The Third Path of NGO Development in China – An Interview with Xu Yongguang, Vice Chairman and Secretary General of Narada Foundation

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  • The Third Path of NGO Development in China – An Interview with Xu Yongguang, Vice Chairman and Secretary General of Narada Foundation

In this candid interview, Xu recognizes the key contribution of international funding in seeding the growth of grassroots NGOs in China, but he is also critical of international funders for promoting a “grassroots ideology” of independence and autonomy among NGOs. For Xu, the result of this ideology is that NGOs tend to distrust the government and do not work effectively with it.

Xu lays out three paths for the future of NGOs. The first is GONGOs developing into more independent NGOs which he does not see happening because GONGOs are too dependent on the government. The second is grassroots NGOs continuing to develop independently while relying on international funding. He believes this is a dead end as well. The third is grassroots NGOs cooperating with the government. Xu believes the brightest future for NGOs lies with this third path.

Xu also gives his views on the fast growing private foundation sector, in which he is a key player. He is cautious about the future of private foundations, noting that they are still at an early stage of development. Many have not created governance structures independent of the corporation or entrepreneur funding the foundation. Many also are unclear about their direction and priorities. He is also cautious about the possibility of private foundations supporting grassroots NGOs. Noting that public foundations control most of the public donations in China, he argues it may be more important to convince these types of foundations to support NGOs. There are encouraging signs that this is starting to happen when the Chinese Red Cross offered funding to grassroots NGOs for the first time after the 2008 Sichuan earthquake. Xu and a few other foundation leaders are also creating initiatives like the China Private Foundation Forum, and the China Foundation Center, to strengthen self-governance and transparency in the philanthropy sector and encourage greater cooperation between foundations and NGOs.

Xu Yongguang has been engaged in NGO activities for nearly 20 years and is an industry legend who has moved from public to private foundations. In 1988, he left his post as head of the Communist Youth League’s Organization Department. Using RMB 100,000 in registered funds, he set up the China Youth Development Foundation (中国青少年发展基金会), and created Project Hope (希望工程), now the most influential public welfare brand in China.

In 2007 he founded the Narada Foundation (南都基金会), which aims to improve the environment in which migrant children are raised. It’s been referred to as Xu Yongguang’s “Second Project Hope”. Xu’s experience over the last 20 years has led him to suggest that, for the moment, “cooperation” [hezuo zhuyi] should be the main development path for China’s grass-root NGOs.

Xu is also the man behind the “China Private Foundation Forum” (中国非公募基金会发展论坛) which was held on July 3, 2009. In the run up to the Forum, China Development Brief (hereafter, CDB) secured an exclusive interview with Xu. As the Vice Chairman and Secretary-General for the Narada Foundation, Xu Yongguang feels he is responsible, not only for building an organization, but also for promoting cooperation within the public welfare sector, in particular bringing together foundations with organizations that carry out projects. This, he hopes, will also promote self-regulation within the sector. The Forum is one in a series of activities this year intended to promote such cooperation.


CDB: The emergence of private foundations has provided another resource for domestic NGOs. After the Sichuan earthquake which struck on May 12th, 2008, the support that Narada Foundation (from hereon called Narada) and YouChange Foundation (和友成企业家扶贫基金会) provided to grassroots organizations made Chinese NGOs proud. NGOs worry about fundraising, while foundations are concerned about finding worthwhile projects to fund. Recently, this prompted some organizations to challenge the funding guidelines of some large international foundations. What do you think are the similarities and differences between private foundations and international foundations when it comes to funding?

Xu Yongguang: I have never specifically researched the actual funding guidelines of international foundations, but it is my understanding that, in general, the project to be funded needs to be aligned with the foundation’s mission. For example, the mission of certain foundations is to promote the development of grassroots organizations, so when they are selecting their projects they will probably first analyze whether it matches their requirements and at the same time consider whether they can help the organization to develop. There are also some foundations which, when selecting projects to fund, tend to choose more well established organizations. Everyone has a different focus.

As for Narada, we don’t consider being well established as a condition for funding, because China’s well-established organizations are extremely few in number. Our main requirement is that the project is exceptional and, at the same time, we hope that our funding will help the organization to grow, thereby drawing together the development of the project and the organization. Organizations who apply to Narada for funding can be registered with Civil Affairs, or registered as a business, or even not registered at all, although funds must of course be transferred through formal institutions.

CBD: For many years, Chinese grassroots organizations have mainly relied on “milk” from international foundations for their survival. You mentioned before that this kind of external funding sometimes comes with “hormones,” which can cause premature development among NGOs. What do you see as the advantages and disadvantages of this premature development among domestic NGOs?

Xu Yongguang: First, I want to say that the support given to Chinese grassroots organizations by international NGOs in the last 10-20 years has been indispensible. The development of domestic NGOs has long been hampered by problems with legitimacy and a lack of resources. Without foreign funding, China would not have grassroots NGOs.

At the same time, foreign funding has caused unbalanced development among grassroots organizations. It’s as if their arms and legs are not strong yet, but their brain is already fully developed. When they receive foreign funds, they get a bit ahead of themselves in terms of their objectives, principles and even their language.  I’ve actually encountered a few grassroots organizations that like to use new vocabulary, to the point where I don’t even really understand what they are talking about.  How then will the government understand what they are talking about? How will the public understand?

I actually feel that grassroots organizations often do not cooperate well with the government. If you cannot build good relations with the government, you will not be able to enjoy the support from the government or gain access to their resources. It will then be difficult for you to do good work. Of course, we also have the problem of the government not trusting grassroots organizations. However, I can say with authority that more than 99 percent of grassroots organizations are out to do good work, so I really think the government should have more confidence in them.

CDB: Since you say that foreign funding of NGOs has lead to imbalanced development, then what would you say is a more suitable development path for local Chinese NGOs based on your 20 years of experience?

Xu Yongguang: Under the government’s guidance, there could be, or you could say there are, three possible routes for the development of Chinese civil society.

The first route is the mainstream approach, “from GONGO to NGO”. Under the dual management system ((Editor’s Note: The dual management system he refers to is the system used to manage social organizations registered with Civil Affairs. Under this system, social organizations need a government sponsor to register. This system puts them under the supervision of two agencies or “mother-in-laws”: Civil Affairs which is responsible for their legal registration, and the government sponsor which supervises their professional affairs. Generally speaking, organizations with some kind of government backing have an easier time finding a government sponsor. Not surprisingly, many of the social organizations that have gained legal status under the dual management system have been GONGOs not grassroots NGOs.)), the majority of NGOs have a strong governmental influence. However, over the last 20 years, very few organizations with a government background have completed the transformation from GONGOs to NGOs. The result is that the strong are getting stronger and monopolizing public donations. For example, following the Sichuan earthquake, several billion in donations went to charities with strong governmental support. Meanwhile, the weak get weaker, as the strong consume resources and fritter away a fortune. These GONGOs tarnish the reputation of NGOs staying in business when they should be closing down.

An important marker of GONGOs evolving into NGOs is a gradual move toward independence, with the board of directors becoming increasingly involved in decision-making.  Of the three most important decision makers in NGOs — the board of directors, the business manager and the program implementers — the board of directors should be the most important. However, the reality in most GONGOs is quite the opposite. The government is first, the program implementers are second followed by the board of directors.

Here we are faced with another problem — the position of popular (minjian) public welfare charities in the eyes of the government. It is not accurate to say that charities are seen as part of the social security system. The government handles social security, while charity work is conducted by NGOs (minjian). If you confuse the difference between these two and classify NGOs as a part of the social security system, then you change their legal status as a NGO. Moreover you also change the way in which the government attracts public donations and monopolizes public resources.

Some of the large foundations and public fundraising organizations accept donations from the public, but at the county level, government departments handle all donations and all their staff (including those who work for All-China Federation of Trade Unions, Communist Youth League, Women’s Federation, Civil Affairs and Red Cross) are civil servants. The reality is that this situation strengthens the government’s control over resources.

This phenomenon was not our original intention. At the time, we thought setting up foundations would increase the power, space and resources for NGOs. The 1988 Foundation Regulations clearly stipulated that foundations were to be non-governmental (minjian). However, over the last 20 years, GONGOs have yet to make the transition to NGOs.

The second route, I refer to as the “grassroots path,” or as some have mentioned in a more critical tone, the “grassroots ideology.” Some say that the cultivation of a civil society should rely on grassroots organizations, but China’s distinctive feature is that the government is dominant, and civil society is constrained by a shortage of funding and difficulties obtaining legal status.

As a result, I think the capability and adaptability of grassroots organizations is still insufficient. The leaders of many grassroots organizations cherish socialist ideals that I really admire, but their problem is that they do not know how to deal with the government.

There are some excellent grassroots organizations that have developed in the last 20 years, and have had an impact both domestically and internationally. However, they have not been able to register their organization, but this is also partially their own fault. They should make more of an effort to register. They should be less rigid, be humble, use their contacts, even socialize. It’s always possible to find a way to register. Some organizations are well known for not being willing to register at the local level, but then are unable to register at the national level. The Alashan Society of Entrepreneurs and Ecology (SEE, 阿拉善生态协会) got around this problem. They registered in Alashan, Inner Mongolia, but who will stop them from working in Beijing?  Who will stop them from operating nationally?  Privately run enterprises know how to be flexible. That is something NGOs need to learn.

In today’s world, where money means power and public office is used for private gain, why can’t grassroots organizations find a way to use public office for public gain?

If the grassroots path becomes the grassroots ideology, then it will turn into the same dead end as the first path.  Grassroots organizations cannot solve their legitimacy problem and thus their basis for existence is extremely weak.

The third path, which should be the mainstream one, is “cooperation” (hezuo zhuyi). To do anything in China, you really need a deep understanding of this country’s culture. Under a strong governmental system, only cooperation can become the mainstream development path for NGOs.

During the post-disaster reconstruction, a few trends emerged. With the government facing extremely unusual social problems, this period became a turning point. Under normal conditions the government is highly competent at dealing with social problems. The Sichuan earthquake, though, was a very unusual situation and the government could not handle everything on its own. It needed the help of NGOs.

Narada and the Chinese Red Cross Foundation (红十字会基金会) collaborated in An county, Sichuan to establish a social service center. Within six months of the center being established, the deputy county head said to me, “The goals of the social workers and the ‘harmonious society’ objectives of the government are the same. But when it comes to the government, some people take an antagonistic attitude and demand exorbitant prices, while most people feel that social workers ((Editor’s Note: The term “social worker” is used here to refer to NGO personnel and volunteers.)) are one of them.” He went on to say that the government has so many resources, and should do more to support NGOs in order to move closer to achieving a harmonious society.

NGOs and the government are unanimous in wanting to build a harmonious society.

In China, NGOs not only want to act, they want to accomplish things. Only then can they prove that NGOs are on the right path. However, even with such high expectations, NGOs cannot overextend themselves and end up producing substandard results. They need to get it just right, keeping one or two steps ahead of the tide. Then they can produce twice the result with only half the effort. If they lag behind current trends, they will end up wasting resources. There are many such organizations, most of them GONGOs that depend on the goodwill of the government. Some public foundations go all year without raising a penny in donations. What good are they?

I have walked all three of these paths before. The China Youth Development Foundation has evolved from a GONGO to a NGO and has been walking the grassroots path for a number of years now. In Beijing there are also a few New Citizen Schools (新公民学校) ((Editor’s Note: The New Citizen Schools is a new nonprofit brand that Narada is promoting in different parts of the country as a means of widening access to education for migrant children living in the cities.)) that are going the grassroots route, but are facing difficulties. At present, New Citizen Schools are cooperating with local governments, including those in the post-Sichuan earthquake reconstruction areas. It is going smoothly, really a win-win situation. However, co-operating with the government is a process. Of course there will be conflicts of interests, but both parties will soon discover that they have much in common and then opportunities for co-operation will follow.

CDB: I saw the news about Narada’s New Citizen Schools planning to open schools in Ningxia this year. Is this only one part of your project? Have these last three years gone according to plan?

Xu Yongguang: What we are launching in Yinchuan, Ningxia is a model whereby we can co-operate with the government to establish schools. So far, Narada is providing RMB two million in funding and the government is providing RMB 21 million, as well as over three hectares of land. The government will also subsidize the education of migrant children who attend New Citizen schools. At the same time, New Citizen Schools can mobilize social resources whereas public schools cannot raise money from the public for migrant children. A leader in the Yinchuan Education bureau told me, “The education of migrant children is essentially the government’s responsibility, but now you are helping them out.” This is the underlying motive behind co-operation between the government and the private sector.

In the future, when Narada works with the government to build New Citizen Schools, Narada’s main contribution will be the branding, the public welfare projects and the management, while the government’s main contribution will be funding.

CDB: During the response to the Sichuan Earthquake, Narada provided RMB 10 million to NGOs for disaster relief and to aid reconstruction. As of November 28, 2008, you had approved 62 projects. Where is the key work being done this year?

Xu Yongguang: Narada’s key work at the moment is to provide support to NGOs on the ground in the disaster zone. We are striving for specialization, long-term commitment and localization.

NGOs should provide long-term assistance to the post-disaster reconstruction according to their specialization. We consider two points when providing funding; the first is that relief organizations cannot just be “paratroopers”. You must consider this when you are providing emergency relief and disaster assistance after a catastrophe. Organizations cannot just provide emergency aid and then leave. So at the moment Narada is helping a few organizations to register in the area.

The second point is specialization. Promoting specialized social organizations is the next most important step. The government is really keen on, and society really needs, social services to develop in line with the demands of the disaster zone. We are currently collaborating with the China Association of Social Workers to make it easier for social service organizations to register, and to secure funding for expertise and sustainable development with the support of the government.

CDB: 15 years ago, you outlined eight “hidden dangers” for Project Hope. What would you say is the biggest hidden danger for private foundations right now? Private foundations in China are funded by entrepreneurs, but given that many Chinese lack a clear understanding of philanthropy, do you think entrepreneurs may interfere?

Xu Yongguang: Private foundations have developed very fast and I used to have very high hopes for them. I once wrote a paper called “Private foundations: carrying the hopes of China’s third sector,” but now I think I was overly optimistic.

I often say that the success of private foundations is guaranteed. They really hold all the aces! The biggest barrier to their development has been removed in that they can legally register and become independent organizations. Secondly, they have funding and can support the growth of grassroots organizations, and thirdly, they now have what it takes to attract a professional staff.

However, there are also “hidden dangers” for private foundations, the biggest being the governance structure. While they have the option of developing into independent entities, the majority still has not done so and is still a subsidiary of the company. GONGOs at least have the appearance of being independent as they have an organization with a staff of full-time personnel. Private foundations are often unwilling to set up a separate governance structure. It’s more convenient for the company to appoint a few people to do extra work [than to hire full-time, professional staff.]  Private foundations need to place more importance on establishing a decision-making system with a board of directors and not the entrepreneur as the main decision-maker. The second problem is how to use your money.  Should you train your own people to carry out projects, fund grassroots organizations to do them, or even donate the money directly to public foundations?

CDB: What do you and others in the private foundation world think about improving self-regulation and raising your credibility? What work have you already done in this area?

Xu Yongguang: This time more private foundations are sponsoring the “China Private Foundation Forum,” which is designed to set up a platform for exchange and co-operation between government departments, learning institutions and public welfare organizations. It is also aimed at improving the self-regulation of private foundations. There are two themes at the forum, management and the distribution of finances, mainly to address the two problems I mentioned before.

At the same time we are also working out the industry norms for self-regulation, which will be announced at the forum. In the future we plan to establish a self-regulating alliance for the industry.

The private foundations development forum’s mission statement is communication, co-operation and development. If in the future we are going to enter into a self-regulating alliance, then we need to have strict entry requirements and the logo of the organization needs to show this.

CDB: In your collection of edited books researching the third sector, the book Mobilization and Participation analyzes the fund-raising mechanism for Project Hope. The way in which market operations and administrative mobilization combined to achieve a national transformation really left a deep impression on us.  Regarding public fundraising for the Sichuan earthquake disaster, we observed that these mechanisms for mobilization still play an important role. In particular, fundraising went through three main channels: the Chinese Red Cross (红十字会), the China Charity Federation (慈善总会), and the Civil Affairs departments. However in the mid- to long-term, do you think the donations private foundations can raise will be enough to support the growth of NGOs?

Xu Yongguang: That is a hard question. First, private foundations that fund NGOs are still in the minority; the majority continues to implement their own projects. As a result, there is not enough support for grassroots NGOs and this will take time to change. In addition, public foundations are still the main source of public welfare funding for NGOs, if we want to fundamentally improve funding for grassroots NGOs, we have to change the funding orientation of public foundations. When public donations to public foundations reached a peak after the Sichuan earthquake, the Chinese Red Cross was the first to openly invite bids from grassroots organizations for post-disaster reconstruction projects. The effect was excellent. Not only did it provide funding and support to some great projects from a number of outstanding grassroots organizations, but as a result of this effort, the Red Cross also published a list of the “Top Ten Chinese Social Organization Events in 2008.” The Secretary-General of the Chinese Red Cross Foundation said, “The social effects of this RMB 20 million tender have exceeded those of RMB 600 million in donations. We are hoping that greater co-operation between public and private foundations will become a pillar for sustainable funding for grassroots NGOs.

In Brief

This article is part of our special issue on New Trends in Philanthropy and Civil Society in China (Summer, 2011). It records an interview with Xu Yongguang, Secretary-General of the Narada Foundation, and arguably the most important figure in the world of Chinese philanthropy.
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