CSR: NGOs Defined in China

Friday, October 6, 2006 1:42
Posted in category The Big Picture
While the majority of our focus on All Roads is for the “for profit” entities in China, we think this is a good time to provide an overview of the NGO side of China, or as Martin Soong called it during my interview with him, the fluffy side.Following in the footsteps of China Law Blog, I will add my full disclaimer here: In addition to being contributor to All Roads and running China SDP, I am also the founder and ED for Hands On Shanghai, the China affiliate of the U.S. based Hands On Network.

The NGO environment in China is one that I consistently have to learn about, work with, and learn again. There is so much change, yet so little has changed. Grey area is something that every NGO works within at some point, and unlike some areas, this grey area is widely supported by government officials (there are of course limits).

For the most part, everyone will agree that the entire environment surrounding the operations of NGO in China has improved. It is something that the government under Hu Jintao has really focused on, and the proof is there. there is still al long way to go, but with the proactive nature of the central government in addressing the issues of AIDS, poverty, the environment, and other causes, I have no doubt that more improvements are coming.

In general, I categorize NGOs into the following 3 categories:
1) Government Owned Non-Government Organizations (GONGOs):
These organizations are the most official and the largest in China. Groups like the China Charity Foundation and the Shanghai Charity Foundation are officially not apart of the government, however a large portion of funding does come from the government, and a number of former politicians will work within these organizations.

These groups are often partnered with when large international NGOs (UNICEF, American Red Cross, or Special Olympics) want to fundraise in China, and when large corporate donations are given it is through one of these organizations.

2) Local NGO:
Often small and rarely scalable beyond the city limits, China has a large number of local charitable organizations that work on various issues. What they lack for in terms of budgets, staff, and sophistication, I have found they make up in passion, and there are thousands of these organizations.

Multinational corporations for the most part choose not to work with these organizations as projects cannot be scaled, or monetary controls are questionable, or management practices are unsophisticated. Many times, the idea is there, however these organizations do not have the ability to construct a funding brief or really plan a project roll out in a way that multinational companies are familiar with.

3) International NGO:
Pretty self explanatory, groups like Special Olympics, Project Hope, Smile Train, and others have all entered China. Programs typically are run from Shanghai or Beijing, and staffs are typically managed by an expat manager.

Many of these organizations at one time were run from apartments, managed by a trailing spouse, and kept quiet. the ones that survived were the ones that kept their heads down, their mouths shut, and just focused on the work. The ones that failed, failed to do one of those, or thought they could operate in the grey area and leverage that to get active in religious or political areas that were clearly marked as red zones.

Right now, the biggest concern outside of the work international NGOs are trying to do now is the fact that there is still no legal or tax structure for International NGOs in China. this is an interesting phenomenon as many NGOs have simply decided not to register anything at all, while others register as for profit business and pay taxes like a business, and others take shelter under the umbrella of a GONGO. Neither of the three is really preferred, and many are waiting for the regulations to be released so that fully registration can occur (regs were to come out 18 months ago).

Wrap-up:
Over the next few years, the landscape is sure to change as much as Shanghai’s skyline. There is an overall improvement in relations between not only the Chinese government and NGOs (local and international), but also between the various NGOs in China.

As local NGOs and International NGOs work more closely together, and local NGOs begin to grow (organically or via consolidation), China wide programs will begin to be possible.

To learn more about NGOs in China, and those that have passed the test of AMCHAM, please here.

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