In this preface to the Beijing News’ 2013 Public Welfare Report, Narada Foundation chair, Xu Yongguang, lays out his bright outlook for the civic welfare sector in the aftermath of the 18th Central Committee’s Third Plenum Decision.
The Spring for Civic Public Interest has Arrived
Editor’s note: This title requires a little explanation. The term “civic public interest” is actually a combination of two separate terms used here to refer to citizen participation in public welfare activities. One is the Chinese term, minjian, which literally translates as “from the people” and refers to activities initiated from the bottom-up by individual citizens, and is often used in contrast with activities initiated from the top-down by the government. The second term is gongyi, and literally translates as “public welfare” or “public interest”.
According to the statistics of China Foundation Center, the 135 foundations participating in Lushan Earthquake fundraising solicited 12.2 hundred million Yuan RMB within half a month, which exceeded the 7.7 million Yuan RMB donation received by the Red Cross Society of China for the same period. Altogether 4.55 million people contributed their money to the One Foundation of Shenzhen, which had no government background at all. The total donations to the One Foundation surpassed those of the Red Cross Society of China and the China Charity Federation put together.
According to the China Network Donation Research Report issued in September, the number of online donations made numbered 560 million by the time of its publication. In the internet era, this means every individual or institution in possession of a smartphone has an equal right and opportunity to participate in the allocation of resources for the public welfare.
Civic public welfare in China has made remarkable progresses in the process of transformation and innovation in 2013. Notwithstanding that the “civic index” for the public welfare sector still has experienced no great breakthroughs, the past year no doubt marks the brightest, most rational, most confident and most hopeful year for China’s civic public welfare development since the Wenchuan Earthquake in 2008.
A. High-level Design
First, the high-level design is clear and the reform is well-arranged. The 18th Central Committee proposed to “accelerate reform of the social mechanism” and it aimed at “constructing a modern social organization system with clear rights and responsibility and administration by law by separating social organizations from the government”. The NPC passed the State Council’s “Institutional Reform and Functional Transformation Plan” and proposed detailed measures for “reforming social organization governance rules”, i.e. “by separating trade associations and chamber of commerce from [their supervising] government agencies, introducing competitive mechanisms and allowing for multiple associations within one industry”; “giving priority to the development of social organizations in four categories: trade associations and chambers of commerce; scientific and technology associations; charitable and public welfare associations; and community service organizations in urban and rural areas”. Organizations in these four categories can apply to register directly with the Civil Affairs bureau.
The Third Plenary Session of the 18th Central Committee proposed for the first time the new thinking for “a social governance innovation system and methods to improve social governance” and it further highlighted “stimulating the vitality of social organizations, handling the relationship between the government and society in a correct manner, and accelerating the separation of government and social organizations … letting social organizations assume the burden of tasks that can be addressed by public services provided by social organizations, and supporting the development of volunteer service organizations ”. The Third Plenum also arranged full deployment regarding “direct lawful registration for the establishment of social organizations”, “intensifying government procurement of social services”, “implementing tax preferences for charity donations”, “establishing a social participation mechanism” and “promoting the transformation of public institutions into enterprises and social organizations where the conditions are set”.
The high-level design regarding social system reform made by the Third Plenum will address the two bottlenecks (e.g. the legitimacy dilemma and the resource dilemma) that have been restricting the development of social organizations, will allow civic public welfare to return to the people. Civic public welfare organizations will be liberated. Compared with the decisions made on the Third Plenum of the 11th Central Committee [this refers to the historic 1978 decision to support Deng Xiaoping’s “reform and opening” program], the Decision of the Third Plenum of the 18th Central Committee will mark a new start for civic public welfare organizations to redefine its relationship with the government and to administer themselves according to the law.
B. Beneficial Interactions
In the April 20, 2013 Lushan Earthquake, the government and the public interacted in a beneficial way which was the first step “for handling the relationship between the government and the society correctly”.
In past natural disasters, the government would mobilize the public to make donations and control the majority of those donations. After the Lushan Earthquake, the grassroots public welfare sector carried out rescue and fund-raising activities immediately. The Ministry of Civil Affairs responded to those actions in a positive manner and published an Announcement to the effect that “we advocate units and individuals willing to donate to earthquake-stricken areas, and to make contributions through welfare and charity organizations that have disaster relief aims and are legally registered, or through competent government departments in the stricken area”. This was the turning point for the disaster fund-raising mechanism to change from “administrative interference” to “social choice” and for the government’s withdrawal from the fund-raising market.
As soon as administrative interference in the public welfare sector fell, social enthusiasm rose. The public of China for the first time got their chances to select the organizations to which they want to donate their money. According to the statistics of China Foundation Center, the 135 foundations participating in Lushan Earthquake Fund-raising received 1.22 billion yuan within half a month, which exceeded the 770 million yuan in donations received by the Red Cross Society of China for the same period. There were altogether 4.55 million people who contributed their money to the Shenzhen One Foundation, which has no government background at all. In addition, the total donations of the One Foundation surpassed those of the Red Cross Society of China and the China Charity Federation together. In the Foundation Transparency Index (FTI) ranking, the 135 foundations participating in the fund-raising for the Lushan Earthquake all ranked at the top. From this, we can see that transparency plays a very important role in the public’s choice of foundations to support.
Another bright spot for the cooperation of the government and the public in the Lushan Earthquake rescue activities was the so-called “Ya’an Model”. After the earthquake took place, the Communist Youth League of Sichuan Province immediately set up a “Ya’an Earthquake Relief Service Center for Social Organizations and Volunteers” with the government’s blessing. It provided offices and coordination services for hundreds of social organizations and supported social organizations to take part in the long-term rescue and the post-disaster reconstruction in an orderly manner. This kind of innovative disaster management system based on cooperation between the government and social organizations is one that can be popularized.
C. Cooperation among Social Organizations
Cooperation among social organizations in 2013 deserves great appreciation. The dark horse of public welfare, a journalist Deng Fei, launched a series of public welfare programs including the “child-trafficking micro-blog campaign”, “critical illness insurance program for children” and “the Free Lunch program” etc. which received caused great sensations. But not many people knew that Deng Fei was supported by a social relief, social welfare and child charity foundations. The three foundations provided Deng Fei with a legal identity and public fund-raising qualifications and these were the necessary conditions for Deng Fei’s success. So it is also a rational choice for foundations to enhance their influence and to attract donations by cooperating with excellent grass-roots NGOs [and individuals] by way of sharing public fund-raising rights and thereby achieving complementary advantages. Of course, such choices require innovative thinking and the courage to assume the risks.
In the international arena, foundations are frequently the providers of capital for public welfare organizations; but in China, the number of grant-making foundations is still small. The 2nd Session of the “China Charity Exhibition” held in Shenzhen announced that it matched funders with 342 projects needing funding for a total sum of 1.709 billion yuan, but grassroots organizations only got a very small share of that money.
After the exhibition, over 100 grassroots NGOs aired their opinions and ranked the foundations, and the first 5 foundations Guangdong Qianhe, Beijing Western Sunshine, Narada Foundation, China Poverty Alleviation Foundation and Xinping Foundation got the “Kumquat Prize” awarded by grassroot organizations. This prize, which was called a counter-attack of the grass-root NGOs against foundations, manifested the strong wills of grassroots social organizations for cooperation and mutual development and it was also a challenge for the service notions and the professional competence of the foundation industry. This rising voices of grassroots NGOs demonstrate that the fundamentals of China’s civic public welfare sector are changing.
D. A Power Redistribution
The communication revolution brought forth by the information revolution is changing the power distribution in the public welfare sector of China in a very fast manner. The internet and news media satisfies the needs of the public for donation transparency, choices and immediacy and provide unprecedented convenience for the public to participate in welfare activities. According to the China Network Donation Research Report issued in September, the number of online donations totaled 560 million by the time of its publication. This means, in the epoch of mobile internet, every individual or institution in possession of a smartphone has equal right and opportunity to participate in the distribution of public welfare resources; while in the power redistribution accompanying “social media empowerment”, the winners must be public welfare organizations which have good credibility, high efficiency and can follow up on the technological revolutions.
Recently, the Anping Public Communications Award, to be granted by the Communications School of Peking University, was born. We hope that this civic and academic award will end the confusion in public welfare opinions and become a weathervane for guiding the values of public communications.
Public welfare innovation and human resource training became the two hot topics for the public welfare sector in 2013.
E. The Only Effective Means
Will the civic welfare sector result in chaos if it is given space to develop freely? Many worry about this. I must say that the return of the public welfare to the people brings with it great energy and vitality; it is common for the sector to have problems or to encounter challenges in the process of its development. But the problems and challenges are not so dreadful. If the government does not control everything, they will not feel deep sorrow for the handling of disorders. This is beneficial for them to rebuild their supervisory authority. We must believe in the public’s judgment and let them have the last word about civic welfare organizations.
The government should also support the establishment of the self-disciplinary mechanism for the public welfare sector as this would be the only effective means for the public welfare sector to make self correction, to weed out bad examples and to strive for excellence. Seventy-two hours after the Ya’an Earthquake, “the April 20 Disaster Relief Self-disciplinary Union” was established. The 5th “China Non-Public Fund-Raising Foundation Development Forum” was held, paying great attention to critical issues related to the development of the industry, and has evolved into an embryonic alliance. In November, the 2013 Chinese Civic Welfare Transparency Rankings, which included over 1000 grass-root NGOs, was published, complementing the FTI. While the transparency rankings showed that the transparency situation of grassroots NGOs is still problematic, the common will and action of the sector will lead to its stable and healthy development.
Just like reform in other fields, social system reform also involves multiple interests. Premier Li Keqiang once said “touching on interests is more difficult than touching the soul”.
The government undertakes major responsibility in the public service sector and the mindset of the old centrally-planned economy still weighs heavily on the public welfare sector. From 2007 to 2012, the investment of the government in social services increased by 2.03 times, while the share of social organizations in the investment dropped by 18%, which shows the “contribution” of the old way of thinking. A piece of bad news came from the China Charity Exhibition that the total nationwide donation amount dropped the last 2 years in succession. So, we must be aware that, behind the positive reports such as “Charitable Fund-Raising Sees an Increase from the Public and Decrease from the Government”, though fund-raising by administrative command has declined, donations from the public will not be sufficient to compensate for the decline in total donations in the short term. In spite of this, I am of the opinion that as long as the donation made by the public is willingly contributed, it should be seen as remarkable progress.
F. Changes in the System
Now, the government is trying to do something for the sector. But, whether or not social organizations can follow up and handle everything properly remains a question. So, the opportunity and the challenge for the industry are both unprecedented.
China has a long-standing history for charitable undertakings and the Chinese are not short of charitable spirit. What is in shortage at the present is a good donation system. Large donations involving asset transactions will be levied a property transaction tax. Income earned from public welfare assets will also be levied an income tax. These cast a shadow over the minds of the rich who want to make donations. Cao Dewang donated 3.5 billion yuan in stocks, but he was assessed a tax of 672 million; Chen Fashu promised to donate 8.3 billion yuan in stocks, but failed to meet his promise because he worried he would have to pay back taxes for asset transfers, and earned a bad name as a result; in 2012, Lu Dezhi made a grand announcement to establish a 10 billion yuan foundation, but took no action in 2013, and even reduced his registered foundation assets from 200 million to 50 million. He even thought of registering a foundation in Hong Kong. Among all the tycoons in China, only Niu Gensheng had the ability to foresee. He established an overseas public welfare trust by using his stock rights in Mengniu, then contributed nearly 200 million yuan in annual proceeds to the Laoniu Foundation. He started his charity undertaking at home, with his wife and children. He had no restrictions at all and he was happy about it.
The public welfare trust laws of China have been in existence for 12 years, but have still not been carried out. Donation tax policies not only repress the enthusiasm of the rich for donation, they also restrict the development of public welfare organizations. Besides, the system design for nonprofit organizations contains defects such as the lack of legal protections for private investment, as well as confusion over whether or not an organization is for-profit or not-for-profit. These defects have become major barriers in the development of civic organizations in fields such as education, medical treatment and elder care. Reforms for the above-mentioned defects are really the expectations of the public welfare sector in this new year.
The government’s effort in intensifying procurement of social services and speeding up the construction of a “beneficial but not expensive” public service development mechanism is closely related to the overall arrangements for beneficial interaction between the government and society. The government is trying to do something for the public welfare sector. But, whether or not social organizations can follow up and handle everything properly remains a question. This is not an internal affair of a certain organization or the affair of an individual. It is a big problem that may test the competence of the whole public welfare sector. Therefore, it deserves sincere consideration of everyone in the sector and requires everyone to act properly for the sector. Regarding the procurement of social services by the government, in order to guarantee the justice, the transparency and the efficient use of capital in the procurement procedure, I believe that it is an extremely urgent business for the public welfare sector to establish a strict supervision and appraisal system.
G. Positive Energy
In retrospect of the year 2013, there was a hot topic deserves our reflection. The First Lady, Ms. Peng Liyuan, manifested great charm as an ambassador of charity in foreign affairs activities. She displayed China’s soft power and won the respect of the whole world. The Practical Education Foundation established by the former Premier, Mr. Zhu Rongji, came into being; the former Chairperson of CPPCC, Mr. Li Ruihuan, also made public the Hometown Education Foundation he had established. In accordance of Deng Xiaoping’s unfinished wish, China Youth Science and Technology Innovation Award Fund, established with all Deng’s copyright royalties, was planning to enlarge its fundraising and conduct a series of activities; and the “Xixian Education Foundation” named after Deng Xiaoping also launched innovative public welfare activities among primary and middle school students.
The participation in and support for public welfare activities by the First Lady, former Chinese leaders and their relatives, and the civic public welfare from the people, and the Night of Charity and Welfare and Charity’s Man of the Year which appeared on CCTV, all arrive at the same end through different means. They all tell stories to foster the true, the good and the beautiful. And they all convey the positive energy of civic welfare and welfare for and by the people.
The Spring for Civic Welfare has arrived!
