1. 1. Managing NPO term paper Xintong Hou Managing NPOs in China Abstract In 2012, there are nearly 460.000 legally certified non-profit organizations (NPOs) in China-with an annual 7 percent growth in recent years. However, in China, the emergence and development of NPOs has been situated in a unique historical and social context: controlled social resources, limited political diversity, and relatively less developed economies. Thus, even though they may both be called nonprofit organizations, NPOs in China and U.S. may differ drastically in the forms in which they emerge, the problems they face, their operating mechanisms, and the focal points of research related to them. This article begins with definition of Chinas NPOs. Utilizing this basis I will then examine the current situation of Chinas NPOs by using SWOT analysis, and will conclude with some recommendations. I. Definition In China, according to the drafting and approval by the State Council issued the relevant documents and regulations by civil organizations management bureau under Ministry of Civil Affairs, non-profit organizations mainly refer to the social groups and private non-enterprise units. Social groups are formed voluntarily by the Chinese citizens for the realization of the common will of members in accordance with its charter activities of non-profit civil society organizations (Ministry of Civil Affairs 1998), which mainly include the associations, unions, research associations, foundations, promotion associations,
2. 2. Managing NPO term paper Xintong Hou association of commerce, and other social organizations (Ministry of Civil Affairs Social Group Management Division 1996). Private non-enterprise units are formed by enterprises, institutions, social groups and other social forces and individual citizens using non-state-owned assets engaging in non-profit social service activities (Ministry of Civil Affairs 1998), which mainly contain a variety of private schools, hospitals, welfare institutions, community service centers, vocational training Center, Research Institute, and cultural centers. In academia, different terms like the TSOs, NGOs, voluntary organizations, social organizations, religious organizations, unions, cooperatives, etc. are used along with non-profit organizations. The government, however, has no interest in using the term non-profit organization, and promotes social organization as the official term. II. SWOT analysis of Chinas NPOs 1. Strengths (1) Program related to development and social service provision Reflecting on the fit of the state-society analytical framework for China, China is neither a state-centered nor a society-centered nation, but rather one with state inlaid within society.(Zhao Xiumei, 2004). Due to the official-civil hybrid characteristic of large parts of Chinas NPOs, their missions are more or less linked to government needs. This, in turn, gives them some advantages with programs related to development and social service provision. Based on the data of the Ministry of Civil Affairs, NPOs with missions related to economic development and social services
3. 3. Managing NPO term paper Xintong Hou delivery (agricultural and village development 10 percent, social services 13 percent, education26 percent, hygiene 10 percent) accounted for 54 percent of total NPOs. This is especially true for system-induced NPOs (SINPOs), who are usually formed to assist local governments in addressing social affairs. SINPOs are placed directly in the center of residential community life and could take advantage of residential community resources and relevant authorities support, and thus having fewer barriers and more resource to enforce their programs. (2) Fund Since Chinas NPOs have more or less official background, they are less likely to worry about their fund problem. The Research Centre for Volunteering and Welfare, Peking University, organized three workshops in the summer of 2002 in Beijing, Guangdong and Shanghai to discuss NPO governance. It did some interviews to attended NPOs. Based on the findings, the funds of most surveyed NPOs had increased in the three years prior to this survey. The increase was consistent across the board with no significant variation among regions or among fields of activity. To be specific, there were three main sources--overseas, government and domestic donations. 54 percent of the NPOs surveyed for the research did not receive overseas funds, while 44 percent did. NPOs located in the capital or large cities were more likely to have access to overseas funds than those in regional areas. Almost none of the business and professional organizations received any foreign funding. The government support for NPOs was reasonably significant--funds from the government amounted to at least one third of their total funds. There was obvious regional
4. 4. Managing NPO term paper Xintong Hou variation in this regard. 70 percent of the surveyed NPOs received domestic donations. Almost all the NPOs in Beijing and NPOs all over the country in the business and professional category received domestic donations. 2. Weaknesses (1) Not independent, not mission-driven The close relationship between the NPOs and the government makes it easier for them to secure system resources; however, its a double-edged sword. The other aspect is that Chinas NPOs need to suffer from some structural flaws and pains. The Rules for Social Organization Administration and Registration and the Model for NPO Constitutions, issued by the Ministry of Civil Affairs in 1998, require the NPOs to have a board, public meeting of members, legal person and a general secretary. According to the Rules, the public meeting is the top organ of the NPOs, in charge of approving and amending the chapters of the NPO, selecting or recalling board members, considering the annual and financial reports of board committee, etc. Secondly, the board of directors is the executive body of the public meeting and in charge of routine work. Thirdly, a standing board of directors is available for the larger TSOs with many board directors, and plays a crucial role during adjournment of board of directors (Ministry of Civil Affairs, 1998). In practice, however, since the prerequisite of successful registration of a NPO is the support of one public official, it is very difficult for the NPOs to have a genuine independent board or independent decision-making mechanism. The survey conducted by Tsinghua University found that less than 30% of the TSOs selected their
5. 5. Managing NPO term paper Xintong Hou leaders on the basis of regulations and more than 60% of the TSO leaders were appointed by the government-supervising agencies or nominated by the government supervising agencies. Besides, almost half of the TSOs did not have a formal decision-making system, only 11% could make decisions on the basis of the formal procedure (Ming, 2001b). Another flaw is individual/relationship based instead of mission-driven. NPOs in China are very likely to fell victim to the ancient pat-tern of Chinese politics: with a new emperor come new ministers. Although NPOs are created to meet certain needs of the society and the government, the external support enjoyed by certain NPO is intimately connected to individual leaders. As a result, a organizational leader change usually lead to losing momentum of a NPO or even breakdowns in the organizations operations. And the breakdown occurred not only in actual operations, but also in the mission behind the operations. (2) Poor social mobilization capacity After the Wenchuan Earthquake, two scholars, Han Junkui and Ji Yingwe from Peking University did extensive surveys and interviews with 465 individuals involved in the earthquake, 171 people who benefited from the charity work, and 60 NPOs. The result shows many people in the affected areas only remember the names of large, well-known NPOs. They generally have weak, if any, impressions of smaller NGOs that were actually active in relief in their areas. So aside from China Red Cross and other large organizations, NPOs did not raise large amounts of capital. Their ability to mobilize donations is limited, and consequently, their ability to act and make an
6. 6. Managing NPO term paper Xintong Hou impact is accordingly limited. 3. Opportunities (1) government needs: more development space In recent years, for promoting economic development, the government has created more room for the development of professional associations. In addition, in order to meet grim challenges of human development, such as aged, unemployed, poverty, etc., the government encourages the NPOs to deliver social service (Yunsong, 2003). Following the 2008 Wenchuan earthquake, government departments witnessed NPOs value in resolving social problems; its attitude toward NPOs subsequently relaxed somewhat (Bian Ning, 2009). (2) After Wenchuan earthquake: increasing public support and more volunteerism Despite the current limited social mobilization ability and impact, the 2008 Sichuan earthquake did offer Chinas NPOs and volunteerism an opportunity. After the earthquake, volunteers from within China and from all over the world played an enormous role. Volunteers and NPOs, which served as a vehicle for volunteer action, showed all of society their value and capacity at this unique time and situation. Volunteers were praised for their spirit, and the inherent significance of NPOs was recognized. For these reasons, 2008 has been heralded by the media as the advent of Chinas volunteerism (). People did start to pay more attention to charitable activities and to place high hopes in NPOs. The same survey aforementioned shows most people are more than willing to donate their money and time to charity. Those who benefited from the charity work also reported high levels
7. 7. Managing NPO term paper Xintong Hou of satisfaction with the NPOs. 4. Threats: political and legal environment Main external threat originates from the political and legal environment. A social organization must first be affiliated with a government line agency which is to make sure that the proposed organization targets to fulfill an actual social need, does not overlap with any other organizations, is not formed in any area where there already exists a similar organization, and have members with educational qualification and skills required to offer the proposed services and effectively run the organization. When all these requirements are fulfilled, the proposed social organization becomes eligible to register with the Department of Civil Affairs. In this twofold administrative system, both registration and administration authority, and the government-supervising agency are responsible for managing the NPOs. Based on the Rules for Social Organization Administration and Registration, the responsibilities of registration and administration authority include registration, annual check and taking administrative disciplinary measures to the NPOs that violate regulations or rules (State Council and Ministry of Civil Affairs, 1999). It is noteworthy, however, that the Chinese government has not specially formulated regulations to address the fiduciary responsibility, transparency and accountability of the NPOs. The existing legal and administrative system for the NPOs may spur the fiduciary responsibility, transparency and accountability more or less, in either direction. Besides, a lot of grass-root NPOs in the past failed to register as formal NPOs, because the government-supervising agency declined to take any responsibility
8. 8. Managing NPO term paper Xintong Hou for the NPOs political views. Thus some famous grass-roots NGOs, like the Green Earth Volunteers, the Global Village of Beijing and the Friends of Nature had to register in the departments of Industry and Commerce, as for-profit organizations. III. Recommendations and Conclusion Based on the SWOT analysis of Chinas NPOs, I then raise several recommendations from the perspectives of both the government and the NPOs themselves. 1. From the perspective of the government For one thing, the government should improve the legal environment faced by Chinas NPOs. For example, the current laws related to NPO public fundraising and many other detailed operations are lacking or unclear. They government, thus need to give a more clear direction through improving relevant laws and administrative rules and creating new laws that consider protection, encouragement and regulation, but not only regulation of NPOs. Besides, the government should increase tax exemption rate for the NPOs. Finally, it should loosen the registration standard. Ironically, due to the restriction of NPO registration standard, many grass-root NPOs are now registered as for-profit organizations. This actually prevents the government itself from the unified regulation of NPO sector. As China becomes wealthier and more diverse, a more robust NPO sector is a necessity. Instead of restricting it, the government should be more positively involved in this process and take the initiative. For another, the government should build a new pattern of collaborative relationship with NPOs on the basis of partnership and positive interaction. Today, with interest
9. 9. Managing NPO term paper Xintong Hou groups multiplying daily, there is an urgent need for the government to establish mechanisms for social consultation, expression, and participation. Establishment of such mechanisms will benefit the provision of public goods at a basic level and will, to a large degree, ease the potential crisis in the governance structure. Since the natural disaster has been rising in recent years, disaster management would be a good enter point. The government should establish a mechanism for NPOs to participate in post-disaster reconstruction. NPOs with the will, the ability, and the resources should be brought to their full and unique potential under the governments direction. However, the process should not be monopolized by the government. Beyond public bidding with the China Red Cross, the government should also consider stimulating small NPO involvement in reconstruction through government contracting of public services. At the same time, allowing NPO participation would develop NPOs further and promote employment. This will not only encourage NPOs but will, on another level, standardize and streamline them, resulting in a more optimal distribution of social resources. Fortunately, some positive changes had been seen since last year. The city of Guangzhou in November 2011 announced a limited easing of civil society control. A key adjustment is that now in Guangzhou organizers of social groups could register directly with a civil affairs office without have an official sponsor. The central government later issued Opinions on Strengthening and Innovating Social Management. And the 12th Five-year Plan also includes a special chapter discussing social organizations. It promises to reform the registration and management system
10. 10. Managing NPO term paper Xintong Hou for social organizations by clarifying five directions: unified registration, clarified duties, coordination, layers of responsibility and supervision under the law. 2. From the perspective of NPOs First, Chinas NPOs should increase its social mobilization capacity. As mentioned above, many NPOs still have relative low public recognition. Therefore, NGOs should, while delivering services, simultaneously increase branding and publicity. Another method to increase social mobilization capacity is to use the internet. NPOs should tailor the Internet to their own use according to their own organizational and operational characteristics. In the meantime, political viability always plays a critical role in deciding its online mobilization strategies. Additionally, strategic and thoughtful partnership with private corporations is another key to maximize Internet NPOs capacity (Tian Luo, 2012). Based on the successful cases of two Internet NPOs-- 1kg and Gesanghua, Internet could be used by NPOs to boost their organizational performance and to mobilize passive online users, transforming them into active participants of missions of NPOs. Second, Chinas NPOs should further enhance its credibility by taking more social responsibility and add more social value. Considered the SWOT of Chinas NPOs, social enterprise would be the optimal choice to achieve this. Youth Business Chinas rebuilding assistance model could be a successful example. During the aftermath of the 2008 Sichuan Earthquake, YBC quickly launched the Rebuild Our Home Entrepreneurship Campaign. With the help of the Mianyang government, YBC set up a local office and brought the campaign directly to the disaster area. YBC took
11. 11. Managing NPO term paper Xintong Hou advantage of its social resources and assisted youth affected by the disaster in starting their own businesses, which boosted the local economy and garnered public recognition. YBCs success was due to the combination of rebuilding and aid concepts with their own management ideas as well as successfully integrated public resources and private resources with its own unique charity management knowledge and standard operations. Finally, Chinas NPOs should learn from foreign NPOs to strengthen its internal management and external connection by increasing the organizational transparency and make their information of organizational structure, programs and finance known to the public; complying with some ethics, values and principles; borrowing the experience of business management and improve the efficiency of functioning; and establishing appropriate evaluation system. However, learning from foreign NPOs doesnt mean Chinas NPOs should and would be exactly the same as them. Foreign NPOs are products of their own contexts. In this way, Chinas NPOs would inevitably develop their own unique form based on its political, social and economic contexts as well as historical and cultural traditions. By taking NPOs in more advanced Asian countries as references, first, Chinas relatively less development economies will limit the resources available to NPOs. Besides, this character will also determine that the activities of Chinas NPOs would continuously center on eliminating poverty, realizing economic development and social equality. Second, the forms, development space and mission of Chinas NPOs will for a long time, continue being limited by political diversification and
12. 12. Managing NPO term paper Xintong Hou paternalism traditions as well as decided by government needs. Finally, traditional social organizations in China such as rural civil groups have become a kind of civic force or even a kind of unwritten social system. On the one hand, they could limit the development of NPOs due to their incumbent advantage. On the other hand, by collaboration and cooperation, they could supplement NPOs missions and activities. 3. Conclusion To sum up, Chinas NPOs are still in its infancy. In the short run, their inadequate internal management structure and capacity-building systems and not-so-supportive external political, legal and social environment will all put challenges on them. However, in the long run, all types of trends, including wealthier society, more tolerance of the government, more social needs accompanying the social development also to varying degrees provide them with more opportunities. Chinas NPOs, when confronted with such a series of opportunities and challenges, by enhancing their strengths and mitigating their weaknesses, mobilizing more social resources, enabling better provision of public services and making a broader and deeper commitment to add social value, are destined to become an increasingly important force in building a harmonious society.
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