Navigating the Labyrinth of Corporate Giving in China

New Report Provides Practical Guidance for MNCs on Corporate Philanthropy in China

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Nov 28, 2012, 10:00 ET

NEW YORK, Nov. 28, 2012 /PRNewswire/ -- Despite numerous regulatory and political hurdles, nonprofit organizations (NPOs) in China have doubled in the past decade and charitable giving levels have risen significantly. However, China's unique structure and regulatory environment – vastly different from the West – presents many challenges for companies looking to launch philanthropic activities there, according to a new report from The Conference Board, Corporate Philanthropy in China: A Practitioner's Guide for Foreign Donors.

The report, prepared by The Conference Board China Center for Economics and Business, examines the rapid growth, changes, and trends of China's nonprofit sector and provides practical guidance on effective corporate philanthropy engagement in China. It also includes advice on choosing partners and focus areas, and how to set up a giving program to effectively meet the organization's goals and objectives.

"China's nonprofit sector has unique political challenges, and a complicated structure and regulatory environment. This is often viewed by western companies as too onerous to effectively help drive social change," said Anke Schrader, Researcher for the China Center and lead author of the report. "The Practitioner's Guide for Foreign Donors provides guidance, recommendations, and key actions MNCs can take to get the maximum benefit out of their engagement and avoid potential pitfalls."

Key findings in the report include:

The Chinese government plays a vast role in the civil society sector as a stakeholder, regulator, and a participant (via government-owned and connected agencies). The sector remains highly opaque, necessitating a significant amount of research and due diligence to ensure efficacy prior to engagement.
Public perception and engagement in civil society and the increasing extent to which citizens can communicate about social issues online is an important new driver shaping China's nonprofit sector, but public opinion can be highly volatile. This development is significantly changing how companies in China need to respond to public pressure.
In contrast to the United States, corporate giving is the major driver behind charitable giving in China, and NPOs increasingly depend on contributions from donors outside the traditional sphere. Corporations are thus poised to play a major role in shaping the development of civil society in China.
While the Chinese government is not fundamentally opposed to NPOs, there are strong political boundaries that control topics, scale and amplitude of the public debate, fundraising, and nonprofit activity. Focus areas of corporate philanthropy programs have to be adjusted to conform to this political reality.
Self-governance, transparency, and accountability remain huge challenges for NPOs in China, so management needs to factor these in when selecting NPO partners. NPOs typically lack appropriate internal controls, recordkeeping, and financial management systems. Extensive due diligence is often required when selecting partners or beneficiaries in China, especially due to the lack of information available on many NPOs and the restrictions they face to even establish themselves and register legally.
Data points of interest in the report:
- The number of registered NPOs in China has more than doubled over the past decade.
- Total contributions increased seven-fold over the past five years.
- China has one legal NPO for every 2,900 citizens, however the United States has one for every 200 citizens.
- 2010 charitable giving in China was roughly 5 percent of giving in the United States.
- Total assets held by Chinese foundations were about 1/4 of the total assets held by the Bill & Melinda Gates Foundation in 2010.
- There are 231 corporate foundations in China, compared to over 2,700 corporate foundations in the United States.
- Bayer Healthcare was China's largest foreign (and in fact largest overall) corporate donor, donating the equivalent of USD 193 million in 2010.
- Nearly 1/3 of total corporate donations made in China in 2010 were made by the 10 largest donors.
- Donations from foreign companies account for 22 percent of total corporate donations in China.

Source:
Corporate Philanthropy in China: A Practitioner's Guide for Foreign Donors
Report # R-1505-12-RR
The Conference Board
Download the full report at this link:
https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2363

About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501(c)(3) tax-exempt status in the United States. For more information, please visit www.conference-board.org.

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