China Development Brief, No.55 (Fall 2012)
Given the many restrictions on charitable fundraising in China, Wu Jiangjiang’s article provides much needed clarity and recommendations on online fundraising strategies for NGOs. Like the China AIDS Walk article, it shows how grassroots NGOs are finding creative ways around government-imposed obstacles to acquire more social resources and legitimacy.
The word “grassroots” in Chinese originally comes from the English word grassroots, and it refers to ordinary people at the grassroots level. Grassroots NGOs usually refers to grassroots NGOs spontaneously organized by grassroots populations. The opposite of grassroots NGOs are “government-run” organizations, which refer to public welfare organizations with a government background.
The most prominent characteristic of grassroots NGOs is their non-governmental quality. The non-governmental nature of grassroots NGOs is an inherent advantage, but it is also the cause of their inherent deficiencies— resource scarce grassroots NGOs almost always face a crisis of survival. How to fundraise is frequently the biggest problem that they face. According to the 2011 China Philanthropy Report, during the 2010 year, only 1.3 percent of donations went to NGOs that were not government-run charities and foundations. Out of this, what can really be used by grassroots NGOs is very miniscule.
Grassroots NGOs are not eligible to engage in public fundraising, lack publicity channels and fundraising staff, and are unable to pay fundraising expenses. The mass media spotlight does not shine in the grassroots NGO corner, and the unknown and obscure presence of grassroots NGOs is often covered up by the attention given to the many government-organized NGOs (GONGOs) and charities. Grassroots NGOs can only look on as these “state-organized” or “quasi-state-run” charitable organizations take all the social resources. Is there a way for the voices of grassroots NGOs to be heard, for them to find resources and and continue with their work? One new path that grassroots NGOs have been moving toward is the internet.
With the rapid development of internet applications domestically in recent years, online donations have also been on the rise. Wide-ranging, far-reaching, low-cost, and powerful interfacing – the miraculous effect of internet communications seems to have opened up a new door for grassroots NGOs. In fact, some successful cases of internet fundraising exist. For instance, the “Guizhou Mountain Area Lunch Program” launched by the grassroots public figure Liang Shuxin (梁树新) in early March of 2011. Through a virtual charity fundraiser, lunch funds were raised for underprivileged children at the Guizhou Province Qianxi County Jianzhong Township Hongban Primary School (贵州黔西县建中乡红板小学). The event raised nearly 700,000 yuan in donations and generated interest in the general public and the government regarding the nutritional issues of rural students. Ultimately, it was also a direct catalyst for the local government’s reform of its rural student nutrition policy.
Can the internet then ultimately provide a solution for grassroots organizations? Moreover, how should grassroots organizations use internet tools to try and obtain the necessary resources for themselves? This issue will be discussed in the pages below with regard to charitable fundraising thresholds, internet fundraising channels, and the operations of grassroots NGOs.
Thresholds for Charitable Fundraising
The internet represents only one communications medium to talk about fundraising, and there are no differences between online and offline entry guidelines. The “high threshold” of fundraising for grassroots organizations consists of two parts: the eligibility to accept donations and the eligibility to publicly fundraise.
According to the Law of the People’s Republic of China on Public Welfare Donations, only three categories of organizations may accept charitable donations: public welfare social organizations (公益性社会团体), nonprofit public service units (公益性非营利的事业单位) and governments at or above the county level and their departments (mainly the Civil Affairs departments). Public welfare organizations may register with the Civil Affairs department as one of three types: social associations (社会团体), private non-enterprise units (民办非企业单位), and foundations (基金会).1 The registration of foundations requires a significant amount of starting capital beyond the reach of ordinary public welfare organizations. As for social organizations, most provinces and cities now require that they must follow the principle of registering only one of each kind of organization within a professional area in the same region. Therefore, most ordinary public welfare organizations that apply for registration are likely to register as a private non-enterprise unit.2 ((Editor’s Note: The author here is pointing out that the private, non-enterprise category has the lowest bar for registration.))
Regardless of the categories, we see that the basic threshold for public welfare organizations to be eligible to accept donations is to register with Civil Affairs.
Public fundraising is the second threshold faced by public welfare organizations. Public fundraising refers to a wide range of fundraising behavior. According to national laws and regulations governing fundraising, the only public welfare organizations that may publicly fundraise are the China Charity Federation (CCF, 慈善会) and its local branches, the Red Cross (红十字会), and foundations that are eligible to publicly fundraise.3 ((Editor’s Note: There are two types of legally registered foundations: public fundraising foundations (公墓基金会) and non-public fundraising foundations (非公墓基金会). The latter are ineligible to engage in public fundraising.)) Public welfare organizations that are ineligible to fundraise publicly cannot engage in public fundraising activities, even if they have been officially registered.4
In the past, fund-raising by many non-governmental public welfare organizations could be put in the “reasonable but unlawful” category. While enforcement agencies might hold a “open one eye, and close the other” attitude toward fundraising by non-governmental public welfare organizations, a tightening of the policy, or the occurrence of legal disputes during the fundraising process, could have legal consequences for fundraisers.
How then can non-governmental public welfare organizations raise money legally? First, register with the Civil Affairs department. Small and medium-sized public welfare organizations may face difficulties when they apply; for example, they may be unable to find the department in charge, have insufficient registration capital or no office space. However, registration can produce great benefits for grassroots NGOs. The organization acquires a legal status for carrying out activities and accepting outside funds. It also becomes eligible to apply to the government for tax deductions for charitable donations, thereby attracting more donations from companies and individuals.5
Next, get around the “public fundraising threshold” by using other means to acquire donor resources. The traditional method is to contact a public fundraising foundation, the China Charity Federation, or the Red Cross, and hold fundraising activities with them serving as the host, or set up a special fund under their supervision and management.6 In addition, there are also some fundraising methods, such as soliciting private donations from companies, carrying out charity auctions, and fundraising through other private channels.
While the barriers to public fundraising for nongovernmental public welfare groups are high, possibilities for overcoming those barriers exist. This article will describe how non-governmental public welfare organizations, especially small and medium-sized grassroots NGOs, can use online tools to carry out fundraising.
Internet Fundraising Channels and Strategies for Grassroots NGOs
Grassroots NGOs are not eligible to solicit contributions from the public, but charity sales directed at the general public may be carried out. Traditional charity auctions are often subjected to the complications of venue, time, limited number of buyers, and high transaction costs and are usually just one-time events with limited sales.
E-commerce refers to transactional activities carried out through the use of computers and electronic communications technology. E-commerce is aimed at a larger group of consumers, not subject to time constraints, enjoys low transaction costs, provides personalized service, and is easy to manage. E-commerce in China has experienced explosive growth in recent years. The Internet Data Center’s (IDC) data show that online transactions in 2011 reached 784.93 billion yuan. Taobao (淘宝) alone reached 100 billion yuan in sales. According to iResearch (iResearch) statistics, in 2011 the number of China’s online shoppers reached 187 million people. E-commerce has caught the public eye, built up a large user base and a new generation of online consumer. Therefore public welfare organizations might try tapping into this very popular channel as a way to increase their donations.
Taobao’s Online Charity Store (淘宝公益网店)
Starting in 2010, the largest Chinese e-commerce platform Taobao launched a charity platform service directed at NGOs. Like all C2C (Customer to Customer) vendors, public welfare organizations (including those registered as businesses and unregistered ones) verified by Taobao can set up their own charity stores on the Taobao website. Organizations eligible to do public fundraising can also use Alipay (支付宝) to engage in public fundraising.
The goods in Taobao’s Charity Store can be supplies, souvenirs produced by the organization (such as organizational badges, specially-made green environmental bags, t-shirts, calendars), as well as items from the beneficiaries helped by those organizations (such as a thank you postcard). The value of the product does not have to be the same as the sales price, and in circumstances where the buyer and seller see this as a charitable contribution, then these sales are similar to soliciting donations.
The greatest difficulty in running Taobao’s Charity Store lie in three areas. One is the lack of credibility and influence of the public welfare organizations and lack of interest in the Taobao Shop. A second is a lack of customer service personnel and capacity. To address the latter problems, some grassroots organizations have begun recruiting volunteers who can spend a long time waiting in front of the computer to provide customer service.
2. Corporate Support
In recent years, domestic companies are increasingly acquiring a sense of social responsibility, and showing more willingness to invest in philanthropy. In 2011, the “Guo Meimei incident” significantly reduced the confidence people have in government-run charities. Some companies as a result have begun to adjust their traditional corporate social responsibility (CSR) model, and make small donations to grassroots organizations. One study revealed that 18 percent of the companies surveyed strongly agreed with the statement “if the company cooperates with public welfare organizations, it will be able to better achieve certain goals.” In addition, 64 percent of the companies believed that public welfare organizations play an important role in a company’s success.7
Accepting directed corporate contributions can remedy the public fundraising difficulties and the lack of funding facing grassroots NGOs. Companies can provide not only funds, but also supplies, volunteer services, and technologies in their own field. Companies, especially local ones, have a substantial resource base waiting to be tapped by public welfare organizations. The potential for cooperation between public welfare organizations and companies is substantial.
China’s NGO 2.0 (中国公益2.0) Information Map Platform
NGO 2.0 (中国公益 2.0) is a technology-based NGO support organization whose mission is to improve the network application capabilities of small and medium-sized public welfare organizations and their ability to use new media. One of their long-term goals is to help China’s grassroots NGOs access corporate resources through network technologies as well as offline activities. For this purpose, the project team developed the “NGO 2.0 Information Map Platform” (www.ngo20map.com). The platform is oriented toward public welfare organizations and is open to companies which operate CSR programs targeting public welfare organizations. Registered public welfare organization users can publish on the map their organization’s charitable projects and charity needs, and corporate users can publish their CSR projects and resources. Registered users and published projects are all visually represented on the “charity map.”
Grassroots organizations can use the search function in the NGO 2.0 Information Map platform to search in a specific sector, or for corporate CSR resources within a specific region. They can also search for information on partner organizations similar to their own. The platform also publishes a series of best practices for cooperation between public welfare organizations and CSR departments. Organizations without cooperation experience can get inspired, and in turn, devise a project and strategy for partnering with enterprises.
Tencent’s Micro-love (腾讯微爱) Project
The Tencent Micro-love project (http://gongyi.qq.com/wgy) is an online charity product launched by the Tencent Charity Foundation (腾讯公益慈善基金会) in 2011 to provide long-term funding support and capacity building for non-governmental public welfare organizations and university student associations. Its core mechanism is funding provided by the Tencent Charity Foundation to projects carried out by public welfare organizations or university associations. Netizens participate and make the final call which public welfare projects hoping for support have funds donated.
Public welfare organizations with a strong project plan, but lacking the funding for implementation can submit project plans to the Tencent Charity Foundation and apply for the Micro-Love Dream Fund（微爱梦想基金). Public welfare projects need to get pre-approval, but even more importantly, they need to gain acknowledgment from Tencent netizens. Public welfare organizations must announce their project goals, planning, budget, implementation of programs, and fund-raising amount on the Micro-love Dream platform, and then use the Tencent microblog to generate publicity for the project, calling on netizens to support them by forwarding the microblog. Each time it is forwarded by a netizen, 0.6 yuan of micro-love capital is raised for the project. Public projects that reach the predetermined fundraising amount within the specified time will receive full funding from the Tencent Charity Foundation. The maximum amount of funding for a charity project is presently 50,000 yuan.
The Micro-love Plan is a classic example of collaboration between grassroots NGOs and Internet companies. On one hand, the Tencent Micro-love Dream Fund provides a fundraising platform for grassroots charity projects. On the other, Tencent’s own multi-media tools, and its extensive user base has brought more public attention to grassroots NGOs. It is also more applicable to fundraising for small public service projects that need to be implemented in a short time frame and get more public exposure.
3. Third Party Platforms
Third-party platforms refer to supporting organizations that makes use of networks to raise resources for NGOs. This category of organization is usually classified as a social enterprise; they use a business model to engage in online fundraising, and donate the funds raised or their profits, minus the necessary operating expenses, to public welfare organizations. Public welfare organizations that cooperate with third-party platforms can make use of their operational and management advantages in fundraising to obtain resources for themselves.
Buy42 Network (善淘网)
Buy42 (善淘网, www.buy42.com) is China’s first online charity store. The meaning behind the domain name “buy42” is to “buy for two,” that is, to encourage people to purchase goods while at the same time feeling good about helping others.
Buy42 has already formed partnerships with 17 public organizations, and the total amount of its charitable assistance has exceeded 600,000 yuan. By the end of 2011, Buy42 had helped more than 22 charity projects. In the “Green Children Quarterly” project, for instance, Buy42 raised 34,417 yuan to provide each of 3441 pupils in Hebei, Henan, Anhui and other impoverished regions noteworthy publications.
4. Donations Within Private Circles
The target of public fundraising is an unspecified social group, while non-public (or private) fundraising activities occur within a specific group. The current law on the scope of public fundraising does not provide specific guidelines, but according to fundraising regulations introduced by some localities, the solicitation of contributions from one’s community or a specific group of people in one’s work unit does not fall under the category of public fundraising8. By extension, fundraising specifically targeting niche communities in the real-name system network can be considered as not in violation of the regulations.9
One individual who heads a grassroots NGO told the author in an interview that when the fundraising amount is not large, he will usually split up the needed amount into small equal portions, and then announce the call for assistance in multiple public welfare QQ groups, calling on people within the groups to make small pledges. Because these people are all in public welfare circles, they are especially caring and happy to give. Moreover, a donation of a few dollars will not impose a burden. In the words of this NGO leader, “Charity should not be limited to the wealthy, and those with low incomes who want to give should also enjoy the opportunity to participate in philanthropy through small donations.”
The internet has made it more convenient for grassroots NGOs to raise resources. But given the restrictive conditions for registering as a public welfare organization and for public fundraising, grassroots organizations face a major disadvantage compared to their government-run counterparts. Therefore, the former need to make creative use of internet fundraising to make up for this disadvantage.
The good news is that the policy environment has been recently relaxed. On May 1, 2013, the Guangzhou City Fundraising Regulations《广州市募捐条例》made improving fundraising transparency a requirement and at the same time lowered the barrier to entry for public fundraising; this is the first time that NGOs registered as private non-enterprise units (民非) can expressly carry out fundraising. On July 1 of this year, Guangzhou also lowered the registration barrier for social organizations. With the exception of certain cases, social organizations will be able to directly registered. Other areas such as Beijing have also introduced similarly relaxed initiatives.10 These measures reflect the gradual opening up of the policy space for grassroots organizations, and a better fundraising environment for grassroots organizations. The “grassroots” that survived in the cracks in the past have developed a strong will to live. We have reason to believe that, once they have been given a wider space to exist, the public welfare sector in China will surely usher in a new tomorrow.
Editor’s Note: Social associations are generally membership associations, while private non-enterprise units are generally service providers such as private schools and health clinics. ↩
Wang Shiqiang. The Chinese Nonprofit Organization Registration Strategy. www.chinadevelopmentbrief.org.cn/ngo_talkview.php?id=3480, 2012-03-01 ↩
The Guangzhou City Fundraising Regulations went into effect on May 1, 2012, and the Regulations permit local non-public fundraising, public welfare organizations that meet the requirements to apply for public fundraising qualification from the civil affairs department. The move is the first of its kind in the country. ↩
Editor’s Note: Here the author is referring to those categories of legally registered social organizations that are not allowed to engage in public fundraising: social associations; private, non-enterprise units, and non-public fundraising foundations. In other words, the large majority of public welfare social organizations in China may not engage in public fundraising. Ironically, the CCF is registered as a social association (shehui tuanti) but because it was established by the Ministry of Civil Affairs, it enjoys a special status not given to any other registered social association. The Red Cross is governed by a separate law under the State Council and is thus not required to register. ↩
Editor’s Note: Generally speaking, registering with Civil Affairs does not automatically bring tax benefits. After registering, the NGO must still apply to the tax department for tax deductions. ↩
Editor’s Note: A number of NGOs and even private foundations have been able to set up a special fund under a public fundraising foundation or the Red Cross. Using this special fund, they then engage in public fundraising in return for paying a management fee to the public foundation. The best-known case was that of the One Foundation when it was still registered as a non-public fundraising foundation and had a special fund under the China Red Cross. In December of 2010, it succeeded in registering as a public fundraising foundation in Shenzhen. ↩
Ogilvy Earth and Millward Brown. The Vision of Cooperation Between Corporate Social Responsibility and Public Welfare Organizations White Paper. www.millwardbrown.cn / article / NGO partnerships.pdf 2012-04 ↩
For example, Article 2 of the Guangzhou City Fundraising Regulations: “These regulations apply to fundraising organizations within the city’s jurisdiction that fundraise from the general public, and whose property is used for public welfare and related management activities. For fundraising activities carried out to help specific targeted communities and directed towards a given work unit or a specific group of people in a given community, these regulations do not apply.” ↩
Editor’s Note: The “real-name system” is an online network in which users who want to start a blog, website, or other online service, are required to register their real identification. The Chinese government is currently considering implementing a national real-name system. ↩
Editor’s Note: Direct registration here means the registration process would be simplified. Organizations would be able to register with the Civil Affairs bureau without first getting sponsorship from a “professional supervising unit” which would normally be a government agency. While these measures have been carried out in certain cities, they are reserved for certain categories of social organizations and their implementation in places such as Beijing has been slow. ↩