This article is part of CDB’s Special Focus on ‘Effective Communication and Cooperation between NGOs and Business’. It originally formed the ninth case study in CDB’s latest research report which we released in July 2015 (you can view the original here). Over the next few weeks we will be publishing translations of the remaining case studies contained in that report. The case studies detail partnerships between Chinese NGOs, foundations, and businesses.
NGOs and businesses have different project cycles. NGO projects are often based on years of planning, and the results sometimes take years to appear. NGO projects may also go through a long development process. When a project changes, how should the organization maintain and strengthen its partnership with a business?
One illustrative example is the Shanghai Better Education Development Center (上海百特教育), which started off helping local youth with financial management, and gradually expanded to providing services like vocational training including self-cognition, teamwork, time management, emotion management, accounting, starting a business, career planning, and so on. Over 5 years, Shanghai Better Education has slowly built out a comprehensive service system training youth in life skills. Throughout this process, Shanghai Better Education has to establish more and more partnerships with corporations: of the 90% of its funding that comes from donations, 75% was subsidized by several corporate foundations. These donors have now funded the Center for 4-5 years.
This kind of continued support gives NGOs time to launch and complete projects. Because good educational programs aren’t “one size fits all”, they can be difficult to duplicate on a larger scale. In such a large country as China, and under the background of the country’s economic disparity and diverse population, developing a program that adheres to the development of children and can fulfill different needs across the country requires exploratory time, which in turn requires financial support. Shanghai Better Education was able to afford the costs associated with this due to the continuous financial support from its donors.
How was the Shanghai Better Education Development Center able to achieve long-term, high-level consensus with its partners? In the initial stages of forming a partnership, uncertainty is hard to avoid. Achieving long-term, sustained cooperation requires that the project itself can stand the test of time, the dispositions of the organization and the corporation are relatively aligned, and the NGO has the ability to do truly effective work.
When a company enters into a partnership with an NGO, it will pay attention to the organization’s sustainability. For example, it will evaluate the organization’s operational professionalism, the transparency of its operations, whether or not it can produce professional budgets and reports, and its ability to integrate social resources. The NGO’s legal and social compliance and development history are also of importance to the corporation’s assessment.
In their actual operations, partnerships will also encounter the need for flexibility. In a given project with multiple financial support providers, for example, their requests may clash, and each of them may want to place emphasis on their own priorities. For example, one funder may require that it does not work together with a competitor, or might even be unwilling to work with another funder altogether. How can such problems be resolved? One approach is to have multiple subdivisions of a large project that can be differentiated by location of implementation or target audience. These subdivisions can perhaps meet the requirements of different funders.
Each company has its own business focus, which determines the company’s community focus. These two foci are fixed. There are two types of funding. The first is for projects that span 3 to 5 years, for which the sum of funding is large and usually contributed by the company’s foundation or headquarters. The second component is short-term funding to be used for seasonal projects, for example for International Women’s Day. According to these characteristics, different NGOs can fulfill the long-term, mid-term, and short-term requirements of a company.
Case study: Holding hands with HSBC for 15 Years
In January 1995, the Shanghai Charity Foundation (上海市慈善基金会) and Shanghai Second Polytechnic University jointly launched the first non-profit organization in China geared towards giving disadvantaged social groups educational training: the Shanghai Charity Education Training Center (上海市慈善教育培训中心).15 years, 8 projects, and 22 million RMB later, this relationship remains: one financial backer for one grassroots non-profit organization. This is something to be proud of.
As a rare example at the time of a charitable partnership between a university and a foundation, the Shanghai Charity Education Training Center (the Center) at its inception actively explored ways to work with the government. In 1997, the Center implemented a project launched by the Shanghai Charity Foundation called the “charity education training for all” program, coordinating it with the government’s re-employment project. As a result, more than 50% of students were able to find employment through the training program. In 1998, after the municipal government started to implement free training for laid-off workers waiting for reassignment, the Center once again actively developed a corresponding training project. Since then, the Center has consistently maintained a cooperative relationship with the Shanghai government. From 2004 to 2013, various Shanghai government organs frequently purchased the center’s services and thus provided funding for all kinds of training projects.
Good government relations over the last 20 years have forged a stable and sustainable foundation for the Center’s development. For charitable organizations at this stage of development, this is important. However the long-term and penetrating cooperation undertaken by Shanghai Charity Education Training Center and corporate social responsibility departments is worth even greater attention.
In 1997, Shanghai served as the front-line for the nationwide state-owned enterprise (SOE) reform. As a result, many workers were laid off. Finding employment for these workers became a social problem in urgent need of solving at the time. However, the Shanghai Municipal Labor Department had not put together any relevant training program. Shanghai Charity Education Training Center set its main mission to aid the government in re-employing laid-off workers.
Meanwhile, HSBC also became concerned about the unemployment problem. As an international financial corporation, HSBC was fully committed to fulfilling its corporate social responsibility (CSR), and to actively support charitable causes. They believed that although the number of individuals waiting for job re-assignment in Shanghai was high, the workers all still had the ability to work. HSBC believed that it should increasingly conduct “knowledge poverty alleviation” rather than assisting the poor with only material goods. This belief agreed with the Center’s aim to “alleviate knowledge poverty and promote personal development”. As a result, under the coordination of the Shanghai Charity Foundation, the two parties came to a preliminary partnership agreement. Subsequently, HSBC put forth recommendations to provide 600,000 RMB in funding to train 600 laid-off workers. After the first round of training, the participating workers saw a 50% re-employment rate, thereby achieving the target. HSBC thus decided to continue funding the Center 800,000 RMB annually for two more years. The partnership between the Center and HSBC moved into its next stage.
Through the first project, the Center came to understand that HSBC is a corporation with an intense sense of social responsibility: via its specialized CSR department, HSBC dedicated a large sum of funding to charitable work. In other words, for a good project with good service, funding will not be an issue. Hence, the Center decided to take action in maintaining its long-term partnership with HSBC. On the other hand, the Center also came to understand: HSBC was more willing to help NGOs to attract more social resources since its own resources are limited, and from this promote an increased sense of responsibility throughout society and develop effective solutions to social problems. In view of this point, the Center believed HSBC would not want its’ long-term funding to be used on one project alone. New projects must be launched continuously to meet the needs of society. Only this will fullfil HSBC’s CSR requirements.
After successfully attracting HSBC as a long-term supporter, the Center came to fully prioritize launching new projects in accordance with both the needs of society and HSBC’s requirements. With this, the Center carried out a thorough investigation into the employment challenges in the 21st century for unemployed youth in Shanghai. Through the investigation, the Center developed a project called “Spreading Wings Under the Sun – Helping unemployed youth in the community find work”. After a trial period of one and a half years, students achieved a 78% re-employment rate. Subsequently, the Center invited Liu Yungeng, deputy secretary of Shanghai municipal party, to attend the pilot class’s graduation ceremony. The government’s affirmation not only brought the Center a great reputation, but also presented a new opportunity for the Center’s partnership with HSBC. As a foreign bank, HSBC had a strong intention to uphold its government relations. For HSBC, indirectly securing government recognition through funding charitable activities was akin to hitting two birds with one stone. Therefore, the chairman of HSBC headquarters’ educational foundation personally came to Shanghai to inspect the pilot project, and soon after approved a 3 million RMB funding for the formal project. After more than a year of formal training, the new group of students achieved a high 80% employment rate. In the second year, after the withdrawal of HSBC, the project once again captured the attention of the Shanghai Municipal Education Committee. Finally, with funding from the Shanghai Municipal Education Committee, the project continued for 10 years, training 5,000 students in total, and achieved extraordinary social results. The project also fulfilled HSBC’s CSR aspiration to attract more social resources through one project.
Through the two projects, the Center has earned HSBC’s full approval and trust. But for HSBC, one successful project was not enough. The Center believed firmly that only consistent communication and new project development with HSBC could create more partnership opportunities. Subsequently, the Center reaches out to HSBC management six months ahead of each project completion in order to understand HSBC’s needs and carry out an evaluation accordingly. For example, in 2012 during the second project funded by HSBC called “green e-banking for all migrant workers”, the Center came to learn HSBC was unable to provide a new round of funding for the project. With this, the Center proactively contacted HSBC Charity Foundation’s secretary general, and found out that ordinary people would be unable to withstand the financial crisis due to the lack of financial knowledge, and therefore the China Banking Regulatory Commission required all banks to provide financial education to their customers. The training center keenly grasped the potential of this point, taking into consideration their own target group, launched a “financial education for all migrant workers” project. After applying, the project quickly secured HSBC’s approval and financial support. Subsequently, this project gained the attention and approval of China Banking Regulatory Commission’s Consumer Protection Bureau and the Shanghai Municipal Banking Regulatory Bureau. The CBRC Consumer Protection Bureau served as the project’s guiding work unit, and the Shanghai Municipal Banking Regulatory Bureau served as one of the project organizers. The project, running from 2012 to 2013, became a success of cooperation among government, corporations, and social organizations in launching a public welfare project.
Apart from smooth communication, the Center was also able to provide excellent customer service to HSBC. In order to keep HSBC updated with the progress of the project, the Center routinely held meetings to report on project results, and invited HSBC project administrator to visit students in classrooms and their work places. In addition, even though the Center itself was not a large-scale organization and its outreach capabilities were lacking, it still drew up publicity plans for each project. The Center fully utilized its limited resources, and publicized its HSBC projects by every possible means including internet, media, activities, and contests. This hard work garnered social approval, expanded the impact of those projects, and indirectly facilitated HSBC in achieving its CSR targets. Moreover, the Center used the fund in strict accordance with HSBC’s requirements, kept its financial operations open and transparent, and has earned the full trust of HSBC.
For the Center, capital investment in education is generally long-term and high-cost. Only sustainable investment can lead to good results. Establishing a long-term partnership with a corporation is essential for diversifying its sources of funding, thereby ensuring its daily operation. For corporations, funding charitable education carries great meaning. The results are measurable, and it can fulfill the company’s CSR commitments. For these reasons, a small organization can also form a long-term relationship with a large corporation and realize its own values if it can identify and meet the corporation’s requirements as well as communicate and coordinate with the corporation timely.
Both Shanghai Better Education and Shanghai Charity Education Training Center through their own distinctive practices have developed stable, long-term corporate partnerships. In fact, in looking for a corporate partner, a NGO must consider the nature of its own projects. If a project is a long-term project, organizations not only have to think about funding, but also must come to a common understanding with the corporation on the project’s development. The success of the NGO projects is achieved by simple replication, expansion, or more funding. NGOs are not only public service providers, but also explorers. Compared with governments and companies, NGOs have far fewer resources to work with, but their innovative and exploratory potential can motivate wide participation from the government and others. Making something great out of something small is an important function of NGOs. Thus, a project, when fully developed, can achieve real results, benefit the recipients of the service and solve social problems instead of just gaining more market share or adding project sites. This concept is not strange to funders with a vision. For example, when a given corporate foundation increases its funding for an NGO’s project from 50,000 USD to 500,000 USD, it will focus on upgrading the NGO’s capabilities in branding, research, project management, and advocacy. Only when both parties share this mindset is there an opportunity to develop a long-term, stable partnership.