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Community Foundations in China: In Search of an Identity?

Chao Guo Associate Professor School of Social Policy & Practice University of Pennsylvania

Weijun Lai Department of Sociology Chinese University of Hong Kong

China Philanthropy Summit Research Center for Chinese Politics & Business and Lilly Family School of Philanthropy Indiana University Indianapolis, Indiana October 31-November 1, 2014

Working paper draft – October 2014 – Not for distribution

Community Foundations in China: In Search of Identity?

Chao Guo and Weijun Lai1

Since the government launched its economic and political reforms over thirty five years ago,

China’s civil society sector has begun to re-emerge along with the Chinese people’s renewed quest for democracy. Economically aggressive but politically conservative, the Chinese government has been suspicious of the motives and consequences of both movements. It is thus not a coincidence that the ups and downs of the nonprofit sector often mirror those of democratization from year to year. Despite the constant pressures from the state, however, the growth of the nonprofit sector seems irreversible: today, there are close to half million officially registered nonprofit organizations (NPOs) with nearly 6 million employees, as well as millions of unregistered grassroots organizations (Guo, Xu, Smith, & Zhang, 2012; see also Deng, 2014;

Zhu, 2014).

It is against this backdrop that the current study reports on findings from our research on community foundations in China. Our interest in community foundations was heightened by two recent developments in the field of philanthropy in China. The first development is related to the decline of public trust in government-affiliated foundations and nonprofits. Triggered by a number of scandals around 2011 that involved such organizations as China Red Cross, China-

Africa Project Hope, and Henan Soong Ching Ling Foundation, public trust in government-

1 Chao Guo is an associate professor in the School of Social Policy and Practice at the University of Pennsylvania. Weijun Lai is a doctoral student in the Department of Sociology at the Chinese University of Hong Kong. Research for this working paper was supported by the Indiana University's Research Center for Chinese Politics & Business and Lilly Family School of Philanthropy with a grant from the Luce Foundation. Our thanks to the interviewees the Guangdong Harmony Foundation, and IU for commissioning this paper. affiliated foundations and nonprofits has fallen to an all-time low (Xu, 2014). This credibility crisis has led to an industry-wide self-regulation, exemplified by the signing of an agreement among the country’s leading foundations to adoptcodes of conduct in December of 2011. In addition, foundations went one step further to explore new models of philanthropy. For example, there has been a growing interest among the leadership of China Charity Federation2 to follow the U.S. community foundation model in the reform CCF and its affiliates. 3

The second development has to do with the government’s recent experiments to reform the regulation of nonprofit organizations. One series of such experiments have taken place in

Shenzhen, an affluent south China municipality once regarded as the “window of China’s reform.” Working in partnership with the Ministry of Civil Affairs, Shenzhen has recently pioneered several important initiatives. In December of 2010, the Civil Affairs Bureau of

Shenzhen officially approved the registration of One Foundation as an independent public fundraising foundation, one of the very few public fundraising foundations with no direct government affiliation (i.e., no supervisory agency). In July of 2012, Shenzhen hosted China’s first-ever charity fair that showcased hundreds of Chinese nonprofits. In April of this year,

Shenzhen launched its first cohort of community foundations—five in the Guangming new area and one in the Bao'an district—as part of the municipal government’s ambitious plan to develop

50 to 100 community foundations in three years.4

Taken together, these two related developments have effectively directed public and scholarly attention to community foundations as an emerging form of institutional philanthropy.

In the western context, community foundations are public charities that work to improve the quality of life of a specific geographic community by pooling funds from a wide range of

2 中华慈善总会. 3 Available at: http://news.takungpao.com/mainland/focus/2014-04/2425572.html. 4 Source: China Daily. Available at: http://www.chinadaily.com.cn/china/2014-04/01/content_17398041.htm. 2 individual, family, and corporate donors and allocating grants to targeted program areas that meet specific local needs (Gronbjerg, 2004; Guo & Brown, 2006). They are one of the fastest growing segments of the foundation field. In 1914, the Cleveland Foundation, the first of its kind, was established in the United States. Today, there are approximately 780 community foundations in the United States and nearly 1,700 community foundations in over 50 countries.

In China, community foundations are the newest members of the “foundation family”; the first community foundation is believed to have been established in either 2008 or 2009.5 Interestingly, while the earliest Chinese experiments with the community foundation model—the “first movers”—were led by social innovators at the grassroots level, the “second movers” had a strong government backing. Do the first and second moves share the same understanding of the community foundation model? If not, how do these pioneers differ in their vision of the important roles and functions of community foundations in society? How do these community foundations differ in their governance and management practices? To what extent are these foundations making an impact on their communities?

In order to answer these questions and better understand this ongoing community foundation movement, it is imperative to provide an early assessment of the definition, scope, and functions of China’s community foundations. This study represents a modest attempt to provide such an assessment. Due to the explorative nature of the research project, we take a mixed-methods approach that combines the collection and analysis of secondary data with an in- depth case study. In what follows, we first provide a brief overview of the history of the global community foundation movement. We then discuss the definition of community foundation in the Chinese context, followed by a preliminary survey and estimation of the landscape of

5 There are two contenders for the No.1 spot: Taoyuanju Community Development Foundation/桃源居公益事业发展基金会, which was registered in Shenzhen in 2008; and Guangdong Harmony Foundation/广东千禾基金会, which was registered in Guangzhou in 2009. 3 existing community foundations. After that, we present a case study of Guangdong Harmony

Foundation, one of the first community foundations in China. We conclude the study with discussions of findings and directions for future research.

A Brief History of Community Foundations: U.S. and Worldwide

This year marks the 100th anniversary of the community foundation movement around the globe. In 1914, an American banker and attorney named Frederick Harris Goff established the Cleveland Foundation, the first community foundation in the United States. Goff’s idea was to create a community-oriented foundation where charitable individuals could establish permanent funds that would be available to respond to current and future community needs. The

Cleveland Foundation was designed to serve two special purposes. First, it focused on acquiring and managing permanent charitable endowments rather than raising annual operating funds.

Second, it aimed at providing community leadership in defining community needs and restructuring philanthropic activity. In the next couple of decades, numerous American communities have followed the lead of Cleveland to establish similar institutions in their own communities, but all of them have not shared exactly the same vision as Goff’s. Whereas those in many Midwestern cities have emulated Cleveland’s example, community foundations in many

Northeastern cities have operated as a mechanism for efficiently expanding individual philanthropy, “a mechanism of conservation and distribution of charitable funds” (Hammack,

1989: 30), but not as a leader in the general reorganization of philanthropy (Guo & Brown,

2006).

Thus since the very beginning of the community foundation movement, there has been a debate between two schools of thought about whether community foundations should be

4 community-focused or donor-focused (Carson, 2003; Gronbjerg, 2004; Hammack, 1989; NCRP,

1994). According to the community-focused model, a community foundation seeks to “create a new framework for private charity, one that would be more secular in orientation and more responsive to business and professional leaders” (NCRP, 1994: 5). The model emphasizes community leadership, participation in community collaborative initiatives, and raising unrestricted funds in order to target high priority needs. According to the donor-focused model, however, a community foundation should operate as a “[vehicle] for the expansion of individual philanthropy” (NCRP, 1994: 7). The model focuses on fulfilling the charitable interests of individual donors and on managing donor advised funds. These two different models and the philosophies behind them have guided the divergent focuses and practices among community foundations, and hence led to differing views on understanding and assessing the performance of community foundations (Guo & Brown, 2006).

Regardless of the differences in philanthropy and approach, the creation of community foundations as a new model of philanthropy has eventually gained popularity across America, and become an international phenomenon in the past three decades. At the turn of the twenty- first century, the total number of community foundations in the world was estimated to be slightly over 900. In just ten years, the total became 1,680 by 2010. Europe accounted for most of the growth: there were 103 community foundations in Europe as of 2000, but the number increased to 631 by 2010. To a less extent, the numbers had also grown in Asia and Africa during this period.6

6 WINGS Global Status Report on Community Foundations 2010. Available at: http://www.wings-community- foundation-report.com/gsr_2010/gsr_about/2010_summary.cfm. 5

Community Foundations in China: Definition and Scope

Confronting the Issue of Definition

The first important difficulty we encountered in understanding community foundations in

China is the issue of definition. According to the current classification system developed by the

Ministry of Civil Affairs (MOCA), the officially registered nonprofit organizations fall into three broad categories:

1. “Social organizations”, which include economic groups (trade unions and chambers of

commerce, etc.), social groups (social clubs, research organizations, hobby groups, etc.),

religious groups, and membership-based public-benefit organizations;

2. “Private non-enterprise organizations”, which include nonprofit schools, hospitals, and

social service organizations, among others; and

3. “Foundations”, which include public fundraising foundations (e.g., Soong Chingling

Foundation, China Foundation for Poverty Alleviation, etc.) and non-public fundraising

foundations (Guo et al., 2012).

As we can see, “community foundation” is not a legally defined category in the current classification system developed by MOCA. The classification system identifies two main types of foundations only: public fundraising foundations vs. non-public fundraising foundations. This poses an important challenge for defining and estimating the number of community foundations in China.

There exist numerous charity foundations at the provincial and local levels across the nation; these public fundraising foundations have been converted from the local affiliates of

China Charity Federation (CCF).7 Considering their diversity of funding sources and clearly defined geographical service boundary, it seems appropriate to treat these charity foundations as

7 中华慈善总会 (http://cszh.mca.gov.cn). 6 community foundations. However, it should be noted that CCF and its local affiliates have a strong governmental background: they were established by the Ministry of Civil Affairs and its local agencies accordingly.8 In other words, CCF and its local affiliates are actually

“government-organized nongovernmental organizations” (GONGOs). Over the years, CCF has developed a very extensive and powerful hierarchical network across multiple levels of jurisdictions. As of June 2012, CCF has established nearly 2,000 local affiliates at the county level or above; it has even created local affiliates at the village or street level in some communities. Relying on administrative means to acquire funds, their funding sources include government grants, corporate contributions, and public fundraising.

There also exist a small number of independent, public fundraising foundations (e.g., One

Foundation in Shenzhen) and non-public fundraising foundations (e.g., Guangdong Harmony

Foundation). As discussed earlier in the paper, unlike most other grantmaking foundations, U.S. community foundations build up their endowment funds and other resources gradually from many donors in the local geographic community, and work to improve the quality of life for all people in a defined area. Examined against the U.S. definition, these foundations likely would not qualify as community foundations. In the case of One Foundation, for example, although its funds come mainly from the local community, its service area is not limited to the local community but rather extended to all parts of the country. In the case of Guangdong Harmony

Foundation, the service area is limited to a broadly defined community, but the fact that it is not eligible for public fundraising makes it extremely difficult to diversify its funding portfolio.

For the purpose of this study, we propose the following working definition for community foundations in the Chinese context: community foundations are place-based

8 The current president of CCF, Mr. Baojun Fan, is a member of the Standing Committee of the Chinese People's Political Consultative Conference (CPPCC), and former Deputy Secretary of Party Leadership Group and Deputy Minister of Civil Affairs. 7 philanthropic organizations that pool funds from local sources and allocate grants in response to local needs. This inclusive definition is intended to serve as a point of departure for stimulating discussion among scholars and practitioners on Chinese community foundations; it is our hope that a more rigorous definition will be developed down the road.

Drawing upon the above definition, in theory we can further place a community foundation into one of the following four categories by considering whether the foundation has the public fundraising status (the x-axis) and whether it is affiliated with the government (the y- axis), as shown in Table 1:

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In practice, however, “government-affiliated, private community foundations” do not exist, as all government-affiliated foundations are eligible for public fundraising. We have not been able to identify a community foundation that falls into the category of “independent, public community foundations.” As we will show in the next sections, examples of community foundations are available for the other two categories: government-affiliated, public community foundations; and independent, private community foundations.

Survey of the Landscape of Community Foundations in China

How many community foundations are out there in China? A useful start for surveying the landscape of community foundations in China is to search some existing databases for organizations that would fit our definition. One such database is the Community Foundation

Atlas (CFA) (http://communityfoundationatlas.org), which provides the names, locations and year of establishment for over 1,800 community foundations around the globe. A search of this

8 database, however, indicated that it contains only two Chinese organizations: Guangdong

Harmony Foundation and Shanghai Charity Foundation. Clearly, the CFA database has very minimal information about community foundations in China.

Another database is hosted by the China Foundation Center (CFC). CFC is a legally registered public charity, referred to as the world’s leading source of information on Chinese philanthropic foundations. We were able to retrieve a list of foundations under the category of

“community” from the CFC database (see Table 2).

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Surprisingly, this short list contains only 30 community foundations, however defined by

CFC. Helpful as it is, there are several problems with the CFC list. First, over two thirds of the organizations on this short list come from one province (Jiangsu), which raises concerns about the comprehensiveness and reliability of the data. Second, it is unclear how CFC defines a community foundation, but some community foundations on the list do not seem to fit neatly into our working definition, nor are they recognized by scholars and practitioners as community foundations in a real sense. For example, Taoyuanju Community Development Foundation

(TCDF) is referred to by some as the very first community foundation established in China.

However, as our assessment reveals, it is actually a corporate foundation as it relies on gifts from a for-profit corporation—Li International Investment (Shenzhen) Group, Co., Ltd.—as a single major source of funding. Similarly, the Social Foundation of Jimei District9 relies on gifts from

9 厦门集美社公业基金会. 9

Jimei Bank (Chiyu Bank), a banking corporation founded by the late patriotic overseas Chinese leader Chen Jiageng (Tan Kah Kee).10

As shown above, the existing databases fall short of providing a satisfactory answer to the question “how many community foundations currently exist in China?” While it is beyond the scope of this paper to draw a complete picture of the community foundation sector in China, we did make an effort to identify all the government-affiliated public community foundations that currently operate in Jiangsu, an eastern coastal province (see Table 3).

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To generate this list, we focused mainly on the numerous charity foundations that had been converted from the affiliated organizations of China Charity Federation (CCF). We excluded the provincial and local affiliates of China Education Development Foundation11,

China Legal Aid Foundation12, and China Samaritan Foundation13, in Jiangsu Province. We also excluded some independent foundations that have a narrower focus on than the community at large, either in terms of functional focus (e.g., Lingshang Compassion Foundation of Wuxi

City14) or geographical focus (e.g., Neighborhood Assistance Foundation of Zhujiang Alley,

Jiangsu Province15). Even with these exclusions, we were able to generate a list of 41 government-affiliated community foundations (charity foundations) in Jiangsu Province alone.

10 Today, Bank of China (Hong Kong) holds a majority stake in Jimei Bank; the rest of the bank is held by the Jimei University Foundation, the municipal government of Xiamen, and minority shareholders. 11中国教育发展基金会 (http://www.cedf.org.cn). 12 中国法律援助基金会 (http://www.claf.com.cn). 13 中华见义勇为基金会 (http://www.cjyyw.com). 14无锡市灵山慈善基金会. 15 江阴市朱蒋巷帮扶基金会. 10

This strong presence of community foundations in Jiangsu is not entirely surprising: above all, Jiangsu is one of the wealthiest provinces in China, boasting the highest GDP per capita of all Chinese provinces. There will likely be fewer community foundations in provinces with a weaker economy, especially those western provinces. Even after taking into consideration the economy factor, however, it seems reasonable to estimate that the total number of community foundations is at least in the hundreds, far more than the 30 foundations included in the CFC list.

Case Study: Guangdong Harmony Foundation

In contrast to government-affiliated community foundations, the number of independent community foundations is very limited. We have only been able to identify two foundations for the “independent, private community foundation” category,16 and found none for the

“independent, public community foundation” category. In order to know more about this small group of independent community foundations, an in-depth case study was conducted on

Guangdong Harmony Foundation (GHF) during the summer of 2014. Semi-structured interviews are conducted with key individuals from the organization and its stakeholders. The selected interviewees include board members, the executive director, senior staff members, and collaborative partners of the foundation. An interview guide, with a list of fully worded questions to be explored with each participant, has been developed based on the relevant literature and previous research. Questions cover fund development, grant allocation, governance and management practices, and major programs and initiatives. In addition to individual interviews, archival data analyses have also been used to provide a measure of validity through data collection method triangulation. The relevant organizational archives include organizational

16 The two foundations are Guangdong Harmony Foundation (广东省千禾社区基金会) and Gonghe Community Development Foundation (成都公和社区发展基金会). 11 bylaws, organizational reports such as quarterly briefings and annual financial reports, newspaper articles, and organizational web sites, among others.

Our analysis adopted the inductive model of thinking, forming categories and identifying patterns from the qualitative data (Creswell, 1994). From the interview data emerged three themes: the conceptualization of community foundation, the awareness and assessment of alternative community foundation models, and the process of GHF’s strategic evolution that entailed three distinct stages. These themes were generalized through careful inductive analysis: they were not imposed prior to data collection but came from the interviews with the participants and archival data (Janesick, 1998). One important component of the process of inductive analysis involves “the presentation of the data in narrative form supported by evidence from the statements and behaviors recorded in the notes and interviews. In other words, the researcher makes empirical assertions supported by direct quotations from notes and interviews” (Janesick,

1998: 46).

Founded in September 2009, GHF is officially registered as a private foundation under the Department of Civil Affairs in Guangdong Province. GHF’s mission is to “support emerging nonprofit organizations” and “promote innovative community development” through “innovative approaches, accountable attitude, and cooperative pattern.” Its vision is to “build up a world of justice, integrity, caring, and vitality.”

Conceptualizing Community Foundation

GHF considers the Pearl River Delta region17 as its target community. In the past few years since it came into being, GHF has developed a unique understanding of community

17 Pearl River Delta is the low-lying area surrounding the Pearl River estuary where the Pearl River flows into the South China Sea. A heavily urbanized region with a population of over 57 million, it is one of the main hubs of China's economic growth. For more details about Pearl River Delta, see: http://en.wikipedia.org/wiki/Pearl_River_Delta. 12 foundations that contains three key characteristics. First, the community foundation mobilizes resources from the local community. GHF once hoped to obtain a major corporate or individual gift, but was not able to find a committed donor. As the leaders of GHF were looking around for other options, the community foundation model caught their attention as a viable solution to

GFH’s resource bottleneck. The following excerpt from the interview with Executive Director explains the localness of resource acquisition:

“Indeed, why not try fundraising locally? We could resort to the media that may act as

intermediaries. Local business ventures also have resources. And there are many other

foundations in the same region that may have interest in the same programs as we do, so

we may work together on those programs. Overall I think the most distinct feature of

GHF is the localness of its funding sources. All the funding of GFH now comes from the

Pearl River Delta, while in the past we had to rely on the donations of board members

(who did not necessarily reside in this region).”

Second, the community foundation bridges community resources and needs. At the heart of this bridging role is a culture of professionalism and service orientation on the part of foundation staff. As the Executive Director reasons,

“Community foundation should no longer be a grant-making institution. Rather, it should

be a service organization and all employees of GHF should become servers. Whom to

serve? Serve the community that has needs, serve other organizations that also provide

support and service to the community, and serve our donors. Others donated to GHF

because we are professionals and we can make the best use of the donated resources. On

the other hand, with us playing the bridge role, the needs of the community can be better

met. Overall, at GHF we changed our mentality, that is, we viewed ourselves as a service

organization and abandoned the arrogance people usually see in a fund-providing

organization.”

Third, the community foundation facilitates the participation of community stakeholders in program design and implementation. Whenever GHF started working in a local community, it always managed to get the local stakeholders involved. As the Executive Director noted,

“Here is my understanding of the community foundation: it is not a particular foundation

type, but rather a particular type of mindset or operating model. It represents a particular

way of thinking [that is, working closely with multiple stakeholders to bridge community

resources and needs].” It does not matter whether the focal foundation is a public fund-

raising foundation or a private one; as long as it leverages its resources and expertise to

address community issues by partnering with stakeholders, then in my view it is

operating in the spirit of a community foundation.”

Awareness and Assessment of Alternative Identities (Models)

The GHF leaders recognized the existence of alternative models of community foundations. For example, public fundraising foundations such as the local affiliates of charity foundations represent such a model. They are closely affiliated with government, usually operate in a top-down manner, and rely on administrative means to raise funds; some of them have active programs, and few of them have the mindset of a community foundation. However, they fit well with our working definition of community foundations in that resources coming from and are used for the local community.

The following excerpt about charity foundations exemplifies well this line of reasoning:

“The fund they raised (regardless of being voluntary or not) all came from ordinary

residents of [the local community], local enterprises, government employees, some

foundations named after local businesses and so on. How was the money spent? Similar

to the conventional way of charity, the money was used to help the ill, poor, handicapped,

and/or uneducated people who were also living in [the local community]. This is more

like a community foundation. Therefore, I actually do not think existing foundations can

be identified as community foundations. Instead some local charity organizations show

more characteristics of a community foundation we usually defined.”

With regard to functional focus, charity foundations usually focus on the provision of basic social welfare, a function that otherwise would have been provided by the government.

Very few of these foundations seem to have a broader vision in response to the ever-changing needs in the community. Yet these foundations do play an important role in the community, especially in some special cases:

“Consider an example of a child with leukemia. The child’s life may have been saved

with the money of local charity organization. If they had applied to GHF for funding, we

probably wouldn’t be able to offer such help.”

Therefore, although leaders of GHF did not identify with the philosophy and operating model of charity foundations, they nonetheless recognized the value of these organizations.

The Strategic Evolution of the Foundation

Over the years, GHF’s strategic focus has evolved through three stages: the “Harmony

Fund” stage, in which GHF operated as a special fund giving out small grants to grassroots nonprofits; the “grant-making” stage, in which GHF operated as a private grant-making foundation; and the “collaborative leadership” stage, in which GHF transformed itself into a community leader that collaborated with multiple stakeholders in the development of a wide variety of philanthropic initiatives.

Stage one: the “Harmony Fund” stage (prior to 2009). Prior to its official registration,

GHF already existed in the form of a special fund called “Harmony Fund” under the Sun Yat-

Sen (Zhongshan) University Institute of Civil Society (ICS)18. GHF’s operating budget was approximately RMB500, 000, coming from the donations of its co-founders and board members.

As the Executive Director recalled,

“We used the money primarily for making grants; around that time very few

organizations would do the same. We offered three types of grants, all of which were

pretty advanced and innovative even when we look back from today. One type of grant

was what we called the Winged Horse Fund, which, similar to Ashoka, supported

individuals. The second type was what we labeled as the Bridge Fund. Back then, a lot of

grassroots nonprofits in China relied on foreign funding sources to survive and operate

(because no domestic funding source available). A gap period would emerge when one

program was completed but the funding for another program hadn’t arrived yet. During

such a period of time, these nonprofits would have difficulties in even paying rents or

employee salaries. Our funding was to support them through the gap period between their

primary (usually foreign) funding sources. The third type was called “seed fund,” which

we offered to those new organizations so that they could start up their operations.

During that period of time, the three aforementioned smaller funds were very novel ideas. They began providing small grants to grassroots nonprofits when few other philanthropic institutions even considered such practices. It is from GHF’s special fund that many organizations in the

Pearl River Delta obtained their first domestic funding support.

18 ICS formerly is Research Center for NGOs in South China (RCNSC). It was jointly founded by Sun Yat-Sen University Research Institute for Guangdong Development and the South China Program of the Hong Kong Institute of Asia-Pacific Studies. Headquartered in Sun Yat-Sen University, RCNSC consists of different research programs for specific fields, such as NGO research, collective action research and corporate citizen research. More information of ICS can be found at: http://www.chinacsrmap.org/Org_Show_EN.asp?ID=560. 16

Stage two: the “Grant-making” stage (2009-2012). When GHF was established formally in the year of 2009, its founders included business people and scholars/public intellectuals. Since then, the foundation began to grow steadily. GHF had only five board members initially, but more and more members joined the board gradually. As the Executive

Director noted during one of the interviews,

“GHF was a grant-making foundation with a small budget size, but why was it so

influential? Because nobody was doing the same thing! Funding of even only RMB10,

000 was unprecedented (for lots of grassroots organizations).”

Two main factors provided the impetus for GHF’s formal registration in 2009. First was the need to increase the capacity of the foundation to meet the fast-growing demand in the community. GHF had received an increasing number of grant applications every year. For example, an organization in Lanzhou (a major city in a northwestern province) once applied for funding of RMB10, 000 from GHF. The organization had to come all the way from the remote northwest to the very southern Guangdong to apply for such a small amount of funding, because no funding support was available elsewhere in mainland China; all funding sources were from foreign countries. With an operating budget of only RMB500, 000, GHF (still a special fund back then) could hardly meet the demands; ICS, the original supervisor of GHF, was not large enough to carry so many functions --- after all, it was only a research center within a university.

Therefore, the leadership needed to think about new ways of mobilizing and leveraging more social resources; the establishment of GHF as an independent foundation offered such an option.

The other factor is the new policy that made it feasible to register as independent legal charities. Prior to 2009, a dual-control system under the previous legal framework required most nonprofit organizations not only to register with the Ministry of Civil Affairs, but also to be

17 affiliated and supervised by a public agency in its functional area (Wang & Jiao, 2003). Usually, a foundation would need a supervisory agency in order to be formally registered. For example, the Education Foundation of Sun Yat-Sen University was sponsored by the Department of

Education of Guangdong Province. As Guangdong Province started to change its policies on the registration of social organizations, the most important of which was to allow organizations to register without a supervisory agency, GHF took the opportunity to become the first officially registered foundation in Guangdong that is truly independent.

Stage three: the “Collaborative Leadership” stage (2012-present). Up to the years of

2011 and 2012, both the domestic and external environments changed significantly, especially the external environment. A variety of strong funding sources emerged and became the mainstream support: government contracts, special funds to support civil organizations, large- scale private foundations such as the Li Ka Shing Foundation (LKSF)19, and resourceful grantmaking foundations such as the Yu Foundation20, to name just a few.

This changing environment posted a challenge to the leadership of GHF: facing the competition from other (much larger) funders, how should this young and small foundation adjust its strategy to maximize social impact? The Executive Director reflected on this transition,

“With a small operating budget, we wouldn’t be able to stay influential if kept making

small grants. We received a large number of applications, of which we could support only

a small portion. In 2012, we were running a deficit. For example, we had only 1 million

on the book, but we offered 1.2 million funding support. The 200K deficit would be

carried forward into the next year. If the programs cannot be carried forward as well, we

would need to use other sources of funding such as administrative fund to support the

19 李嘉诚基金会 (http://www.lksf.org/). 20 与人基金会 (http://www.yufoundation.org.cn/). 18

programs first. This way of operation was not sustainable at all. Again, if we continued

giving out small money to a large pool of applicants, sort of like sprinkling peppers, our

value and social impact would be extremely small.”

Indeed, a strong sense of urgency was felt among the GHF leaders:

“GHF must reinvent its strategy; otherwise it will soon be gone. You have a total budget

of one or two million RMB, while others are giving out grants in the amount of ten

million; so they are doing much better (in terms of both resource acquisition and grant-

making)…But then what should we do? We should re-examine our strategy. We have no

money, no power, and no patronage from business ventures. What is the solution?”

As they were struggling with the idea of strategic transformation, the GHF leaders noticed an interesting contrast: whereas institutional philanthropy became very popular in

Guangzhou (the provincial capital city), it was much quieter in other smaller cities in the Pearl

River Delta region. Foshan, a prefecture-level city with a strong economy in central Guangdong, fell onto their radar. They paid a visit to Foshan, where they developed a collaborative philanthropic program with Foshan Media Group to host the Foshan Charitable Project Contest.

The Contest was well received. This successful collaborative experience opened up the eyes of the GHF leaders to a new strategy. The keyword of this new strategy is “collaboration.”

Today, GHF has six full-time paid staff members, with a budget of about RMB850, 000 for administrative expenses, including leasing, utilities, and personnel salaries. The overall budget is RMB11 million. From 2010 to 2013, its annual budget remained above RMB10 million, except for the year of 2009. Although the budget has been pretty much the same in the past few years, GHF’s internal structure has changed greatly:

“In 2010 a majority of our programs were escrow programs---at that time the escrow

programs from Guangzhou Subway alone were sized roughly at RMB 6million. But the

Subway escrow programs decreased year by year, while our expenses on other types of

programs increased significantly, which changed our internal structure in a fundamental

way. To give you a rough estimate of proportions. In the past, within our 11million

budget, probably only 1 million could be fully controlled by GHF and the rest was

escrow programs. But now escrow programs probably are about the size of 3 million, and

on the remaining budget GHF can make independent decisions. For example, for the

Foshan Charitable Project Contest, GFH played a very active role in program funding

decisions, instead of providing only escrow program service.”

In sum, GHF has repositioned its strategy to focus on playing a collaborative leadership role by convening community stakeholder and engaging them into partnering with GHF in the design and implementation of major philanthropic initiatives. As such, GHF has been able to leverage its (still quite limited) grant-making capacity to collectively make a stronger impact on the community.

Discussion and Conclusion

This study contributes to the existing literature by providing a first assessment of the conceptualization, scope, and function of community foundations in China. To facilitate current and future research, we provide a working definition and developed a typology of Chinese community foundations. Our empirical analysis reveals the co-existence of two distinctive identities (or models) among the first cohort of community foundations in China: the community foundation as government-led social reform, and the community foundation as civil society-led social innovation. This co-existence of dual identities in the community foundation movement

20 reflects the on-going tension between the Chinese civil society and government. As Guo and

Zhang (2013) point out, the Chinese government is becoming more open to the idea of having nonprofits provide needed services to communities, but at the same time is exerting its influence to “herd the sheep,” discouraging nonprofits from influencing public policy, mobilizing people, and promoting social change.

Within this context, will the top-down and bottom-up approaches merge as the community foundation sector continues to grow, or will the former eventually crowd out the latter? Salamon and Anheier’s (1997) observe that authoritarian political regimes leave little room for a truly independent nonprofit sector in these societies. If this observation still holds true, then it pains a dim future for independent community foundations. However, our case study illustrates how a civil society-led community foundation has adapted to a changing environment by constantly experimenting with new philanthropic strategies. The success of their new strategy—one that is featured by collaborative leadership and stakeholder participation— suggests a promising new direction for other independent community foundations that aspire to take a bottom-up approach to community development and social change.

In light of the rapid growth of community foundations around the world and the blossoming of community foundations in China, we hope our findings will stimulate more discussions and research on this subject. Our study indicates several possible directions for future research. One direction is related to resource acquisition. Community foundations – and their donors – make a long-term commitment to their community. In the United States, this has been through the creation of endowments and donor-advised funds: the endowment money stays with the foundation in perpetuity, because the foundation keeps the principal donation and spends only the earnings; the donor funds, on the other hand, are totally expendable. Our research

21 indicates that the endowment option is almost completely missing in the current practice of community foundations. It would be interesting to explore the different ways of acquiring resources by community foundations in China, where the financial systems are fragile and the regulatory environment is not necessarily conducive to the growth of this new form of philanthropy.

A related area of future research is grant-making. Compared with other philanthropic institutions, a potential strength of community foundations is that their grantmaking is based on detailed knowledge of their communities and expertise in addressing a wide variety of emerging and changing needs. How and to what extent is this potential realized among Chinese community foundations? What are the practices and mechanisms by which community foundations conduct community needs assessment?

Another issue that we briefly touched on but did not further explore is the issue of board governance. Guo and Brown (2006) note the tendency among the leaders of U.S. community foundations to focus more attention on the development and management of assets than grant- making. Within this context, community foundation boards tend to be treated as fund-raising mechanisms rather than grant-making entities. In a subsequent study, Brown and Guo (2010) observe that community foundation boards are not fully engaged in developing strategy as much as staff might desire such insights. To some extent, findings from our case study seem to echo the observation that the board is committed to fundraising, but they also offer evidence that the board is engaged in the strategic development of the foundation. Future research is needed to better understand the role of board governance in the effectiveness of community foundations.

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Table 1 A Typology of Chinese Community Foundations

Public Fundraising Status

No Yes

Yes Government-Affiliated Government-Affiliated Private Community Public Community Foundation Foundation

Not Available (e.g., Yangjing Community Government Foundation/上海洋泾社区公 Affiliation 益基金会)

No Independent, Private Independent, Public Community Foundation Community Foundation

(e.g., Guangdong Harmony Not Available Yet. Foundation/广东省千禾社区基金会; Gonghe Community Development Foundation/成都公和社区发展基金会)

Table 2 Community Foundations in the China Foundation Center Database

No. Name 1 Taoyuanju Community Development Foundation (桃源居公益事业发展基金会) 2 Liaoning Provincial Non-Profit Foundation (辽宁省公益基金会) 3 Charity Foundation of Dalian City, Liaoning Province (大连慈善基金会) 4 Charity Foundation of Bayujuan District, Yingkou City, Liaoning Province (营口市鲅鱼圈区慈善基金会) 5 Shanghai Charity Foundation (上海市慈善基金会) 6 Charity Foundation of Wuzhong District, Suzhou City, Jiangsu Province (苏州市吴中区慈善基金会) 7 Charity Foundation of Xinghua City, Jiangsu Province (兴化市慈善基金会) 8 Charity Foundation of Binhu District, Wuxi City, Jiangsu Province (无锡市滨湖区慈善基金会) 9 Charity Foundation of Xinyi City, Jiangsu Province (新沂市慈善基金会) 10 Charity Foundation of Chongchuan District, Nantong City, Jiangsu Province (南通市崇川区慈善基金会) 11 Charity Foundation of Jingjiang City, Jiangsu Province (靖江市慈善基金会) 12 Public-Benefit Foundation of Juqiao Village, Jiangsu Province (张家港市巨桥惠民基金会) 13 Charity Foundation of Qidong City, Jiangsu Province (启东市慈善基金会) 14 Charity Foundation of Dongtai City, Jiangsu Province (东台市慈善基金会) 15 Public-Benefit Foundation of Yonglian Village, Jiangsu Province (张家港市永联为民基金会) 16 Benevolence Foundation of Wenming Village, Jiangsu Province (海门文明村爱心基金会) 17 Public-Benefit Foundation of Hanshan Village, Jiangsu Province (张家港市韩山福民基金会) 18 Public-Benefit Foundation of Nonglian Village, Jiangsu Province (张家港市农联爱心基金会) 19 Charity Foundation of Dafeng City, Jiangsu Province (江苏省大丰市慈善基金会) 20 Charity Foundation of Kunshan City, Jiangsu Province (昆山市慈善基金会) 21 Charity Foundation of Huaian City, Jiangsu Province (淮安市慈善基金会) 22 Neighborhood Assistance Foundation of Zhujiang Alley, Jiangsu Province (江阴市朱蒋巷帮扶基金会) 23 Charity Foundation of Jinchang District, Suzhou City, Jiangsu Province (苏州市金阊区慈善基金会) 24 Charity Foundation of Gangzha District, Nantong City, Jiangsu Province (南通市港闸区慈善基金会) 25 Charity Foundation of Huangyan District, Taizhou City, Jiangsu Province (台州市黄岩区慈善基金会) 26 New Rural Area Development Foundation of Siqian Village, Jiangsu Province (浙江泰顺司前新农村发展基金会) 27 Social Foundation of Jimei District, Xiamen City, Fujian Province (厦门市集美社公业基金会) 28 Xiao Huasong Charity Foundation, Pingdong Road, Shantou City, Guangdong Province (汕头市平东肖华松慈善基金会) 29 Guangdong Harmony Foundation (广东省千禾社区公益基金会) 30 Gonghe Community Development Foundation, Chengdu City, Sichuan Province (成都公和社区发展基金会)

Table 3 Government-Affiliated Public Community Foundations in Jiangsu Province

No. Name 1 Charity Foundation of Changshu City (常熟市慈善基金会) 2 Charity Foundation of Dafeng City (大丰市慈善基金会) 3 Charity Foundation of Dongtai City (东台市慈善基金会) 4 Charity Foundation of Gaoyou City (高邮市慈善基金会) 5 Charity Foundation of Haian County (海安县慈善基金会) 6 Charity Foundation of Haimen City (海门市慈善基金会) 7 Charity Foundation of Huaian City (淮安市慈善基金会) 8 Charity Foundation of Chuzhou District, Huaian City (淮安市楚州区慈善基金会) 9 Charity Foundation of Jingjiang City (靖江市慈善基金会) 10 Charity Foundation of Kunshan City (昆山市慈善基金会) 11 Charity Foundation of Lianyungang City (连云港市慈善基金会) 12 Charity Foundation of Haizhou District, Lianyungang City (连云港市海州区慈善基金会) 13 Charity Foundation of Lianyun District, Lianyungang City (连云港市连云慈善基金会) 14 Charity Foundation of Xinpu District, Lianyungang City (连云港市新浦区慈善基金会) 15 Charity Foundation of Lianshui County (涟水县慈善基金会) 16 Charity Foundation of Nantong Economic & Technological Development Zone (南通开发区慈善基金会) 17 Charity Foundation of Nantong City (南通市慈善基金会) 18 Charity Foundation of Chongchuan District, Nantong City (南通市崇川区慈善基金会) 19 Charity Foundation of Gangzha District, Nantong City 南通市港闸区慈善基金会 20 Charity Foundation of Tongzhou District, Nantong City 南通市通州区慈善基金会 21 Charity Foundation of Pizhou City (邳州市慈善基金会) 22 Charity Foundation of Qidong City (启东市慈善基金会) 23 Charity Foundation of Rugao City (如皋市慈善基金会) 24 Charity Foundation of Sheyang County (射阳县慈善基金会) 25 Charity Foundation of Suzhou National New & Hi-tech Industrial Development Zone (苏州高新区慈善基金会) 26 Charity Foundation of Suzhou Industrial Park (苏州工业园区慈善基金会) 27 Charity Foundation of Suzhou City (苏州市慈善基金会) 28 Charity Foundation of Canglang District, Suzhou City (苏州市沧浪区慈善基金会) 29 Charity Foundation of Jinchang District, Suzhou City (苏州市金阊区慈善基金会) 30 Charity Foundation of Pingjiang District, Suzhou City (苏州市平江区慈善基金会) 31 Charity Foundation of Wuzhong District, Suzhou City (苏州市吴中区慈善基金会) 32 Charity Foundation of Xiangcheng District, Suzhou City (苏州市相城区慈善基金会) 33 Charity Foundation of Suining County (睢宁县慈善基金会) 34 Charity Foundation of Taicang City (太仓市慈善基金会) 35 Charity Foundation of Binhu District, Wuxi City (无锡市滨湖区慈善基金会) 36 Charity Foundation of Wujiang city (吴江市慈善基金会) 37 Charity Foundation of Xinyi City (新沂市慈善基金会) 38 Charity Foundation of Xinghua City (兴化市慈善基金会) 39 Charity Foundation of Xuzhou City (徐州市慈善基金会) 40 Charity Foundation of Zhangjiagang Free Trade Zone (张家港保税区慈善基金会) 41 Charity Foundation of Zhangjiagang City (张家港市慈善基金会)