Article 60 of China's Charity Law stipulates that the management fees of charitable organizations shall not exceed 10% of the total expenditure of the current year. Clause 1 of Article 60 clearly states that "the annual management fee shall not exceed 10% of the total expenditure of the current year," while Clause 3 specifies that "if the donation agreement has a provision on the charitable activity expenditure and management fee for a single donated property, it shall be based on the agreement."
So the question is: if the management fee is not explicitly mentioned in the donation agreement, does the provision of Clause 1 of Article 60, which concerns the management fee, apply? I believe that from a legal perspective, it should be applied.
Recently, the administrative penalty decision made by the Ministry of Civil Affairs against the China Biodiversity Conservation and Green Development Foundation (CBCGDF) for "providing for management fees without agreement and changing the use of donated property" is inappropriate. Moreover, "providing for management fees" cannot prove that it "changed the use of donated property."
Any charitable organization needs funding support to maintain its daily operations. How to interpret the "management fee" stipulated in China's Charity Law? The law does not provide a clear definition. According to the customary understanding in the public welfare and charity sector, "management fees" are generally considered to be the service costs provided by charitable organizations to ensure the organization, implementation, supervision, and acceptance of public welfare projects. This fee is allowed by China's Charity Law.
It is understood that the public welfare project involved in the penalty imposed by the Ministry of Civil Affairs on CBCGDF is still ongoing, and the use of the donated property has not been changed, and CBCGDF has not provided for management fees. In addition, even if "management fees" have been provided and have not exceeded 10% (whether for a single item or for annual overall management fees), CBCGDF's operations are legal.
Furthermore, we can also analyze whether the administrative penalty imposed by the Ministry of Civil Affairs on CBCGDF is reasonable and legal from the perspective of China's Administrative Penalty Law and Administrative Litigation Law.
According to Article 44 of the Administrative Penalty Law, "Before making a decision on administrative penalties, the administrative organ shall inform the party concerned of the content, facts, reasons, and basis of the proposed administrative penalty, and inform the party concerned of the rights of statement, defense, and request for a hearing enjoyed by law." In other words, before the administrative penalty is imposed, the relevant facts and reasons, including the explanation of the "Heren Charity Foundation" mentioned in the Ministry of Civil Affairs' administrative penalty, should also be fully notified to the administrative counterpart. If these materials are not notified to the administrative counterpart, it constitutes a serious violation of the law. The Ministry of Civil Affairs should also make legal decisions. However, the Ministry of Civil Affairs' operation also excludes the provision of Article 74(1)(2) of the Administrative Litigation Law, which pertains to "minor procedural violations," and belongs to "serious illegal conduct." According to Article 70(3) of the Administrative Litigation Law, the people's court shall render a judgment revoking or partially revoking the decision on administrative penalties and may order the administrative organ to make a new decision on administrative penalties.
In addition, the "Administrative Penalty Decision" issued by the Ministry of Civil Affairs regarding CBCGDF mentioned that according to the "Measures for the Administration of Credit Information of Social Organizations," CBCGDF has been included in the "List of Abnormal Social Organization Activities." Regarding this issue, I would like to emphasize that administrative penalties must be based on relevant legal provisions; the lowest level of "law" is "regulations" and their "interpretations," and departmental "rules" and "administrative measures" are not "laws," and violating "rules" doesnot mean "illegal." The Ministry of Civil Affairs cannot impose administrative penalties based on its "rules" alone.
(This article is based on expert comments and represents the author's own views. Comments and criticisms are welcome.)
By Yin Ding
Translator: Xiaoai
Editor: YJ
[relavant report]
CBCGDF Sends Official Letter to Alipay Fundraising Platform Asking a Withdraw of Unlawful Notice (2023.5.6)
http://www.cbcgdf.org/English/NewsShow/5004/23559.html
On Environmental Public Interest Litigation: CBCGDF LWC Answers Media Interview (2023.5.6)
http://www.cbcgdf.org/English/NewsShow/501
Contribution
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