China’s stunning economic rise and massive societal shifts have led to a historically unprecedented drop in poverty levels. World Bank figures show that just twenty years ago, more than 727 million people in China, or 69 percent of the population, lived in extreme poverty. Today, that number is...

China’s rising social sector

China’s stunning economic rise and massive societal shifts have led to a historically unprecedented drop in poverty levels. World Bank figures show that just twenty years ago, more than 727 million people in China, or 69 percent of the population, lived in extreme poverty. Today, that number is below 6 percent and dropping.

In this same period of dramatic change, the social sector in China has been inventing itself, first through international support and now, increasingly, with the deployment of local resources. Key milestones—among them the 1995 UN World Conference on Women that sparked the creation of many nongovernmental organisations (NGOs) and the 2008 Sichuan earthquake that established a new generation of philanthropists, volunteers, and social entrepreneurs—have marked clear growth points in the lifecycle of Chinese civil society’s increasingly complex system of social institutions.

The question of how to influence the social sector’s growth, effectiveness, and sustainability led us in 2011 to create the China Social Sector Pioneers (CSSP) Strategic Initiative. Given the opportunity presented by the development of the grassroots nonprofit movement in China, it was a unique moment in time to make strategic investments that would truly help strengthen the sector.

Over the past three years, the China Social Sector Pioneers Initiative has sought to improve, expand, and replicate the work of China’s pathfinders—those who are who are helping shape the development of China’s emerging cadre of civil society organisations.


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Strategic Initiative

SECTOR

Economic Empowerment

TOTAL INVESTMENT

US$ 3,851,217

LOCATION

China

LIVES CHANGED

31,068

SOCIAL IMPACT INDEX

66.4 (out of 100)

AVERAGE COST PER LIFE

US$ 123.96

Expand All

SI Breakdown:

Key Achievements

·         Grants to 14 of China's pioneering organisations directly resulted in 22,644 lives changed.

·         Many more lives were changed indirectly through the 14 CSSP partners' support to 1,063 unique organisations throughout China. 

·         Programme outcomes include well-developed organisations, stronger networks, replicated models, and improved and expanded projects.

The Problem

In China, few donors are willing to pay for the cost of exploring and making mistakes, but this is a critical component for organisational growth.

The lack of support for organisational development perpetuates a cycle of risk avoidance, as both organisations and donors are unable to meet opportunities because they do not internally have a culture of positive risk taking. 

The Legatum Foundation’s approach was a marked shift from that of most grantmakers in China, which is modelled more on the concept of charity—providing funding for goods and services that go directly to beneficiary needs—than on philanthropic investing, which supports grantees to pursue their missions above implementing donor-dictated projects. The norm of NGOs in China operating according to donor funding directives is, we hope, on the decline. Donor-directives are not inherently faulty, but they can mean that projects may not reflect true community needs or appropriate, sustainable solutions.

Solution

When taking risks is allowed, and when the grantee is well-equipped to execute, amazing things can happen. High-quality development can be accelerated. We saw in several instances that it was the grants to discrete crucial elements of an organisation’s strategy that no one else besides the Legatum Foundation would fund that really launched them into their futures. 

Since the Initiative’s launch in 2011, each of the Foundation’s 14 partners have achieved their project targets. Together, they have reached 21,542 individuals and built capacity among 790 individual social sector organisations in over 100 cities across China. 2013 was the first full calendar year of Legatum Foundation granting for several partners, including all of those operating in Guangzhou. Implementers in 2013 not only reported on the number of individual beneficiaries reached through their interventions, but also on the number of other, less mature, organisations that were strengthened through training, coaching, or resource-sharing.’

Critical Analysis

Funding from the Legatum Foundation has allowed the CSSP partners to examine inward, exploring their true mission and identifying their key strengths and resources to make strategy shifts. 

This initiative has given us several examples of rapid, healthy growth and expansion. The transformations we have seen among some of our riskier projects have been truly surprising. In these cases, investments in building internal systems or creating tools that catalyzed growth paid off tremendously.

Many CSSP projects have had a multiplier effect. Aspects such as training of trainers, creating handbooks and toolkits, replicating models, and building networks all mean that investments made since 2011 will continue to benefit the sector and its ultimate beneficiaries for years to come. An interesting and unexpected example of this effect is that several of our partners have been able to influence policy through advocacy activities. 

The most exciting discovery to emerge from the programme is the willingness and drive of pioneers to support peer organisations and networks as well as state-operated institutions, in order to increase project effectiveness, support the development of the sector, and most importantly, improve beneficiary outcomes. The general lack of an international aid ecosystem in China seems to have created a unique social-sector culture that, while imperfect, tends to avoid some of the infighting and competition found more prominently in countries with large aid industries. The general belief, common among the majority of our partners, is that NGOs in China are interconnected—that their success largely depends on the success of the sector as a whole. This success will only come as a result of reaching a critical mass of mature organisations implementing solid projects.

Conversely, the undercurrent of opposition that these organisations are working against was reinforced as well at many points along the way over the past three years. So much has been discussed and written about the challenges faced by social sector organisations in China that it is a wonder that any manage to move into the later stages of maturity.

Several partners have developed incredibly; others have in smaller ways, but in all cases the projects that they are implementing will help them to have more relevance and effectiveness as they grow in the future. Final reports show that the experience of CSSP has, in large part, helped our partners to define what they want for their futures as organisations. Articulating a vision for the future is an immensely important step in an organisation’s strategy.

This final year of the first phase of CSSP has been a time of data collection, analysis, and strategy refinement as we simultaneously launched the 2014-17 programme phase with SI Fund III. In order to understand where we are going, we knew it would be very important to understand both where we have been as well as the present landscape of China’s social sector. Thus, we launched two projects that would help us incorporate external perspectives: a research partnership with Dr. Andreas Fulda of the University of Nottingham, and an evaluation partnership with Social Resources Institute (SRI), a Beijing-based research and evaluation consultancy.

Dr. Fulda’s research study will interview 20 of the top funders, implementers, and social sector supporters in China—including the Ford Foundation, Save the Children, China Development Brief, and others. The study seeks to uncover emerging trends of support and encourage openness and collaboration in the sector. We anticipate that the analysis of findings will be submitted for publication in the Journal of Contemporary Chinese Affairs next year.

Lessons Learned

Successes

Clarity around growth factors for organisational development

Generally accepted best practices on organisational development abound in the literature, but few available resources reflect the unique context in which Chinese civil society organisations operate today. CSSP’s experience contributes lessons from our own case studies that reflect the contextual idiosyncrasies that have such an influence on China’s social sector actors.

Characteristics of organisational development include: pursuing one’s own mission, effectively designing and implementing one’s own projects, and finally, expanding that foundation in either scale—the size and/or number of locations in which your project operates—or scope—the range of interventions/products offered within a particular sector.

The lack of support for organisational development perpetuates a cycle of risk avoidance, as both organisations and donors are unable to meet opportunities because they do not internally have a culture of positive risk taking. When taking risks is allowed, and when the grantee is well-equipped to execute, amazing things can happen. High-quality development can be accelerated. We saw in several instances that it was the grants to discrete crucial elements of an organisation’s strategy that no one else besides the Legatum Foundation would fund that really launched them into their futures.

Customised approach

Raising the perceived legitimacy of grassroots work in China depends on the abilities of organisations like our partners to tell their stories in an effective, transparent way that is both engaging and compelling. In order to do this, they should not focus first on marketing, but on implementing quality data management and learning systems, then utilizing that content to power their social media, marketing, and public relations campaigns as well as produce quality reporting.

What we have learned in CSSP is that customised, diverse, and long-term strategies to realise organisational development are the most effective. If the organisation is self aware (and has a culture of monitoring, evaluation, learning, revising, and refining), then most often they already know what they need to move to the next level of reach and effectiveness. What they need from a donor is the financial support that permits them to take action.

Involvement and ongoing coaching are more important and more likely to cause real and lasting change than theoretical or even practical skills training. While CSSP provided capacity building training, and did receive positive feedback on that training, it was the investments in very specifically targeted needs that seemed to reap the greatest rewards.

During the project period, some partners made adjustments to their original design. The Legatum Foundation’s investment has allowed them to identify their key strengths and thus shift or pivot strategy successfully.

Legitimacy

Recognition by local governments, media, and the public has increased for most partners since the beginning of CSSP, due in large part to the expansion of their work or the relevance to currently popular topics, of which philanthropy, volunteerism, and social services are a few. Increased attention has helped several partners secure additional funding from external sources, contributing to improved stability to carry out strategic plans. Some partners won direct financial support or subsidized office space from the government, which is quite rare. One partner not only secured funding from the local provincial government but also received permission to accept donations and an exemption from paying taxes on those donations. Though these are common allowances in many countries, they are extremely rare in China.

Policy influence

In 2012, CSSP expanded beyond Beijing and Shanghai to include projects located in Guangdong province and its capital city, Guangzhou. Many policy changes previously thought impossible have been enacted here in recent years. The central government of China has slowly shifted its attitude and strategy toward the NGO sector, combining caution with selective support. Guangzhou was chosen as a trial city for policy changes, making it a hotbed for social sector activity.

Our NGO partners have also influenced this more positive operating environment. They have aligned with other influential NGOs to push forward favorable changes in the province’s NGO management guidelines and government procurement ventures. The adopted policies were regarded as a milestone.

One partner had success in helping government officials gain a better understanding of people with special needs, and has won favorable policies for more equitable access to opportunities such as secondary education and vocational training. Although not resulting in a direct influence, several partners have tried to bring local government’s attention to the needs of grassroots service providers through annual conferences, personal networking and sharing, and cooperation. They believe Guangzhou’s success can be replicated elsewhere through their continuous effort.

Dissemination of ideas in the information age

Civil society organisations have been trying to create and replicate successful models for a long time. Replication is difficult but China’s interconnectedness has increased the availability of resources and the accessibility of models and best practices to degrees that do not exist in many of the other strategic initiatives supported by the Legatum Foundation. Many CSSP implementing partners are leaders in their sectors and, therefore, have a wealth of knowledge to share with less developed organisations or with other stakeholders, such as nonprofit professionals, families, beneficiaries, policy experts, advocates, or the public.

While traditional ways of sharing information, such as creating manuals and offering in-person trainings, are still viable, the utilization of technology to reach wider and farther audiences is a key achievement of the programme. Over 45 percent of mainland Chinese people were online at the start of 2014, according to the state-affiliated research organisation China Internet Network Information Center. The growing number of connected citizens has changed China in countless ways. In the social sector, technology has created the platform that is enabling even the smallest NPOs or volunteer associations to access resources. These resources ranged from international standards for best practices in community development, to sector news and updates to support forums, to instructional videos and live-streaming trainings. As in all other facets of society, technology is offering the social sector opportunities to accelerate development and engage stakeholders in new and innovative ways.

For a few of our partners, creating toolkits, curriculums, and instructional videos has allowed them to reach audiences across China while also promoting their own legitimacy and brand. This has resulted in new partnerships with donors, new collaboration opportunities with other organisations in the sector, and opportunities to expand to new geographies, all within a very short timeframe.

Peer support and horizontal collaboration

As early as 2012, we learned that pioneering organisations in China are some of the most capable trainers and coaches in the country. Though government actors, foundations, and academics are often the ones delivering content on organisational effectiveness because they are the ones with the resources available to offer such trainings, it is the practitioners who have the know-how.

Though many leading organisations do participate in training less mature organisations, the practice is not widespread for two reasons. Firstly, organisation leaders— the ones who have the experience needed to conduct the training, mentorship, or coaching—are often overextended with the demands of their own organisations and do not have much time to share. The second reason is the underlying cause for many of the sector’s growth challenges: the lack of financial resources. Trainees do not have enough to pay for training. Trainers are barely able to keep their own organisations running, therefore any resources directed to train others is literally funding out of their own pockets.

As a result, the programme’s premise of funding pioneers to offer support to other sector actors was a key piece of the CSSP strategy, and had an enormous bearing on the initiative’s success. One-half of our partners equipped peer organisations through experience-sharing, toolkit and curriculum distribution, onsite visits, and resource recommendations. Several partners have even helped establish smaller organisations or volunteer groups.

Throughout the initiative, replicating effective models has been a key strategic objective. Replication has taken a variety of forms across our 14 partner projects. At the light-touch end of the continuum are interventions of a few trainings or the sharing of a handbook. Total in-depth interventions include franchising—which essentially entails adopting a smaller organisation in another city, implementing the model there, and taking financial responsibility for its operations—and replication, which involves starting a new branch in a new location.

Challenges

Clarity around growth factors for organisational development

We note that achieving a level of clarity on growth factors was a key success of CSSP, though we also list it as a challenge in that there is much to be discovered, particularly as the sector is rapidly changing.

Assuming that most nonprofit organisations in China can be assigned to one of three stages of organisational development—emerging, growth, and maturity—we have been challenged to clarify what exactly it takes to move organisations along the continuum in China.

CSSP has shown that organisations must balance vision with execution. This is particularly true in China for a number of reasons. First, it is often the case that one or two strong leaders within an organisation can carry most of the decision-making power as well as the responsibility for forming a strategic vision and managing implementation. Culture and experience reinforce the top-down structure; leaders are typically one of few people within an organisation that have specialised experience.

When a disproportionate burden is placed with one person, the organisation’s ability to execute the vision can easily become lost. Lower-level staff become disconnected from decisions and their rationale. Thus, strong team communication and alignment is of critical importance, from volunteers to entry-level employees to middle management to those in leadership.

We have also found that projects which attempt scale and scope expansion are a higher risk. Success is achievable but flexibility on timeline and implementation approach is very important. Assessing the merit of a granted project according to the original project plan and benchmarks is of some value, but only if that assessment includes also taking the long view and accepting that good projects finished a few months past schedule can still be counted as successful.

We know that our experience will continue to contribute to our understanding of the growth factors most critically important to China’s social sector organizations. As we learn more, we can continuously apply that knowledge to our granting strategy in order to refine it over time.

Recruiting and retaining qualified staff

Social sector organisations have a difficult time recruiting for leadership positions and lower-level staff alike. With a booming economy and rapidly rising for-profit salaries in the last decade, China’s young professionals do not often turn to the relatively low wages and difficult work of social sector careers.

Recruiting for leadership positions is particularly difficult, with vacancies remaining open for months at a time. The highly limited pool of prospects is a result of few experienced professionals in the sector. A major lesson learned in 2013 was that organisations seeking to fill an executive director-level position should be considered even higher risk in China (regardless of strong board leadership) due to the difficulty in filling those positions in a timely manner.

Sustainability

Financial sustainability is difficult to achieve in China. Foreign funding has dropped as the country’s income has risen. Domestic funding is generally highly restrictive and is sometimes characterised by nepotism, trend-following, and generalised mistrust. Though many of our partners have found new and more varied sources of funding since CSSP began, the challenge remains for them to build relationships with donors like the Legatum Foundation who understand strategic investment in sector and organisational development, beyond just direct service to beneficiaries.

Ideal or not, external stakeholder relationships in China largely determine the long-term sustainability of nonprofit organisations. The downsides to this include the amount of internal resources it takes to initiate and maintain relationships with government officials, foundations, private-sector actors, and other nonprofits, as well as the space these relationships create for conflicts of interest and ’mission creep’.

China Social Sector Pioneers Initiative: Featured Projects

SII ScoreProject NameGrantLives ChangedCost Per LifeSector
80.00 Starfish Project$439,5303,315$132.59
76.00 Huiling$220,7872,908$75.92
76.00 Stars and Rain$345,130558$618.51
72.00 Bethel Foundation$653,2216,600$98.97
68.40 Eden Ministry$387,02012,509$30.94
68.00 Qingcongquan (QCQ)$177,978950$187.35
64.80 AIDS Care China$92,0301,321$69.67
64.80 CereCare$227,98758$3,930.81
64.60 Jiuquan$98,990431$229.68
61.20 Yang Ai$175,5381,007$174.32
60.00 Golden Ribbon$140,5721,068$131.62
54.00 NGOCN$124,43635$3,555.31
53.20 WISPAD$166,580308$540.84
Note: The Social Impact Index Score reflects the relative social impact of a given development project. The lowest possible score is 20; the highest possible score is 100.

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