New regulations introduced to tighten up the way charity and social funds are operated

Effective from December 10, the new decree, issued on Friday, reinforces that these funds must operate as non-profit entities aimed at supporting various cultural, educational and humanitarian causes.

Key updates include stricter guidelines for naming funds to avoid duplication and ensure respect for cultural and ethical standards, along with an increased cap on fund management spending from 5 to 10 per cent.

Funds must operate as non-profit entities aimed at supporting various cultural, educational, and humanitarian causes. — Photo chinhphu.vn

This decree also enforces tougher penalties for the misuse of fund names or unauthorised activities, with potential disciplinary, financial or criminal repercussions.

According to the old decree, issued in 2019, the purpose of social and charitable funds was clearly outlined as supporting and encouraging the development of culture, education, healthcare, sports, science, technology and charity for humanitarian purposes, without any profit motives.

The new 2024 decree reiterates that these funds must operate on a non-profit basis, aimed at supporting cultural, educational, healthcare, sports, scientific, technological, agricultural and environmental protection causes, in addition to promoting rural and community welfare.

The new decree also stipulates regulations for naming funds as follows:

• The fund name must be in Vietnamese and may be translated into a foreign language if it complies with legal standards, aligning with the fund’s mission, scope and core activities.
• The name cannot duplicate or resemble the name of an existing registered fund.
• It must respect national history, culture, ethics and traditional values.
• The name should avoid using the names of national heroes, cultural figures, or current and former leaders of the Party and State, as well as religious figures or founders of the fund.
• It should not cause misunderstandings or potential conflicts among different religious, ethnic, or social groups within Việt Nam, nor should it violate international agreements to which Việt Nam is a party.

In addition, the symbol of any fund must not duplicate or resemble other registered symbols, nor violate ethical standards or international agreements and it must be registered with the competent authorities in line with intellectual property law.

In terms of fund management expenses, while the old decree capped administrative expenses at 5 per cent of annual revenue, with exceptions for in-kind donations and state-sponsored projects, the new decree increases this cap to 10 per cent of the total annual expenditure on programmes in line with the fund's statutes. Any unused funds at year-end may be carried over to the following year.

Stricter penalties are also added for the misuse of social and charitable fund names for illegal activities or unauthorised fund management. Violators may face disciplinary action, fines or even criminal prosecution depending on the severity of the breach. Additionally, those causing financial harm may be liable for compensation in accordance with the law.