Founded in May 2007 by Zhou Qingzhi and Xu Yongguang, at a time when most of the country’s existing foundations were operating foundations, Narada Foundation was the first grantmaking foundation in China dedicated to providing financial support to grassroots NGOs. Its vision is of ‘a fair and just society where every heart carries hope’. Since its founding, the philanthropy scene in China has changed dramatically. Alliance’s Andrew Milner asked Narada’s President and co-founder, Xu Yongguang what the main changes are, how attitudes of the Chinese government and society have shifted and what the prognosis is for the future of philanthropy in the country .
Xu Yongguang, President and Co-Founder of Narada Foundation, Beijing
How has the legislative environment for philanthropy changed in China in recent years? Has it, for example, become easier for philanthropic institutions like foundations or charities to set up and operate?
During the past few years, the legislative environment for philanthropy has had major advances. A series of new laws to regulate philanthropic organisations has been passed, such as the Administrative Measures for Charitable Organisations’ Fundraising and the Administrative Measures for Charitable Organisations’ Information Disclosure. But perhaps the most important step was China’s Charity Law, which was passed in March 2016. It’s the first legislation in China specifically made to address the development of the philanthropic sector. The law’s greatest significance is in clarifying the relationship between the philanthropic and non-profit sector and the government. It helps secure the legitimate interests of philanthropic and non-profit organisations, donors, beneficiaries, and other participants in the sector as well as clarifying the responsibility of government to advance and supervise the sector. It also prevents other practices which public foundations with a government background used to indulge in. Previously, for example, the donations raised from the public by those foundations would be distributed together with government funds as public funds for, for instance, disaster relief. These kinds of behaviour are prohibited by the Charity Law.
Another notable event was the Overseas NGO Domestic Activities Management Law in April 2016. In the past, there was no legal basis to regulate and supervise overseas foundations and NGOs working in Mainland China, so it was easy for a ‘do whatever we wish’ situation to appear. Supervising agencies may have made quite subjective decisions on whether to allow or prohibit overseas NGOs’ activities. Overseas funding has become more strictly managed and now needs to go through various procedures. Overall, and based on their reactions, these changes have been welcomed by overseas NGOs. It seems they find it easier to carry out work, now that regulations have become more centralised and clear and there are already hundreds of them which have gone through the Ministry of Public Security to register their offices or representative offices, etc.
So is the attitude of your government towards philanthropy changing for the better?
The government has demonstrated through its legislation that it supports and encourages the sector’s development. However, in terms of supervision, the requirements on charitable organisations to self-regulate have grown, and in certain respects, are probably overly stringent. For example, there are many provisions regulating value appreciation in the investments of charitable organisations’ – and particularly foundations’ – assets. The requirements in regard to investment risk control are even stricter than those of the National Social Security Fund, which is not conducive to charitable organisations’ handling their own assets responsibly and independently, nor is it advantageous for preserving and growing those assets. As a result, many charities and foundations just place their funds in the bank, which means they earn only a small amount of interest. At present, the total year-end appreciated value of all Chinese foundations’ assets combined is only about 2.3 per cent. As this is lower than the amount of inflation, charitable assets are actually shrinking, so this regulation is not too reasonable. Charitable organisations should be responsible for the preservation and growth of their own assets, in accordance with the requirements of the law. There’s no need to be supervised so severely.
‘China’s philanthropic sector is still in its early stages.’
Has the government’s generally favourable view resulted in a growth of institutional philanthropy? Has the number of foundations increased, for example?
At the end of 2015, the number of Chinese charitable foundations totalled 4,696 . It’s important to make a distinction here. China has two kinds of foundations: public fundraising and non-public fundraising (or private) foundations. Many public fundraising foundations previously had a governmental background – the GONGOs I talked of earlier. There are not as many private, citizen-initiated foundations, though citizen-led philanthropy is strengthening. As of the end of 2017, China had a total of 6,307 foundations, 1,678 of which were private fundraising foundations . About a third of public fundraising foundations also have no governmental background, so there is a growing trend of citizen-led institutional philanthropy.
However, I should also say that there are very few of these 6,000-plus foundations that are grantmaking–only about one per cent. This reflects the fact that China’s philanthropic sector is still in its early stages. Most foundations raise their own money to do their own work. They’re not playing the role of a charity investor. In this respect, there still needs to be continuous efforts to push for change.
Community foundations have also seen growth, but are still not that common. According to the China Foundation Center’s yet to be completed statistics, as of October 2017, China had a total of 144 community foundations, distributed unevenly across the country, mainly in Shanghai, Guangdong and Jiangsu. There are few in other provinces.
As far as you are aware, has the amount of giving by individuals increased?
Not only the amount, but individual giving as a proportion of the total of donations has increased in recent years. To give you an idea, according to the 2015 China Charitable Donations Report released by the China Charity Alliance, total charitable gifts in 2015 reached over 110.857 billion yuan ($16.1 billion) , with individual gifts totalling 16.93 billion yuan ($2.46 billion). The 2017 version of the report, released in September 2018, shows total charitable gifts of 149.986 billion yuan ($21.83 billion), with individual gifts estimated at approximately 34.9 billion yuan ($5.1 billion) or 23.28 per cent of total giving – more than doubling the figures for 2015.
In terms of the ratio of individual to corporate giving, though, individual giving is still lower. Corporate donations account for three-quarters of the total, while personal donations are only about a quarter. So while the growth of individual donations shows growing public participation in philanthropy, the margin of improvement is still disappointing.
What about events to encourage individual giving, like charity marathons or other sporting events, national giving days, or telephone donation events?
There is an unending number of new kinds of activities encouraging individuals to donate. For example, starting in 2015, Tencent Charity Foundation launched its ‘99 Charity Days’ initiative, during which non-profit organisations receive public donations. In the first one, in 2015, public donations from the event reached 127.9 million yuan ($18.6 million). In 2018, that figure reached 830 million yuan ($120.9 million). At the same time, more than 2,000 enterprises participated with one-to-one matching gifts initiatives which raised 185 million yuan ($26.9 million). Add that to Tencent Foundation’s approximately 400 million yuan ($58.2 million) in matched funds, and ultimately over 1.414 billion yuan ($205.8 million) was collected to support 5,498 philanthropic and non-profit projects.
The gingko tree: a symbol of Narada Foundation’s growing mission to promote grassroots philanthropy
Additionally, Alibaba Foundation has selected a number of charitable programmes and/or organisations to be highlighted on the online retail site, Taobao.com. Companies can voluntarily designate a percentage of the sales proceeds they generate on Taobao.com to the selected charitable initiatives, so consumers can contribute to those initiatives by choosing to buy from these companies. These donations aren’t large – only four cents – there is a Chinese maxim saying that over time, small pieces of sand form a tower. In 2018, this raised a total of 320 million yuan in donations to domestic and overseas projects.
Sports fundraising events are also becoming increasingly popular among China’s philanthropic and non-profit institutions. For example, the China Foundation for Poverty Alleviation has ‘the Great Walker’ activity; the China Youth Development Foundation has the ‘Eight-Hour Challenge’ walk-a-thon; and the Lingshan Foundation has its ‘Walk for Love’ event.
Online giving is a growing phenomenon around the world. What progress has it made in China?
‘The participation of China’s internet companies in philanthropy has led to many innovations.’
China now has 22 online giving platforms recognised by the Ministry of Civil Affairs – they need governmental recognition to operate. Primarily, these platforms are established by commercial institutions such as internet companies, etc. The advantage is that, as these commercial institutions themselves have a large flow of users, philanthropic and non-profit organisations can reach many more donors by using these platforms to fundraise. Of course, there’s also a problem here. Now, the government is requiring charitable organisations go through these platforms when they want to fundraise online, which imposes restrictions on the ability of an organisation to fundraise. This should be changed. If a charitable organisation’s qualification for fundraising has been approved by the government, it should be able to fundraise via its own website.
In other ways, too, though, the participation of China’s internet companies in philanthropy has led to many innovations. For example, WeChat Sports—a new function of the platform that encourages exercise among social networks—has united with Tencent Foundation to launch the ‘We Gift Every Step’ initiative. Users can redeem every 10,000 steps they walk with one yuan in charity funds donated by enterprises. In 2017, JD.com and another charitable fund jointly launched an initiative for households to donate unused toys, using JD.com’s own courier network to collect and redistribute the toys for better use. This was an example of building on one’s own advantages to great effect. Baidu has also used its artificial intelligence capabilities for public welfare purposes, using facial recognition technology to identify lost or trafficked children and help them return to their loved ones.
Are you aware of more media attention for philanthropy – articles in the press, TV coverage of charitable events or the work of prominent philanthropists?
There are many cases of this in China right now. For example, TV channels are creating their own charity programmes on China Central Television (CCTV), the country’s most influential TV station. A good example: an annual CCTV show called ‘Community Heroes’ which has been aired for the last six years. Around ten philanthropic and/or non-profit organisations come on the show and introduce their programmes, and then the audience votes for them. The programme with the most votes gets a donation from a charitable foundation.
Numerous magazines and newspapers have special pages which focus on philanthropy. Many media organisations run annual charity meetings at the end of the year to recognise philanthropic and non-profit institutions, as well as donors and entrepreneurs active in philanthropy. The media’s attitude toward these types of activity has been quite proactive. It allows them to expand their influence, and at the same time, discharge their social responsibilities.
Have any new umbrella or network bodies for encouraging philanthropy been set up?
China has quite a number of platforms for promoting the sector’s development, and one of the most important of these is the China Social Enterprise and Investment Forum (CSEIF). This has played a vigorous role in promoting a social enterprise movement that uses impact investments to both develop social enterprises and address societal problems. The Forum has a structure of annually rotating the presidency (and correspondingly, conference hosting responsibilities) among the different member institutions of its organizing committee.
Growing network of platforms for sector development
Another important platform is the China Effective Philanthropy Multiplier (CEPM), first raised as a concept by the Narada Foundation in 2016 and then co-created with 15 other foundations. The goal of CEPM is to reframe traditional charity programmes as philanthropic products that can address social problems in an increasingly efficient and scalable manner. It selects good quality charity programmes within China which become CEPM-certified. Fifty-three of these have been certified so far. They are wide-ranging, including issues such as elderly care, childhood education, environmental protection and aid to vulnerable groups. NPOs in different parts of the country can then implement these programmes, which they are brought into contact with by CEPM roadshows. Currently, the programmes have been implemented over 10,000 times by locally-based NGOs.
The China Foundation Forum, which has already been in operation for ten years, is also important. It has played a very positive role in promoting the development of, and collaboration between, foundations.
There are two other critical platforms: the China Association of Fundraising Professionals and the China Donors Roundtable (CDR). CDR provides a space for donors in grantmaking foundations to talk about issues related to grantmaking, which is important in a country where, as I said earlier, grantmaking foundations are in a small minority.
In 2015, you were nominated for the Olga Alexeeva Memorial Prize. How would you assess the progress of philanthropy in China since then?
Generally speaking, China’s philanthropic sector continues to develop and improve. But from the perspective of reviewing 40 years since China’s opening up and reform, the development of the sector has had its ups and downs. Often, development accelerates for a period and is then followed by a slowing down, when the government feels that more supervision is needed and strengthens its management. So, as a whole, it is improving but many challenges remain. I believe, that for the philanthropic sector to develop, the government should give more space for citizen initiatives. Let citizen-led philanthropy and non-profit organisations strengthen their own good governance, but under the legal standards and supervision of the government. Let the sector set up its own mechanisms for self-regulation to promote more discipline and regulation. Meanwhile, large-scale public participation and fair competition should be encouraged so that the fittest organisations survive. We should believe that competition can help the sector improve and become even better.
In your view, is anything missing which would help to further encourage philanthropy in your country?
‘I believe, that for the philanthropic sector to develop, the government should give more space for citizen initiatives.’
I think the greatest obstacle to Chinese philanthropy’s development is that a favorable tax system has yet to be fully realised. China’s Charity Law stipulates tax incentives for charitable organisations and donations. While tax benefits on donations are basically in line with international standards, there are still many obstacles in terms of charitable organisations’ tax benefits. Some social services organisations, for instance, still pay tax on their income. Income that charitable organisations receive from investing their own assets is now subject to corporate income tax, creating a lot of pressure for large foundations. This is not conducive to wealthy individuals’ donating their monies to philanthropy and this deters the sector’s development.
With thanks to Jennifer Kou of the Narada Foundation for her help in translation.
1. ^ A much abbreviated version of this conversation was first published in the recent Alliance article, Olga and onwards.
2. ^ The figure comes from the Blue Book of Social Organisations: China Social Organisations Report 2016-2017 (Editors’ note)
3. ^ 2017 Bulletin of Statistics on Social Services Development
4. ^ All currency conversions are based on www.xe.com, as at 4 January 2019