Philanthropy Infrastructure Building in China — Learning and Challenges

by Zuofu Lai

Narada Foundation

Founded in May 2007, Narada Foundation (Narada) is committed to a mission of “Fostering Civil Society” with the vision of “A fair and just society where every heart carries hope” Narada is the first grant making foundation in China that is dedicated to providing financial support to grassroots NGOs, while most of the existing foundations across the country at the time of its launch were operating foundations. Its unique DNA of promoting the interests of the general public has been instilled by its founders Zhou Qingzhi and Xu Yongguang, two philanthropists with distinguished experience and great insights and visions. A humble businessman now serving as the President of Shanghai Narada Group Co. Ltd., Zhou is a typical idealist among the first batch of college students after the Cultural Revolution in China and shares with other idealists of his generation a view that philanthropy is the way to promote the transition to a good society in China. Founder of the Project Hope dedicated to supporting children’s education, Xu has been making continuous efforts to advance the development of China’s philanthropic and non-profit sector and social innovation over the last three decades.

During the last decade since its establishment, Narada has been playing leading roles in the following aspects:

  • As a supporter of philanthropy and grassroots NGOs, Narada has practiced and advocated the concepts of grant making foundations, contributing a large proportion of funds to grassroots organizations;
  • As a constructor of the philanthropy infrastructure, by carrying out financial support, joint initiatives and network building, Narada has supported over ten significant networks, platforms and professional supporting organizations in corresponding industries, such as the China Foundation Center (CFC), Non-Profit Incubator (NPI), the China Foundation Forum (previously known as the China Private Foundation Forum, CPFF), the China Association of Fundraising Professionals(CAFP), the China Donors Roundtable(CDR), the China Social Enterprise and Investment Forum, and the Effective Philanthropy Multiplier;
  • As a leader in philanthropy concepts and practices, Narada has been at the forefront of investing in NGOs leaders and providing unrestricted grants to leading NGOs, which are both seen as pioneering practices in foundation sector in China; and,
  • As an advocate of competent laws and policies, Narada has been supporting the researches into and promotion of laws and policies by gathering peers to provide suggestions for the development and amendment of competent laws and regulations such as the Charity Law of China, with a view to proactively creating an enabling external environment for the development of philanthropic sector.

Learning 

During the philanthropy infrastructure building, Narada has learned that:

  1. The construction of philanthropy infrastructure is a long-term cause demanding great patience. Rome wasn’t built in a day; neither will the philanthropy infrastructure be. As the public goods supporting the development of the philanthropic and non-profit sector, the infrastructure requires long-term investment and efforts from responsible and patient philanthropic capital con With this in mind, Narada has been offering continuous support to significant network and platforms, such as the CFC and the China Foundation Forum, which Narada has backed since their establishment.
  1. The multiplier effect of the philanthropy infrastructure will give full play to the lever effect of the philanthropic capital. For instance, Narada initiated the Ginkgo Fellow Program dedicated to supporting leaders of grassroots NGOs and social entrepreneurs. The Program provides the honorees, or the “Ginkgo Fellows,” with RMB 100,000 (around US$ 15,625 ) each year for three consecutive years that can be deployed as they wish in living, learning or charitable activities, sparing them worries about the costs of living and helping them focus on the social cause they dedicated. The fellows have brought in changes in their respective organizations, which has eventually impacted the social sector in a positive way. Through this kind of support, Narada has been able to create a ripple effect and facilitate exponential growth. 
  1. Collaboration is needed for philanthropy infrastructure building. The long time and huge capital requirement makes philanthropy infrastructure building a mission beyond the capacity of just one or a handful of foundations. For example, in 2015, Narada, with an average annual budget of around RMB 30 million (around US$4.7 million ), ranked 137th in charitable spending among all foundations in China[1]. Therefore, it is necessary to engage a wide range of collaborators. That is why when establishing CFC, as the main founder and sponsor, Narada encouraged more than 30 foundations to contribute to the establishment of the center.
  1. Funding is important, but it alone is far from sufficient. During the past decade, Narada has granted a total of RMB 246 million (around US$38 million) to 783 projects initiated by 451 organizations or individuals. Despite the small amount allocated to each project, as a firm and reputed builder of the philanthropic sector, Narada has also helped with the governance of these projects and offered non-financial support including intellectual support, experience sharing and resource matchmaking based on its 10-year experience and significant influence, maximizing the effect of financial support.

 

Challenges 

First, the modern philanthropy infrastructure building in China faces a tough journey ahead. Despite the long tradition of philanthropy in China[2], public goods have been mainly provided by the government since 1949[3]. It was not until 2004, or rather 2008, known as the “Year of Civil Society” after the devastating Wenchuan Earthquake, that the true grassroots philanthropy and non-profits started emerging. Therefore, China’s civilian philanthropy, especially the institutionalized philanthropy represented by modern private foundations, has a history of less than 20 years and suffers from a serious shortage, if not a gap, of supporting philanthropy infrastructure, such as the media outlets dedicated to delivering information of the sector, database platforms and qualified intermediate agencies.

Second, the awareness of supporting the philanthropy infrastructure should be increased. As philanthropy infrastructure is public goods that require long-term commitment and a large amount of funds, and will not demonstrate benefits in a short time as other projects do, it is in need of patient philanthropic capital contributors. Given that most grant makers expect short-term achievements, it will be helpful to raise their awareness of the importance of the philanthropy infrastructure building or the support to it.

Last, philanthropy infrastructure lacks financial support. Despite the fact that even  the US has to face this challenge[4], it is more serious in China, due to the small scope of its philanthropy sector. According to the Ministry of Civil Affairs of China, in 2016, social organizations including all kinds of legal entities, contributed only 4.3‰ to the country’s GDP. As of 2016, foundations in China have numbered 5,555, but only 1% of them are grant making foundations[5], with others operating on their own programs, or merely providing support to specific projects selectively.

A mindset of renewed learning, openness and collaboration are needed to explore suitable patterns for the philanthropic sector in China – by drawing on international practices on effectively and smartly leveraging the financial support and by improving the philanthropy infrastructure – for the benefit of effective development of the philanthropy and non-profit sector that can contribute to valuable solutions to social issues. Despite a late start, the grassroots NGOs and philanthropic foundations in China have been thriving quickly, with all concepts practiced in the country – from traditional charitable practice in meeting immediate needs, to modern scientific philanthropy, and further beyond social entrepreneurship and social investment. Narada believes that as a country that accounts for 20% of the world population, China’s efforts and progress in building a prosperous philanthropic sector of its own can significantly contribute to global philanthropy.

 

Zuofu Lai, is the program director at Narada Foundation.

 

[1] Source: China Foundation Center, see http://data.foundationcenter.org.cn/content_52.html .

[2] Yu Yue Tsu, The Spirit of Chinese Philanthropy: A Study in Mutual Aid, 1911.

[3] For more information about the history and evolution of China’s third sector, see Hui Qin, Understanding China’s Third Sector, Social Innovation and Social Transition in East China, Supplement to Stanford Social Innovation Review, Spring 2017.

[4] Suzanne Perry, Nearly 2 Dozen Groups Urge Foundations to Spend More to Strengthen Nonprofits, May, 2016 see https://philanthropy.com/article/Nearly-2-Dozen-Groups-Urge/236498.

[5] Yongguang Xu, Essay on the GDP of China’s Social Organizations, see http://www.naradafoundation.org/content/5141.

2 thoughts on “Philanthropy Infrastructure Building in China — Learning and Challenges

  1. Pingback: WINGS Network Monthly Update – April | Philanthropy In Focus

  2. Pingback: Philanthropy Infrastructure Building in China - Learning and Challenges - Giving Compass

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