of the documents submitted by relevant parties seeking to establish a charitable entity. Regulators are empowered to use their administrative discretion to decline the establishment of certain charitable entities whose operations are deemed to pose risks or to require changes to be made to the scope and activities of the proposed charitable entity before granting approval. Approval by regulators is essential to the valid establishment of a charity. Over the past two decades, this legal arrangement has impeded the willingness of private individuals and enterprises to form charities, make charitable donations, and participate in voluntary work carried out by charities. The government’s tight legal control over charitable resources has led to public dissatisfaction with the process.
The public is also dissatisfied with the charitable sector in China regarding transparency and accountability. Because of ill-defined governance mechanisms in law and inefficient internal governance rules in charities, scandals involving the misuse of funds have frequently been exposed by the media or the general public. These have greatly damaged the charitable sector’s credibility and public trust.Footnote 14 For example, in 2013, the Song Qingling Foundation of Henan Province was exposed by the media as having spent more than RMB 120 million (USD 16.99 million) on building a 27-metre tall sculpture, but this sculpture was immediately demolished after construction.Footnote 15 Another well-known scandal involving misappropriation of charitable funds was the case of Guo Meimei, a young woman whose social media posts showed her posing in front of a luxury car and wearing expensive gifts of jewellery. The car and the majority of the jewellery were funded by Wang Jun, the former vice chairman of the China Red Cross.Footnote 16 A third scandal involved the Red Cross Society of Sichuan Province. Its former executive vice president, Wen Jiabi, was sentenced to 16 years imprisonment for accepting bribes of RMB 550.09 million (USD 77.88 million) and embezzling public funds amounting to RMB 295.342 million (USD 41.82 million).Footnote 17 These scandals have, to a large extent, discouraged the public from participating in charitable causes. As a result of frequent charity-related scandals, charitable donations in China fell by more than 80 per cent between June and August 2011.Footnote 18 Private individuals were especially unlikely to make charitable donations; the majority of donations came from enterprises. There are two main reasons enterprises make charitable donations. The first is that enterprises receive a tax deduction: according to Chinese tax policies, charitable donations are tax-deductible for legal entities but not individuals.Footnote 19 The second is that enterprises, in their pursuit of higher financial returns, employ charitable donations to improve their reputations.Footnote 20
C Establishment of a New Legal Framework for Charity Operation
In light of the above problems, Chinese legislators and policymakers have held a large number of conferences and forums since the late 1980s to discuss legislative reforms to promote the development of charitable causes. The discussion of legal reform has revolved around two objectives, which are formally articulated in central government policies.Footnote 21 The first objective is to strengthen the autonomy of benevolent property owners and minimize the influence of political forces on the development of the charitable sector. The second objective is to adopt modernized facilitative regimes to buttress the development of the sector and facilitate the management and use of charitable resources generally. From a legal perspective, at the heart of these two objectives is how to strike a balance between the autonomy of private individuals to determine how their resources are used in promoting the state’s public welfare goals and the central government’s need to ensure that charitable resources are used to benefit the legitimate interests of broader society without facilitating illegal and improper practices. Private individuals are forbidden from using charitable resources for private use: they have the autonomy to determine how to exercise their management rights, but only to the extent that such exercise aligns with the state’s public welfare policy.
Alongside the discussion of legislative reforms, a growing number of academics and practitioners have considered the possibility of adopting trusts to develop charitable causes. Over the past two decades, there have been three major institutional forms for establishing charities: foundations (jijin hui 基金会), social associations (shehui tuanti 社会团体), and privately-operated non-enterprise organizations (minban feiqiye danwei 民办非企业单位). They have high establishment thresholdsFootnote 22 and are subject to the requirement that they do not engage in commercial activities. These forms are generally used by government organs or private companies with large-scale assets. It is financially difficult for an individual to establish a charity through these forms. In contrast, as will be discussed further in Chapter 3, trusts are seen as having three main institutional advantages over foundations, social associations, and privately-operated non-enterprise organizations. First, trust creation has no threshold for initial start-up funds. Second, the cy pres doctrine can be applied in certain situations to save a trust from failure and thus preserve the trust assets in the public domain on an ongoing basis. Third, trusts can carry out commercial activities if the profits obtained are exclusively used for charitable purposes.
To encourage the general public to play a proactive role in developing charitable undertakings, legislators, drawing on the experience of public welfare trusts in JapanFootnote 23 and South Korea,Footnote 24 introduced public welfare trusts to the Chinese legal system in 2001 with the promulgation of the Chinese Trust Law.Footnote 25 However, public welfare trusts have been unsuccessful over the last twenty years: no more than twenty public welfare trusts have been successfully established.Footnote 26 There are two reasons for this failure. The first is the difficulty that benevolent property owners have in identifying public welfare administration authorities (regulators). The law makes no mention of who the regulators of public welfare trusts are and how they can be identified. The parties to public welfare trusts find it difficult to determine to whom a registration application can be submitted.Footnote 27 The second reason relates to the conservative attitude taken by regulators towards registration.Footnote 28 In practice, regulators have been unwilling to approve the establishment of public welfare trusts due to the concern that their supervision of public welfare trusts might attract public scrutiny and that any regulatory failure or scandal will result in irrevocable reputational damage.Footnote 29 For these two reasons, a gap has opened up between the advantages that public welfare trusts were supposed to have in developing charities and the limited role they play in practice.
Drawing on the failure of public welfare trusts, Chinese legislators introduced the charitable trust in 2016 with a view to unlocking the potential of trust institutions to promote charitable causes. They constructed a new legal framework for this model. In this framework, greater scope was given to the civil capacity of legal actors,Footnote 30 and special regulators (i.e., civil affairs departments and banking regulatory authorities)Footnote 31 were introduced to supervise charitable trust affairs. The 2016 legislative reforms facilitated the use of charitable trusts and made their establishment and regulation easier than for public welfare trusts. However, it is unclear to what extent and in what ways charitable trusts relate to the old model of public welfare trusts. Do legislators expect charitable trusts to replace public welfare trusts in the furtherance of charitable causes? Or do legislators expect the two models to operate in parallel? The law makes no mention of these issues. Rather, it uses the expression ‘trusts belong to (shuyu 属于) public welfare trusts’Footnote 32 to describe the relationship between the two models. This legislative language has given rise to intense debate. Some opine that the two models are identical and thus share the same legal meaning.Footnote 33 Others propose that public welfare trusts are in nature distinguishable from charitable trusts.Footnote 34 As the charitable trust model has only recently been established, there is a great deal of uncertainty in its operation, and the design of the laws and regulations to promote and regulate it is likewise continually developing.
In this context, important questions remain about how charitable trusts function in China. This book focuses on one central question: How are charitable trusts governed in both law and practice? The charitable trust model was introduced when public welfare trusts had failed, with legislators seeking to use this new model to encourage public participation in charitable undertakings. This book examines the similarities and differences between charitable trusts and public welfare trusts to identify the legislative changes that the new charity law has made to the governance framework for charitable trusts. This analysis elucidates the role that legislators expect charitable trusts to play in the Chinese legal system, as well as the changes in the relationship between the state and private individuals in the provision of social welfare goods.
In addition to the law, this book will also critically examine the practical implementation of the legislated governance framework. The Chinese bureaucratic system indicates that government control over charitable trusts and the charitable sector is not going to change any time soon.Footnote 35 The establishment and development of charitable trusts bear the mark of China’s political and social norms. In this context, this book will study the ways in which trust parties and regulators engage with the law, evaluating the strengths and weaknesses of the current legal governance framework and identifying the factors that influence the behavioural patterns of each actor.
II Literature Review
This section provides an overview of the existing literature on Chinese charitable trusts, especially works relating to two pertinent aspects of the governance of charitable trusts: first, the policy and social contexts in which Chinese charitable trusts operate; and second, the legal rules governing Chinese charitable trusts. After examining these two aspects, this book will be located relative to the existing literature.
A The Policy and Social Context for Charitable Trusts
The institutional context in which the charitable trust model has evolved and is evolving has been extensively explored by Chinese legal scholars, economists, and social scientists, as well as their English-speaking counterparts. In substance, the two bodies of literature overlap considerably with each other, both touching upon the development and reform of Chinese charity laws.
The literature on the relevance of China’s social, political, legal, and economic conditions to the evolution of Chinese charities and the laws governing them is extensive and diverse, both in Chinese and in English. This literature essentially reflects the insights of legal realists, for whom the application of law is not simply ‘a mechanical exercise in deductive reasoning’.Footnote 36 To better understand the practical implementation of written laws, one must attend to the ‘reactions of [relevant actors] to [specific] facts and to the life around them’.Footnote 37 As Ḥanoch Dagan suggests in Reconstructing American Legal Realism and Rethinking Private Law Theory: ‘[L]aw cannot be understood merely by reference to its static elements (its existing rules); understanding the doctrinal materials at any given moment as the things to be classified misses the inherent dynamism of the law’.Footnote 38 Such realist thinking is prevalent in the literature relating to Chinese charities. The application of realist thinking in the Chinese context requires consideration of the Chinese political and economic environment, government developmental policies, and important party policies. According to Ying Xu and Ngan-Pun Ngai, ‘As the government wants to maintain political stability, the current administrative rules and regulations that concern these [charities] do not aim to expand their social rights and freedoms, but rather give various officials the legal right to intervene in, interfere with, or control [charitable] activities’.Footnote 39 In contrast to the Western democratic model, China’s party and state make political and social stability their policy priority: ‘[M]aintaining economic growth with social stability has been and will continue to be the central leadership’s political priority.’Footnote 40 China’s party and state prohibit any action directly threatening political or social stability or challenging the authority of the political system.Footnote 41 On the other hand, so long as a new institution does not adversely affect, but rather contributes to, political stability and societal control, the CCP and state often allow for, and even promote, its development, taking initiatives to remove obstacles created by their previous policies.Footnote 42 The current charity-promoting policy is a good example. As Lincoln Chen, Jennifer Ryan, and Tony Saich state, ‘[A]s China continues to allow nonprofits to expand their role, the government has begun to shift the balance, opening space for [charities] to solve social problems while maintaining control over the growth and development of civil organizations that could become a threat to [political and social] stability’.Footnote 43
Over the last three decades, the government’s tight political control of the charitable sector has significantly impeded the development of civil organizations in China. There have been intense discussions of legislative reforms to empower and encourage charities to develop charitable undertakings. The suggested legislative reforms can be divided into two categories. The first is based on micro-analysis, focusing on identifying the challenges facing the charity law system and its possible solutions. For example, Feng Xiaoming suggests that there should be a clear legal definition of the relationship between government, enterprises, and civil society, and that the registration procedures for charities should be simplified and the dual management requirement (whereby charities are required to have a sponsor organization to assist the civil affair departments in the creation and oversight of all charities) should be dismantled.Footnote 44 Similarly, Rebecca Lee opines that modernizing the facilitative regimes for charity operation depends on ‘minimizing government influence over the establishment and management of charitable organization[s]; developing a coherent legal definition of charity to standardize charitable operation; providing more support to small, grassroots charitable organizations so as to promote diversity in charity operation; and enhancing fiscal incentives for charitable organizations to buttress development of the sector generally’.Footnote 45 The second category of legislative reforms is based on macro-analysis, focusing on how to coordinate the relationship between civil society and government and how to foster a vibrant and autonomous civil society in light of China’s political and social culture. For instance, Pitman Potter argues that, to create an environment favourable to the growth and prosperity of charities, the government should minimize its bureaucratic control over the charitable sector and secure the autonomy of charities in delivering public welfare.Footnote 46 Recognizing the importance of China’s policy and social traditions, Adam Chodorow argues that legal reform alone is not enough to create an autonomous civil society; rather, policymakers and legislators should change both China’s legal rules and its social and political conditions.Footnote 47
Studying the links between China’s social and policy conditions and its law-making process and law enforcement is not exclusive to the charity sector. The English and Chinese literatures have also engaged extensively with these links when examining corporate governance, Chinese judges’ decision-making, and enforcement campaigns in China.Footnote 48 Regarding corporate governance, one view is that, due to the increasing forces of economic competition and globalization, it is difficult for national governments to maintain their own policies or regulatory systems.Footnote 49 Many scholars have argued that economic globalization will lead to convergence across nations in corporate governance practice.Footnote 50 Chenxia Shi rejects this argument. By identifying political factors as the key determinants of corporate governance development in China, she states that market globalization and China’s integration into the world economy will not lead to the convergence of its corporate governance with international models. China’s social, political, and legal traditions are essential to shaping its corporate governance model. Significant factors include China’s longstanding preoccupation with state ownership of property, its top-down regulatory system and weak enforcement, and its distinctive business regulatory culture.Footnote 51
This social and policy context also plays a vital role in influencing the decision-making of Chinese judges. Xin He and Kwai Hang Ng, in Embedded Courts: Judicial Decision-Making in China, suggest that the behaviours of Chinese courts are shaped by different social forces, including administrative embeddedness, political embeddedness, social embeddedness, and economic embeddedness.Footnote 52 Because of these social forces, Chinese judges’ behaviour often differs from what one might expect from a strict reading of the law. The conclusion drawn by Xin He and Kwai Hang Ng is consistent with Brian Tamanaha’s observation in Beyond the Formalist–Realist Divide: The Role of Politics in Judging that judges do not strictly follow legal rules and precedents; rather, they make choices in consideration of practice-related social and institutional factors, as well as their moral views and personal biases.Footnote 53 A similar process is at work in China’s enforcement campaign. China responds to enforcement failures in areas such as food safety, environmental pollution, and working conditions differently from other nations, demonstrating a strong preference for ‘extralegal forms of political intervention’Footnote 54 in law enforcement. As Sarah Biddulph, Sean Cooney, and Ying Zhu argue, ‘It is the strong planned nature of the campaign and its emphasis on state leadership of [law-making] and enforcement that continues to shape the development of China’s particular version of the rule of law’.Footnote 55
Although the literature examined so far is not directly linked to Chinese charitable trusts, it is still pertinent for two reasons. First, it identifies and explores the social, economic, political, and legal factors relevant to law-making and law enforcement in China more generally. These factors can help identify the factors related to the governance of charitable trusts and how they interact in the design and development of legislative governance rules for charitable trusts. Second, the hypothesis of this book is that the governance framework of Chinese charitable trusts can only be understood in light of China’s particular circumstances and the relevant laws, administrative practices, and private actions of trust parties. Notwithstanding the rich literature on the institutional context within which charitable trusts operate, the various policy and social factors are often identified and discussed in a highly abstract and generalized manner. Furthermore, the current literature does not provide a detailed analysis of whether these policy and social factors are related to the governance of charitable trusts and, if so, how they impact the creation and administration of charitable trusts. In this regard, this literature review helps one understand the challenges and complexities confronted in the governance of charitable trusts. Two lines of inquiry are particularly relevant in this regard: (a) how the Chinese institutional setting affects the ways in which trust parties and regulatory officials behave and (b) to what extent legislated governance goals are implemented in practice.
B Legal Rules Governing Chinese Charitable Trusts
There is a substantial body of literature in Chinese analysing specific questions on the legal rules governing Chinese charitable trusts. These rules and the related literature are explored in detail in Chapters 3 and 4. The Chinese literature mainly concentrates on a textual analysis of the law, with a focus on three aspects of the governance of charitable trusts: (a) the dominant role of settlors in the administration of charitable trust affairs; (b) the negative role that regulators play in supervising charitable trusts; and (c) the under-determined legal nature of beneficiaries.
The works dealing with the first aspect recognize that a tension between settlors and trustees plays a central role in the governance structure of Chinese charitable trusts. This tension has three aspects: (a) the legal title of charitable trust assets; (b) the allocation of powers between settlors and trustees; and (c) the legal character of the Chinese charitable trust; that is, whether it is more like an agency relationship than a trust. These three aspects are inter-related. First, the Chinese Trust Law stipulates that, to create a trust, the settlor needs to entrust their property rights to the trustee and allow the trustee to administer or dispose of such property rights in the interests of a beneficiary or for any intended purposes.Footnote 56 The legal term ‘entrust’ suggests that settlors are entitled to retain the legal title to charitable trust assets.Footnote 57 This legislative approach illustrates that protecting the autonomous interests of settlors is critical to the creation and ongoing operation of charitable trusts. Second, under the existing legal framework, settlors are endowed by law with extensive powers while trustees are burdened by law with broad duties. This legislative approach is deeply rooted in the background against which the Chinese Trust Law was enacted.Footnote 58 Moreover, due to the silence of the law regarding what these powers and duties entail, some scholars have argued that this approach makes it easy for the settlor to intervene and creates significant uncertainty around the performance of the trustee’s duties.Footnote 59 Third, when (a) and (b) are viewed together, it becomes clear that charitable trusts closely resemble agency relationships.Footnote 60 But in what ways and to what extent are Chinese charitable trusts similar to and different from Chinese agency relationships? This question has not yet been thoroughly investigated in the existing literature. What is more, the literature does not consider the significance of the answer to this question for understanding the governance of Chinese charitable trusts.
The literature in Chinese also engages extensively with the narrow issue of the significance of the government regulator’s changing roles and powers in the establishment of Chinese charitable trusts, from registration (dengji 登记) to recording (bei’an 备案).Footnote 61 Many works argue that, through recording as opposed to registration, regulators are legally entitled to engage in only a formalFootnote 62 examination of the trust documents and have no discretion to decline recording applications where the trust documents meet the formal requirements of the law. Consistent with the textual interpretation of the term ‘recording’, some scholars have observed that policymakers have given more scope to the civil capacity of legal actors.Footnote 63 Furthermore, regulators for charitable trusts are clearly tasked with educating and supporting charity participants on best practices in the carrying out of charitable activities.Footnote 64 The law has also adopted numerous collaborative measures to encourage the public to play an active role in raising awareness of charitable trusts. Many scholars suggest that the current favourable regulatory environment reflects the increasing level of autonomy and capacity of private parties and reflects the fact that regulators have attributed great value to the role of individuals in the advancement of state–society relationships.Footnote 65 While this conclusion is drawn from an analysis of the changed legal provisions, the literature has not explored whether this textual change has been reflected in regulatory practice, nor has it considered the factors in addition to law that may influence regulatory practice.
There is also an extensive Chinese literature on the legal nature and role of beneficiaries in Chinese charitable trusts. A striking debate prevails among legal scholars regarding the legal nature of the object. Are the objects who receive benefits from charitable trusts beneficiaries or merely recipients? The distinction between beneficiaries and recipients is not theoretically significant in the context of common law charitable trusts. However, this distinction is particularly meaningful in understanding the nature of Chinese charitable trusts and the role of objects receiving charitable trust benefits. If these objects are beneficiaries, it means they have an interest in the proper distribution of charitable assets and are therefore entitled to claim distribution. If these objects are only recipients, it means they have no interest in the proper distribution of charitable assets and therefore play no role in the governance structure of charitable trusts. The distinction between ‘beneficiary’ and ‘recipient’ is not clear in the area of Chinese charitable trusts. In law, the term ‘beneficiary’ is used extensively, suggesting that the objects who receive benefits are beneficiaries in the trust law sense.Footnote 66 In contrast, many academic papers and commentaries have regarded the term ‘beneficiary’ as speculative, arguing that it can be interpreted as meaning either beneficiary or recipient.Footnote 67
Current academic debates have mainly focused on the conceptual distinction between beneficiary and recipient. While scholars have recognized that the interpretation of an object’s nature has an important bearing on our understanding of its capacity to exercise supervisory roles,Footnote 68 they have fallen short of pointing out the relevance of the distinction between ‘beneficiary’ and ‘recipient’ to the rights or powers that the objects may have in the governance of charitable trusts. In the current literature, the answer to the question of which term, ‘beneficiary’ or ‘recipient’, best describes the objects receiving trust benefits has not been directly related to the analysis of the governance of charitable trusts. The real question that needs to be explored is what powers or rights the objects of a charitable trust may have.
Current literature concerning the unique features of Chinese charitable trusts has identified the efforts that lawmakers have made towards the construction of a legal framework for charitable trusts; it has also contributed to the discussion of the underlying objectives of charitable trusts to promote charitable undertakings and strengthen settlor autonomy. However, this literature has not considered the relevance of each objective to the design of the governance structure of charitable trusts, the ways in which the two objectives interact, and the implications of this for understanding the legal nature of charitable trusts.
In the area of charitable trusts, the current literature has examined the legislative provisions governing the internal relationship between trust parties and the role of regulators; however, it has not considered how trust parties interact with regulators in the day-to-day governance of charitable trusts, what uncertainties trust parties and regulators may encounter when performing their legal roles, and what strategies they have adopted to mitigate the risks that may arise out of the implementation of the law. Legal realists have argued that, because the application of law is not an ‘exercise in mechanical deduction’,Footnote 69 it is possible that actual practices may differ from what one might expect to arise from a strict interpretation of the law.Footnote 70
In terms of the ambiguities in the current legal framework and the legal uncertainties that arise from these ambiguities, much of the Chinese literature has recited the problems and has proposed solutions based on textual interpretation of legal rules without undertaking a comprehensive analysis of the broader social and policy contexts within which the rules were developed and operate. In particular, the literature does not consider what specific ambiguities the current legal framework has created and how policy and social factors affect the ways in which trust parties and regulators address these ambiguities. This is anomalous, as there is little point in proposing reforms to the challenges and legal uncertainties of today without understanding how charitable trust laws are practically implemented and the extra-legal factors affecting the governance and administration of charitable trusts.
In contrast to the abundant Chinese literature on charitable trusts, there is very little literature in English examining their introduction and development in mainland China. An exception is Lin Siyi’s analysis of the advantages and disadvantages of the Chinese charitable trust system.Footnote 71 The dearth of English literature is scarcely surprising given that the charitable trust model was only recently introduced into the Chinese legal system in 2016. However, although the public welfare trust – an institution serving the same function of encouraging charitable causes – has been present in the Chinese legal system for two decades, there nonetheless remains a dearth of English literature on this topic. This is surprising, suggesting either that the topic has been discounted or discussed without exhaustive analysis or that its significance has not been fully appreciated by writers in English.
C Locating This Book in Relation to Existing Literature
The current study of the governance of charitable trusts contributes to the literature by locating charitable trusts within the Chinese legal, policy, and social contexts and by examining the ways in which the legislated governance rules regarding charitable trusts are implemented in practice. It engages with both the Chinese and English language literatures in three ways.
First, it engages in a detailed analysis of the legal regulatory framework, identifying gaps in the current laws governing charitable trusts. This analysis reveals the continuities and discontinuities between public welfare trusts and charitable trusts regarding the checks-and-balances mechanisms between trust parties; it also identifies the ways in which regulators interact with trust parties in the governance of charitable trusts. At the macro-level, this analysis identifies the progress that legislators have made to strengthen the autonomy of private individuals in charitable undertakings.
Second, this book analyses the regulation of charitable trusts in practice. The comparison between law and practice reveals the social and policy norms that underpin the traditional legal system for charities and that continue to inform the regulatory system of charitable trusts today. To carry out this comparison, semi-structured qualitative interviews with regulatory officials were conducted in both eastern developed areas and western undeveloped areas in China. Regional differencesFootnote 72 in the regulatory practices of charitable trusts – a supportive regulatory environment in the east and a conservative one in the west – suggest that the policy and social context is relevant to the performance of regulators’ roles in practice. The law and its institutional context should be examined together to identify how legal actors engage with the law and how the law is carried out in practice.Footnote 73 In this light, this book explores the social and policy factors that regulators have taken into account when implementing the law.
Third, this book extends the literature examining the checks-and-balances mechanisms between settlors and trustees by exploring how contracts are used to redistribute each party’s powers and duties. The settlor is endowed by law with extensive powers while the trustee is burdened by law with onerous duties. Charity law does not clearly define what these powers or duties entail and how the role of each party is to be discharged. This book examines real-world contracts and interviews with relevant actors (i.e., trustee managers and settlors) to identify how trust parties use contracts in the governance of charitable trusts and the reasons behind these uses.Footnote 74 Contract theorists acknowledge that contracts are widely used as tools to allocate risks between relevant parties.Footnote 75 In the Chinese charitable trust setting, trust parties tend to use contractual tools to vary the legal framework of charitable trusts to mitigate the risks posed by regulatory practice and the vagueness of the law. The present book enriches contract law scholarship and legal realist scholarship by examining how trust parties use contracts to distribute their powers and duties and what role extra-legal factors have played in the planning and development of relevant contract clauses. It shows that the vagueness of the law creates risk for trust parties, motivating them to use contractual tools to guide the management of charitable trusts. This observation, along with the analysis of regulatory practice, provides insights for trust practitioners and academics seeking to understand how newly-recorded charitable trusts are actually governed in China.
This book examines charitable trusts with reference to the legal rules governing them, locates their governance practices within policy and social contexts, and synthesizes the three perspectives outlined. In doing so, this book seeks to make an original contribution to scholarship on the governance of Chinese charitable trusts.
III Legal Definition of Charitable Trust Governance
A Semantic Meaning of Governance
This book examines the governance of Chinese charitable trusts. As such, the analysis of this book depends on how one defines the term ‘charitable trust governance’. Semantically, there is no uniform interpretation of ‘governance’.Footnote 76 Context plays a vital role in unravelling its meaning.Footnote 77 Etymologically, it derives from the Latin words gubernare and gubernator, which refer to ‘steering a ship and to the steerer or captain of a ship’.Footnote 78 ‘Governance’ originates from the old French word gouvernance, which means ‘control and the state of being governed’.Footnote 79 The term is not a ‘precise one and its meaning is affected by cultural variables’.Footnote 80 As David Renz and Fredrik Andersson observe, ‘[T]he concept of governance has been defined less clearly than is necessary to advance research in this field’.Footnote 81 Legal words, in essence, ‘are best understood and investigated by reference to the content of the doctrines that create the concepts rather than by reference to dictionary definitions’.Footnote 82 Nevertheless, dictionary definitions are a good starting point. Examining how ‘governance’ is defined in dictionaries can shed light on subsequent discussions of charitable trust governance in China. In authoritative dictionaries such as the Modern Chinese Dictionary, the Oxford English Dictionary, and the New Shorter Oxford English Dictionary on Historical Principles, ‘governance’ is generally understood as a set of procedures, methods, or rules by which something is regulated,Footnote 83 or as a method of management.Footnote 84
B Governance in Context
Existing scholarship has extensively analysed the meanings of ‘corporate governance’ and ‘charity governance’. Exploring how these terms have been understood can illuminate how the dictionary meaning of governance is implemented in particular contexts. This analysis can then contribute to the understanding of governance in the Chinese charitable trust setting. Although the meaning of governance varies in these three legal contexts, comparisons between charity governance and corporate governance shed light on the interpretation of charitable trust governance – particularly given that the language used to describe charitable trust governance suggests similar conceptual characteristics and origins as those for corporate governance and charity governance.
1 Corporate Governance and Charity Governance
Critical writings and commentaries from a wide range of disciplines have studied the meaning of ‘corporate governance’.Footnote 85 Examination of these scholarly works yields no standard definition. According to some scholars, ‘corporate governance’ relates to the set of procedures and practices by which companies are regulated, managed, or controlled;Footnote 86 others emphasize the fulfilment of institutional objectives.Footnote 87 For example, the China Security Regulatory Commission’s Governance Codes for Listed Companies in China Footnote 88 states that ‘corporate governance’ deals with the methods by which a corporation is controlled and directed and the ways in which its objective is achieved by way of internal management.
Likewise, the term ‘charity governance’ is also open to interpretation. In some scholarly writings, it is defined according to the internal management of charities. In Fundamental Issues of the Non-Profit Organization Law in China, ‘charity governance’ is defined as a set of rules, standards, and procedures through which a charitable organization is managed, controlled, or regulated.Footnote 89 Other works have incorporated the values underlying the creation and operation of charities into the definition of ‘charity governance’. An illustrative example is the definition given in Research on the Governance of Chinese Charities: ‘charity governance’ refers to a set of principles or rules that enable charities to be managed in a way that achieves their public benefit objectives in an effective and transparent manner.Footnote 90
2 Charitable Trust Governance
In contrast to the abundant discussions of the definitions of ‘corporate governance’ and ‘charity governance’, the literature examining how the governance of charitable trusts should be understood is sparse.Footnote 91 The dearth of literature is hardly surprising because the charitable trust model was only introduced into the Chinese legal system in 2016. Based on the understanding of corporate governance and charity governance previously discussed, one can identify two elements that are most relevant to the definition of ‘governance’. The first deals with the rules or procedures by which an entity (corporation or charity) is managed or administered. The second relates to the purpose of governance: namely, an entity is governed to achieve its institutional objectives in an effective and transparent manner. When these two elements are viewed together, it can be said that governance is concerned with the rules or practices by which the objective of an entity is achieved through management. In this light, this book defines the governance of charitable trusts as a set of mechanisms that ensure the trustee of a charitable trust complies with their duties in order to effectively realize the charitable purpose or public benefit that the charitable trust pursues. This definition of charitable trust governance focuses on the control of trustees’ power and on the mechanisms available to ensure their accountability for exercising that power.
IV Hypothesis and Research Questions
A Hypothesis
This book focuses on the governance structure of Chinese charitable trusts, assessing it from the perspective of China’s particular political, social, and economic conditions. It tests the hypothesis that the governance framework for Chinese charitable trusts can only be fully understood in light of relevant law, administrative practice, and private actions taken by trust parties. This hypothesis comprises three inter-related aspects. First, the law sets up a governance framework for charitable trusts but is vague and under-determined in various respects. Second, administrative practice is a significant component of the governance framework because regulators in China are subject to intense administrative and policy pressures and are thus highly responsive to extra-legal concerns. Third, private action is essential in the governance framework because trust parties vary the framework of the law to mitigate risks posed by administrative practice and the vagueness of the law.
As discussed in Section III, ‘charitable trust governance’ denotes any governance mechanism ensuring that the trustee of a charitable trust complies with their duties in order to effectively realize the charitable purpose or the public benefit pursued by the charitable trust. This definition indicates that the focus of charitable trust governance is on how a trustee’s exercise of power should be controlled. Based on this understanding, there are four types of actors relevant to the governance of charitable trusts, each of whom exerts pressure on trustees to ensure they comply with their duties. Settlors can exercise their statutory or contractual powers to supervise the trustee’s administration of charitable trust affairs. Beneficiaries might have standing to bring proceedings to remedy the misuse of charitable trust assets where they have particularized (or individualized) interests in the proper distribution of trust assets after receiving notice. Regulators can exercise their regulatory powers to interfere with the management of charitable trusts and to punish trustees for non-compliant behaviours. Finally, the general public can access information disclosed by trustees and report the misuse of charitable funds to the relevant regulators. The subsequent discussions of charitable trust governance in this book will focus on the roles of these four actors and the ways in which they interact both in law and in practice.
This book identifies the factors that shape the governance framework for charitable trusts – legal, administrative, and contractual. It examines the realization of these factors in the creation and ongoing administration of charitable trusts. It also examines the rules governing the creation and administration of charitable trusts and how these rules are implemented in practice. A closer scrutiny of the Chinese Charity Law suggests that, in contrast to public welfare trusts, legislators have constructed a public law–private law hybrid model for charitable trusts. On the one hand, the state has given greater scope to the civil capacity of legal actors. Private actors are permitted to define the ways in which their private funds are used for charitable purposes as defined by the state. On the other hand, the state is unwilling to relinquish its control over the use of charitable trusts, granting regulators extensive powers to monitor whether charitable assets are being used in alignment with the state’s social welfare goals.Footnote 92 This public law–private law hybrid is reflected in the vagueness of the legal rules governing charitable trusts, which has created risks for both trust parties and regulators. Furthermore, the social and policy environment in which charitable trusts are established and operate plays a vital role in determining how the legal governance framework is implemented in practice. Regulators have long been subject to intense policy and administrative pressures and have greater incentives to consider extra-legal factors when implementing the law. Trust parties are willing to take private action to define the ways in which they interact so as to mitigate risks posed by regulatory practice and the vagueness of the law.Footnote 93
The literature reviewed in Section II indicates that political objectives largely dictate the development of the charitable sector in China. Although the Chinese Charity Law was implemented to mediate the relationship between civil society and the state, the balance leans more in favour of the state’s public welfare goals. In fact, the state uses the new charity law to guide the public’s charitable activities in order to advance its own public welfare goals. The government has exercised strict control over the charitable sector for a long time; therefore, it will be difficult to change its traditional methods and ideas within a short time.Footnote 94 Given this, one may ask the following question: In what way does this policy and social context influence the implementation of the legislated governance framework? The answer can shed light on how trust parties engage with the law in practice and further illuminate the continuities and discontinuities between regulators’ behavioural patterns before and after the new charity law was introduced.
To test the above hypothesis, the book takes the following steps. First, the legal governance framework for Chinese charitable trusts is examined across a range of issues. To this end, Chapter 2 discusses the public law–private law hybrid model that legislators have created for charitable trusts. Chapter 3 traces the legislative process of the Chinese Charity Law and the Measures for Charitable Trusts, investigating what legal rules have been constructed for the governance of charitable trusts.Footnote 95 This examination compares charitable trusts and public welfare trusts, as well as the rules underpinning both. Chapter 3 explores the nature and scope of the autonomy of parties to determine what types of benefits the trust will create and which sectors of the community can receive such benefits. Chapter 4 analyses the ways in which regulators control the establishment and development of trusts for the purpose of promoting public benefit.
Second, by examining charitable trust contracts and interviewing persons with charitable trust experience, Chapters 4 and 5 analyse the ways in which trust parties and regulators perform their roles in practice. This analysis locates the governance of Chinese charitable trusts in their institutional context. In doing so, it identifies the political and social factors relevant to governance practice and their influence on the implementation of legislated governance rules.Footnote 96
B Research Questions
The analyses in Section IV-A raise three questions to be answered in this book. The first question is, How has the charity law shaped the governance structure of charitable trusts? To answer this, Chapters 2 and 3 study the laws and regulations relevant to public welfare trusts and charitable trusts, respectively; practice in respect of public welfare trusts over the last two decades; and legislative changes that the new charity law has made to the governance framework for charitable trusts. It is revealed that, while charitable trusts are tasked with a similar legislated objective to public welfare trusts (i.e., promoting charitable undertakings), there are fundamental differences regarding the legislated governance rules. The rules governing charitable trusts have elevated the scope of autonomy of private parties and, in theory, limited the extent to which the creation and ongoing operation of a charitable trust is subject to state intervention.Footnote 97 These differences incline towards the conclusion that, in contrast to the public law model of public welfare trusts, legislators have constructed a public law–private law hybrid model for Chinese charitable trusts.
While the hybrid model demonstrates the state’s desire to promote private philanthropy, it also shows its unwillingness to relinquish control over charitable undertakings.Footnote 98 Chapter 2 explores the particular mixture of public law and private law norms that co-exist in the Chinese charitable trust, as well as the implications of this hybrid model for the governance of charitable trusts. Based on the analysis of the charitable trust’s hybrid nature, Chapter 3 discusses the legal regulation of trust parties; it covers the assignment of statutory powers and duties to settlors and trustees, the ways in which the checks-and-balances mechanisms between them are established, and the roles that beneficiaries under a charitable trust might play in the governance framework. Chapter 4 explores the new regulatory framework for charitable trusts, providing a textual analysis of the law relevant to the assignment of statutory powers to each regulator (i.e., civil affairs departments and banking regulatory authorities), how the two regulators interact in law, and what regulatory measures they can undertake.
The second question is, How have regulators implemented the legal regulatory regime in practice? Chapter 4 explores this question by drawing upon empirical findings from the regulatory practice of charitable trusts. Under the legal framework, regulators are granted broad powers to oversee whether trust assets are being managed in compliance with the state’s broader interests. However, the regulatory framework is vague and incomplete regarding what these regulatory powers and duties entail in substance and how they should be exercised. This vagueness in the law has created substantive risks for regulators, motivating them to adopt strategies to protect their interests from being adversely affected when engaging with the law.Footnote 99 Chapter 4 identifies the deficiencies of the current regulatory framework, the legal uncertainties that these deficiencies have created, and the strategies that regulators have taken in the exercise of their powers and responsibilities.
Apart from the law, China’s social and political circumstances, within which charitable trusts are introduced and operate, play a vital role in shaping the decision-making of regulatory officials.Footnote 100 In the Chinese bureaucratic system, regulators are highly responsive to extra-legal factors in their implementation of the law.Footnote 101 This approach helps regulators strictly control the use of charitable trusts for public welfare purposes and minimizes the risks that may arise from the performance of their responsibilities.Footnote 102 Drawing on the empirical findings from regulatory practice, Chapter 4 identifies the extra-legal factors shaping the regulatory framework and the ways in which these factors are realized in the administration and supervision of charitable trusts.
The two questions already mentioned lead to a third: What private actions have trust parties taken when engaging with the law? Chapter 5 explores this question through an examination of charitable contracts collected for this research. In the public law–private law hybrid model, trust parties are granted greater autonomy to determine the distribution of rights and responsibilities between them in the day-to-day management of charitable trusts.Footnote 103 The law establishes checks-and-balances mechanisms between trust parties. However, it does not clearly define how these mechanisms should operate and what measures can be taken by trust parties when these mechanisms are inadequate to regulating their relationship.Footnote 104 In view of the risk posed by regulatory practice and the vagueness of the law, the parties to charitable trusts are strongly motivated to use contracts to clarify their powers and duties and to define the ways in which they interact with regulators. Similar to regulators, practice shows that trust parties consider a wide range of extra-legal factors in the planning and development of contract clauses, seeking to use these clauses to mitigate risks in the performance of their legal roles.Footnote 105
To explore how contractual tools are used by trust parties, Chapter 5 examines three subsidiary questions. In what ways are contracts used in the management of charitable trusts? What types of relationships are regulated by charitable trust contracts? And how do extra-legal factors affect the planning of contract terms between trust parties? To address these questions, Chapter 5 considers areas where the law governing the relationship between trust parties is vague, the risks that trust parties may confront when implementing the law, and the policy and social norms underlying the creation and ongoing administration of charitable trusts.
C Questions beyond the Scope of This Book
Although this book examines the governance structure of charitable trusts both in law and in practice, it focuses on how legislated rules are implemented in practice in the governance of charitable trusts. Examination of such governance practices can help to identify problems or deficiencies in the current legislative framework. For example, the current law makes no mention of the role beneficiaries might play in the governance of charitable trusts,Footnote 106 and it does not evaluate the extent to which a more restrictive approach regarding the settlor’s role in charitable trust governance might adversely affect their willingness to make donations.Footnote 107 It fails to detail the rules governing information disclosure, and it does not require trustees to explain in their financial and annual work reports how well they have realized the public benefit goals the trust was set up to deliver.Footnote 108 This makes it more difficult for settlors, regulators, and the general public to understand and evaluate the performance of charitable trusts and their trustees. This book discusses these problems alongside its analysis of the governance of charitable trusts. However, it does not articulate a detailed pathway for the reform of the governance rules of Chinese charitable trusts: this would require an examination of these problems from a more comprehensive perspective, encompassing law, sociology, and politics.
Furthermore, this book does not provide an in-depth analysis of the different theories concerning the governance of charitable trusts or issues relating to how an appropriate balance might be struck between the needs of the state in using trusts to promote charitable undertakings and the needs of benevolent owners to have more autonomy to deal with their properties. Rather, it focuses on the legal construction of the current system and the challenges it has created. It also evaluates the legislated governance structure of charitable trusts in light of the policy and social contexts in which they operate, identifying the factors influencing how each actor engages with the law.
V Research Methods
This book is an in-depth study of the legal rules governing Chinese charitable trusts and how the legislated governance goals are implemented in practice. It adopts three methods: textual analysis of the legal rules and other legal mechanisms, such as charitable trust contracts; semi-structured qualitative interviews with individuals with charitable trust experience; and translation of Chinese sources.
A Textual Analysis
Documentary sources include legislation, explanatory memoranda, official speeches, public information on recorded charitable trusts, academic treatises, and comparative works. These sources relate to the book’s analysis in different ways. Legislation and explanatory memoranda provide information on legal rules that have been constructed for the governance of charitable trusts and the core values that charitable trusts exist to pursue. Official speeches provide information for policy reasons underlying the legislative reform of charitable trusts and the interaction between the state and the general public in promoting charitable undertakings. Public information on recorded charitable trusts provides information on charitable trust practice, including what types of charitable trusts have been created, what their charitable purposes are, and how they have been administered and regulated. Academic treatises provide information on areas where current research can be continued or expanded and on areas where this book can make further contributions. Comparative works provide information on continuities and discontinuities between charitable trusts and public welfare trusts regarding governance and measures that lawmakers have taken to unlock the potential of trusts to develop and further charitable causes.
The textual analysis is divided into two parts. The first part is an interpretation of Chinese charitable trusts; it includes a critical analysis of legislative provisions, the nature and function of Chinese charitable trusts, and the threshold for establishing Chinese charitable trusts. In contrast to the deep historical roots of charitable trusts in common law, charitable trusts are new to the Chinese legal system. The successful establishment of Chinese charitable trusts still faces many problems. In this regard, the textual analysis here clarifies and comparesFootnote 109 analogous domestic institutions, such as Chinese public welfare trusts and Chinese agency systems. Comparing these two institutions provides a framework for understanding how Chinese charitable trusts operate and helps identify three issues in the model of governance set out by legislation: (a) the ways in which settlors and trustees perform their roles in law, (b) the relationship between Chinese charitable trusts and Chinese agency systems, and (c) the role and function of the regulatory authority in the governance of Chinese charitable trusts.
The second part is an examination of the legal nature of Chinese charitable trusts. As already noted in Section I, because of the onerous requirement to obtain regulatory approval, only twenty public welfare trusts have been successfully established over the last twenty years. Drawing on the failure of public welfare trusts, lawmakers have established a new governance model for charitable trusts, imbuing this newly established institution with its public law–private law nature. Studying the ways in which public law norms interact with private law norms can help explain why lawmakers chose to legislate a whole new regime (the charitable trust) rather than reform the model of public welfare trusts. Furthermore, this study sheds light on how the checks-and-balances mechanisms between trust parties are established. At the macro level, it also assesses the efforts of lawmakers to advance ‘state–society relationships’.Footnote 110 Legislative history offers an explanation of the development of the law.Footnote 111 Charitable trusts are introduced in a context in which large numbers of poor, disabled, and unemployed people have created a huge social demand for charitable causes. As such, to explore the legal nature of charitable trusts, this book will also examine the policy and social contexts within which charitable trust rules operate and develop.
B Semi-structured Qualitative Interviews
The governance model of the Chinese charitable trust has not been studied at all by Chinese scholars, let alone using empirical research methods. An analysis of the law suggests a tension between settlors and trustees, both of whom are given wide discretionary powers, implying that regulatory agencies play a passive role in supervising the administration of Chinese charitable trusts. The law concerning Chinese charitable trusts has only been in place since 2016; as such, many aspects of the practice of governance are still in their formative stages, with the extant literature not offering any in-depth analysis of the questions noted in Section IV-B. Given this, gaining insights into the ways in which the legislative scheme of the charitable trust has been practically implemented is significant for evaluating the strengths and weaknesses of the current governance structure for Chinese charitable trusts. Law is an aspect of broader society; as such, it is necessary to examine the law and its institutional context together to identify the ways in which the law is implemented in practice. This book engages in direct contact with human participants through the method of semi-structured qualitative interviews to explore how each of these powerful actors interacts in the day-to-day governance of charitable trusts and to clarify the ways in which regulators exercise their roles and responsibilities of oversight of charitable trusts.
Thirty-one interviews were conducted in Beijing, Shanghai, Shenzhen, Hangzhou, and Guangzhou from October 2018 to January 2019, where most of the charitable trusts are established and where the main regulators and legislators are located. Additional later interviews and more informal discussions with trustee managers and lawyers working in the charitable sector continued into early 2020. Ethics approval was granted before the commencement of this empirical study. Interviews were carried out to obtain insights from participants on the basis that their responses would be anonymous. Two categories of interviewees were involved, and all interviewees had expertise and experience in Chinese charitable trusts. The first category of interviewees comprised private actors, including lawyers, academics, and trustee managers. Interviews with this category of actor elicited their opinions on the ways in which the settlor and the trustee perform their roles, issues of day-to-day governance, and measures taken to comply with legislated governance goals. The second category of interviewees comprised public actors: namely, officials working in regulatory agencies. Interviews with these actors enabled the author to investigate the interaction between the two institutional objectives – promoting charitable undertakings and securing the autonomy of trust parties – of Chinese charitable trusts, the standing of the beneficiary, and the attitude of regulatory authorities to the regulation of Chinese charitable trusts. To ensure anonymity, the identifying information of the interviewees has been replaced with codes: L for lawyers, A for academics, T for trustee managers, and R for regulatory officials.
The qualitative analysis of empirical data gathered through interviews enriches the understanding of the governance practice of Chinese charitable trusts. The qualitative analysis in this book yields two significant findings. First, there is a considerable gap between theoretical analysis and practice regarding the governance of Chinese charitable trusts. Second, the policy and social contexts play an important role in realizing the governance goals set out by legislation: regulators and trust parties do not respond to the legal governance model perfectly, and their behaviours are significantly affected by factors transcending the law.
C Translation of Chinese Sources
This book draws on both English and Chinese sources. As such, the author’s translations of relevant legal rules and concepts into English are essential to the analysis. The translation of Chinese legal concepts into English can be problematic when there are no close equivalents in English. This is particularly true in the case of Chinese charitable trusts. Accordingly, each chapter that examines the governance of Chinese charitable trusts – for example, Chapter 2 in the case of public welfare trusts (gongyi xintuo 公益信托) and Chapter 4 in the case of recording (bei’an 备案) and supervisory conversation (jianguan tanhua 监管谈话) – provides an explanation of the Chinese terms and how to understand them in English. Unless otherwise indicated, all English translations of Chinese text and materials are the author’s own and are based on the following four principles. First, regarding Chinese to English translations, accuracy in meaning has been preferred over literal translation. Take the concept jing zhun fu pin (精准扶贫). This concept often occurs in connection with policy documents or official speeches. While its literal meaning is ‘precise poverty alleviation‘, it has been translated here as ‘targeted poverty alleviation’. Second, regarding the interview data, accuracy in meaning has also been preferred over literal translation. By focusing on the precise meaning of individual words and terms, a literal or technical translation cannot accurately convey the actual meaning of the interview respondents. Third, semi-official English translations – namely, English translations available on websites, such as those of PKU law or Westlaw China, which do not have any official status – have been modified where the translation is considered suboptimal or deficient. Fourth, where it assists in understanding, the original Chinese text has been included in parentheses after the English translation to identify the relevant concepts. Illustrative examples are the three major institutional forms for establishing charities in China: foundations (jijin hui 基金会), social associations (shehui tuanti 社会团体), and privately-operated non-enterprise organizations (minban feiqiye danwei 民办非企业单位).