Over 40 US and Chinese legal experts and NGO practitioners gathered recently in a Charity Law Workshop in Beijing, addressing the controversy over China’s Charity Law draft (see here) and Mark Zuckerberg’s pledge to donate 99% of his shares to charity. The workshop was held by the Charity Law Research Center(慈善法律研究中心) of the China Philanthropy Research Institute (中国公益研究院).
MS Evelyn Brody, a law professor at the Illinois Institute of Technology, kicked off the workshop with a speech on legal forms and taxation for US charity organizations. The requirements and procedures for establishing a charitable trust and a non-profit legal person in the US are different from each other. There is no governmental involvement in setting up a charitable trust. For the establishment of a non-profit legal person, on the other hand, registration with the relevant state government is necessary. Regarding tax exemption, organizations are required to apply to the Internal Revenue Service and publicize their information online. Two types of revenue are exempted: donations and operational income related to charitable purposes. However, for organizations that enjoy tax exemption, fundraising only constitutes a small percentage of the total income. Nearly half of the overall income of US charity organizations comes from hospitals and the other half from higher education institutes.
David Levitt, a partner from Adler & Colvin, then introduced US regulations on charitable investment and presented the details of Mark Zuckerberg’s pledge. Both private foundations and public charity are entitled to conduct charitable investments. Zuckerberg and his wife Chan established an LLC, which is becoming more accepted as a form of charitable organization, alongside the two forms mentioned above. The section ended with a presentation on US donation regulations by Karin Kunstler Goldman, associate director at the Charity Bureau of New York State Attorney General’s Office. Regarding the supervision of online fundraising, a topic that has stirred heated discussions lately in China, Karin talked about the Charleston Principles, a guideline for state-level legislation on online fundraising supervision, and presented two case studies which illustrated supervisory practices.