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Frances Buckingham
Insights 18 Oct 2010

NGOs in China: In the Market for Change?

By Frances Buckingham

For over two decades SustainAbility has been working on the evolving relationships between business and civil society – and in particular between business and NGOs. In 2003 we published The 21st Century NGO: In the Market for Change which explored questions around the relationships between NGOs AND businesses as well as questions around the operation of NGOs AS businesses. The report acknowledged that the organizations covered in the research were predominantly northern-based. In part this is because we believed that such models help describe how other parts of the world may develop. At the same time we realized that NGOs operating in emerging markets face very different opportunities and constraints.

We are therefore very pleased that a Chinese translation of the report was recently launched in Shanghai and Beijing (and is available for download here). Simon Li, Director of the Social Resources Institute, who was responsible for the translation, talks to Frances Buckingham about the need for a Chinese version of The 21st Century NGO and gives his insight on the emergence and evolution of China’s non-profit sector1.

Firstly, can you tell me a bit more about the Social Resources Institute and the work that you do?

Social Resources Institute (SRI) is an independent research and advisory institution focusing on sustainable development. We provide services including research, evaluation, consultancy and information services to governments, companies and NGOs to help them to manage social and environmental challenges, and thus to promote sustainable development in China.

SRI also dedicates to provide knowledge and capacity building to Chinese NPOs (non-profit organisations). SRI has started and is involved in several research projects on NPOs in China.

You have published a Chinese translation of our 2003 report The 21st Century NGO, why the interest, and why now?

Thanks to the funding from the China Social Enterprises Foundation, which is dedicated to promote Social Innovation in China, we have been able to translate and disseminate it around China.

Although it was published in 2003, the ideas and thinking in the report are still relevant and useful to understand the paradigm shift occurring in the Chinese and international non-profit sector.

Since about 2006, Chinese NGOs have begun to think about their relationship with enterprises and markets. Some NGOs are re-designing their strategy to watch behaviours of enterprises; some NGOs hope to change to become social enterprises themselves. I think the report 21st Century NGO outlines the methodologies, challenges and solutions very well on both dimensions.

The report was launched at the Social Innovation Carnival at the Shanghai World Exposition. Can you tell us a bit more about the background and purpose of this event?

Social Innovation Carnival, hosted by the China Social Enterprises Foundation, is a big festival for Chinese NGOs, especially for NGOs which hope to employ market methodology and seek cooperation with business enterprises. The Social Innovation Carnival included a series forums and activities covering venture philanthropy, small credit, volunteer management, partnership between NGOs and business, social innovation and social enterprises, garbage sorting, disability protection etc.

The Social Innovation Carnival in 2011 will be held in Beijing. For more information about the background of Social Innovation, refer to http://english.youcheng.org/P2/

Since SustainAbility started its NGO research, the so-called ‘Third Sector’ of civil society organisations has grown exponentially in the OECD countries – has this growth been mirrored in China?

In recent years we have witnessed a fast growth of Chinese NGOs, especially those which provide direct services to the disabled, rural areas and communities. Governments have demonstrated their tolerance to such service-oriented NGOs and Chinese enterprises have also begun to show their interest in such support service-oriented NGOs.

We also see a growth in the number of international NGOs operating in China. But contrasting with Chinese NGOs, international NGOs are growing slowly.

The report focused mainly on Northern NGOs and identified the need for further research into the challenges and opportunities for NGOs operating in emerging markets, in particular China, India and Brazil. Can you share some insights as to how the NGO landscape differs in China?

  1. Chinese NGOs are regarded to have emerged at the middle of 1990s. In the past ten years or so, Chinese NGOs have mostly been supported by international organizations and funds such as Ford foundation, Oxfam Hong Kong etc. The ideas and approaches of Chinese NGOs are also mainly learned from international organizations.
  2. Recently, as the non-public funding foundations (for example the Chinese Social Enterprises Foundation) have begun to be active in China, Chinese NGOs are seeking exploring resources within China. It’s a good trend.
  3. The most influential NGOs in China are Governmental Owned NGOs (GONGOs). They are like State Owned Enterprises in the non-profit sector. They are usually partners for enterprise and governments which hope to do something in philanthropy. However the public trust to GONGOs is very weak and therefore the appeal to reform is very strong.
  4. It is currently a good time for services-oriented NGOs in China. Some government agencies and enterprises start to buy services from them and they also enjoy a good public image in media.
  5. Chinese law and policy is still not friendly to Chinese NGOs, especially grass roots organizations. Registration is difficult and they cannot get tax exemption. But in some areas, such as Shanghai and Shenzhen, the governments are starting to reform their policy and open the door to services-oriented NGOs.
  6. For the advocacy-oriented NGOs, it’s still hard for them to operate.
  7. I think Chinese NGOs are now experiencing a paradigm shift to overcome the challenges in fundraising, policy and internal management, to become established professional and solution focused NGOs.

The report also identified public-private partnerships as increasingly important in leveraging environmental and social change. How do NGOs engage with business inside China? Do Chinese corporations demand a different approach than multi-nationals?

I think there are two kinds of NGOs in China in respect of approach and engaging with business.

Some NGOs play a role of watchdogs. They undertake research on enterprises’ impact on society and put pressure on enterprises through the media, examples are Greenpeace China and several Chinese NGOs.

Some NGOs are beginning to cooperate with companies. They are friendlier to enterprises and some are partly funded by enterprises. Some NGOs use both the watchdog and friendly approach in different ways depending on the enterprise.

Chinese corporations are quite different from multinationals. Generally, it is not wise for NGOs to launch a big campaign towards Chinese enterprises, especially State Owned Enterprises. It will bring much pressure and stricter regulation on specific NGOs. So, to engage with Chinese corporations, the moderate approaches are better. This is the reason why Chinese only campaign on multinational corporations.

Partnership is now quite hot in China. Chinese NGOs are now trying the collaborative approach. There will be more platforms for NGOs and enterprises to develop partnership and the Social Resources Institute is doing much to promote this including through our information provision and monthly forum.

1 We use the term NGO (non-governmental organization) to refer to the non-profit sector in China, but recognise that NPO (non-profit organization) is also commonly used.

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