The International Journal
of Not-for-Profit Law

Volume 1, Issue 1, September 1998

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Article

Legal Mechanisms to Encourage Development Partnerships
By Karla W. Simon and Leon E. Irish

Review

Handbuch Stiftungen
Edited by Bertelsmann Stiftung, Germany
Reviewed by Karla W. Simon

Case Notes

European Court of Human Rights Holds Right to Form Associations is Fundamental Human Right

Country Reports

Asia Pacific:
Region | Australia | China | India | Pakistan

Central and Eastern Europe:
Region
| Albania | Bosnia-Herzegovina | Bulgaria | Croatia | Estonia | Hungary | Latvia | Lithuania | Macedonia | Poland | Romania | Slovakia | Yugoslavia

Latin America:
Region | Belize | Brazil | Chile | Trinidad & Tobago | Venezuela

Newly Independent States / Central Asia:
Region
| Armenia | Azerbaijan | Belarus | Georgia | Kazakhstan | Kyrgyzstan | Moldova | Tadjikistan | Turkmenistan | Ukraine | Uzbekistan

Middle East and North Africa:
Egypt
| West Bank/Gaza | Yemen

North America:
Canada
| United States

Sub-Saharan Africa:
Cameroon | South Africa | Tanzania

Western Europe:
Region | England and Wales | Germany | Ireland | Italy

Self-Regulation Reports

New Zealand
By David Robinson

Kenya
by Edward A. Adiin Yaansah

Ethiopia

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Editorial Board

Subscription Information

Previous Issues

ICNL Homepage

Country Reports: Asia Pacific

Region; Australia; China; India; Pakistan

REGIONAL REPORT

IJNL wishes to announce the publication of an important new publication called Philanthropy and Law in Asia. This is the main product of the three-year Comparative Nonprofit Law Project launched by the Asia Pacific Philanthropy Consortium in 1995, and it will be published in December by Jossey-Bass. Philanthropy and Law in Asia will be a tremendous addition to the existing literature because it is the first in-depth analysis in the Asia Pacific Region of how the legal and fiscal enabling environment for the sector helps it to grow and thrive.

The book includes detailed country reports on nonprofit law from ten Asia Pacific countries written by local legal specialists using a common analytical approach and with a comparative analysis of the nonprofit laws of all ten countries, based on those reports, written by Tom Silk, of Silk, Adler & Colvin in San Francisco, who served as the Legal Director of the Project and the editor of the book

As Barnett F. Baron, Executive Vice President of The Asia Foundation, writes in the Preface, one of the gratifying results of the Project and the book is the identification of many new legal specialists and "their induction into the small but growing community of nonprofit experts." ICNL welcomes these legal specialists to the field!

In addition to Mr. Silk, the authors are:

Takako Amemiya graduated from the law department of Keio University and received her doctorate in 1973. She is a Professor of Law at Shoin College and Dean of the Department of Business Management. Professor Amemiya is an internationally recognized authority on Japanese nonprofit law.

Satya Arinanto is a lecturer and the Secretary of the Department of Constitutional Law at the Faculty of Law of the University of Indonesia. He was recently a Visiting Young Asian Scholar at the University of Melbourne Law School, Melbourne, Australia. Mr. Arinanto has conducted research, and has edited and published articles in the field of constitutional law.

Jessica Los Bañ os earned her B.S. (1989) and her LL.B (1994) at the University of the Philippines. She is a law associate with the firm of Raval and Lokin; and she is also an Assistant Professor in the Department of Business Administration, University of the Philippines.

Chinchai Cheecharoen received his B.W.W.(1980) and his M.S.W. (1984) from Thammasat University, Bangkok. He is the head of the secretariat section of the National Commission on Social Welfare, Ministry of Labor and Social Welfare, Bangkok.

Joyce Yen Feng is a Professor of Sociology in the Department of Sociology, National Taiwan University. She has been heavily involved with child welfare policy and service delivery in Taiwan. She is a board member of several professional organizations and foundations in Taiwan. Professor Feng has published extensively in the field of child welfare.

Chang-Soon Hwang received his B.A. degree (1981) and his M. A. degree (1985) from Yonsei University, and his Ph.D. in sociology from the University of Georgia (1991). He is an Assistant Professor of Social Welfare at the Soonchunhyang University, Korea. Professor Hwang has pushed articles on youth welfare issues and nonprofit law.

Dinh Duy Hoa was educated in Vietnam and in Germany, receiving his Diplomjurist (Bachelor of Law) (1977) and Doctor Juris (J.D.) (1991) at Leipzig University. He is presently Deputy Director of the Department of Organization of the Government Committee on Organization and Personnel, which has jurisdiction over domestic NPOs in Vietnam.

Ku-Hyun Jung is a graduate of Seoul University and holds an M.B.A. from the State University of New York, and a Ph.D. from the University of Michigan. He is Professor and Dean of Business Administration at Yonsei University, Seoul. He has also taught at the Chinese University of Hong Kong, the University of Hawaii, the University of Michigan, and the University of Washington. He has also published extensively and is an internationally recognized authority on business and philanthropy in Korea. Professor Jung is a consultant to business and government and a member of the Boards of Directors of several business and nonprofit organizations, including the Hyundai Construction and Engineering Corp.

Carol C. Lerma earned her B.A. (1989) and her LL.B (1994) at the University of the Philippines. She is also a certified public accountant. Ms. Lerma practices law; and she is also an Assistant Professor in the Department of Finance, Accounting, Business Economics, and Business Law at the University of the Philippines.

Corinna Lim has practiced law in Singapore for eight years. She is currently completing work at Columbia University, New York, for her Master of Public Administration degree. She is actively involved in women’s interests in Singapore and was formerly Vice President of the Singapore Association of Women Lawyers.

Myles McGregor-Lowndes has undergraduate degrees in Law and Arts, a Masters of Public Administration, and a Doctorate. He is an Associate Professor in the Faculty of Business at the Queensland University of Technology; Co-Director of the Program on Nonprofit Organizations; and consultant in nonprofit and charity law to Dunhill Madden Butler, Solicitors. He has published extensively in the field of Australian nonprofit law and is an internationally recognized authority in the area.

Tae-Kyu Park earned his B.A. degree from Yonsei University (1973), his M.A. degree from Mankato State University, Minnesota (1975), and his Ph.D. degree in economics at Indiana University (1980). He is Professor of Economics at Yonsei University. Professor Park has published numerous articles on taxation policy and corporate philanthropy.

Nicole Tan Siew Ping graduated from the Faculty of Law of the University of Singapore with an LL.B (Hons) in 1993. She practices law in Singapore with emphasis on corporate and commercial law, banking and finance. She is also a member of the executive committee of the Singapore Association of Women Lawyers.

Dipa Swaminathan graduated as a twin gold medalist from the National Law School of India in 1995. She works for an international law firm in Singapore and is associated with NGOs in Singapore and India devoted to animal welfare and eco-conservation.

Nguyen Van Thanh was educated at Hanoi University (1960), the University of Foreign Affairs, Vietnam (1968), as a Researcher at the Academy of Social Sciences (former USSR) (1982), and as a Special Fellow, Johns Hopkins University, Baltimore (1995). Mr. Thanh has been a Professor of Philosophy, a diplomat in Laos and Japan, and is now Executive Vice President of the Vietnam Union of Friendship Organizations, which has jurisdiction over foreign NPOs in Vietnam.

Titawat Udornpim received his LL.B in 1989 from Thammasat University, Bangkok; an LL.M. in 1993 from Southern Methodist University, Dallas; and an LL.M in 1994 from Tulane University, New Orleans. He is a Judge in the Central Labor Court in Bangkok and a lecturer at the Sukothai Dammadhiraj University, Bangkok. He also holds gold medals in epee (fencing).

Yamaoka Yoshinori graduated from the School of Architecture (1964) and the Graduate School (1969) of Tokyo University. He is the Secretary and Managing Director of the Japan NPO Center. Formerly, Mr. Yamaoka was a Program Officer, Program Director, and consultant to the Toyota Foundation. He has published extensively on the role of philanthropy in society.

Zhang Ye is Program Liaison Officer for the China Program of The Asia Foundation. She has been Assistant to the Representative of the Ford Foundation, Beijing (1988-1994) and was responsible for women and gender programs as well as personnel management. Ms. Ye has also been Deputy Director/Program Officer at the Chinese Academy of Social Sciences (1980-1987), where she organized academic activities and was in change of academic exchanges with the U.S. and other North American countries. Ms. Ye is an accomplished writer and translator of academic books a papers.

Xin Chunying received her law degree from The Law Department of Jilin University (1978), her LL.M from The Law Department of the graduate school of the Chinese Academy of Social Sciences (CASS) (1981). She has been a Visiting Scholar at the University of California at Berkeley School of Law and a Visiting Professor of East Asian Legal Studies, Harvard Law School, Professor Xin is currently Deputy Director of the Law Institute, CASS, Beijing. She has published extensively in the areas of jurisprudence, constitutional law, and human rights law.

For further information on the book, please contact Tom Silk at TSATSAC@aol.com. A review of the book will appear in the December issue of IJNL.

For a complete listing of Documents the ICNL has in its documentation center on the Asia Pacific Region, Click Here!

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AUSTRALIA

AUSTRALIAN NONPROFIT CORPORATIONS AMENDMENTS AND TAX REFORM PACKAGE
By Myles McGregor-Lowndes
Australian Nonprofit Corporations Amendments

Some 11,000 nonprofit companies in Australia are registered under the National Corporations Law that was amended on 1 July, 1998. The amendments will generally make incorporation of nonprofit corporations easier with requirements of having only one member and relying on the model rules (by-laws) which are part of the Corporations Law. The English legal notion of a memorandum and articles of association are abolished and a company may now choose to have a constitution, only if it does not wish to adopt the model rules in the Corporations Law itself.

There are also changes to the accounting standards required of nonprofit companies in some technical aspects and a short form of accounts can be provided to members instead of the full accounting report. The day after the amendments came into force, another Bill was introduced to bring more reforms to accounting standards and nonprofit company director’s duties. It is proposed to adopt a modified American "business judgment rule" into Australian legislation. This will be welcomed by Australian nonprofit directors, some of whom were recently found personally liable for $98 million as the result of a nonprofit company crash.

The Tax Reform Package

The Australian Federal Government after a year of planning has announced that it intends to implement a new taxation system. It is conditional on the government being re elected. The Taxation Package contains a host of reforms to the Australian Federal and State taxation systems as well as the social security system.

The centerpiece of the reform is the introduction of a broad based value added tax on goods and services, called a Goods and Services Tax (GST). All of the proceeds of this tax would be remitted to the States in return for the States abolishing many of their indirect taxes such as stamp duty and pay roll tax. The GST rate would initially be 10%. The Federal Government would require the approval of all State Governments and both Federal Houses of Parliament before it could increase the rate of the GST.

Some charitable and religious nonprofit organisations would be GST-free (usually referred to as zero rated). Such organisations will be able to claim all input taxes as a refund from the government and not be obliged to charge any GST. It is not clear where the boundary lines will be drawn between transactions that require a GST and those that will be regarded as GST-free. However, the government has indicated that commercial services delivered by nonprofit organisations will be taxed. To date there has been no UBIT style tax in Australia. Nonprofits, even if they derive substantial income from unrelated business sources, have not been taxed. The new GST is likely to have a substantial effect on nonprofit organisations.

Usually gambling transactions are not subject to a GST style tax, but in Australia a GST will be paid on a gambling operators margins. As many nonprofit organisations conduct gambling to finance their activities, this further impost on their finances is causing concern. Residential rents and financial transactions will be input taxed, known as exempt in most other GST systems. Government grants, donations and sales of second hand goods for personal use will not be an activity subject to GST.

Nonprofit organisations have also been able to exploit a tax concession where neither they nor their employees were required to pay fringe benefits taxes on salary packaging of goods and services. This permitted nonprofits to attract quality staff at a discount through the taxation system. The government believes that this has been abused and has capped the salary packaging to the equivalent of a six cylinder car. This will impact on nonprofit organisations and their employees, especially those organisations that have employees on long term contracts. The Opposition has also stated that it will adopt the same policy with respect to fringe benefits of nonprofit employees.

The GST is to begin just months before Sydney hosts the 2000 Olympics, provided the present government is re elected.

Myles McGregor-Lowndes BA, LLB, M.Admin, PHD is a Law Professor at the Queensland University of Technology in Australia and a consultant specializing in nonprofit law to Dunhill Madden and Butler, lawyers. E-mail: m.mcgregor@qut.edu.au

For a complete listing of Documents the ICNL has in its documentation center on Australia, Click Here!

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CHINA

1. Framework Legislation

The Department of Administration and Registration of Social Organizations of the Ministry of Civil Affairs has completed its reorganization. It is now called the Department of Administration and Registration of Non-Governmental Organizations. Dr. Wu Zhongze remains the Director. There are 25 staff members in four divisions. These include the Division of Registration and Administration of NGOs (Shetuan), Division of Registration and Administration of NPOs (non-profit organizations - Shi Yeh), the Division of Registration and Administration of Overseas NGOs (including NGOs of Hong Kong, Macao and Taiwan), and the Division/Office of General Affairs.

As a result a reduction in the staff of the Department, an NGO service center is to be set up under MOCA to manage the newly decentralized responsibilities. These include the work required preceding the registration of an NGO/NPO, training, liaison work, file management, research and publishing, some international cooperation programs, etc.

The Department's current work program focuses on four tasks:

a. Organizing study, dissemination, and training programs when the "Regulations Governing Registration and Administration of Social Organizations (revision)" and the "Provisional Regulations Governing Registration and Administration of Non-Profit Organizations" are announced by the State Council.

b. Preparing and organizing a working conference on administration of NGOs on behalf of the State Council.

c. Reviewing the registration of social organizations nationwide and readjusting and reregistering them under the appropriate registration categories.

d. Beginning the new processes for administration of NGOs.

The new Regulations are expected to be published later this month or in early October.

2. Tax Legislation

The draft legislation that would provide tax relief for donations to social welfare organizations is still pending in the National People’s Congress.

For a complete listing of Documents the ICNL has in its documentation center on China, Click Here!

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INDIA

1. Framework Legislation

A joint working group comprising representatives from the National Foundation for India, VANI, and the Indian Centre for Philanthropy has begun work on draft legislation that would create new framework laws for NGOs in India as well as create new tax incentives for the organizations themselves and for donors to them. Contacts include Jagadananda of CYSD, Chair of the Board of VANI (91 674) 405 428 (tel) and 410 195 (fax), Shankar Ghose, Executive Director of the National Foundation (91 11) 644 4701 (tel) and 372 3261 (fax), and Pushpa Sundar, Executive Director, Indian Centre of Philanthropy (91 11) 689 7659 (tel) and (689 9368) fax).

2. Tax Legislation

In 1997 the Indian Government developed proposed legislation that would severely restrict tax preferences for various different kinds of not-for-profit organizations. A useful discussion of that proposal was written by Noshir Dadrawala, Executive Secretary of the Centre for Advancement of Philanthropy, Mumbai. It is published in @lliance, Vol. 3, No. 2 at page 39. For subscription information for Alliance, connect to www.charitynet.org.

For a complete listing of Documents the ICNL has in its documentation center on India, Click Here!

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PAKISTAN

Pakistan has enacted significant tax provisions favorable to charities, and a process for long-range, more comprehensive reforms has been initiated.

In the 1998/99 National Budget the Government of Pakistan adopted amendments to the Income Tax Ordinance of 1979 that :

Allow deductions for the value of contributions of gifts-in-kind,
Remove the Rs. 2.5 million limit on contributions that a charity can receive from a single donor, and
Increase the deduction limits for companies from 10 to 15 percent of total income, and for all other taxpayers, including individuals, from 25 to 30 percent of total income.
These amendments reflected some of the recommendations made by the Working Group on Financial Sustainability of NGOs that is composed of key figures in the NGO community in Pakistan, including technical advisors. The Working Group was chaired by Dr. Aisha Ghaus-Pasha.

The Working Group will continue to press for additional favorable changes in the tax laws as they affect NGOs. It believes that a more enabling legal and fiscal framework for the NGO sector in Pakistan is critically important for the strengthening and development of credible citizen-led social institutions, and for complimenting the work of the government to address human development needs.

Under the leadership of the Aha Khan Development Network (AKDN), a Steering Committee of eminent Pakistanis from the private and non-profit world has been established to guide research leading to a national forum on the promotion of indigenous philanthropy in Pakistan. In that connection, the Aga Khan Foundation (AKF) requested ICNL to provide assistance to the Working Group.

AKDN, AKF, the Steering Committee, and the Working Group are now planning to establish a Fiscal and Legal Reform Task Force composed of NGO leaders and appropriate representative from the Government, to simplify and rationalize the current legal and fiscal framework for not-for-profit organizations. The objective of such a Task Force would be to develop a set of recommendations for the Government of Pakistan, through a broad consultative process involving Government and NGOs, to enact a single framework law that would include the desirable provisions and alternatives of the five existing laws within a single, integrated legal structure. International donors will be invited to support this process.

For a complete listing of Documents the ICNL has in its documentation center on the Pakistan, Click Here!

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ISSN: 1556-5157