Mark Chen is better qualified than most people to bridge China’s prosperous corporate world and its burgeoning nonprofit industry. He has a long history in China and Taiwan with consulting firm McKinsey & Company and has headed charitable organizations for years. But there’s a kicker: After the end of his corporate life in 1992, before he started working on nonprofit projects in 1996, he was a Buddhist monk.
“I spent two years at a Zen monastery in Taiwan and one year traveling around Qinghai, Tibet, Nepal, India, China, searching for my guru, learning different practices,” he said.
In 2005, he put his experiences in corporate consulting, monkhood and charity management together. He rejoined McKinsey as a senior adviser, and worked with the firm to start an organization called Non-Profit Partners, LLC (NPP).
NPP is China’s first venture philanthropy organization, bringing a more corporate financial model to the nonprofits that are increasingly filling the vacuum left behind by a shrinking welfare state.
The increase in nongovernmental organization (NGO) and the private sector participation in providing public goods is being fueled by a rise in volunteerism. More people are donating their time than ever before.
For example, Junior Achievement, an NGO that gets corporate volunteers to teach business skills to students, has seen its volunteer base skyrocket.
“In 2001 we had 35 volunteers, but today we have thousands,” said director Gao Yang. “There is a lot of demand from corporations to work with us.”
Open to ideas
At the same time, Beijing has shown some signs of being more open to NGOs. The Ministry of Civil Affairs is considering a draft a charity law but details are still sketchy.
“The government realizes it cannot take care of everything from cradle to grave as it did many years ago,” said Zhang Li Wei, associate general secretary at the Amity Foundation, one of China’s largest independent NGOs. Amity works on education, healthcare and disaster relief projects out of its Nanjing headquarters. It has 50 full-time staff and more than US$13 million in project funds.
Amity has already adopted some practices venture philanthropists advocate. It is audited yearly and posts the results.
“With the marketization of the economy, there’s more room for NGOs to grow, and the government is now more willing to delegate,” Zhang said.
NPP’s approach may provide a natural next step, said Rob John, a visiting fellow at the Skoll Centre for Social Entrepreneurship at Oxford University.
“It is likely that there are nonprofit organizations in China whose potential can be unlocked by partnership with NPP – bringing [together] the powerful combination of growth finance and business skills.”
Changing the world
Venture philanthropy rose to prominence in the mid-1990s when high-tech companies in the US, backed by venture capital, created a generation of wealthy individuals with a thirst for world-changing ideas. These technologists and financiers started to apply the principles of venture funding to charities.
Unlike the traditional grant-making model, where funds passively hand out money, venture philanthropy uses precise metrics to link the level of financing to past performance.
That’s where NPP’s expertise comes in. The group has roped in marquee multinationals like McKinsey, Deloitte and Ogilvy & Mather to teach business and finance skills for free. It also plans to raise “quite a number of millions of dollars” to invest. It already has 11 staff in Beijing and high-powered directors, including the heads of multinationals like Motorola.
But NPP’s venture fund is still empty. Fundraising will start when the group is registered as a foundation, which could take up to a year.
For now, it is limited to more modest activities. In Qinghai, for example, NPP helped a school for nomadic children turn around a yak cheese factory and channel the profits back into education. It is also building a web database for China’s hundreds of NGOs.
China’s non-profit organizations have generally been supportive of a more corporate approach, but practical as the idea may seem, not everyone agrees with it.
“Organizations do need core competencies,” said Nick Young, editor of the China Development Brief, a newsletter that tracks social development. “But this whole vision of private sector-led social services depends critically on the government’s capacity to regulate, and it does not have that fundamental capacity.
“Look at [the] environment: It can publish rules, but it can’t inspect or enforce them. Developing a private sector-led social welfare delivery model where the government has no proven capacity to regulate is a recipe for a big mess.”
But that’s not to say the government is comfortable allowing all NGOs to grow. Groups working in areas like human rights, for example, are still frowned upon. Indeed, not long after speaking to CHINA ECONOMIC REVIEW, China Development Brief was ordered to cease publication.
The official reason was that Young had conducted surveys without approval but media speculated that the true reason was the sensitivity of the publication’s subject matter ahead of a Communist Party Congress later this year.
“[The government] is in a bind in that they want to promote market-led social services delivery, but they also want to very carefully control the amount of citizen advocacy there is,” Young said.
“[But] more space will be given if the NGOs continue to show that they can do useful work that doesn’t threaten the government.”