In recent years, the scope and frequency of government purchases of NGO services in China have gradually increased, which has helped to promote the sector’s development.
To better understand the reasons and requirements of government purchases and how NGOs can better prepare for them, the Narada Foundation interviewed Gu Weimin, former president and current consultant of Jing’an District Social Organization Federation in Shanghai. A veteran NGO worker, Gu shared his views about government purchases based on his personal experiences and observations.
Significance of government NGO purchases
Documents from the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council, Ministry of Finance, and Ministry of Civil Affairs highlight that government purchases enable NGOs to play a greater role in assisting with the provision of public services.
Their participation in social governance is an inevitable trend in public affairs governance, according to Gu, which is conducive to promoting the transformation of government functions and the healthy and orderly development of NGOs. It is also an important part of deepening the reform of public institutions and promoting the transformation of government functions.
Compared to government agencies, NGOs can be more professional in some specialized areas, more flexible with resource integration and cooperation, have a better understanding of target groups, and generally can provide services for less, Gu said.
As an important source of funding for the development of NGOs, government purchases enable organizations to not only create jobs (NGOs are also an important employment channel) but also, through stable development, standardize their own operation, establish their credibility and provide high-quality services to better participate in social governance.
Improving purchases of NGO services
Government at all levels should include funds for purchasing services in their budgets and increase the amount of money used for purchasing services each year, Gu proposed.
He also proposed improving the pricing mechanism of government purchases to take into account the full labor costs of NGOs to avoid jeopardizing their ability to survive. Charity doesn’t mean cheap labor — low pay prevents NGOs from retaining talented staff in the long run.
“I’ve seen, in the past few years, cases where the labor costs were only 10 percent of the total project amount, which is unreasonable,” he said. Depending on the project specifics, Gu suggested setting labor costs at 45 to 55 percent of the project total.
It’s also essential that government departments lower administrative barriers for NGOs when bidding to encourage more of them, especially from the grassroots, to join the competition. Only through competition can capacity building be improved, Gu said.
When the government discovers deficiencies and problems in social governance, instead of the traditional way of investing more money and materials internally, such as adding institutions, increasing positions and appropriating funds, purchasing the services of social organizations can be an effective way to solve the problem.
Gu’s suggestions on how social organizations can improve their own capabilities and increase their competitiveness include enhancing credibility, focusing on talent management, and communicating more effectively with government departments, businesses and foundations.