Is a lack of transparency driving a wedge between charities and donors, and undermining the charitable spirit? Zhang Yuchen in Beijing reports.

Do you know where your money goes when you donate to charity?

Studies show that many people who support worthy causes in China admit they have absolutely no idea how or where the money is being spent.

As the country has no law requiring aid groups to publish monthly or even annual accounts, experts say the vast majority of donors are in the dark about where funds go due to basic lack of transparency in the sector.

“Charitable organizations seldom respond to donors’ requests for information about financial reports so few donors have a clear understanding of what their money is used for and what effects it brings about,” said Deng Guosheng, an associate professor at Tsinghua University’s school of public policy and management.

The situation has resulted in serious problems when it comes to supervising grassroots charities and non-governmental organizations (NGOs), and threatens to undermine the growing charitable spirit among the Chinese, he said.

Following the 2008 earthquake in Sichuan province, the nation raised record amounts of money to help survivors. Those records have since been broken following the disaster in Qinghai province in April. So amazing was the response that media analysts suggest the disaster triggered an explosion in compassion, which has continued to spread throughout the country.

The amounts being donated have also steadily increased year on year over the last decade, official figures show.

China received 107 billion yuan in donations from home and abroad in 2008, more than three times the amount in 2007, according to the Blue Book on Charity Donation Development in China (2003-07), an independent report sponsored by China Philanthropy Times. For the first time, the money given by individuals on the mainland surpassed donations from corporations – 54 billion yuan ($7.9 billion) given by individuals, compared to 34 billion yuan by corporations.

However, in a recent survey of people who donated to the Sichuan relief efforts, Deng found that less than 5 percent of the 1,684 who responded know exactly how the money is being spent, while more than 60 percent had little or no idea. (Authorities have published financial accounts during the ongoing reconstruction of Sichuan.)

The trend is also typical among people who give regularly to many Chinese charities, said the professor, who added that although the public is growing more aware of how they work, the overall disclosure of information is far from sufficient.

Trust is fundamental to how most charities are run in other nations but “getting all charities in China to be 100-percent transparent has proved virtually impossible”, said Deng, who also works in the university’s NGO Research Center.

About 410,000 charitable organizations were registered to operate by the end of 2008, while another 760,000 were running but still waiting for official documentation, said a report in the Blue Book of Philanthropy 2009, an independent academic evaluation of China’s charity sector.

Very few publish any kind of annual progress or spending reports, and donors rarely think to ask for them, say analysts.

“A lack of professional management, transparency and trust are major problems facing the charity sector in China,” said Yang Tuan, a professor at the Chinese Academy of Social Sciences’ institute of sociology, who co-authored the Blue Book of Philanthropy 2009. “The fact that there is no charity association is the biggest problem, though. There is simply no co-operation that allows these groups to confront and overcome common obstacles, as well as provide mutual supervision.”

Fund-raising problems

China’s first and, as yet, only regulations for charitable NGOs were implemented in 2004 and apply just to the administration of foundations. A draft of the new Charity Law, which is expected to contain stricter legislation over fund management, was submitted to the State Council last year.

Under the current rules, NGOs have to be affiliated with a government department before they can register with the Ministry of Civil Affairs.

Finding one is no easy task, however, and there are some 250,000 grassroots groups that are instead being run illegally with business licenses, the Blue Book of Philanthropy 2009 says.

“Also, only foundations that are affiliated with a government department or have ties with an authority enjoy the luxury of being allowed to raise money in public,” said Deng. “Grassroots organizations always suffer a chronic shortage in donations.”

Of the 943 foundations registered in China that can legally raise funds in public, 83 are government-owned NGOs (otherwise known as GONGOs), said the professor.

Collecting money from the public without the proper authority is illegal and can lead to serious consequences for charity organizers, and the groups will automatically be shut down.

“This is a concern for many of my friends who work for grassroots NGOs,” said Guang Pu, the 30-year-old director of One Heart, a legally registered non-profit orphanage in Xiamen, Fujian province, that publishes monthly financial reports for donors. “The rules effectively stop a lot of grassroots charities from raising awareness of their cause and soliciting public donations.”

The lack of clear governance has led to conflicts between charity organizers and donors.

Sun Village, one of China’s first charities for children of convicts in Beijing, has been well supported for many years, including by several multinational companies.

However, complaints in recent years by donors over its opaque spending habits have cast doubts over its reputation.

The village director, Zhang Shuqin, denied the claims and feels she was unfairly criticized in press. She blamed the charity’s difficulties on the fact that it lost its affiliation with the government in 2003.

When Sun Village lost its link to the local authority, “I begged more than 10 other departments to help us”, said Zhang, who launched Beijing Sun Village Children Education Consultancy in 2003. As none agreed, she opted to register the organization as a business with the capital’s administration for industry and commerce – make it illegal for the village to raise funds publicly.

“My company got involved (with Sun Village) years ago but we’ve started to feel more and more uncomfortable (about its management) in recent years,” said a Beijing-based communications director for a multinational corporation who did not want to be identified. “We’ve usually helped by donating food for the children but recently we’ve continually received calls asking the cash donations, without any explanation of how the money will be used.”

However, the school’s director argues that her critics do not understand how hard it is to run a charity in China.

“Why do (the people criticizing me) not recognize the hardship I’ve been through?” said Zhang, a fast-talking woman who has also been accused of being too aggressive. “I don’t think they have any right to say anything about me or Sun Village.

“We cannot get (affiliated), so why do (donors) think I should publicize our financial records?” she added, before offering to show China Daily the charity’s accounts. “The privacy of the convicts’ children is the only reason why I am reluctant to make my financial report transparent to the public. Issues related to people in jail is very sensitive in China and I don’t want the children to be hurt to any extent.”

Most charities do not offer detailed information about donations and spending unless donors specifically ask to see some, say analysts. The Beijing communications director admitted her company had never formally requested any financial reports from Sun Village.

Regularly publishing accounts can actually be a heavy financial burden for charity minnows.

Dandelion School, a charitable education project targeting the children of migrant workers in Beijing, is consistently praised for its transparency. Yet due to the extra cost of distributing its accounts, the group can only keep donors updated on the specific projects they contribute to.

“That costs less than posting the whole package, such as how the money was spent and what kind of effects it has had,” said Clare Pearson, chief editor of Charitarian, the only English-language philanthropy magazine published in China.

The accounting can also be complicated by the fact charitable NGOs also rely on donations to cover running costs. This can be difficult to break down for people not working in the charity sector, explained Deng.

“The public in China isn’t really familiar with how NGOs are managed and often don’t recognize that the costs of running a charity – people’s wages, transport, etc – often comes from donations,” said the professor. He estimated that, depending on the size of the charity, about 5 to 20 percent of the money raised goes towards administrative costs.

However, grassroots NGOs often do not allocate enough funds towards its management, which can also contribute to the slow disclosure of information to donors, said Li Dajun, program manager for the China Social Research Center affiliated with Peking University.

“They are so busy looking for fund-raising opportunities (to support their cause) that they leave little room for their own development as a charity,” said Li, who worked with several NGOs between 2003 and 2007.

“Ultimately, if trust is built (between a charity and its donors), few will doubt how the money is spent,” added Pearson, who is also a corporate social responsibility manager for the international law firm DLA Piper.

Selection process

Carefully selecting a charity that is run by professionals is key to ensuring any donation will be spent correctly and efficiently.

“Sometimes, when people decide to find a charity to support, their eyes are always caught by the famous or popular ones, although neither of these qualities guarantee professionalism or qualifications,” said Deng at Tsinghua University.

As the charity sector continues to develop, so too does the experience of those working in it. However, the current demand for human resources at NGOs far outweighs supply.

“The first generation of China’s NGO founders knows less about managing charities, so they have stuck to the tradition of being family run and giving relatives jobs in the organization, which creates more suspicion,” said a publicity expert who has studied the development of NGOs in China for more than a decade ago but did not want to be identified.

Sun Village is one of those organizations that have been accused of being “family run” and media reports claimed Zhang employs two daughters and a son-in-law to manage the school.

However, the under-fire director fiercely rejected the allegation, saying: “I have hired professional personnel to work at the village.”

To increase the level of trust in charities, many experts argue they should be made independent of government departments.

“Charity should be independent from authority, while transparency should be realized through social supervision, not regulations,” said Deng, who added that many of the problems charitable NGOs face are caused by the complex registration process.

“The easiest way (to boost the sector and ensure transparency) is to allow more room for these organizations to register. Only by doing this can more charities get the chance to impact society.”

(From http://www.chinadaily.com.cn/cndy/2010-05/27/content_9897275.htm )

(China Elections and Governance has abridged and translated this article on the evolving relationship between Chinese NGOs and the government. It appeared in Nanfeng Chuang Magazine on May 10, 2010. The article focuses on the Chinese Foundation YouChange (China Social Entrepreneurship Foundation 友成）, which has been working closely with the municipal government of Mianzhu to fund and coordinate earthquake recovery efforts, highlighting both the benefits and drawbacks of this cooperation)

Pulished:  May 10, 2010

“It costs a lot to establish an organization. Mianzhu municipal government helped us with work place and basic administrative expenses. They are well-financed,” said Zhai Yan, director of YouChange Volunteer Support Center. “Volunteers assist the government; this is equivalent to working for the government free. So the government should bear the cost.”

YouChange is a Beijing-based, non-profit charitable organization with independent legal status and is officially registered at the Ministry of Civil Affairs. In August 2008, about three months after the 8-magnitude earthquake hit Wenchuan and neighboring areas, YouChange and the Mianzhu government co-founded a program for integrating social resources to help with earthquake relief and recovery.

The program is mainly financed by YouChange, which is also responsible for recruiting and assigning volunteers, while the Administrative Service Center of the Mianzhu government is lead management unit.

“The program has contributed a lot to the earthquake relief and recovery efforts. Although there are only six workers, they have contributed many resources. On average, each worker has helped to introduce 10 million yuan to the stricken area in Mianzhu,” said Peng Zhebin, deputy secretary-general of the Mianzhu municipal government.

It seems that YouChange and the government are still in their honeymoon phase. However, it’s a mismatched, bittersweet marriage.

When the program was established, no government agency wanted to be the lead management unit. It was said that some NGOs, backed by overseas forces, used aid as a pretext for anti-state and anti-government activities. Thus, taking over the platform became a hot potato, as it falls to the head management unit to prevent such organizations from entering Mianzhu. It’s a tough job.

As the program was about to die on the vine, Deputy Secretary-General Peng came forward to take over.  He said one shouldn’t stop eating for fear of choking.

Now, local officials are excited about the program’s achievements – from August 2008 to March 2010, it directly absorbed a total of 10 million yuan worth of funds and materials, as well as 2 billion yuan indirectly.

This demonstrated that earthquake relief and recovery is outside the confines of the government’s capability, especially in poor areas. The government is in need of additional aids.

Some top leaders in the central government also hold a positive attitude toward NGO involvement in supporting the poor. Besides YouChange, Oxfam Hong Kong was introduced to Sichuan Province by the State Council Leading Group Office of Alleviation and Development last year. Two counties separately received 1 million yuan each year from Oxfam Hong Kong, and the county governments also provide supportive poverty relief funds. The local authorities want to explore a new anti-poverty model through the cooperation between government agencies and NGOs.

“It’s a challenge for the government – how to deal with NGOs and build sound relations with them. We do not have prior practical experience,” said Zhu Xiaofang, deputy director of the Administrative Service Center of Mianzhu. “After the earthquake, the government was awakened to the necessity of NGOs.”

In Mianzhu, volunteers working for the project report directly to the governmental Administrative Service Center, and Deputy Secretary-General Peng is in charge of examining and approving their aid plans. Each volunteer needs to sign a tripartite agreement with YouChange and the Administrative Service Center.

According to Zhai, as these volunteers are not registered with any government agencies, their private aid activities would be illegal without government sanction. The tripartite agreement lends legality to their activities.

“It would be hard to operate projects here without the government’s support. It’s a good cooperation model,” said Zhai. For NGOs, the benefit of integrating with the government is that such cooperation can lessen the difficulty of entering certain areas. “There are some places where you are hardly allowed to enter,” said Zhai.

The attitude of local officials toward NGOs has changed a great deal since the 2008 earthquake. Officials admitted that the government could not uncover all of the problems that arise in relief and recovery efforts, that NGOs could serve as a supplemental force, and that NGOs do contribute a lot. The governmental authority no longer rejects NGOs, and relations between the two are “very harmonious” now.

This is in part because the government is certain that the “bad” NGOs have been removed, and that those that remain are reliable.

When a branch volunteer station of the program was set up in January in Bazhong, Sichuan Province, all important officials in Bazhong attended the opening ceremony, and the event made headlines in the local Party newspaper. The government allocated government office space for the station.

When Zhai and her group visited Sichuan on a survey trip in March and April, local officials at all levels treated them as honored guests.  Officials presented different difficulties and needs, expecting that YouChange could lend a hand.

“A little spark kindles a great fire; YouChange’s participation could encourage more social forces to help the poor,” said Zhang Min, deputy secretary-general of Bazhong Municipal Committee of the CPC. “YouChange is a newcomer without administrative functions. Working in the government building will increase its credibility and influence.”

However, each side just takes what it needs. In Mianzhu, the government has made the program resemble an official agency in less than one year. Every volunteer has to wear a card made by the municipal government, and volunteers are a treated like local officials when they travel to counties and villages.

When it comes to characterizing the nature of the program, YouChange calls it a subordinate sector of YouChange, while the Administrative Service Center insists that the program belongs to the government and that YouChange is just a main supporter.

According to Peng, although the program has brought 2 billion yuan worth of funds and materials into Mianzhu, the achievement is not that of YouChange, but should rather be credited to the local Party committee and government, since the program is headed by the governmental authority.

The Local Youth League Committee and the Ministry of Civil Affairs also want a piece of the action. “When the MCA came, they said the program fell within their domain, and when the local Youth League Committee came, they said the program should be the committee’s duty. The program has helped these department a lot.  It’s my contribution, but these department could also take the credit for their work,” Peng sighs.

Now these departments are trying to integrate their other projects with the relief program. “You can never see such close cooperation between NGOs and the government in other places. Now we have deeply merged with the government,” said Tang Rong, a major executive of the program.

However, merging so deeply with the government can damage an NGO’s  independence. Almost all the program volunteers are also employees in government departments and institutions.

Zhai felt ambivalent about the current situation. “Now, our branch volunteer stations are actually working for the government,” said Zhai. “We are totally integrated into the government. It’s out of order. The two sides are inseparable.”

But Zhai’s colleague Tang holds a different opinion. “We should fulfill not only YouChange’s requirements, but also the government’s. We should do whatever the government asks us to do,” said Tang.

The government is obviously the stronger party in such cooperation. Government management is the prerequisite for NGO development. YouChange cannot set up branches independently; the only way is to establish subordinate volunteer stations registered at certain government agencies.

Under such circumstances, these government-backed NGOs are likely to become another government agency. Zhai used to criticize some volunteers for just sitting in the office, rarely traveling to grass-roots units to discover potential demands.

After her survey and investigation in Sichuan, Zhai found that only if a NGO sends its own team to assess demands in grassroots units, and then initiates an independent project, can the NGO avoid being absorbed by the government.

“Our volunteer stations have no ‘roots.’ Our service objective is unclear. Some said the objective is to serve grassroots residents and farmers, but it’s just too vague a group,” said Zhai. “Some other NGOs, like Oxfam Hong Kong, projectized their operations, and their service objective is clear. Their volunteers follow certain projects,” and do not act under the orders of the government

(See the original Chinese article at: http://www.022net.com/2010/5-11/442428212632326.html )

By CARA ANNA (AP) , March 12, 2010

BEIJING — China has surprised thousands of aid groups by stepping in to regulate overseas donations for the first time, complicating efforts to get money from supporters in the United States and elsewhere. Some groups warned that losing the support could force many to shut down.

China’s leaders have only recently realized that outside help is needed on deep social welfare problems, but they worry the work of independent activist groups could turn political. Groups must find a government partner to register as a nonprofit. Many that want to stay independent have set up as a tax-paying business instead.

“I think the new rules will regulate us to death,” said AIDS activist Wan Yanhai, who runs a Beijing-based aid group.

As of this month, China-based aid groups — but not those connected with the government — must show proof that overseas nonprofit donor groups are registered in their home countries. The groups, also known as nongovernmental organizations or NGOs, must strictly follow detailed agreements with foreign donors and not use the money in other ways.

Religious groups also need approval from the State Religious Affairs Bureau for any donation that exceeds 1 million yuan ($146,000).

“I think it’s inevitable that they were going to start tightening the noose on NGOs,” said Meg Davis, executive director of New York-based Asia Catalyst, which works with a number of grassroots groups in China on AIDS-related projects. “There’s a sense at the top that they’re suspicious of NGO powers.”

She spoke by phone from the southern province of Yunnan, where her group works with 90 women with HIV. The new rules are complicating efforts to wire the group money from overseas, she said. Asia Catalyst has been told a representative must be present on a specific day this month to get key paperwork notarized — a day when the group says none of its people will be in China.

“Stopping work is not an option. These women are working with a population that is sick and dying,” Davis said. “The only thing we can attempt to do is comply as best as we can.”

The rules were issued by the State Administration of Foreign Exchange, which normally has little to do with NGOs. They were posted on the administration’s Web site and came into effect March 1.

Phones at the administration rang unanswered Friday.

China never really regulated foreign donations until now, said Deng Guosheng, a lecturer with the NGO Research Center at Tsinghua University in Beijing. “I think most will not face a problem, but for those sensitive NGOs, it will become hard for them to get foreign donations.”

China has struggled to keep up with the growth of aid groups in recent years. The Ministry of Civil Affairs says about 400,000 groups are registered and many more are not. A report published by the Chinese Academy of Social Sciences has estimated the total number could be 3 million.

“No government official knows how to regulate them,” and they don’t know what most aid groups are doing, said Wang Liwei, the CEO of China Charity Media Group, which publishes Charitarian magazine.

His fellow editor, British lawyer Clare Pearson, said other countries long ago made similar moves to watch where money for aid groups comes from.

“Look at this way,” she said. “If I’m in the UK and a bunch of Chinese people come over, build a school and set up a curriculum to start teaching children, I’d be asking a lot of questions.”

But some groups worry that China is checking more for possible political challenges.

Last month, China told schools to sever all ties with the international relief agency Oxfam and bar its campus recruitment efforts, accusing the group’s Hong Kong branch of having a hidden political agenda. Oxfam has operated in mainland China for 20 years and denied that its activities were political.

Associated Press researcher Xi Yue contributed to this report.

Copyright © 2010 The Associated Press. All rights reserved.

Also see post “On the Impacts of China’s SAFE Regulation Regarding Overseas Donations“.

He’s a Chinese government official. She’s a British lawyer. Together they publish a magazine that hopes to lift a veil of illegitimacy clouding a local NGO scene that’s thriving in a gray area of Chinese society.

Edited by Wang Liwei, vice-mayor of Guan County in Shandong Province, and Clare Pearson, a lawyer at the Beijing offices of DLA Piper, The Charitarian wants to encourage the local non-profit sector by informing NGOs about how to operate within government goal and guidelines.

Though there’s a flood of activity in the local NGO scene, reliable information is scarce. Sources of reliable information are even less assured. A crew of Chinese and foreign volunteers under chief-editor Wang is working hard on the March issue.

There are thorny issues to be explained: A recently proposed tax on investments by non-profit organizations has pitted the national Tax Bureau against the Ministry of Civil Affairs, which worries that such a tax will kill off many NGOs which rely on earnings from those investments to run their operations in China.

Different backgrounds, same goal

Wang describes the operation as “Chinese food with a British cook and an African market.” The British cook is clearly Pearson, a corporate lawyer and corporate social responsibility (CSR) expert who put up much of the cost of the first issue of the magazine (helped by adverts bought by companies, including her law firm and Boeing).

In charge of CSR – the voguish but often questioned science of corporations contributing to local communities – across Asia at DLA Piper, Pearson met Wang at a conference. Well connected, she helped put together a 3-week tour of the UK to explore how Western governments regulate and cooperate with NGOs.

Pearson recalls being introduced to Wang by a mutual media friend in Starbucks.

“We immediately hit it off and realized we represented two sides of the same charity coin, the Eastern and Western approach. He interviewed me for the magazine and it turned out to double up as an interview as English language editor. The rest is history.”

The African link is Vimbayi Kajese, the Zimbabwean-born editor who uses time off her anchoring job on CCTV9 news to write for the magazine. Author of a searching article on sexual abuse of women in the workplace, Kajese said the magazine finds stories “as much in what’s not reported as what’s reported [in the national media]. An example is fears of quakes in coal-rich central China, which went unreported due to coal companies’ fears of walk-outs by frightened miners. The human element of the story, workers’ welfare, will be reported in the upcoming Charitarian.”

The magazine is a bridge between government and the non-profit sector: Stories touch on sensitive issues but are written in a constructive manner, explained Wang.

Introducing the magazine at a recent Beijing launch party he explained the magazine’s purpose in three acronyms: CSR, GSR and PSR. “Corporate social responsibility, government social responsibility and public social responsibility.”

Sure enough in the latest issue of the magazine peppered between pieces on local NGOs there’s articles for a corporate readership about CSR budgets getting cut in the recent recession. Some interviews with local CSR heads of multinational companies read like heavily censored corporate copy.

Some of the more interesting copy centers on a trend of CSR among local companies. A relaxed Jin Siyu, head of publicity at the State Owned Assets and Administration Commission talks frankly on why some State-owned firms are giving more money than others to needy causes.

More controversially, there’s two pages on successful water bottler Nongfu Springs suing two government-affiliated entities the Philantrophy Times and the China Association of Social Workers for allegedly defaming the company by raising skepticism on their pledge to donate 0.01 yuan to charity from every bottle sold between January and July 2006. The case has prompted Chinese lawmakers to reshape laws in favor of charities.

Drawing the line

Upbeat and smiling, Wang’s energy is infectiously articulated in language that’s more that of an evangelical preacher than that of a hard-faced bureaucrat. He talks of wanting to influence change, “to bring hope and love to people.”

Yet Wang is a government insider with a duty to implement the government line. His role as a vice-mayor – he divides his time between Beijing and Shandong – means Wang has an insider’s knowledge of what goes in terms of issues open for coverage. Being a government official means he knows “where to draw the line.”

Wang also wants the magazine to increase trust between government, NGOs and the community to ease disaster relief work and charity work. “We want to bring trust and security,” he said.

Yet Wang won’t take sides in intra-government affairs. As the manager of a non-profit firm and a government official Wang finds himself uniquely in the middle, and he’s not taking sides. On the spat between tax officials and Ministry of Civil Affairs, he said: “Time will tell us what is the best solution to this issue.”

As a government official Wang is also au fait with the commercial realities of media in China. Since 75 percent of local publications are losing money, the government wants to reform ownership. “The government wants to own the media but it doesn’t want to operate it.” 

Changing attitudes to have nots

The magazine will take advantage of a recent media preoccupation with charity work and NGOs. Wang recalls last year sharing a TV talk show couch with one of China’s wealthiest men, Chen Guang, who on live TV donated 40 million yuan ($5.8 million) to help underprivileged locals have a better Chinese New Year. The outsized gesture was criticized as the attention-seeking ploy of a man with more money than sense. “But I thought ‘why not?’,” recalls Wang.

Chen’s gesture, said The Charitarian editor, was useful if it encouraged others to similarly share their wealth. The episode convinced Wang that media and charity work depended were interdependent.

“Media is now really interested. And charities really need media [to get their message out].”

The son of a working-class Shenyang family – “we were poor,” he recalls, Wang nonetheless feels he has reached professional as well as personal satisfaction out of caring for others. He recalls a reunion with his university classmates, 15 years after their graduation. With the wealth and responsibility of executive roles some of his classmates had no hair, some had big bellies, were overweight and overstressed.

“Of them all I was the happiest. I make a living in a job I like.”

Competition

There’s plenty of publications, online and off, covering charity in China. They range from the dry, corporate-focused CSRChina to Global Charity, a bilingual monthly published under the umbrella of the China Soong Ching Ling Foundation, a government-affiliated organization.

The Ministry of Civil Affairs meanwhile authorizes its own monthly journal the Philanthropy Times, detailing what’s happening for a mostly political readership.

An earlier publication, China Development Brief, was pithy and well edited but closed several years ago when its reports proved too revealing for certain provincial governments. The Chinese and foreign sides in this partnership were well represented among the healthy turnout at a launch party in a stately Thai club in the city’s business district.

Judging by the plentiful presence at the magazine’s launch party NGOs are keen on the magazine. “Right now it’s only the first issue and there’s a lot of improvements that would make it more reader-friendly, like using less text. But these issues need covering and there’s no one publication that does that as well as this one has managed,” said an NGO spokesperson present.

Pointedly, she didn’t want to be quoted as her NGO remains on shaky legal ground in China.

The Charitarian clearly has a way to go but the thickness of the first tome and the turn-out for its launch suggests there’s a ready readership. The future editorial direction may still be hazy, and funding is less than secured. But Wang is clear about the end vision: “that there will be no Charitarian because there will be no more poverty… I hope that day will come soon.”

gaofumao@globaltimes.com.cn

(Original Title: Charity Cases, published by Global Times, Februrary 1, 2010: http://www.globaltimes.cn/www/english/metro-beijing/community/events/2010-02/502674.html)

(By Wang Hongyi, China Daily)  SHANGHAI: The latest donation of 43.16 million yuan ($6.3 million) by a major philanthropist and 512 other entrepreneurs toward the needy has stirred controversy in the charity sector.

On Friday, Chinese entrepreneur Chen Guangbiao stood behind a wall of banknotes at the Industrial and Commercial Bank’s Jiangsu provincial branch to announce his new charity trip.

Related readings:  Philanthropists donate to the poor in Tibet, Xinjiang  Love cannot be measured with money  The most inspiring Charitarian in China  Nation’s ‘First Charitarian’ touts his deeds  Charity in any way welcome

Before next month’s Spring Festival, Chen, with 126 other philanthropists, will visit the remote rural areas of the west and distribute aid to the poor in the Xinjiang Uygur and Tibet autonomous regions, as well as Yunnan, Guizhou and Sichuan provinces.

Still, many in the Chinese online community have questioned Chen’s motives and accused him of generating publicity for his own benefit.

“I have committed myself to philanthropy in the past 10 years, during which many people said I was just concerned with my own reputation,” Chen was quoted by China National Radio as saying yesterday.

“But I really hope more people can follow me and also make a show with their own money, of course,” he said.

“In this way, more people in need can get help.”

Stories of Chen’s generosity abound. After growing up in a small, poor village in Jiangsu, Chen now manages a construction company and is one of the entrepreneurs who received the Charity Award by the Ministry of Civil Affairs. He said he has been committed to charity from the day he started his own business.

After the massive earthquake that hit Sichuan province on May 12, 2008, Chen arrived in the quake-hit area with his rescue team and excavation equipment. He and his colleagues pulled more than 200 people out of the rubble. His team also went on to build roads in the quake-hit areas.

Chen has returned to Sichuan many times, helping the area’s reconstruction with his time and money.

So far, Chen has reportedly donated 1 billion yuan to charitable causes in the country, including the reconstruction of disaster-hit regions and the building of primary schools in remote mountainous areas.

From 2008, Chen said he took his aid directly to the needy.

“Where is our money going to? That is a question that most donors asked,” Chen said.

“An inadequate charity system and lack of openness and transparency on funds are the main reasons that many entrepreneurs choose to donate directly to the poor,” he said.

“This has also restrained the development of China’s philanthropy.”

Tang Jin, a member of the standing committee of the Jiangsu provincial people’s congress, echoed Chen’s views.

Tang said several problems exist in the country’s charity scene.

These include the high management costs of running charity organizations that make people more willing to donate to the needy directly rather than through groups.

Zheng Yuanchang, an official of the social welfare and charity affairs department under the Ministry of Civil Affairs, said regulations and standards were needed to reform the country’s charity sector.

China has seen a rapid development in philanthropy in the past few years. Official statistics show that donations toward charitable causes in the country’s reached 107 billion yuan in 2008, 3.5 times that of the previous year’s figure.

(See oringinal at http://www.chinadaily.com.cn/china/2010-01/25/content_9368782.htm)

 By ANDREW JACOBS, New York Times, Published: December 2, 2009

 (Abridged from artilce entitled “H.I.V. Tests Turn Blood Into Cash in China“)

 …Although not trumpeted in its promotional materials, the foundations (Gates Foundation) other goal is more far-reaching: to empower the small but growing crop of nongovernmental groups that stand a better chance of addressing the AIDS epidemic than Chinas lumbering bureaucracy does.

To carry out its mission, the foundation has linked up with the Ministry of Health, which funnels $20 million to about 200 nonprofits, many of which exist in a bureaucratic gray zone and are viewed suspiciously by Chinas authoritarian government.

The distrust flows both ways.

By compelling the government to work with privately run organizations, the foundation is hoping to foster a lasting relationship between them and over time contribute to creating more profound changes in Chinese society.

Dr. Ray Yip, who runs the foundations China effort, acknowledges problems with the program but likens them to growing pains.

We are experiencing some of the hiccups of a less-than-perfect arrangement, but we expected that, he said. If you look historically at arranged marriages, some of them last.

Dr. Yip, who is the former director of the Centers for Disease Control and Prevention office in China, embraces the Gates Foundations philosophy of bold initiatives and risk taking traits often lacking in government-run global health behemoths. He said that if some of the money ended up in the pockets of corrupt officials running fake organizations, it was the cost of doing business in China, where government malfeasance is endemic.

We dont expect every grant in every city to be spectacularly successful, he said. Thats like buying 30 stocks and expecting them all to go up.

Sun Jiangping, deputy director of Chinas National Center for AIDS/STD Control and Prevention, said the program had already had a positive impact on government attitudes toward private AIDS organizations, whose numbers have increased to more than 400 from just a few dozen when the initiative started. He said his agency was working to weed out illegitimate groups.

Compared with the rates in other developing nations, the prevalence of H.I.V. in China is relatively low, with fewer than a million people thought to be infected, according to government figures released last week.

But public health experts are alarmed by an infection rate among gay men that has been doubling annually. By the end of 2008, nearly 5 percent of gay men in Chinas largest cities were thought to be H.I.V.

positive; in some cities, that figure exceeds 10 percent. Health officials say gay men now account for a third of all new transmissions, up from 12 percent in 2007.

Advocates for people with AIDS say the government has been ham-handed in its efforts to prevent the spread of H.I.V., in some cases banning condoms in bars or hounding activists who become too vocal.

In recent years, organizations have sprung up to help those with AIDS who are refused care by hospitals. Many, like Deep Blue, a group that operates from an apartment on the outskirts of Tianjin, are largely financed by grants from abroad.

Deep Blues two counselors meet with the 50 people who come each week for an H.I.V. test.

If you have any questions, contact the volunteers with the red armbands, says one poster. You can stop the testing at any time,

says another. About 65 percent of those who test positive come back for counseling, said the groups director, Yang Jie.

Tong Ge, a veteran AIDS activist who has advised the Gates Foundation on its China program, said he was pleased with the foundations work, though he said he wished there was more of an emphasis on training government workers and less money spent on testing. His biggest regret, he said, is that the foundation chose to funnel the money through the government.

So much of the Gates money has ended up nurturing corruption in a place it didnt exist before, he said. Then, after a pause, he added:

But the truth is we cant blame them. The real problem is with China.

 (Orginal article available at http://www.nytimes.com/2009/12/03/health/policy/03china.html?_r=2)

Many look to introducing some innovative funding strategies having recently immerged in the West  into the nonprofit sector in China. These models include micro-finance, social investment, or the earned income model.  Are these models applicable to China’s situation?  What factors are needed for the new models to work in the emerging social market of China?  What can be the way out for the nonprofits in China to get sustainable source of funding?  We will look at these questions at the lunch dialogue with Professor Michael Chu of Harvard Business School, and Grace Chiang, Founder and Managing Director of Social Venture Groups in Shanghai and Hong Kong on Dec 2nd at the Hauser Center.

Grace will speak from her personal experience of starting up the Social Venture Group, and what she and her team has learned in trying to set up a model of ”innovative philanthropy in China”, about the readiness of the field in China for innovative funding solutions, about current situation of micro-finance in China as shown by some of their clients, and about the effort to sustain their own organization through the earned income model.

Professor Chu will first brief the audience the latest development of innovative funding models for social purpose initiatives, and then comment on Grace and the Social Venture Group’s case, throwing insights on why things are working or not working well in China, and provide advices on potential way out in China for application of those models.

Event Details:

Social Enterprises & Philanthropic Investment in China:

How to Break New Ground in Emerging Markets

A  Lunch Dialogue with

Michael Chu
Senior Lecturer,  Harvard Business School Social Enterprise Initiative; Managing Director, IGNIA Fund in Mexico dedicated to investing in commercial enterprises serving low-income populations in developing countries

Grace Chiang
Co-Founder and Managing Director, Social Venture Group in Shanghai and Hong Kong

Moderator: Xing Hu

Domain Manager, Nonprofits in China Domain of Practice, Hauser Center of Nonprofit Organizations at Harvard

December 2, 2009
1:30–3:00pm

Lunch Provided

Nye B & C, Taubman Building 5^th Floor , Harvard Knnedy School

Co-organized with Harvard Initiative for Nonprofits and Social Entrepreneurship in China [HINSEC], and HKS China Caucus

中文座谈会A Panel Discussion in Chinese

Monday, November 16, 2009

5:00 pm – 6:30 pm

Location: NYE B&C, Taubman Building 5^th Floor, HKS

Huang Haoming 黄浩明

Vice-Chair and Executive Director, China Association for NGO Cooperation

中国国际民间组织合作促进会

Dr. Wang Ming 王名

Professor, Director of NGO Research Center, Tsinghua University

清华大学NGO研究中心

Liu Zhenguo 刘振国

Director of General Office, Bureau of Administration of NGOs Ministry of Civil Affairs中国民政部民间组织管理局

 Dr. Yin Lihai 殷丽海

Deputy Director, Ministry of Finance Tax Policy Department

中国财政部税政司

Commentator: Dr. Chu Songyan褚松燕

Professor, China National School of Administration;国家行政学院

Asia Programs Fellow, Ash Institute of Harvard Kennedy School

Moderator: Xing Hu
Domain Manager, Nonprofits in China, Hauser Center for Nonprofit Organizations

Speaker Bios

Chris Stone and the Chinese private foundation delegation

On 28 October, the Nonprofits in China Domain invited twelve top Chinese private foundations to a seminar on non-profit governance at the Hauser Center. The seminar was moderated by Professor Christopher Stone, director of the Center, while representatives from the Narada Foundation, China Foundation for Poverty Alleviation, Mercy Crops China, Beijing Western Sunshine Rural Development Foundation, Sun Yafang Foundation, Vantone Foundation, Beijing Ren Ai Charity Foundation, China Social Entrepreneur Foundation, Huaxia Center for Economic and Social Development Research, XinPing Foundation, and Nonprofit Incubator (NPI) served as discussants. Mercy Crops China organized this delegation in a week long program to visit relevant institutes in the United States; Harvard was the delegation’s first stop (details of the delegation’s representatives and their respective organizations are available here).

Professor Stone opened with remarks that the role of governance can be distilled into the responsibility of non-profit organizations. He stressed that an organization, such as private foundations operating in China, ought to maintain its integrity in three areas: finance, operations, and purpose. He challenged representatives from these twelve private foundations to assess the effectiveness of governance in their respective organizations and discuss in general how governance affects non-profit organizations in China.

Xu Yongguang, Vice Chairman and Secretary General of the Narada Foundation, provided an overview of governance in Chinese nonprofit organizations. Xu stated that each NGO should be held responsible to the people, to the government, and to their sponsors, regardless of their country of operations; overall the board of directors should be the ultimate decision maker for the NGO. However, such is not always the case in China. Many Chinese NGOs face structural problems to give the board its proper due: in government-operated non-governmental organizations (GONGOs) the board only ranks third after the government and management in its decision making ability; whereas in grassroots NGOs the founder often find his decisions unchallenged regardless of the board structure. For private foundations there are no external pressures to set its structure: however, donors, often entrepreneurs of strong leadership, often interfered with the decision of the board. The Narada Foundation resolved this problem by establishing a diverse board, composed of both donors and experts. The Foundation created a meticulous but effective by-law to govern its meeting procedures; last summer, the Foundation adopted a declaration of self-governance to reaffirm its autonomy of the board.

Other organizations, however, have experienced difficulties in setting a structure to effectively govern the board. The board and the management team often conflict with one another. According to Yang Dongping, founder and chairman of Western Sunshine Rural Development Foundation, his organization lacks the diversity of board necessary to make the board effective. Composed of only experts, the board is in need of entrepreneurs of business background. For many small private foundations like the Western Sunshine Rural Development Foundation, management team is the actual decision maker. On the other hand, an overactive board with diverse opinions can be equally ineffective. Yang Ping, executive officer of Sun Yafeng Foundation, shared his experience from 2004 to 2007 as the secretary-general of entrepreneur-founded Alxa SEE Ecological Association. The board, largely composed of successful businessmen with rich resources, is powerful while the secretary-general lacks real decision making abilities. To sponsor any grant over RMB 100,000, the secretary-general must submit to the board for approval. Yang noted that a strong board against a weak management has both pros and cons. It creates more incentives for entrepreneurs to participate, but at the same time leaves the experts of the organization no role in decision making. In worst case scenarios, the secretariat may retaliate through manipulation of information to gain power for decision making. Overall, Yang urged for more supervision. Chen Yimei, China Country Director of Mercy Crops, agreed with this view and urged state legislature to impose rules in standardizing non-profit governance.

The Hauser Center accepts gift from the Chinese delegation

Answering Stone’s question on whether members of the board should be compensated, both Xu Xiaodong of Vantone Foundation and Gan Dongning of China Social Entrepreneur Foundation agree that they shouldn’t. Gan further called board member to serve as examples for other members of the organization, suggesting that many staff of some Chinese non-profit organizations are given little or no compensation. Stone further commented that boards, like people, develop their own identity and culture.

Lu Zhao, founder and director of Nonprofit Incubator (NPI), explored the question of non-profits governance in China from a different perspective. Speaking from his experiences in helping numerous grassroots organizations, Lu noted that many of these organization’s problem lie with their founders—many of whom are eccentric and stubborn in character. These creators of grassroots organizations are unwilling to give up their own ideas and seldom pull themselves out. They would only seek help from others and seek diversity of the board when realizing the limit of their own resources; even then few could check on these founders’ decisions. Thus, the lifespan of these organizations are likely to be bound by the limits of the founder’s personal ability and resource. Lu highly esteemed founders of organizations willing to quit their organization, if not disbanding the organizations all together once the organizations’ social purpose is accomplished or effectively absorbed by the government. But this ideal found in many well established civil societies is perhaps still a bit distant from China.

(Article contributed by Hong Liu of Harvard University)

Since then, the number of registered and non-registered NPOs (nonprofit organizations) has increased in China in the recent decade, and along with this growth, the philanthropic and policy environment has gradually changed. Such changes were the focus of the afternoon panel discussion at the Hauser Center for Nonprofit Organizations on September 30, 2009, moderated by Professor David Brown, Senior Fellow at the Hauser Center, which brought together main figures from different sectors of the Chinese philanthropic world: Zhuang, Professor Hanlong Lu from the Institute of Sociology at the Shanghai Academy of Social Sciences, an expert on social policy in China, and Zhaomin Jin, Executive Director of the NDC and previous Deputy Secretary General at Shanghai Charity Foundation, a government owned foundation.

Zhuang began the panel discussion with a brief introduction to the development and expansion of her NPO Development Center in Shanghai, emphasizing the importance of such NPO support organizations to help enhance the capacity and legitimacy of grassroots NPOs—an “NPO for NPOs” of sorts. Such capacity and legitimacy may be difficult for grassroots NPOs that often lack professional resources to achieve on their own, especially given the rising expectations for Chinese NPOs by the government, donors and beneficiaries.

According to Zhuang, the key points to cultivating NPO success are to provide a supportive policy environment, good promotion and advocacy on the part of the media, and access to services such as training, coaching and networking. NDC’s influence and strength grew rapidly by strategically levering such needs and creating its niche as one of the few capacity building organizations. In addition to coaching NPOs in important skills such as grant writing and strategic planning, NDC has also helped bring together and forge partnerships between NPOs and the local government. NDC has expanded its services to NPOs throughout China and has created constituents in different areas such as health, disability and the environment. 

Over the past five years, NDC has trained over 4,000 executives and managers in the nonprofit sector in China, and has provided consulting to over 100 NPOs and corporations.

However, like most other nonprofits in China, NDC still faces major challenges of sustaining funding and recruiting highly qualified professionals.

Professor Lu followed up Zhuang’s introduction to her own NPO with a broader discussion of the policy and attitude changes towards NPOs and philanthropy in China throughout the last few decades. 1989 was the baseline year for recognition of NPOs with the establishment of the “Management Regulations of Social Associations,” one of the first documents outlining the Chinese government’s policy towards NPOs. Another key year was 2002, when China officially entered the World Tread Organization. Finally, he pointed to the 2008 earthquake in Sichuan that saw thousands of volunteers and donors gathering to help the victims, and the 2008 Beijing Olympic Games, which also inspired thousands of volunteers to action, as the most prominent signs of the emerging importance of philanthropy in China.

Lu divided Chinese social organizations into three categories: social organizations (such as the Chinese Handicapped Organization), civic non-profit enterprises (such as the NDC), and foundations. Between 1999 and 2008, the total number of social organizations in China increased by an astounding 290%, from 142,665 to 413,660.

Despite this increasing presence of social organizations, however, the official registration process continues to be restrictive. Registration requires the approval (or sponsorship) of a government agency at the county level or above. To prevent unnecessary competition, there can only be one of each type of organization in a given district.

Recent changes see, however, some regional government directing more resources towards NPOs; with greater provision of funding and even free NPO office space, the government is starting to include the development of the nonprofit sector into its long-term strategic plan.

Zhaomin Jin concluded the presentation portion with a brief overview of the current status of foundations in China, coming from her own previous experience of working at the Shanghai Charity Foundation. She noted that philanthropic donations in China are very unevenly distributed:  the top six foundations out of close to 1,600 foundations in China had collected 700 million dollars in donations out of the 1,200 million dollars collected by foundations in total last year. Furthermore, about 90% of all donations were received by “GONGOs”—governmental-operated NGOs—such as the Olympic Games Committee and the China Charity Federation.

According to Jin, most foundations in China run their own relief programs (operational foundations, rather than distributing grants to other nonprofits); for example, the Shanghai Charity Foundation operates nineteen branches throughout China and mostly allocates its funds to those programs. Even if funding is provided to other relief programs, very limited support is given to NPO support organizations like the NDC. However, recently, more and more foundations are moving towards becoming grant-making foundations, with Red Cross and Shanghai Charity Foundation giving out 8 million dollars for grassroots NPO programs last year.

When asked what they think will happen in the next ten years, all three speakers were hopeful about the increasing dialogue between the government and NPO sector and the gradual transition to a more enabling legal environment. Considering the immense rise of awareness of NPOs by the general public, especially following the 2008 Sichuan earthquake public relief efforts, the role of NPOs in Chinese society seems poised to increase.

Zhuang’s analogy of the philanthropic environment in China as a stage perfectly summarizes this optimism: “Currently, the government is the main actor on the stage; nonprofits are the ‘side figures’ running behind the stage. They’re there, but it’s hard to know what they’re doing or how they’re doing it. Eventually, the threshold to get on the stage will be lower; NPOs can then join the government on the main stage for equal assessment by all.”

(Written by Yongtian Tina Tan of Harvard University)