If there is one thing that the recent rash of scandals in China’s charities proves, it is that China has a long way to go with developing a credible and robust culture of philanthropy.
A few weeks back there were the pictures of a woman named Guo Meimei caught posing with luxury cars and accessories, while talking about her connection to China’s Red Cross. Not the first time that the Red Cross has been linked to inefficiency, the fact that she had names for BOTH her Lamborghini’s was deemed to be too excessive. 7-10 days after Guo MeiMei, news of potential impropriety at the Song QingLing Foundation began to make waves on the internet as well. Unlike Guo MeiMei though, this was more related to misuse of publicly raised funds, understanding where money was being spent (i.e. was the school built), and whether or not a charity existed at all.
According to the developer’s plan, the residential compound that occupies the majority of what was supposed to be the youth center was expected to gain 2 billion yuan ($313.2 million) once all the apartments were sold.
Partnered with plenty questions of NGO efficiency following the Sichuan Earthquake and several surveys showing donors fatigue, these events have essentially drained the public trust in charities:
the impact of the Red Cross scandal would not be limited to that organization or group of organizations only. The worsening blood shortage in Beijing, for one, is a sad footnote to the scope of the collateral damage of the drain of trust.
A couple of (egregious) acts of misused funding, and the whole system fails. Highlighting a very simple point.
Beijing’s management of civil society, and interest in engaging the public in civil sector issues, has simply not made the transition from “Philanthropy on demand” to a system of “engaged philanthropy”. It is a transition where the donors have changed, where the expectations of donors have changed, and the needs of NGO to provide transparency of operations will be a requirement public trust.
Problem was that these organizations were simply not prepared, or capable, of giving that level of transparency and still aren’t. Which, contrary to what one might think about how donors would react, has really resulted in damaging the efforts of China’s grassroots organizations more than ever before.
On the one hand, donors are more skeptical, and rightfully so. Largely ignorant of the realities of managing NGOs, or the role of NGOs in general, their reaction is to reduce their exposure and turn to the government (once again) to manage the issues of civil society. It is a system they know well, and regardless of whether or not they believe government agencies are in the best place to manage the issues, by reverting back to this system they no longer have to work to identify organizations that are effective.
Second to that, and this is where I believe grassroots organizations will be hurt the most, is that these events will catalyze new regulations that measure “efficiency” of NGOs. “Efficiency” as measured by an arbitrary number that caps administrative overhead. Regardless of the NGOs nature, industry, or platform. Everyone will be limited to 15%… maybe 20%.. and for some organizations this will either lead to their closure or will lead to their improved accounting creativity.
Neither of which will improve the situation.
For China to go forward and truly transition from a system that demands donations from companies and citizens to a specific cause, to one that engages companies and citizens to give to an organization they trust and believe in, more investment in the hardware and software is needed.