This article is part of CDB’s Special Focus on “Effective Communication and Cooperation between NGOs and Businesses”. It originally formed the first case study in CDB’s latest research report which we released in July 2015 (you can view the original here). Over the next few weeks we will be publishing translations of the ten case studies contained in that report. The case studies detail partnerships between Chinese NGOs, foundations, and businesses.
Corporate funding in China
Chinese NGOs benefit from financial partnerships with private enterprises. In the early stages of cooperation between businesses and Chinese NGOs, relationships were for the most part marked by simple and direct funding, and supported with extremely limited funds. This relationship was linked to the objectives and methods of private enterprises at the time, and to the early stage of development of Chinese NGOs. Perhaps even more so it was also linked to the societal background and the relationship between the government, businesses, and civil society at the time.
The primary modes and objectives for businesses contributions are associated with one another. Many years ago, a local charity leader claimed that donating to charity “can be a means to gain government recognition and the right to political participation such as qualification to be a member of the People’s Congress or the CPPCC [Chinese People’s Political Consultative Conference].” Businesses, especially in the entrepreneurial start-up period, need to acquire immediate resources to survive and develop, and in China the majority of resources remain in the hands of government. Charitable giving became a means to exchange for these resources, and this approach still exists now. However, as they grow and expand, Chinese businesses are beginning to become more pro-active in the field of public service. This is bringing great changes to the ways in which Chinese businesses donate funds and participate in charity.
For the most part, the founders of early NGOs possessed strong leadership qualities, links to resources within the system, and name recognition. The work of early NGOs was one-sidedly regarded as the charity of “good deeds”, which relied on tragic stories and a “tear-jerk factor” to attract donations. Fund-raising methods were also somewhat unsystematic, with many NGOs relying on chance and circumstance rather than strategic planning, to obtain funds.
The 2008 Wenchuan earthquake created space for widespread discussion about the business sector’s role in charitable giving. After donating 2 million RMB to the relief effort, the chairman of Vanke, Wang Shi stated that “it is appropriate for Vanke to donate 2 million”, and also stipulated that “Vanke’s average workers are restricted to giving 10 RMB, so as not to make charitable-giving a burden.” Almost immediately popular online forums were inundated with comments from netizens expressing criticism, doubt, discontent, and ridicule of the chairman’s comment. Under public pressure, Wang Shi issued an open apology. Looking back at this controversy in 2015, although Vanke may have made or conveyed decisions in an inappropriate manner, it is impressive to note that this publicly traded company observed a system of establishing annual charitable giving quotas ratified by a board of directors. Now, due to the establishment of corporate foundations and specialized CSR (corporate social responsibility) departments, the rate of systematic and independent corporate contributions is beginning to rise in China.
Accordingly, since 2008 Chinese the Chinese NGO sector has experienced great changes. Hotspots of NGOs – such as in Guangdong and Shanghai – have been fostered through progressive local policies, and the overall number of NGOs in China has rapidly increased. These NGOs remain heavily affected by the external environmental. Their operation continues to rely heavily on funding from international organizations and this is becoming more difficult with each passing day. In light of this, the Chinese NGO sector, with its growing emphasis on professionalization, self-sufficiency, and efficiency, has urgently begun moving towards partnering with private enterprises to obtain resources. However, generally speaking, partnerships between public interest organizations and private enterprises over the last decade have remained almost unchanged. Nevertheless, as it is noted in CDB’s 2015 report, the exploration and practices of some pioneers have opened up the possibility of greater cooperation between the two sectors. This will not just solve funding issues, it will also positively impact other areas, such as organizational management, team-building, and professional development.
Blooming cooperation between corporations and Hongdandan
The Beijing Hongdandan Education and Culture Exchange Center (红丹丹文化交流中心， referred to below as “Hongdandan”) was established in Beijing in July 20031. The Center is dedicated to using audio to create accessible cultural products for those with visual impairment, and to improving the lives of the visually impaired by providing aids such as “talking” movies , audio books and reading materials. After experiencing a series of crises in 2005, Hongdandan turned to partnerships with corporations as a means of survival. Over the past two years, Hongdandan again resolved its funding source challenges by utilising the methodology of social enterprises. From the brink of bankruptcy to increased growth and expansion, there is much to learn from the experience of Hongdandan and its corporate partnerships.
Before 2005 Hongdandan’s funding channels were very narrow, consisting primarily of program funding from international foundations. However, beginning in 2006 Hongdandan completely ended its partnership with international foundations for a number of reasons2. Following this self-imposed cut-off from funding sources, Hongdandan plunged into an unsustainable situation. While the organization was engaged in litigation the “Fuping Development Institute” introduced Hongdandan to Microsoft. By April of the same year, Microsoft began to send volunteers to participate in Hongdandan’s “Theater of the Mind” activities, and provided computer maintenance and other professional services. Microsoft provided a glimmer of hope to Hongdandan at its most difficult time, and impelled Hongdandan to turn the focus of its partnerships towards the private sector.
On the first anniversary of this initial crisis, April 2006, Hongdandan received an opportunity to partner with the Radio Beijing Corporation (北京人民广播电台), with the radio station willing to feature long-term broadcasts of “Theater of the Mind” as a service to the visually impaired. However, according to regulations, the station required a sponsorship fee. This led Hongdandan to seek out Bayer Pharmaceutical Company’s corporate social responsibility department, hoping that the business would help solve this problem. After being told about the “Theater of the Mind” program, Bayer decided to offer financial assistance to Hongdandan in the form of public service advertisements. After receiving 70,000 RMB of start-up capital, “Theater of the Mind” successfully began to air. From its inception the broadcast stirred up a large social response, and within a few short months it was reported on Beijing Radio & Television Network’s talkshow “The Seventh Day” (第 七日) and CCTV’s “Oriental Horizon” (东方时空), making the program even more popular. In October 2006 Hongdandan decided to organize a large-scale “Theater of the Mind” campaign at the PLA Theater, and Bayer promised to provide full financial sponsorship. Hongdandan also utilized the advertisement screens at the PLA Theater event to provide “free” publicity about Bayer’s charitable support of the activity. Hongdandan and Bayer’s relationship grew deeper due to the positive publicity that this event received. In addition to providing sustainable financial support to Hongdandan, Bayer also began sending volunteers to provide “Theater of the Mind” with manpower.
After Microsoft and Bayer’s initial partnership in 2006, the “Theater of the Mind” program became financially sustainable and Hongdandan completely broke off its reliance on foundation support. As a matter of fact, the influence of Microsoft and Bayer on Hongdandan far outweighed the support of any one single activity. The work of volunteers from Microsoft caused Hongdandan to receive more attention from the corporate sector, and businesses began to take initiatives to establish contact with Hongdandan through Microsoft.
In 2007, a media report about the experiences of a Chinese Starbucks employee volunteering with Hongdandan caught the attention of the Starbucks regional manager. Starbucks’ employee volunteer group, under the support of the Regional Manager, began partnering with Hongdandan. Every month at a settled time this employee volunteer group took coffee and snacks to the “Theater of the Mind”, helped the visually impaired to “listen to” movie clips, and also used tastes and smells to help the visually impaired experience the world through different senses. The partnership between Hongdandan and Starbucks was not solely a one-sided voluntary service program. Hongdandan also educated Starbucks through every method available, deeply entrenching the idea of “helping the blind” within its business actions. Hongdandan would send workers to Starbuck’s cafes and give Starbucks employees training on how to guide the visually impaired. Hongdandan hoped that through these kinds of methods it could slowly influence businesses and transform social attitudes towards the blind.
Beginning in 2007, many CCTV hosts, led by Wang Xiaoya, volunteered at “Theater of the Mind” by helping the visually impaired listen to movies, and the program team from the CCTV talkshow “Tell It Like It Is”（实话实说）extended an invitation for Microsoft volunteers to record a program together with Hongdandan. After these scattered partnerships Hongdandan gained a certain degree of influence with CCTV. Therefore, beginning in May of 2008, CCTV’s financial channel officially became a member of Hongdandan’s volunteer team, regularly sending hosts every last week of the month to “Theater of the Mind” to provide professional audio services.
Hongdandan comprehensively considered what businesses it would choose for partnership, seeking assistance by targeting varied companies with unique traits. For example, the partnership with CCTV was chosen because of the immense social influence held by the station’s hosts and anchor people, and the partnership with Starbucks was chosen because of the large number of Starbucks coffee shop locations and the large number of lower-level employees with strong service skills who could volunteer for the organization. Several large-scale events after the partnership were staffed with volunteers from Starbucks, whose support provided ample manpower. Microsoft also used its leading IT technology to provide a specialized “cloud service” during the development of the “Library of the Mind” audio program, which allowed the visually impaired to use their phones to listen to audio books. A Hong Kong business also provided specially-made braille scarves. The organizations could raise funds through charity auctions, and could publicize effectively by donating to people from all walks of life who had previously received services. Continuous support from varied sources allowed Hongdandan to leverage these resources from businesses to provide long-term services to the blind.
After just several years of effort, Hongdandan’s main program, the “Theater of the Mind”, was already made sustainable through corporate funding. But a steady stream of aid and support still could not fulfil the organization’s mission of “promoting social integration and a supportive environment for the visually impaired.” Hongdandan began exploring ideas of self-sufficiency at the intersection of the societal and business spheres.
In 2009 Hongdandan designed a card that used braille prompts to help the visually impaired to quickly distinguish between different denominations of paper money. However, after its design there was not a channel to bring it into the market. At this time, another beneficial partnership with the corporate sector created an opportunity for Hongdandan. In April of 2011 a leader of the Beijing branch of the China Construction Bank contacted Hongdandan about the possibility of future partnership. Hongdandan utilized this opportunity to recommend the card to the leadership at China Construction Bank. At that time it just so happened that a number of discrimination incidents involving visually impaired people in banks had just occurred, which evoked a strong response from society. Therefore China Construction Bank quickly agreed to the partnership, and under the bank’s financial support Hongdandan distributed its first batch of cards to its Beijing branches. Afterwards, the leader of China Construction Bank introduced the cards as an example at a national China Banking Regulatory Commission meeting to demonstrate its experiences with improving accessibility. Fortunately, after half a year, the China Banking Regulatory Commission released a document requiring all bank teller counters to provide the accessibility cards for the blind. At that time all banks sought out Hongdandan to buy the cards, with the Agricultural Bank of China buying cards for more than 20,000 branches in a single order. By 2014 Hongdandan had sold over 700,000 RMB worth of cards to assist the blind, enabling the organization to completely turn its accounts from the red to the black.
In 2014 Hongdandan presented its “Beijing Map for the Blind” project as a government procured service. It aimed to make going outside in Beijing more convenient for the visually impaired, and also aimed to compel more public organizations to provide services. As a component of the project, the organization initiated contact with Walmart, and provided training to Walmart’s employees, educating cashiers and salespeople how to better service the visually impaired. While in the initial phase of promotion these training services did not require the financial support of the company and were provided completely free as a form of advocacy. Hongdandan hoped to bring blind customers into the store after the training to enable the company to understand the benefits of helping the visually impaired. It remains to be seen whether if in the future the government were to cease its support of this program, Hongdandan could also provide paid training services to corporations, and use the revenues to guarantee the continued operation of the “Beijing Map for the blind” project.
Partnership with the Beijing historical imperial site Prince Gong’s Mansion (恭王府) was also a way for Hongdandan to provide standardized products for the market. In 2010 Hongdandan and Prince Gong’s Mansion signed an agreement in which Hongdandan provided free training sessions on how to help the visually impaired, and in turn Prince Gong’s Mansion established a public service day every month in which it provided free tours for the visually impaired. Following this, Hongdandan developed a 3D travel guide for the blind for Prince Gong’s Mansion and helped the Mansion apply to become a “grade 5A” scenic spot (the highest level tourist attraction in China). The travel guide was just a part of Hongdandan’s integrated advocacy. Although the cooperation was one of mutual exchange, in the end the partnership was for the convenience of a vast number of visually impaired.
For the past ten years, through funding and volunteer support from the corporate sector, Hongdandan has has adhered to their mantra of “voluntary support and self-sufficiency” (“志愿-输血- 造血”). From the story of Hongdandan we can see that obtaining funds from profits and corporate sources in an appropriate way need not have a negative effect on an organization, but rather allows the organization to continue to fulfil its mission.
The China Association for NGO Cooperation (CANGO), Non Profit Incubator (NPI, and the International Communication Center’s 2011 survey, the “Research Report on Cooperation between Chinese NGOs and Business” (中国公益组织与企业合作调研报告), shows that of the companies surveyed about their investment in CSR, 45% had invested between 1.01 million to 9.9 million RMB. For the majority of those surveyed, investment in CSR remained in the range of a few million RMB. In addition, 25% of companies had invested more than 10 million RMB. Moreover, SynTao’s 2015 study “2015 Professional CSR Manager Research Report” (2015年CSR职业经理人调查报告) shows that 49% of companies had a budget below 1 million RMB for CSR, and 17% of companies budget more than 10 million RMB. It is thus clear that the amount of money that businesses invest in CSR towards civil society organizations is not trivial. However, the proportion of funding sources from businesses to NGOs surveyed was not high. Each company will partner with many public welfare organizations, with NGOs only accounting for a small share of support.
The partnership between Hongdandan and the corporate sphere can be contemplated from several aspects. Research and previous data shows that companies are most willing to donate to fields such as education, disaster relief, and elder care. Disability services is a field which can be unattractive to investment because it usually does not show results in a short-time frame. However as an organization which helps the disabled, almost all of Hongdandan’s funding comes from corporate sources. What exactly is the key to a successful partnership?
This kind of partnership in fact is an incremental process. The volunteer partnership between Hongdandan and China Construction Bank, for example, is relatively long-term. Volunteers grow to understand the needs of the visually impaired, and are able to see the problems from the perspective of Hongdandan. At the beginning of the partnership it was easy for the two sides to communicate, and to avoid the problem of not knowing what the other is speaking of due to the differences in terminology between the public interest organization and corporate sectors. In choosing to partner with the bank Hongdandan took into consideration the intellectual property protection a NGO could receive by partnering with a large-scale enterprise. Because Hongdandan had been involved in problematic situations in the past, as soon as the organization designed its braille card to help the blind it immediately applied for a patent.
In regards to product promotion, a presentation by a leader of the Beijing branch of China Construction Bank at a national meeting of bank leaders explained the public benefit of using Hongdandan’s card. This kind of presentation is very powerful promotion. Later, after the China Banking Regulatory Commission released a document requiring the provision of accessibility tools for the impaired, related departments would carry out implementation inspections. Therefore many more banks began to partner with Hongdandan. Today over ten Chinese banks use Hongdandan’s braille card to assist their visually impaired customers. Through this card the visually impaired are able to complete their transactions independently, contributing to an increased respect for their personal privacy rights. This card is a tool which has brought the concepts of “respect” and “empowerment” to the banking industry, and which has made more people understand what the needs of the visually impaired are. Hongdandan’s braille bank card has become a vehicle for advocacy for the rights of the disabled in China.
Both sides of this bilateral cooperation have found points of agreement in meeting the demands of one another. From a corporate point of view, in comparison to excessive advertising fees, a bank’s investment in a few thousand cards makes a great impact. From another point of view, if banks were to give money to produce these cards for NGOs, perhaps it would not be able to intuitively see the impact and reasons why it’s helping produce the cards. According to some critics, Chinese NGOs in their early stages did not adequately deal with the complexity of social problems, or they were too distant from the social problems they tried to solve. NGOs believe that they should stand on high moral ground, and businesses should follow with support. However, when NGOs fail to provide effective services to companies, why would the company offer its support? After all, the ultimate goal of a company is profit maximization, not maximization of social responsibility.
Hongdandan’s braille bank cards are a symbol that makes clear that Chinese NGOs are moving towards a transition phase. At a recent forum involving NGOs and companies in Shanghai, one businessman commented that NGOs should improve their services, policies and attitude. The normal concept is that if you provide good standardized programs or services, companies will want to invest in them. In partnering with businesses, Chinese NGOs often believe that the rules and standards created by corporations will not be in line with their own aims and methods. However, why can’t NGOs provide their own specialized metrics for standards to corporations? If an NGO can provide normalized standards and possess the required implementation capacity, and if it can achieve excellent communication and partnership with companies, it can have companies accept results in accordance with standard program evaluation of NGOs.