Who should be Chair of the Charity Federation: a Government Official or the Largest Donor?
(Translated directly from Southern Weekend, April 11, 2002)
Deng Ke, Southern Weekend Reporter
· In the Yuechen District of Zhaoxing City, Zhejiang Province, the largest donor to the newly established Charity Foundation will soon be appointed as its Chair. This has caused heated debate throughout Zhaoxing.
- In Wenzhou City of Zhejiang Province, the head of the Luchen District Charity Federation is an entrepreneur while the head of the Wenzhou City Charity Federation is a retired city official. There have been monumental differences between their respective fates and job progress.
- The person in the leadership position for the so-called “Third Sector” Charity Federation not only decides its direction of development, but also, to some extent, its entire fate. It still seems very difficult for these third sector organizations to develop into the truly nongovernmental and independent agencies described by academic scholars.
“Buying Power” versus “Doing Good”
“Since it’s a nongovernmental organization, why not use nongovernmental forms of management?” asked Wang Jiaxing, the Secretary of Zhaoxing City Committee. In front of him sat Huang Weiying, Chair of the Yuechen District Department of Civil Affairs, who had come to report on the establishment of Yuechen District’s new Charity Federation.
“I didn’t expect that Wang would suggest this new idea,” Huang Weiying said, “The creation of the new charity federation actually goes back to last year. Although Zhaoxing is an economically developed region, Yuechen District is an even richer area. But we discovered that there were over 5,000 residents living in dire circumstances, and thus decided to establish a Charity Federation that could raise money towards supporting and helping these communities.”
The custom in China has always been to appoint current or recently retired governmental officials as leaders of Charity Federations, who then controls the use of its funds.
Secretary Huang said: “Originally we were planning to operate in the customary way, to invite a governmental official to take the lead of the new federation. But when we reported to the District, the head of the District suggested a new approach: a nongovernmental organization should operate using a nongovernmental governance approach.”
The District head didn’t actually specify what he meant by such a nongovernmental governance approach. As soon as she came back from meeting with Wang, Huang and her colleagues began discussing this matter.
Since it is to be a nongovernmental approach, the leader must not be a governmental affiliate but rather someone from civil society. What kind of person, then, should hold such a position? The most fundamental requirement is that he or she has a passion for the doing good, but the most direct way to express this passion is possibly through how much money he or she is willing and eager to donate to public causes. Thus, a bold idea of “whoever donates the most money will assume leadership” was proposed.
Yuechen District Deputy Secretary Wang Wei said, “The ‘whoever donates the most money will assume leadership’ idea is merely a simplistic one, and in practical implementation there should also be other requirements besides looking at the amount of the candidates’ donations. The Federation Founding Committee has outlined three main criteria: the first is capital potential, used to measure their contribution; the second is passion for a career in serving society, used to evaluate the candidate’s character; and the third is willingness to abide by the ‘Yuechen District Charity Federation Constitution, used to finalize a plan of action.
Wang Wei said, “Using these three criteria, we hope to select the candidate with the most character and wealth from civil society to assume the Charity Federation’s leadership position.”
In February of this year, the Yuechen District Charity Federation Founding Committee issued a “Public Announcement Address to Yuechen District Residents.” This address outlined the decision for a new mode of management in the new Charity Federation, including the three-tier combination of nongovernmental governance, governmental assistance, and civil society participation. The February 23 issue of “Zhaoxing Nightly News” featured this story in its headlines. The report read: “For many years, the leadership of each area’s Charity Federation has been assumed by governmental officials. The newly established Yuechen District Charity Federation has announced its decision to adopt a completely new style of management: to have the largest donors assume all positions of leadership. This is the very first example in China of directly using donation contributions to decide leadership roles.”
This news immediately sparked a strong reaction among Zhaoxing residents, with people taking polarized positions. One reader wrote to the newspaper claiming that this method is basically “selling power,” and is an exchange between position and money which “taints the sanctity of a career in serving the public good.” Other people expressed the view that since the Charity Federation was a nongovernmental organization in the first place, its leaders can’t be classified as officials, and thus whoever shows more passion for the organization and is willing to donate more should be able to take the lead. This method, according to these readers, seemed to essentially justify the original role of a Charity Federation, and is a completely different matter from “selling power.”
Wang Jianqing, a member on the Charity Federation’s founding committee, said, “The debate during this period of time was very heated, and we felt a lot of pressure as well. But gradually, people’s opinions began to converge, and most people saw the aptness of the approach.”
The March 18th issue of “Zhaoxing Nightly News” presented an entire section devoted to nine different reader responses under the title “Let’s Discuss ‘Whoever Donates the Most Money will Assume Leadership’.” In these reader responses, it seemed that the original proposal was gaining ground. One reader even called this “a transformational” new change.
Awaiting “Transparent Operation”
This actually shouldn’t be considered anything transformative or new, as we are basically doing what all Charity Federations should already have been doing in the first place. In the future, it probably won’t just be Charity Federations, but other nonprofit organizations might steer in this direction as well.” Wang Wei of the Yuechen District Department of Civil Affairs said.
According to Wang Wei, use of Charity Federation funds is often unclear to many donors when under the direction of governmental officials. “Nongovernmental governance” has the benefit of having the donor himself take direction of the charity’s funds, thus increasing the transparency of the operation. Where funds are applied would be clearer to everyone, and can be termed “Operation Sunshine.” This management style should further reinforce the purpose of charitable work and increase the public’s confidence in this field, aligning with international methods.
The federation founding committee began fundraising on February 20th, and as of April 8th they have collected over 4,260,000 RMB, with the single largest donation amounting to 120,000 RMB. According to a staffer from the Department of Civil Affairs, the donor of this largest donation is an entrepreneur, who has always been a supporter of charitable work. Previously, she has already donated almost six to seven million RMB to various nonprofit organizations, and at this time it is very likely for her to be appointed the head of the new Charity Federation.
The donors who have donated over 100,000 RMB also include three local banks. A member on the fundraising committee said, “According to our rules, ‘whoever donates the most assumes leadership’ considers mainly personal contributions as well as one’s company contributions.
After Yuechen District publicly declared the new nongovernmental management approach for the new Charity Federation, the situation many feared of entrepreneurs “fighting with money to assume power” didn’t actually happen. Wang Wei said, “Entrepreneurs who contribute money are not doing so for the power or the position, but are only doing it to contribute to charitable work.” But according to another committee member, there is a still a long way to go before China can truly claim to have cultivated basic volunteerism and philanthropy among the general public.
A resident of the city described how every new change must carry with it new concerns and considerations. For example, under this new model, what should be the official relationship between charity federations and governmental agencies? Along with the benefits offered by the new governance model, are there some difficulties and challenges that must be tackled as well? A reality that must be faced here is that China is and has always been a “politicized” country, and political forces usually pervade and overcome other forces. If the leader of a nonprofit organization were a government affiliate, it would be much easier and more effective for him to fundraise among businesses than someone who was not a government affiliate. Under these circumstances, would it be possible that giving up its political affiliations and embracing nongovernmental methods would actually hinder their progress and development? An official from the Department of Civil Affairs said, “We also thought of this concern, which is why in our new constitution, we immediately added ‘governmental assistance’ right after ‘nongovernmental management,’ realizing that under certain circumstances, the government still needs to step in to help.”
He conceded that if the government wasn’t involved at all in certain situations, fundraising would have its share of challenges. The fact that Yuechen District was able to raise as much as four million RMB in a little over a month owes a lot to government support as well.
Our understanding is that the fundraising stage of Yuechen District Charity Federation is nearing its end, and an official establishment ceremony is under planning.
“Government Approach”: Annual Fundraised Amount of 40 million RMB
Around the same time that the Yuechen District Charity Federation was running its fundraising campaign, another rich and well-developed area of Zhejiang Province, Wenzhou city, also established its own new charity federation on April 3rd. In stark contrast to Yuechen District, the leadership appointment followed a strict traditional “governmental approach”, with the city’s highest official assuming leadership. This city official had once been the Minister of the Wenzhou Municipal Committee as well as the Standing Deputy Director of City Council. Because many officials currently in office throughout Wenzhou had been appointed by him, he still holds much influence among government officials despite being retired from office.
Since Wenzhou City Charity Federation began fundraising in December of 2000, it has raised almost forty million RMB total in one year. The person in charge of this effort remarked proudly, “such an efficiency and scale of our fundraising efforts is rarely seen among fellow charity federations.” According to him, Wenzhou Charity Federation is second only to Ningbo’s in all of Zhejiang province in terms of funding, “Ningbo has fundraised almost sixty million RMB, but they had started in 1997 whereas we’ve only done it for a little more than one year.”
An inside source remarked that the efficiency and speed of Wenzhou Charity Federation’s fundraising efforts is certainly impressive, but it is clear that political ties are largely responsible for this. In February 9th of this year, the federation launched the “2002 Wenzhou Charity Giving Day.” This campaign encouraged people from all levels in local governmental departments and private businesses to contribute to the cause, “leaving no one behind.” Furthermore, the campaign announcement even had a schedule of which days certain departments were most encouraged to contribute. For example March 5th was for the City Planning Commission, March 6th was for the Municipal and Economic Trade Commission, and March 7th was for the Department of Education etc.
The city mayor of Wenzhou City made an appearance himself for this campaign, personally carrying a donation bin around to many businesses, covering over ten businesses in one day and raising 1.36 million RMB as well as 50,000 RMB worth in valuables.
What is especially interesting is that the Wenzhou City Charity Federation actually received permission from the city to grant local residence permits in exchange for donations. The policy outlined that migrants from beyond the city limits who owned property of at least 60 square meters, and who also donated more than 150,000 RMB towards the local charity federation, would be able to obtain the city residence permit.
This policy gave migrants a new welcomed method for establishing legal residence in the city, while at the same time providing a monetary source for the charity. A source from the charity federation said, “Since this policy has been in effect, a total of 598 people have donated to the federation, with funds totaling 89,750,000 RMB. Later, the police department issued a notice, claiming this policy to be condoning the sale of resident permits, and thus prohibited such an exchange.” According to this source, if it wasn’t for the police notice, they could have raised even more funds this way.
The Wenzhou City Charity Federation grew very quickly under its strong governmental affiliation. A source from the charity told us, “when the charity sector is just starting out and when most people still lack understanding of this new phenomenon, it is important for the government to take the lead in supporting these charities.” Last year, at the Second Annual Charity Work Experience Exchange and Training Conference in Zhejiang Province, representatives from Wenzhou City described their experiences in precisely this area.
Recently, Wenzhou Charity Federation had set its next ambitious goal: “to fundraise up to 100 million RMB by the year 2015.”
The Struggle between the Two Approache
Besides the Wenzhou Charity Federation, there is another charity federation registered in Luchen District in the same city, which had been established in October of 1998. The most unique aspect of this particular charity federation is that its leader is actually an entrepreneur, possibly the first entrepreneur to lead a charity federation in all of China.
His name is Ceng Laoguang, and he is the CEO of Wenzhou Huawei Electronics Company. According to Ceng, he has always had a strong interest in charitable work, and at the time that Luchen District Charity Federation was being established, the District official approached him and invited him to take the lead, which he immediately agreed upon. In its three years of operation, the Luchen District Charity Federation has fundraised over 6 million RMB.
When we compare the charity federations in Luchen District and in Wenzhou City, we can see a clear difference between the two. One is operated using the nongovernmental approach whereas the other is very tied to the government. It seems that the Luchen District Charity Federation, which operates with the nongovernmental approach, should be more in line with the basic purpose of charity federations. But in actuality, the “government-run” charity has raised forty million RMB in one year while the nongovernmental charity has only garnered six million RMB in three years. This difference cannot merely be explained by the difference in their city versus district levels, because both are located within the heart of Wenzhou. Their differences in fundraising performance, then, must also be attributed to their different approaches in management style.
This phenomenon seemed to have stimulated a new controversial theory: although the governmental approach doesn’t align well with the message and purpose of charitable work, this affiliation does expedite the fundraising process and improves the efficacy of fundraising efforts. On the other hand, even though nonprofit governance aligns better with the message of charitable work, this type of operation actually slows down fundraising efforts.
Is it possible that the so-called “nongovernmental approach” to management may not be able to applied very well in China, simply because its years of established government-centric traditions and values necessitate the involvement of government?
One researcher noted that the success of the governmental management approach in helping charity federations fundraise depends upon the general influence of the government on society and on businesses. When the government has a larger influence, then having governmental affiliation would certainly help charities succeed in raising money from the public and from businesses. However, we now seem to be moving towards a world in which the influence of the government is gradually decreasing, and we are approaching more of a “small government, large civil society” type of power dynamic. This certainly would begin to threaten the dominance of the current government-centric approach.
At the same time, the government approach also has its major flaws. Charity work might actually be in conflict with government affairs. While charity workers should aim to promote volunteerism, government officials are, to some extent, mandated to order that people abide by the law. If the influence of the government is overused in fundraising campaigns, many people might start to resent charity work, and thus the effort of promoting volunteerism would be lost.
One of workers in Luchen District Charity Federation once described to a reporter her experience of being “pestered.” The two times that she had gone to a bank for business matters, workers at the bank immediately circled around her once they found out she was working for a charity in order to complain about the charity’s unreasonable demands. She later found out that when Wenzhou City Charity Federation had been fundraising at this bank, the bank automatically deducted 100 RMB from each worker’s salary to add to the bank’s contribution. Many of the workers felt like this was an abuse of power, and all tried to take out their anger on her despite not knowing exactly which charity she was working for.
A Wenzhou City Charity Federation representative also described that the last time the charity met with the city government, where some officials complained about the excessive support the government has given to local charities.
From the two points above, it seems that the governmental approach may not necessarily be the right direction for charity federations. If charity federations truly aspired to improve its own efficacy and efficiency without the reliance on governmental support, then they not only have to transform from within, but also have to limit the affiliations they have with the government. In other words, if charity federations don’t completely separate themselves from the government, then their journey towards achieving independence will be a difficult one.
One researcher claims the “whoever donates more should assume leadership” approach is actually a step in the right direction for charities. As to how far this step can go really depends on how much charities can change and improve in the ways outlined above.
Other scholars have also noted that throughout these years, the identity of charity federations has become murky due to the strong presence of the government. In the more economically developed regions of Zhaoxing, Wenzhou etc., active civil society participation has improved in conjunction with its economic improvement. It would do wonders for civil society’s goal of advancing the good will should the government have the foresight to gradually remove itself from these areas, and give more room for civil society to take charge.
(Translated by Tina Tan of Harvard University. © Hauser Center at Harvard. )
