A Proposal Submitted to the International Interns Program

Attachment 2

Proposed Research Topic:

Community Foundation: Cure for Revitalizing Hong Kong’s Third Sector?

A Proposal Submitted to the International Interns Program, Center for the Study of Philanthropy, The City University of New York (Note 1)

Terence Yiu Kai YUEN, HONG KONG

Abstract

This proposal discusses the issues and problems of philanthropy as well as the voluntary nonprofit sector in Hong Kong, and suggests that the establishment of a Community Foundation may be a possible cure for revitalizing Hong Kong’s third sector. Recent research has shown that Hong Kong’s civil society sector is at a crossroads and faces various crises: financial and economic crises, and crises of effectiveness and legitimacy. A study to evaluate the operation of community foundations in the US is thus proposed and the lessons learnt will contribute toward the reinvention of Hong Kong’s third sector.

(Note 1) Background information about the International Fellows Program: The International Fellows Program provides leadership training through applied research and professional mentorships for young scholar-practitioners in the nonprofit field. Fellows are based at The Graduate School and University Center of the City University of New York, where they will have an opportunity to design and pursue a research project. Specific topical areas are chosen each year and the topic for the year 2002 will be Community Foundations.

1 Fellows will participate in a 3-month seminar on the US and international voluntary sectors. Fellows are expected to produce a 30-50 page paper on their findings to be presented in the seminar. They will learn about the work of key agencies and meet with foundation and nonprofit representatives. They may also have the opportunity to attend selected conferences.

2 Background of the Study

What new functions ought to be performed by our philanthropic institutions in future? How can we perform the existing functions better? What are the missing components at present? What is the significance of the missing components to social development? What should the philanthropic scene in Hong Kong be say in 5 years’ time?

In cooperation with other like-minded individuals and organizations, a series of studies have been undertaken since 2000 to examine the future development strategies of Hong Kong’s philanthropy and the nonprofit sectors (Yuen 2001; Yuen and Chen 2001a, 2001b). From our findings, we have gathered some rough ideas on how to address the above concerns. It is generally believed that both the funding sector and service non-governmental organizations (thereafter NGOs) should be empowered for improved grantmaking and service provision.

Research Questions and Expected Accomplishments

As will be outlined in the discussions to follow, our studies reveal that both the philanthropy and the nonprofit service sectors are at crossroads. While different attempts are undertaken to improve the operations of our philanthropic institutions and service NGOs, it seems that the measures being adopted are only marginal in addressing the identified issues, and there are problems deeply entrenched in our existing culture and system of operation. These issues have imposed serious constraints on attaining fundamental improvement. It is evident that we need to change our old way of thinking - but how can we simultaneously address the problems of both our philanthropic system and the service sector? Is there any leverage point where we can fundamentally alter the ways in which funding bodies and nonprofit organizations interact with one another, as well as their relationships with our citizens and the community-at-large?

It appears that the experience of community foundations in the US would be able to offer us some suggestions; our broad research agenda is therefore set out as follows:

What can we learn from the experience of the community foundations in the US?

3 Is it possible that creative cultural and organizational innovations can produce much better outcomes? What likely adjustments and adaptations would be required if we are to establish a community foundation in Hong Kong?

While the viability of community foundations in our local context needs to be further evaluated, a thorough study on the operating mechanisms of community foundations can help us rethink the nature of the collective problems to be addressed, and help transform our “established worldviews” about the operation of our grantmaking system (Evans 1997b). Hopefully, innovative institutional design can be crafted to produce a greater impact, which might lead to the eventual establishment of a community foundation in Hong Kong.

Thus, our research design will aim at examining the operating mechanisms of community foundations, its underlying institutional settings, and more importantly, how different actors (funding bodies, service agencies, community groups, the business community, volunteers, service recipients, other societal actors, etc.) interact with one another to produce the desired outcomes. We are to explore the institutional imperatives in accounting for the successful operations of community foundations in the US, and the “ideal-typic setting” of case study methodology will be employed to examine the nuts-and-bolts of community foundations. We want to know how and why things work under an ideal scenario, examine the viability, and identify, where appropriate, the necessary adjustments for applying the model of community foundations to our own situation. Without doubt, the study could provide us with innovative ideas for addressing the complicated problems confronting our third sector, which are briefly discussed below.

Problems of Hong Kong’s Present Philanthropic Scene

The undesirable situations of the present philanthropic scene require urgent attention (Yuen and Chen 2001a):

 After having been extensively funded by government for a long period of time, many subvented NGOs have become completely reliant on increased government funding for program expansion and meeting new service needs.

4  While fundraising is still frequent among NGOs, donations raised are mostly used to top-up government funded services; however, donors are not keen on funding the deficits of subvented services, and as a result, most NGOs are unable to develop fundraising programs that can cultivate long-term donor support.

 Many subvented NGOs are not interested in building up their fundraising capacity, which is viewed as an undesirable chore and a distraction from service provision; consequently, many NGOs have given up the important task of promoting their services in the community-at-large through philanthropic activities.

 Philanthropy is perceived by many NGOs as merely a means to raise funds, and its other important social functions are very often ignored. Over- emphasis on event-based fundraising strategies and the single-minded focus on achieving fundraising targets have weakened the role of philanthropy in enhancing civic engagement and community building.

 Many fundraisers are indeed event organizers with little knowledge about service activities, or how fundraising can be undertaken to cultivate donor loyalty, or how donors can be encouraged to actively participate in the NGOs’ activities. Corporations and their staff are encouraged to donate and to participate in fundraising events, but not to become involved in NGO operations. The dominance of only a few philanthropic institutions such as the Community Chest also hinders the development of a more pluralistic philanthropic scene.

 Community building is not considered a function of fundraising and is often left entirely to the service providers. As a result, more advanced practices in fundraising, including the promotion of volunteerism and corporate citizenship, are yet to be developed in Hong Kong.

 Overall, the current philanthropic scene is considered not healthy. The sector is not operating in a transparent manner and information is not freely available. Campaigns are not backed with strategic thinking on service provision or advancement, and donors are not interested to learn about the causes they support. Donor involvement in service activities is still very rare.

Crises of the Third Sector and Difficulties in Enhancing NGO Capacity-Building

5 Apart from the aforementioned problems related to the grantmaking side, the service sector is experiencing its own crises. To examine these crises, we need to understand the development and the transformation of our voluntary service sector, which are briefly outlined below (Salamon 1999; Yuen and Chen 2001a, 2001b).

The civil society, in the form of voluntary agencies or NGOs, has been heavily involved in the delivery of welfare services to the public for a long time. Even before the British colonial government started to provide basic social welfare services to the public, various community services had already been offered by different community organizations; they included local charities and indigenous groups, international relief agencies, branch of overseas religious bodies, etc.

When the government began to take up more responsibilities on funding welfare services, it soon realized the importance of involving voluntary organizations in service delivery, which could serve as an effective interface between the citizens and government. With community leaders involved in the operations of NGOs, valuable “volunteer resources” from the civil society were also gathered in overseeing the operation of subvented welfare services. In short, the early period of welfare service development in Hong Kong owed a great deal to synergy attained through the interaction of the government and the voluntary sector.

After decades of development, the situation has now changed considerably. With the government’s long adopted policy to involve NGOs in service delivery, most welfare services in Hong Kong are provided by NGOs through government subvention. However, due to the rigid subvention rules and over-reliance on public funding, many NGOs have lost their pioneering instincts and the “voluntary sector” has gradually been transformed into a “subvented sector”, with many NGOs operating as if they were an extension of the government. Volunteer involvement at the board level of NGOs has been weakened due to highly standardized subvention rules, which leave very little room for NGO boards to exercise independent thinking and innovation. Professionalization of the sector and the increasing complexity of NGO operations have also hindered the ability of board members to exercise effective governance functions.

As a result, the failure of many subvented programs in addressing emerging new service needs and eliminating persistent social problems have opened up questions about the effectiveness of voluntary organizations, which were heavily involved in the delivery of the ineffective programmes. With the absence of

6 effective outcome measurements, NGOs generally are unable to demonstrate the value of their services to the public. The aggregate outcome has been the emergence of an undesirable situation where the government is often blamed for reacting inadequately to community needs, while the effectiveness and legitimacy of the nonprofit sector are also being questioned because of their inability to resolve many social problems, very often appearing to have been advocating for their own self-interest instead of their clients’. Following the trend of many western welfare states to privatize community services, market principles have been applied to manage the new government-NGO relationships. This may have a positive impact on efficiency, but it may further hamper the development of the intrinsic qualities of the third sector, including its ability to generate community resources and pile up the stock of social capital.

In short, the nonprofit sector in Hong Kong is facing not only financial and economic crises due to stringent control of rising public expenditure and market competition, but more importantly, it is also having to address the need for effectiveness and legitimacy, which are essential in re-establishing the trust of the citizens to voluntary agencies and their services.

In the wake of the crises and faced with various reforms, capacity-building has become an up-market term for the NGO sector. However, many third sector practitioners merely view reinvention as replacing one set of rules with another, thus failing to achieve the desired goal in advancing the sector’s management capacity. Not surprisingly, most of the existing training and capacity-building offerings are inadequate in terms of width, depth and volume (Yuen 2001).

Apart from the lack of emphasis on NGO’s capacity-building needs assessment, other factors have also adversely affected the efforts in enhancing capacity- building: a) an inadequate model of knowledge development and transfer, b) the lack of sector-wide baseline information, c) insufficient local expertise on nonprofit management, d) NGOs lack of willingness to put in time and resources, e) the overly competitive culture and the resulting lack of in-depth sharing among NGOs, and f) fragmented service division and funding provision (ibid. 2001).

While there is strong resistance on the part of NGOs to make changes, perhaps a more crucial problem lies in the inability and lack of emphasis on the part of our philanthropic institutions to encourage NGOs in committing to genuine capacity development. Our philanthropic institutions have failed to support our service agencies in institutional advancement and community development. As

7 community foundations in the US have particular strengths in addressing these important agendas, we have every reason to believe that by learning from their experiences, we will be able to address similar issues in our own situation.

The Way Forward

With the above findings in mind, we have set forth the research agenda as noted above. It is clear that we need to reinvent the way our philanthropic system operates, as well as to promote organizational capacity-building of NGOs. These issues are in fact intertwined with one another, and we need to employ innovative “soft-technologies” on organizational development to resolve the nested problems – the idea of community foundation could be a possible cure for revitalizing both the philanthropy and the NGO sector in Hong Kong.

References

Evans, P. (1997a). Introduction: development strategies across the public-private divide. In Peter Evans (ed.), State-Society Synergy: Government and Social Capital in Development, University of California at Berkeley (International & Area Studies), Berkeley.

Evans, P. (1997b). Government action, social capital, and development: reviewing the evidence of synergy. In Peter Evans (ed.), State-Society Synergy: Government and Social Capital in Development, University of California at Berkeley (International & Area Studies), Berkeley.

Lam, W. F. and Perry, J. L. (2000). The role of the nonprofit sector in Hong Kong’s Development, Voluntas, 11(4), 355-373.

Salamon, L. (1999). The nonprofit sector at a crossroad. Voluntas, 10(1), 5-23.

Yuen, Terence (2000). Governing Hong Kong’s Welfare Sector – An Institutional Analysis, Unpublished MPA Dissertation, The University of Hong Kong.

Yuen, Terence (2001). Study to Examine the Organizational Capacity-Building Needs of NGOs in Hong Kong, Report submitted to the Creative Initiative Foundation,

8 Hong Kong.

Yuen, Terence and Chen, Darwin (2001a). Strengthening Philanthropy in the Asia Pacific – An Agenda for Action: Hong Kong Background Paper, Paper presented at the Biennial Conference of the Asia Pacific Philanthropy Consortium, July. APPC.

Yuen, Terence and Chen, Darwin (2001b). Social functions of the third sector: Concepts and perspectives, Journal of Youth Studies (Hong Kong), 4(2), 28-41.