This article is part of our special issue on New Trends in Philanthropy and Civil Society in China (Summer, 2011). It records an interesting and important dialogue at the Second Private Foundation Forum held on October 28-29, 2010. In the dialogue, several prominent grassroots NGO leaders and private foundation leaders discuss the disconnect between the up-and-coming private foundations and grassroots NGOs. Given the close relationship between foundations and NGOs in developed countries, why is it so difficult for grassroots NGOs to get funding support from private foundations in China?. A few answers emerge from this dialogue. One is that private foundations and grassroots NGOs are relatively new, and growing quickly, in China. Part of the disconnect between these two actors stems from their relative newness. Both are going through growing pains and trying to figure out their missions, roles and development strategies in a difficult political, economic and social environment. Both lack qualified professional staff that are trained in nonprofit management, fundraising, and strategic planning. Foundations often lack confidence in grassroots NGOs to carry out projects, and grassroots NGOs feel overburdened by the planning and reporting required of them from foundations. Ironically, foreign governments, international NGOs and foundations from developed countries have historically been more willing to fund grassroots NGOs in China. A critical question for China’s civil society is whether Chinese private foundations will learn to value NGOs as partners. The views expressed here by the Narada Foundation and SEE suggest that a small number of private foundations do want to support NGOs1.
During the Second Private Foundation Forum, Liang Xiaoyan, Secretary General of the Western Sunshine Foundation, chaired a panel entitled “Private Foundations Do Not Lack Money, but Grassroots Groups Do.” The issues raised inspired intense debate among the participants, and turned into a heated and in-depth dialogue between private foundations and grassroots organizations during the two-day forum. What follows is an abridged and edited version of the dialogue.
Liang Xiaoyan, Secretary-General, Beijing Western Sunshine Foundation (西部阳光基金会)
Liu Zhouhong, Deputy Secretary-General, Narada Foundation (南都公益基金会)
Meng Weina, Director, Beijing Huiling Community Services for People with Learning Disabilities (北京慧灵)
Wang Weijia, Chairman, SEE Foundation (北京企业家环保基金会)
Song Qinghua, Director, Shining Stone Community Action Center (社区参与行动)
Dou Ruigang, Executive Secretary-General Tencent Public Charity Foundation (腾讯公益慈善基金会)
Is there a shortage of funds? Different views emerge
Liang Xiaoyan: In preparing for this forum, more than one organization raised this issue with the organizers. Some foundations stated, “The year is coming to an end, but many foundations haven’t spent all their money.” While NGOs are saying: “We have a real need for funding.” Today, we will discuss this disconnect between foundations and grassroots NGOs.
Liu Zhouhong: Looking at the Narada Foundation’s budget over the last few years, there has been a gap between money spent and our planned budget at the end of each year. In 2008, our budget was 18 million RMB, but in the end we only spent 15 million. In 2009, our budget was 22 million, but we only spent about 20 million. In our end-of-year report to the board, we explained the gap by saying that it is better to maintain strict control over quality than to settle for poor results.
From our perspective, it seems we need to adjust our approach. In the beginning, we were too selective. Selecting capable grassroots organizations was especially hard and only a few met our standard. Later we made some adjustments and decided to support organizations that are a bit weaker and improve their capacity through project support. As a result, I believe this year we’ll be able to spend our budget without a problem.
Meng Weina: The Narada Foundation needs to find good projects and I’ve been engaged in a discussion with them about what makes a good project. Organizations like us focus on traditional service provision, but foundations generally emphasize creative initiatives. But I think in a materialistic society, the most traditional and decent services get ignored, and then foundations start acting like the government.
Wang Weijia: We (SEE) are a foundation established under the Alashan Ecological Association (阿拉善生态协会). We do not cooperate formally with any government agency, and only fund environmental NGOs. The number of environmental NGOs operating in China is only about 300, with an average size of just 2-3 full-time staff. The total annual budget for China’s environmental NGOs is about 30-50 million RMB, compared to 3 billion U.S. dollars in the U.S.. This means that Chinese support for environmental NGOs is about 1/1000 of the level of support in the U.S., even though China’s GDP is one-third of the U.S. GDP. Our mission is to improve the health of China’s environmental NGOs. We just started last year, and are constantly learning. Last year, our budget was 80 million RMB and this year our total funding is 600 million RMB. We hope that in 5 to 10 years, investment in environmental NGOs rises to a point that matches our country’s level of economic development.
Some Taiwan businessmen feel that we have been too permissive in giving money to NGOs. In our evaluation and review of funded projects, we found that some organizations are small and weak. Our philosophy is that it doesn’t matter how small these organizations are, or how imperfect their management is. Our aim is to learn with them and grow together, rather than accusing them or finding a reason not to provide support. We will continue to fund them and give them space and opportunities to grow.
Song Qinghua: Our organization is called Community Action, and our main goal is to promote public participation in the community at all levels. So far, our organization does not lack for money. But what we lack is money from private foundations. Logically, private foundations and NGOs should really be strategic partners, but why is cooperation so hard? Foundations say it’s hard to find capable NGOs. We feel that it’s foundations that lack the ability to find competent NGOs. We have cooperated with some private foundations, including Youcheng (友成企业家基金会), Vantone (万通基金会) and Narada. During our cooperation, I kept reflecting on why it is so difficult for foundations and NGOs to work together. I finally figured out that it is because NGOs have 20 years of history while private foundations have only been developing for 5 years. We (NGOs) should support their work. Everyone must work together for change to happen.
Dou Ruigang: Looking at China’s development, we are at a stage where we do not lack money. So why do so many NPOs feel they lack funds? It’s because there’s a communication problem between foundations and NPOs. NPOs and foundations share a common goal: to solve social problems. One side provides capital for a purpose and the other side provides solutions to social problems. Both sides have valuable areas in which they excel. But if there is not a good connection between the two sides, foundations will be unable to find good partners and NPOs will be unable to find good funders2.
A lot of NPOs say that they can survive without foundations. But if foundations don’t have NPOs, they will lose their existing value. Foundations should reflect on this point. On the other hand, foundations can go in another direction and become operational foundations that implement their own projects to solve social problems. Both sides need to reflect on this issue. There are many social problems, but few effective and creative solutions and few qualified professionals. So we face a dilemma: private foundations can’t spend their money, and grassroots public interest groups can’t find money.
Looking for solutions in an underdeveloped public welfare environment
Liang Xiaoyan: How should we view the dependence between foundations and grassroots organizations? Just now, Meng Weina raised the question of what makes a good project and whether it is good or bad to provide traditional services in traditional ways. Everyone talks about innovation, but does it mean that if we support traditional services that we don’t support innovation? How much latitude should we leave for creativity? Foundations are engaged in practical work and you need to recognize the reality that grassroots organizations are developing and that money always requires cooperation with people. From that starting point, we can discuss the deficiencies in how foundations are operating3.
Liu Zhouhong: Foundations should not make the requirements for financial assistance too stringent. They should be patient and give NGOs a certain amount of space and time. Support should cover a 3-5 year period before checking in to see if the NGO has improved. In addition, foundations need better publicity as many people don’t know that foundations can provide funding. Of course, our own capacity needs to be strengthened too. Many of our staff are young and inexperienced. We (foundations) have relatively few staff members, but have many projects to oversee. So, figuring out how to manage projects in a detailed way is also an issue.
Dou Ruigang: Yesterday, I heard an NGO say that every organization has different requirements regarding project planning reports. First NGOs write a project plan, then write up a PowerPoint presentation, and finally fly over to discuss the plan. Then, after the discussion, where is the time to actually do the project? So new public interest organizations can’t get established and the chain of the common good is broken. I suggest that, in the future, foundations stop forcing organizations to write out planning documents. Can one plan cover ten years of funding? If the annual appraisal is good, we can then automatically continue our support.
Wang Weijia: At first, we just provided financial support and we encountered the same problem. This year, we started providing institutional support. What is institutional support? It is that we focus on people, rather than work. As long as we trust you and your team, what you do is not our concern. Environmental NGOs all face the same problem: To get money, they’ll write different project plans for different foundations. An organization with 2-3 staff members does not have the capacity to carry out 5-6 tasks and will be unable to develop. Like a company, an organization can only accumulate experience and develop a team in a specific market niche. So our institutional support is for at least 2-3 years. This year, we have provided 3 million RMB in institutional support, which is an amount equal to our project-specific funding.
If we look at our work as a business investment, no NGO would be able to get support. Right now is like the last ten years in which China’s internet was just starting out. At that time, investors couldn’t tell who would be successful and they had to give money to everyone. Our principle is that we only give money to people we trust. Environmental protection has many aspects and, in a short time, it is not possible to become expert in all of them. We can only rely on people to set the standard, but what can we do if they are unreliable sometimes? My personal principle is to assume that people are good. If I do not know you, I assume you are a good person and give you some money. If you haven’t done anything or bungled the job after six months or a year, you won’t get any more funding from us. At most, we’ll waste a little bit of money, but this is the cost we pay to learn.
Dou Ruigang: We’ve just been reflecting on our own behavior and the most important issue is discourse. A foundation with a corporate background needs to voice its opinion. For example, it has to be effective and seek solutions for social problems. What is a problem we often run into? Hearing people say that social problems are very serious and money is needed to solve them. But the difficult thing is that I don’t see a plan. We are not Buddha, always ready to give money when you are in trouble. In the future, there will be competition between NGOs. Different NGOs will provide different solutions and funders will pick the better plan.
Song Qinghua: At present, the environment for charity is not good. I especially agree with Dou. We need to work and grow together to have a future.
Second, you cannot reject dialogue and our discussions must increase. I may make demands that you say are unreasonable, but you cannot say: “Give me money and leave me alone. Stop interfering.” Like companies and suppliers, we should have a way to communicate in order to better understand each other. Only then we can grow together.
Liang Xiaoyang： There are many ways for foundations to provide financial support. We should ask ourselves, what is currently the most common way to support grassroots organizations? How can it be improved? What challenges will innovation bring to private foundations? Are foundations well-prepared? What about their staff? How can we come up with new ideas to fund the public good?
Liu Zhouhong: The Narada Foundation is a grant-making foundation with a mission to support public welfare. Our research shows that it is hardest for grassroots organization to get financial support to cover staff costs, administrative expenses and small subsidies for volunteers. When we visited Yushu and Xining to investigate, we found out the money that NGOs raise must be spent on projects rather than personnel and administrative costs. As a result, there are more than 2,000 grassroots organizations in Qinghai province, but 80% have no full time staff. So we focus our grants on staff costs, administrative expenses and volunteer allowances4.
Second, we support capacity building for grassroots organizations. Some organizations say it is very helpful to receive 1,000 RMB to cover transportation and accommodation costs to attend a training program. This is another thing we are doing now.
Third, we believe that project grants alone are not enough. We need to support the growth of organizations and their staff. This year, Narada introduced a new project called the “Gingko Partnership Growth Plan” (银杏伙伴成长计划) designed to back young people to do pioneering work in public welfare. ”Ginko Partners” will receive 100,000 RMB per year for 3 years. This money can be used to subsidize a salary, living expenses or professional development, like opportunites to take courses, visit other places or study other models. The Narada Foundation also has other plans for complementary activities to meet this common need.
Wang Weijia: In cooperation with several universities, we have launched a green partnership leadership plan. Last year, we trained 57 leaders from 36 environmental organizations. In 200 universities we also have a program called “Green Country, Green Cities” (青国青城) to encourage college students to enter a career in environmental protection. We have also funded about 100 environmental organizations in universities. The next step we are considering is to offer college graduates start up capital if they want to choose a career in the environmental NGOs sector. Right now, there aren’t many people in the field, especially talented young people. In addition, we have supported many intermediary organizations, including training institutions. In a relatively short time, we hope that we can create a good environment for grassroots environmental protection.
Liang Xiaoyan: Private foundations and grassroots organizations are a critical link in public welfare and our common mission is to improve Chinese society. We have been talking on and on about projects, but we have to bear in mind that our cause has another function that can’t be ignored. Although we do one specific job after another, we are creating a new society in China. The goal of a new society requires us, not to go about doing projects and complaining about each other, but to find a deeper common purpose and a clear idea of how to realize that goal.
Note: In the afternoon discussion on the second day, the topic of foundations being unable to spend their money came up again. But in the small group discussion, very few NGOs said they had worked with private foundations and no foundation admitted to having money they were unable to spend. In the end, the chair had to step in to say that it might be a false to assume that foundations are having difficulty spending money. Of course, he mentioned that there is also another possibility: foundations do not want to admit they are unable to spend money. In addition to the reasons raised in the round table discussion, other causes for the problem also came up in small group discussions. Some foundations think that inability to spend money is related to having too many “mother-in-law” organizations, a reference to government supervising agencies that may interfere in funding decisions. These agencies have different priorities from foundation leaders and boards, and the foundations have to respect their opinions. If disagreements (between the two sides) arise, it can be difficult to make grants.
Moreover, foundation boards, which consist of investors, experts and sometimes entrepreneurs, may also disagree. In small group discussions, some foundations said difficulty spending money was due to difficulty reaching agreement among these different parties. Also, private foundations may not be in a hurry to spend money.
A related problem expressed in this forum is that funding tends to go to projects rather than to funding a NGO’s personnel and administrative costs. The lack of funding to build the organizational capacity of grassroots NGOs is a longstanding problem in China, and contributes to the communication gap between private foundations and NGOs. It’s a vicious cycle. As long as NGOs remain weak, foundations will continue to lack confidence in NGOs. But if foundations are not willing to fund NGOs, then NGOs will remain weak. Again, the views of Narada and SEE show that some private foundations understand what is required to break this cycle. They need to put more trust in the ability of NGOs, and devote more funding to organizational capacity, and not just to projects. ↩
Editor’s note: the speaker here uses NPO (nonprofit organization) instead of NGO (nongovernmental organization) but they are synonymous. In China, NGO can be somewhat sensitive because it connotes an organization that is against the government. As a result, terms like NPO, charitable organization (cishan zuzhi) or public welfare organization (gongyi zuzhi) are often used in place of NGO. ↩
Editor’s note: Social innovation (shehui chuangxin), and the related concept of social enterprise (shehui qiye), are becoming increasingly popular concepts in China’s nonprofit community. Liang Xiaoyan raises the important issue of whether social innovation really differs from traditional nonprofit work, and whether more value should be placed on innovation. ↩
Editor’s note: Yushu is a county in Qinghai that was hit by an 6.9 magnitude earthquake on April 14, 2010. ↩