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Initiative on Philanthropy in China

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Initiative on Philanthropy in China Do not quote or cite without author's permission Initiative on Philanthropy in China Community Foundations in China: In Search of an Identity? by 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 © Indiana University Research Center for Chinese Politics & Business and the Lilly Family School of Philanthropy 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
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