China Development Brief, no.47 (Fall 2010)
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 Zhuang Ailing, then the new CEO of the just-established China Foundation Center1.
The CFC’s founding stands as one of the biggest events in China’s philanthropic sector since 1949. Zhuang talks about how the CFC came about, its legal status and operations, her own background and views on heading the CFC, the differing expectations and views of the CFC held by various social groups, how the CFC seeks to promote transparency in the foundation sector and the various challenges they face. Zhuang concludes by describing the CFC’s emergence as part of a natural historical process of rapid growth in China’s foundation sector, as well as of contradictions emerging from that growth. She sees the CFC’s role in addressing those contradictions as critical to the healthy development of philanthropy in China.
“I’ve done a lot of strategic planning, and this was the shortest. From the initial communication to the time the Board adopted the plan, it only took 9 days.”
This exclusive interview was conducted by “China Development Brief” at a Jianguomenwai apartment with Zhuang Ailing, President of the China Foundation Center (hereinafter CFC, www.foundationcenter.org.cn),
Perhaps it’s her disposition that makes Zhuang Ailing’s words sound calm and gentle, and allows her to laugh easily from time to time, with no sign on her face that she just went through a busy, tense preparatory process. Zhuang, and a small working group, had only three months time to get everything done to meet the CFC board’s July 8 deadline. Preliminary investigations and consultation with stakeholders, recruitment of staff, setting up teams to construct collection systems… … she and her team have come a long way. Now, they have begun the traveling “road show”, visiting the sponsoring foundations, strengthening relationships, promoting the website, seeking feedback and urging the sponsoring foundations to submit relevant information and to show initiative in fulfilling their commitment to transparency2.
Zhuang Ailing is optimistic about the CFC’s future prospects. Taiwan has roughly 23 million people and about 5,000 foundations (or one foundation per 4,600 people). The United States has about 300 million people and 100,000 Foundations (or one foundation per 3,000 people). In contrast, China’s population is 4 times that of the United States, and the number of Chinese Foundations is less than 2,000 (or one foundation per 650,000 people). “During the next 3 to 5 years, the number of China’s Foundations will grow from 2000 to 5000, and during the next decade, it may grow to more than 10,000. Imagine how much work the CFC has ahead of it!”
The Historical Context
In 1998 the China Foundation and NPO Information Network (中国基金会与NPO信息网) emerged to promote information-sharing between foundations and other nonprofit organizations in an effort to strengthen their credibility. In 2001 the organization changed its name to “Beijing Enjiu Information and Consulting Center” (北京恩玖信息咨询中心), and registered with the Beijing Civil Affairs bureau in 2009 under the name Enjiu Non-profit Development and Research Center (hereinafter, Enjiu). Enjiu’s main function was to establish the CFC which was known then as the Foundation Center Network. After the sponsoring organizations met to arrive at a consensus, the CFC relied on Enjiu to develop activities and entrusted Enjiu’s board of directors to act provisionally as the Network’s board. In addition, Enjiu would lay the groundwork for the eventual registration of the CFC, and the election of its board of directors. The CFC’s role was to serve as the platform for information disclosure, and a support and services center, for the foundation industry.
Registration and Operation of the CFC
When I asked Zhuang about the legal registration, she said that feedback from the Ministry of Civil Affairs (MCA) was positive, but first they wanted to take care of a few more things to wait until the time was ripe to re-register. The CFC still needed 2-3 years to develop into an influential, professional and recognized web portal for the industry — if they had started to register too early, it might have backfired. Of course if there had been an opportunity, they would have registered in advance. As early as 1998, the CFC had in fact already registered a number of domain names that are currently on record with the Ministry of Industry and Information Technology. The organization and the website are now both legal, and it’s unlikely that there will be any problems3.
The CFC’s founding members consist of 35 foundations (15 public and 20 private foundations). Nine of those foundations serve on the CFC’s board of directors which numbers 11 and includes two scholars: Professor Kang Xiaoguang, director of the Nonprofit Organization (NPO) Institute at Renmin University, and Professor Li Qiang of the School of Humanities and Social Sciences at Tsinghua.
The foundations on the CFC board provide funding and personnel support. The CFC management came over from the founding members, while the rest of the staff consisted of external hires. In terms of developing the website content, there are five people responsible for gathering news, and five who gather and input information into the CFC’s database. Technical support is provided by an outside company.
In terms of funding, Narada Foundation (南都基金会) gives one million RMB annually. Supporting leading organizations in the foundation sector is one of Narada’s three main strategies. The Amity Foundation (爱德基金会), China Youth Development Foundation (中国青少年发展基金会) and China Foundation for Poverty Alleviation (中国扶贫基金会) are established public foundations and have been promoting the transparency in the foundation industry for several years. These organizations, in addition to the Chinese Red Cross (中国红十字会), contribute 200,000-500,000 RMB each year. The Social Entrepreneur (or YouChange) Foundation (友成企业家扶贫基金会), Vantone Foundation (万通公益基金会), and the Tencent Charity Foundation (腾讯公益基金会) are new additions to the board, and donate 250,000 RMB each year. On the technical side, Microsoft provides the necessary software and Cisco is donating online learning systems, and providing technical support. In addition, the Ford Foundation has provided funding for two years4.
A Personal Transition
“What was my first reaction to being hired as the CEO of the Center Network? I wasn’t surprised. I’d already heard that the board was conducting a search and pulling together a list of promising people and evaluating each person. I was honored to come out at the front of the list. The reason was probably because I’ve been working in this area for a long time, and the board knew that I had connections. I had worked for ten years at the Amity Foundation, my Ph.D. thesis researched foundation capacity building and development, I founded Green Reflection (映绿), a community development center that works to include foundations in capacity building for public welfare organizations. Also, in 2001 I started volunteering at EnJiu where I participated in planning a conference on NPO capacity building, planned a conference about building public trust, compiled teaching materials and job training work. For the past few years I’ve been carrying out consulting and training to encourage some foundations to move towards a grant-making model.”
“Since Green Reflection was founded in 2004, every day has been overloaded with work. Last year, when the first term of Green Reflection’s board came to an end, I chose to continue on as chair of the board, but not as the executive director. Green Reflection’s board hired an executive director from the outside to oversee daily operations and management. I needed to give myself some time to think things through, to give some consideration to the future development of Green Reflection, and also to spend some time with my family, especially since my son will be taking the university entrance exam next year. Unexpectedly, I am now busier than ever—I’ve turned into an “amphibious” person on the fast train from Beijing to Shanghai,” she says with a laugh5.
“People ask me, what is the difference between working at Green Reflection and CFC? I worked five years in preparation for Green Reflection, and it was a personal dream. After the launch we got a lot of response and recognition from the industry, and many well-known people in the industry were willing to come on to the board of our small organization. I was very moved. The board’s early expectations of me were not very high, and that gave me a lot of space to explore and gradually grow. The main line of Green’s development is clear, but our resources are very limited. “
“The CFC is different. From the outset, there has always been a large structure in place. On the one hand, the main direction is clear. On the other, you have many famous and influential foundations involved, each with different but very high expectations. CFC’s impact is large, and so is the driving force behind it. Our high-profile launch also generated high expectations throughout the sector for CFC.
I also had some misconceptions about CFC early on. I thought the CFC website was only part of my work, and that I would be working on other areas including foundation capacity building and other services. But then I came to realize that our main service is the publication of information, and the website is the core of our business. But my role will not be so much to manage the website as it will be to use the website to promote the industry’s credibility and development. That will be a new challenge for me, and involve some learning on my part.
Of course, after laying down the information infrastructure, the foundation will provide other services, but it needs to do so in stages. Information is the CFC’s life blood. For those who push for information transparency, the CFC needs high-profile appearances to arouse the concern of the community. At our July 8 launch, 30-40 media outlets came and, within 2 weeks, released nearly 5000 different news reports online about CFC. I predict when the Beijing University Center for Civil Society Studies names the “top ten civil society events in 2010”, the CFC opening will be somewhere among the top three.
It’s easy to have high hopes about creating something, but making this hope a reality, and not just a flash in the pan, is going to be a challenge for me and my team. “
Expectations Shaped by Different Needs
Zhuang went on to discuss the different agendas and interests held by the foundations sponsoring CFC. “Public foundations which have more influence and a long history of public fundraising, hope to expand their influence through the CFC platform, including getting more support for their own fundraising initiatives. The smaller private foundations, which are not allowed to engage in public fundraising, face little pressure to fundraise, but they also want to enhance their social prestige and influence. Some of them have capacity building needs, and want to use our services to develop more quickly.
“The scholarly community is the CFC’s most direct beneficiary, and so their feedback has been positive and active. In the past, when scholars looked for information about foundations it was very difficult because you needed to look at many sites. At present, the CFC is still a very broad “information supermarket”, but over time and with the growth of the team’s capacity, gradual improvements will be made in the information database. The website can be used to compare donations, net asset value, and other factors across different provinces and sectors, and provides more than 20,000 items of historical and current news relating to foundations.
“Grass-roots NGOs have high expectations for the CFC. In communicating with NGOs, we found they lacked resources. Government bids for public projects were often limited to traditional philanthropy, and took into account factors such as the organization’s registration, evaluation, capacity, and influence. As a result, grass-roots organizations had a difficult time competing. Corporate donors generally take into consideration the social and media resources and social impact of grassroots organizations. Therefore, grassroots NGOs want to use our website site as an industry platform both to learn more about foundation resources and to showcase themselves. We also plan to provide personalized services for the public welfare sector, including capacity building and personnel development to meet their needs. Since the foundation sector’s information systems lag behind other industries, we may also provide website support to small foundations.
“The government is now carrying out its annual inspection and writing up its annual report on the foundation sector. But the CFC website provides even more information. For example, the Shanghai NGO Management Bureau can use the CFC database to understand how Shanghai foundations rank nationwide in areas such as donations, activities, and net assets.
“We’ve created a list of China’s 100 Largest Foundations that ranks both public and private foundations in terms of their net assets, donations, public welfare spending, and so on. We also have an information center where you can view daily news collated from more than 400 foundation websites.
“In the future the CFC will also provide other information resources. At the end of the year we will publish a report analyzing the development of China’s foundations. The report’s objective is to provide a detailed understanding of the current state of China’s foundation sector based on industry data.
Promoting the Government’s Disclosure of Information
“Currently, the main information source for the CFC is the Ministry of Civil Affairs’ (MCA) publicly-released information and annual reports. The CFC’s publication of government information plays a catalytic role. Before July 8, only the MCA departments in Beijing and Shanghai made public their annual foundation reports. After July 8, the CFC will gradually add more publicly-available information on foundations in other provinces. Some of this information is on the website of the Ministry of Civil Affairs, where you can find foundation annual reports and some basic information open to the public. The recent increase in information made available to the public by the government has been significant and is a particularly welcome change, and we look forward to seeing more information. Of course, making this information public will take time. The number of annual reports that we’ve collected so far (a total of 1601) is already triple the number we had at the time of the website’s launch. But only a small number of foundations have reported information for the 2005-2009 period6.
Sponsoring Foundations Set an Example
Shang Yusheng, one of the driving forces behind the CFC, once said: “The process of the CFC pushing for the industry’s self-regulation is more difficult than accession to the WTO.” According to Zhuang, “The challenge is not just about the CFC promoting transparency in the foundation sector. It’s also about promoting the idea of transparency in society as a whole. Foundations may know about the CFC, but are surprised to find their financial information published on our website. They ask us how we were able to obtain their foundation’s financial information, thinking that they submitted the information for the government’s eyes only. Many foundations do not realize that donations are a resource belonging to the public, not just the donor or recipient. According to the MCA’s “Measures for Managing Foundation Information Disclosure”, foundations are public bodies with an obligation to disclose information to the public, not just the government.
“In addition to government sources, some information came from the foundations themselves. For example, starting in 1995, the Amity Foundation began disclosing its financial information in its annual report which is available on its website.
“Our current emphasis is to promote the CFC’s core sponsoring foundations as models, asking them to submit basic, financial, project and donation information. From late August on, we visited more than ten of these foundations to introduce them to the CFC’s resources. These visits also had the effect of encouraging them to disclose information as soon as possible.
“Why was the CFC established in 2010? First, the concern with strengthening the credibility of the foundation sector did not just start this year. Some of the large foundations started to push for this 20 years ago. The CFC is the culmination of a long, gradual process.
“Second, this is the result of foundations having developed to a certain level. After the “Regulations on Foundation Management” were issued in 2004, the public, enterprises and individuals were given more space. After 2005, new private foundations emerged, changing the environment for foundations which had previously been established by the government. After the Wenchuan earthquake, foundations began to receive a large number of donations. After 2008, newly-emerging foundations began to grow in scale. When I wrote my doctoral thesis in 2000, the number of foundations whose net assets exceeded 10 million RMB was very small, and only three foundations had net assets that exceeded 100 million. Now some 45 foundations have net assets exceeding 100 million RMB, and now some foundations with tens of billions in net assets are appearing. As a result, public concern about the credibility of foundations has increased, and people have begun asking hard questions about how charitable funds are being used. In 2005, private foundations initiated a self-regulation movement, and in 2009 they held a forum. The industry’s self-regulation movement has, at an early stage, benefited from the foresight of people with high ideals, and has already gained the consensus of those in the public welfare industry7.
“The third reason is that the public is beginning to be aware that it has choices. Whoever is transparent will be chosen. In addition, grassroots NGOs hoping to apply for government procurement projects also need to improve their transparency and standardize their operations. The entire public welfare sector needs to address the issues of transparency and self-regulation if it wants to move forward. The CFC is, thus, the result of the industry experimenting, engaging in action, and responding to society.
“China is in the process of creating a modern public welfare culture. Transparency will promote good governance, efficiency, and the standardization of an organization’s operations. The CFC wants to promote a healthy and transparent public welfare mechanism and public culture. We see the next decade as a critical decade for the development of our sector.
Not long after this interview, Zhuang resigned as the CEO of CFC. ↩
Editor’s Note: The sponsoring foundations were the CFC’s founding members and consisted of 15 public and 20 private foundations. ↩
Editor’s Note: The discussion in the above two paragraphs shows the CFC going through various names and organizational identities. It uses the name CFC, but is not registered under that name. Legally, it is part of Enjiu which is registered with the Beijing Civil Affairs bureau. ↩
Editor’s Note: YouChange, Vantone and Tencent are all private foundations. ↩
Editor’s Note: Zhuang was previously based in Shanghai and, after being hired to head CFC, was shuttling back and forth between Shanghai and Beijing. ↩
Editor’s Note: In recent years, the Chinese government has been promoting information disclosure at both the central and local levels in order to strengthen transparency and good governance. ↩
Editor’s Note: Zhuang is referring to the Private Foundation Development Forum which was first held in July 2, 2009. On the forum, see the following articles in this issue, “Changes in the China Charity Federation System”; “Different Opinions at the Second Private Foundation Forum”, and “Develop Philanthropy through Debate and Cooperation” ↩