Barriers to Effective Philanthropy in China

In her post Things are Different Here, Emily D’Ath touched on the issues that companies face in China when engaging in CSR.  It was a post that, as you will see in my comments to her, hit a bit of a nerve, and in a good way.

It made me think about what the real barriers to effective philanthropy in China are.

It is a deeply complex issue that reaches outside of any internal issues that a donor organization faces (corporate, foundation, or private), issues of government regulation, limited projects, scalability, the varied quality of moral fiber within benefactors, fear of certain organizations, and general ignorance that any new donor would face when entering “China” for the first time.

At a basic level, one must first recognize that domestic and foreign donors are, at this time, facing different barriers to effective philanthropy as their approach to and motivations for donation are coming from different places. That, while many domestic organizations may only now be looking past the first steps of philanthropy (cut check, take picture, and move on), many foreign donors who are used to operating in transparent and mature environments are chocking on their own structures.

For both, the core issue faced is really one of ignorance. Ignorance of structures, issue, and organizations of need. Ignorance that has been fuelled by a history of cut check and run philanthropy that benefited large government organizations nongovernmental organizations (GONGOs). Organizations with massive scale, but operationally had legacy issues of program management, governance, and policy making that could have a dramatic impact for the worse on any project goals. A condition that has scared many off, while catalyzing others to ask for transparency and accountability – a sign of progress.

As donors (foreign or domestic) have begun to mature in their practices, and look to expand programming beyond the GONGOs to grassroots organizations, a new level of technical difficulty entered into the picture. Fragmented, scattered, inaccessible, and often unregistered, the grassroot NGOs that typifies the “Western” NGO model were limited, and those that were readily identifiable were largely found in the gateway cities of Beijing, Shanghai, and Guangzhou. Cities that many would agree were least in need of assistance, but would serve well in a pinch.

It is a condition that keeps things at the surface, and will require growth in donors and infrastructure.

Infrastructurally, there are are essentially 5 hurdles that must be overcome:

  • Regulation – This is perhaps the biggest elephant in the room, and without regulations that support NGOs, or donors, any efforts are going to continue to be efficient
  • Investment – Regardless of regulations, and issues of legalization, there needs to be a significant investment of time and money into supporting the stability of NGOs and their programs. Part capacity training, and part effective program development, someone needs to invest in the non-sexy stuff that will provide a smooth road for future programming.
  • Education – Creating awareness about the organizations and issues in need, and the best means of supporting each. it isn’t always about the money!
  • Trust – Trust between donors and benefactors needs to be established. right now, too many donors are scared of paying too much in administrative fees or having the money go completely to waste, and this is not unjustified in every case. The gap needs to be filled
  • Capacity – NGOs need to be granted the funding and expertise to grow. Having a single project in the middle of a hot zone isn’t a healthy organization, and donor need to begin funding scale as part of any program. Funding needs to move past the 6 month/ 1 year budget, and develop into 3-5 year programs that provide stability for the organization

On the donor side, there are a few other hurdles that exist:

  • Limited project knowledge – There is still a set of donors who expect to find their projects in the gateway cities, and are unwilling to make the investment in time and train tickets to get out and develop project pipelines.
  • Fear of GONGOs and “unscrupulous people” – there is still a lot of legacy fear that anyone in the NGO sector is a quasi-government official and should not be trusted. A stereotype that needs to be set aside, and would be overcome once donors did a bit of field work and profiling. There are foxes out there, but they are getting easier to recognize
  • Ideas of what an NGO should be – many donors, without ever having managed an NGO, have a perception of how these organizations should be run. this is particularly true of domestic donors who believe that any administrative fees over 5-10% are excessive, but I have worked with a number of international donors who are unwilling to pay administrative fees on any level. For those groups, I recommend reading Uncharitable.
  • Scale – donors are always looking for scale (today), not realizing that many organizations have the potential for scale

Executing effective philanthropic programs in China has over the last 5 years become exponentially easier and more interesting over the years, but barriers still exist for those donors who have yet to make the investment in time and money to learn about where effort are best directed, in what way, and what to expect.



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