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China Spotlight:

What's in It for Donors?

Jennifer Brady Headshot

We think China offers one of the most interesting opportunities in international philanthropy today, even with local wealth on the rise and new regulations that will bring foreign activities under stricter control.

The previous blog in this series focused on why China needs a stronger social sector and how significant changes in both the security framework and the charitable regulatory environment are bringing uncertainty and a higher compliance burden for foreign donors.

Many of China’s nonprofits were founded with technical and financial support from foreign counterparts. But today international funding is dropping rapidly, down by about one-third since 2012, according to Social Resources Institute. Cross-border cooperation and support could see another dramatic drop next year due to new policies that aim to promote local participation and diminish foreign influence.

Here I discuss why international philanthropy’s engagement with China has arguably never been more timely or more compelling. Supporters who stick with China have the opportunity to observe how funding can be used to help address social needs at a remarkable scale, and to act as a partner during the rare transition of a country from aid recipient to an emerging global philanthropic leader.

The philanthropy and charity sectors in China are just starting to prove their value

China’s formal social sector is only about twenty-five years old. The first nonprofits started work in the mid-1990s, emerging alongside an opening economy in a push to diversify and improve the stakeholders responsible for the social safety net of a growing population.

Forming slowly but steadily in the late 1990s and early 2000s, the sector’s growth surged following a devastating 2008 earthquake in Sichuan province. The major humanitarian crisis activated public charitable giving, volunteerism, and NGO activity to a level never before seen in China.

Not without controversy and accusations of mismanagement, the 2008 earthquake nevertheless introduced the idea that the social sector can play an important role in delivering services to those most in need. While the majority of people in China today still have little familiarity with charitable organizations, many others, mostly the urban educated and government officials, are now asking if and how this new part of society can contribute in a meaningful way.

The sector needs to prove its value so that it can have the support it needs to thrive. A key challenge is that the landscape of organizations working in China has a critical missing segment—the lack of indigenous groups that are currently moving the needle on important social issues at a national scale.

The optimistic perspective is that the sector will eventually gain enough momentum to fill this missing segment with pioneers who will become a critical part of the system that is creating a more prosperous, equitable society. With more Chinese people than ever preparing for jobs in the social sector, starting their own organizations, volunteering time, and making donations, the signs point to a promising future.

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Students of nonprofit management participate in courses offered by WISPAD, an organization focused on training China’s current and future NGO leaders.

There’s potential to address social needs at a big scale

China’s philanthropic moment is now. The opportunity to meet the country’s big social challenges lies in the ability of donors, nonprofit organizations, government, volunteers, and others to harness the swell of activity and, together, multiply their social impact.

International and local donors can work together on two key levels: First, by partnering as peers to share learning, leverage resources, and push each other toward new heights of effectiveness. Second, donors can apply that collaboration to build a much stronger infrastructure of effective indigenous organizations and social enterprises to close the service supply gap across the country.

Donors offer China’s social sector a chance to leapfrog others’ mistakes

Many of China’s wealthiest people have begun their own philanthropic journeys. Looking to the future, it is possible that Chinese philanthropists may actually rival their Western peers in donations for global health and development projects. Likewise, Chinese social organizations that are now just getting started could very well grow to lead movements to tackle global issues that affect tens of millions of lives.

Though the rate of development is exciting, the large sums being spent through public fundraising, major donations, and government procurement of social services from NGOs also give reason for caution, knowing the power that development projects have to open doors for unintended harm.

Most of what we would consider to be poor development practice stems from a lack of understanding about what communities really want and need, and what levers to pull in order to trigger changes within the system that allows the problem to exist in the first place.

Excluding perspectives from the intended stakeholders and failing to take a systems-change approach, by both funders and implementing organizations, ultimately leads to projects that aren’t adopted as expected, generating poor results and wasted time and money.

Such a common global problem is not surprisingly occurring to some degree in China as well, given the incredibly short history of philanthropic activity and the very small number of sector actors with significant practical experience. No doubt China’s social sector leaders will find their own localized models, but because many are new to this field they would greatly benefit from learning exchanges with Western peers.

The power of sharing practical case studies, coaching, and mentorship can’t be overstated. International donors can share important lessons that others have learned the hard way. Of particular importance is calling attention to lessons learned in how social issues can be approached from a systems-change perspective, rather than a linear transfer of products or services, the approach routinely taken by local philanthropy initiatives.

Donors gain opportunities to leverage impact

Building a strategy to give, convene, learn, and share across the various interconnected systems and actors in China’s social sector has the potential for impact that is both broad and deep, immediate and with implications far into the future.

Geneva Global works with clients to build such strategies, always with the target of transformative impact. We’ve been doing this in China for nearly a decade, both working with local partners to test, refine, and replicate effective services models and working with international donors to navigate the changing landscape in order to work effectively.

That was the goal of a program we designed and are currently managing for a client, and we are seeing some really exciting results.

Grantee partners for this program are given operational support over at least a few years so that they can respond to under-resourced social issues at a meaningful scale.

The support includes funding for improving internal monitoring and evaluation systems, expanding and replicating effective models, building stronger teams and governing bodies, and developing strategies and implementation plans to scale their work for future

These partners are pioneers and movement builders, working to bridge the gap between supply and demand by:

  • Serving as the risk-takers and model testers, finding solutions that themselves and others can deliver to achieve scale
  • Creating information platforms and peer-learning networks to spread ideas, encourage innovation, and link peer organizations to tools, skills, learning opportunities, and international best practices
  • Connecting information and service options to beneficiaries, families, and communities
  • Helping government to improve existing social welfare delivery by setting standards to monitor service quality

Because the NGO sector has such a critical role to play, supporting even a few effective organizations to achieve scale will:

  • Blaze the trail and instill confidence and a sense of possibility for others
  • Leverage government commitment to poverty alleviation by becoming trusted partners in rolling out solutions across the country, in alignment with long-term national policies

Donors can open doors to fund innovation and support systems change

Given this, we can envision the role that each stakeholder group—philanthropists, corporates, and foundations; NGOs and social enterprises; and government—could play to increase social impact in China.

Government: China’s government will not allow social sector organizations to grow to a size where they would have an outsized influence. In order to address the big needs in China, government sponsorship is the key path forward. Only government has the budget and organizing ability to conduct large-scale delivery. Local NGOs and philanthropies should help government by being the voice for what is needed and what is working on the ground.

NGOs and Social Enterprises: Those that stand to create the most impact are those that are given the runway to take risks by testing solutions, innovating, and proving effective models, so that the powerbrokers (government and philanthropies) can then fund the expansion or implement replication across the country.

Philanthropists: At its best, private funding is nimble, responsive, and willing to test and fail and retest until it gets the solution right. This segment’s value is not only in its financial resources, but more important in its ability to find and support social pioneers. Philanthropists can fill an important mentorship role to promising NGOs and social entrepreneurs. And by giving these organizations the freedom and flexibility to refine their solutions, lead as examples, and push the sector toward higher quality and greater reach, donors will create more long-term value for the sector and the country.

Much of China’s local philanthropy has yet to recognize its own unique role, instead typically spending resources on service delivery and project implementation. We hope to see more of a shift in the future toward viewing philanthropy as a unique position from which to take the investment risks that government and individual organizations (on their own) cannot.

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There are important opportunities now, as China’s philanthropy movement transitions out of its current nascency and matures to fit the role that philanthropy can play in contemporary society—from buyer to builder, purchaser to investor, power broker to strategic partner.