With the recent success of signing 40 billionaires to the Giving Pledge, it should not be any surprise that the recent news of Bill Gates and Warren Buffet coming to China would create headlines, and rumors that they were coming to convert.  It is an event, set for late September,  that was on the front page of many of the world’s leading financial mediums, and has remained there when the “story” broke that there were some who were “unwilling” or “scared” to attend the event.

Through all this though, I am left to wonder what the real goals are, what they should be, and is it too early to expect much from this event.  In essence, I am wondering whether or not China (and its wealthy) are ready a "Giving PLedge" pitch.  Even if that is not the stated goal of this trip.

It is a question I ask as I think back to last November when the UN Foundation and CAF held a dinner in Beijing for similar purposes, only this dinner was led by Former Secretary General Koofi Annan, UN Foundation founding donor Ted Turner, and key noted by One Foundation’s Jet Li.  Event organizers were clear in their goal of planting the philanthropic seeds, and much of the conversation surrounded when “China would be ready”.  The 5.12 earthquake, and more specifically the numbers of donations, were fresh in the minds, and the mood was engaging.  Yet, at the end of the event, everyone returned to the parking lot without having made any pledges

Which leads me back to the event that will be hosted on the 29th of September, and what should be expected.

With the list apparently sourced from the Forbes Richest People list, which is itself guaranteed to have a lower turnout than had a core group of friends been enlisted to bring in their friends (Bill and Warren apparently need a refresher on the role of relationships in China) the event being on September 29 only adds to the difficultly as the day after is the last day before a 10 day holiday. Logistical hurdles which could have been better planned, but not themselves event killers

However there are a few reasons why I do not think China is ready for the "Giving PLedge" and the message coming from this event needs to be managed better (releasing a letter after the fact shows they are trying to correct this)

1. As the vast majority of China’s rich represent the first generation of wealth, it is too soon in China to expect anything at that level.  That these business men and women are still focused on ensuring the future (i.e. amassing sufficient wealth and assets) of their family (parents and children) and business(s), and asking any of these people to commit to any gifts of significance is failing to understand the deep rooted cultural and historical drivers of this generation. 
2. While I have no doubt that both gentlemen are respected locally, I do doubt their ability to convert many (in the short term) as they do not understand the drivers of philanthropy in China.  That, while there was most certainly a spike in philanthropy following the 5.12 earthquake, there was a near equally drop off in donations since.  While there have been a significant number of new foundations opening (a typical sign of philanthropy), many of those foundations are tied to the quasi—government GONGOs (Government Organized Non-Government Organizations), and that philanthropy has taken on an era of coolness in China, but has sparked an equal amount of discussion over the lacking transparency of many funds (Zhang Ziyi and Jackie Chan included)
3. Were Bill Gates and Warren Buffet to have a massive turnout, I would suspect it would be for reasons beyond altruism or their ability to connect.  That they themselves would be the draw, and those in attendance would be looking to look aligned to the cause more than be willing to engage in the cause. 

All the above aside, were Bill Gates and Warren Buffet to focus on building a more intimate circle of friends (Like Warren’s investment recipients) who would form a core for future expansion, then the message would begin to filter out. 

Although, once the gates are opened, that does lead to the next problem.  given all the issues in China of trust, and a lacking process for donating large sums to more than a handful of causes, just figuring out what to do with all the money is going to be interesting.

So what do you think? Are China's wealthy ready to sign onto the "Giving Pledge"? Are they they next big pool of philanthropists?

In the non-profit realm, there have been fewer hotter topics discussed than the "social enterprise". it is an organization that, if asked to define, would have a spectrum of definitions that were at times vague, romantic, and would leave a lot of questions open about the real difference between an NGO and a social enterprise. Were there really a core difference.

In China, this is no different, and given the fact that the concept and role of NGOs is relatively new, "social enterprise" has in some ways surpassed the global movement in terms of take up, expectations, and "movement". And even with the same issue of defining social enterprises, everyone from government agencies, to incubators, to social funds, and academics have been developing their "social enterprise" platforms. Something that should be applauded on the one hand as these steps are a trend in a right direction, but on the other hand should be scrutinized carefully to ensure that the right steps are being taken.

The problem is that as the terms social enterprise and social entrepreneur have grown more widely used, and the numbers of followers have grown, it is creating several big problems. One of which being the fact a lot of very talented people into believing that they could participate in this new field, only to walk away after 12-18 months. It is a problem that results from a number of issues, which I will detail below, and needs to be addressed as it is having a number of negative impacts on the efforts on organizations.

1) The vague definition of SE - At the core of nearly everything that is wrong about SE, is the fact that there is no definition of SE. On on pole there are the sustainable profit purists who are issue agnostic, but look for organizations who are profit first/ mission second, with a slant towards groups who have a product/ service that provides the funding... and on the other pole you have a wide acceptance of anyone serving a social good regardless of profitability, and public fundraising is allowed. It is on some levels a good thing, as it allows for flexibility, but it can also be a negative thing as it can lead to overcomplicated structures that lose their focus on solving the social mission they were set up to address.

2) The romantic nature of SE - Over the last few years the number of positive stories, books, blogs, and movies that have come to light highlighting the work being done by social enterprises has created a image of social entrepreneurs that has attracted a lot of attention. And it is all great. Because it has attracted a lot of talented and passionate people into new organization, into supporting existing organizations, into developing funds, and so forth. But it is also bad because, through many of these stories, a lot of the hard work and disappointments are often glossed over. It is hard and tiring work to build an organization, to build partnerships, to train staff, to raise seed funding, and to manage the daily grid... it, unfortunately, isn't all childrens smiles and happy times. It is tough.

3) Misaligned motivations - Making the jump into SE, particularly from those from a stable, successful, and financially fruitful position, isn't a decision to be made lightly.. and a lack of clarity about how or why one is leaving that position for the life of a social entrepreneur, like the one they read about, will only have negative consequences later on. There has to be more than a short term fit of passion, and it has to come from something deeper than a single encounter or experience, and it has to be a decision that is made with a clarity of purpose, an understanding of the issue(s) that one wants to work with, a clear idea of how one can help, and a long term commitment.

4) Tool kits - Closely linked to the ability of someone to effectively integrate into the new lifestyle that social entrepreneurialism will bring is the experience and knowledge that they will bring to the organization. It is something that, depending on experience, will be both a blessing and a curse. That, while the professional talents they are bringing to the organization may be in need of, but may lead to a "corporate" label to be placed on them by the more idealistic/ issue passionate members of the organization. Nothing that cannot be overcome through a couple of happy hours, but could open themselves up to another issue. That, while they may be good at being "corporate", there is a high probability these individuals made the jump so that they could do something else. Get into the field. Do some good.

5) Timing - Timing is like location, it is EVERYTHING, and it has to be juuuust right. 20 years ago when Mohammad Yunnus looked out his classroom window and asked himself the fundamental questions about how to effectively alleviate poverty, he was a pioneer. Building a unique platform, one that was constantly challenged, that would ultimately support millions through the Grameen Foundation. but what if he were to ask the exact same questions today, and try to build the exact organization? Would his ideas garner the same attention in the face of web 2.0 SE startups occurring on a daily basis? Would he have been given the same opportunities to work with (educate) his partners, or would they already think they know everything.

At the end of the day, it is my hope that new entrants to SE stay. that the investments made bring a return, and are not wasted when someone leaves because of one of the issues above. that instead of seeing organizations losing talent, they are capturing, incubating, and engaging their talent base long term for the betterment of society.

In her post Things are Different Here, Emily D'Ath touched on the issues that companies face in China when engaging in CSR.  It was a post that, as you will see in my comments to her, hit a bit of a nerve, and in a good way. 

It made me think about what the real barriers to effective philanthropy in China are.

It is a deeply complex issue that reaches outside of any internal issues that a donor organization faces (corporate, foundation, or private), issues of government regulation, limited projects, scalability, the varied quality of moral fiber within benefactors, fear of certain organizations, and general ignorance that any new donor would face when entering "China" for the first time. 

At a basic level, one must first recognize that domestic and foreign donors are, at this time, facing different barriers to effective philanthropy as their approach to and motivations for donation are coming from different places. That, while many domestic organizations may only now be looking past the first steps of philanthropy (cut check, take picture, and move on), many foreign donors who are used to operating in transparent and mature environments are chocking on their own structures.

For both, the core issue faced is really one of ignorance. Ignorance of structures, issue, and organizations of need. Ignorance that has been fuelled by a history of cut check and run philanthropy that benefited large government organizations nongovernmental organizations (GONGOs). Organizations with massive scale, but operationally had legacy issues of program management, governance, and policy making that could have a dramatic impact for the worse on any project goals. A condition that has scared many off, while catalyzing others to ask for transparency and accountability - a sign of progress.

As donors (foreign or domestic) have begun to mature in their practices, and look to expand programming beyond the GONGOs to grassroots organizations, a new level of technical difficulty entered into the picture. Fragmented, scattered, inaccessible, and often unregistered, the grassroot NGOs that typifies the "Western" NGO model were limited, and those that were readily identifiable were largely found in the gateway cities of Beijing, Shanghai, and Guangzhou. Cities that many would agree were least in need of assistance, but would serve well in a pinch.

It is a condition that keeps things at the surface, and will require growth in donors and infrastructure.

Infrastructurally, there are are essentially 5 hurdles that must be overcome:

• REgulation - This is perhaps the biggest elephant in the room, and without regulations that support NGOs, or donors, any efforts are going to continue to be efficient
• Investment - REgardless of regulations, and issues of legalization, there needs to be a significant investment of time and money into supporting the stability of NGOs and their programs. Part capacity training, and part effective program development, someone needs to invest in the non-sexy stuff that will provide a smooth road for future programming.
• Education - Creating awareness about the organizations and issues in need, and the best means of supporting each. it isn't always about the money!
• Trust - Trust between donors and benefactors needs to be established. right now, too many donors are scared of paying too much in administrative fees or having the money go completely to waste, and this is not unjustified in every case. The gap needs to be filled
• Capacity - NGOs need to be granted the funding and expertise to grow. Having a single project in the middle of a hot zone isn't a healthy organization, and donor need to begin funding scale as part of any program. Funding needs to move past the 6 month/ 1 year budget, and develop into 3-5 year programs that provide stability for the organization

On the donor side, there are a few other hurdles that exist:

• Limited project knowledge - There is still a set of donors who expect to find their projects in the gateway cities, and are unwilling to make the investment in time and train tickets to get out and develop project pipelines.
• Fear of GONGOs and "unscrupulous people" - there is still a lot of legacy fear that anyone in the NGO sector is a quasi-government official and should not be trusted. A stereotype that needs to be set aside, and would be overcome once donors did a bit of field work and profiling. There are foxes out there, but they are getting easier to recognize
• Ideas of what an NGO should be - many donors, without ever having managed an NGO, have a perception of how these organizations should be run. this is particularly true of domestic donors who believe that any administrative fees over 5-10% are excessive, but I have worked with a number of international donors who are unwilling to pay administrative fees on any level. For those groups, I recommend reading Uncharitable.
• Scale - donors are always looking for scale (today), not realizing that many organizations have the potential for scale

Executing effective philanthropic programs in China has over the last 5 years become exponentially easier and more interesting over the years, but barriers still exist for those donors who have yet to make the investment in time and money to learn about where effort are best directed, in what way, and what to expect.

In today's MSNBC article Beijing starts locking poor villages at night, it is being reported that Beijing's migrant communities will effectively be locked down in an effort to prevent crime. According to the article, residents entering and exiting areas will be asked to show their documents (assumed to be Hukou and/or temporary residence permits) at night in the 16 villages. Experts in the article are quoted as saying that this is a move that not only looks bad, but also will only serve to more deeply ingrain existing discrimination. Discrimination that is part of the core problem of migrant crime.

It is an action that is surely being taken with short term security goals in mind, but as the quoted experts suggest, the long term implication of the "Sealed Management" policy are likely to only exacerbate the underlying issues that exist. Which will likely do little to relieve the pressures of future instability and security within the population as the feelings of isolation and discrimination are only reinforced by policies that single them out as "the problem".

Long term the problems are more complex.

Issues of economic and physical security at the forefront of crime, long term the policies will need to be focused on offering migrants an opportunity to reap the rewards for their work to build and support cities, but also ensure that their investments be protected.

To learn more about my thoughts on creating stable communities and cities, please refer to my recent pitch from the BMW Young Leaders Forum

This is an old post that I originally had at another site, but while catching up on some reading, I was reminded by the power of the interviews we did last summer, the stories we began to tell, and the sense of respect I have for China's migrant workers

Earlier in the year while a few of my interns were inbetween assignments, I tasked them to get out of the office and do some street interviews. Now, executing street interviews was nothing new for them, but instead of taking out a video camera and asking questions to our typical targets, I wanted to push them outside their boundaries and speak to people whom they were more likely to walk right past on their way to work.

Migrants. Cooks. Sidewalk Seamstresses. DVD vendors. Pot Sticker vendors. Fruit vendors. Crane Operators. Bus Drivers.

It was a project I named Shanghai's 100 hardest jobs, which was (for the sake of full disclosure) inspired by the Discovery Channel program Dirty Jobs.

Initially, my interns were a bit skeptical, and were giving me the face of "he has gone crazy... again", but over the course of the next few weeks the first team completed about 30 interviews (2 more teams have since completed nearly 100 interviews), and were looking for more. In short, they were not only hooked, they were seeing a side of Shanghai that they never new existed.

... and they were Shanghaiese.

Reading through the interviews (we use the same questions for each), one is given a really humbling glimpse into the lives of these people and how hard they have it. People who are busting their humps day in and day out, and eating bitterness, for a common cause.

Hope and opportunity.

Cigarette Vendor - female from Henan

Q: Would you want your children to have this job?

A; No. My husband and I have this job/career because we lack of qualified education background. Letting them step on our old roads is the last thing I want to do. To my 14-year-old girl, I don’t have so many strings attached and just want her to live a happy life; as to my boy, I hope he can be a government official someday, a big name who has power (laugh).

Watermelon Vendor

Q: What do you want most right now?

A: We hope our boys can go to school in Shanghai. The education conditions are much better than we have in Linyi and we can take care of them while making a living here.

Hat Vendor

Q: If there was one thing you could change about your job, what would it be?

A: Change? It is such a luxury to me. How can I dream about changing my current status? I want to do my own business, like opening my own restaurant, but who will give me the money? I want to recruit and train my employees, but who will teach me how to manage or run my place? I dare not think of change. I guess my only hope is my son. He is the one can bring real changes.

Everything comes down to hope and opportunity

For the next generation.

With the last 2.5 years being the most active time in China's recent history of citizen based philanthropy, it has become clear that the level of opaqueness in the system has become a real issue for some.  That while the historical system of donations, largely fuelled by corporations looking to leverage their donations into something else, benefited from a level of opaqueness.  the current system that is meant to encourage public engagement does not.

This was perhaps highlighted best during the 5.12 Earthquake when firms, and celebrities, were thrown into a media cycle that no one had expected.  That, unlike before, people were paying attention to how much was donated, by whom, and for what cause, and additionally, it was also clear that, unlike before, the organizations on the receiving end of the donations were going to be expected to show a far higher degree of transparency than they were used to.

It is an issue that has come up recently on a number of occasions when speaking to students, corporations, and ordinary people, and it is an issue that has recently been highlighted in a Global Times piece Skeptical Chinese donors need concrete results where Wang Zhenyao discussed the difficulties of fundraising, reporting, and managing expectations:

To persuade people to support you, you need to have a strong reason for them to do so. Good causes and good proposals speak for themselves. Take the project on autistic children in Shenzhen for example. The Shenzhen Autism Society (SAS) gathered hundreds mothers with autistic kids and wrote to the central government. The top leaders learned about the project and sent inspectors there to learn how SAS helps the young patients. Now SAS receives millions of yuan from the local bureau every year.

In addition to that, you also need to show people what you have done with the money received. The lack of transparency creates misunderstanding. There is a common speculation that the money has gone to the pockets of corrupt officials. What I did back in the Ministry of Civil Affairs to combat such misunderstanding was to have flyers and pamphlets printed out and sent to all sponsors and related departments.

After seeing the smiling faces and reading the reports about the people and projects that received donations, the donors and public had a much better idea of what the charity had done. Some charity organizations posted their statistics online but received unsatisfactory results.

It is a situation that I feel at times is grounded more in ignorance than curiosity as average citizens are looking to understand the "impact" their money is having, and it is a condition that I feel will require NGOs, GOvernment Agencies, and 3rd parties to begin working together in an effort to educate the public, manage expectations, and provide a clearer picture of where NGOs are spending the money.

Why is doing this so important?

Simple. On a fairly regular basis, I find myself fielding questions about the impact of donations, the amount of money that an NGO spends on overhead, and whether or not NGOs are simply wolves in disguise, it is clear that regardless of where the education gap lies, it is NGOs who will be forced to pay the price in the long term. that, without addressing the transparency concerns of donors and opening themselves up to 3rd parties, they will eventually risk their brand, funding streams, and eventually programs.

As part of our work to define and support the efforts of China’s social entrepreneurs, the Collective Responsibility Social Entrepreneur have been working on a series of exercises. Exercises that are mean to begin developing a framework that defines what is a social enterprise (non and for profit) is in China, as well as to develop a stronger understanding of the constraints that these entrepreneurs and organizations operate in, the challenges they face, the potential scale of their ideas, and areas where they can be supported in their endeavors.

The first exercise was a simple one.

Take 25 of China’s most well known social enterprises and place them on a chart to measure their potential scale (size of bubble), their primary mission (X Axis), and their financial model (Y Axis).

And as you can see in the chart above, there is a wide spectrum of organizational structures, financial models, and scale in China’s social entrepreneurs. With the more nonprofit group found in the lower right quadrant (Hands On Shanghai, 1KG, Huadan, Golden Bridges, and others), it was clear that the perception was that the more socially focused one’s organization was, the more reliant on fundraising and event based revenues it was. While, on the other side of the spectrum, groups like Shanghai Organics, Naked Retreat, and Bambu Home have developed (in the eyes of participants) a financial model that is focused more on profit, and has a stronger product or service model to support operations.

More interesting though was that when we plotted the perceptions of participants against those of the founders, what we found was that there were a number of groups who had clearly done a good job of communicating their mission and message externally, and others who had not.

That, and I will use my own first social venture HandsOn Shanghai, as the example, there were a range of opinions about the potential scale of HandsOn Shanghai. For some, a volunteer platform was something that offered limited scale, while for others, they took the view that volunteerism in China held large potential. Mission wise and economic model wise, we were nearly in line (at least everything was within the same quadrant).

However another group, who I will keep nameless, had a very different set of perceptions. That, even though they are one of the more well known social ventures in China, they have largely created a name for themselves without creating a name that had a managed focus in the minds of participants. That, even though they are perhaps one of the more well known brands, there is wide range of perceptions about their core mission, their economic model, and their scale. And that confusion was even shared by the cofounders (red dots).

In the end, and the above charts are only a fraction of the existing body of work, the trends we are beginning to see are quite interesting. That in general, the more profit driven the group, the increased perception of scale and economic sustainability exists, while those on the NGO side (lower right) are seen to have a smaller potential scale. And that while there are clear cluster patterns emerging, there are still a number of hybrid organizations that exist and are creating a bit of gray space between the black and while.

If you would like to participate in the first exercise, feel free to send an email to SE (at) collectiveresponsibility.org and we will send you the file to be completed.

As part of our first official discussion in the Social Entrepreneur committee, and one in fact that is often had in the wider community, we began a process of finding a way to put our finger on what is a social enterprise vs. what is an NGO.

Clearly, it was a conversation hat was not goign to be solved by the 8 of us, and clearly it is a question that will only be answered in time, however to help us develop some framework that would help to narrow the discussions we began with a few simple classifications.

1. Reason for being: Whether or not the prime motive for the organization is one of social mission, of profit motive, or somwhere inbetween

2. Financial Structure: Was the organization one that had (or would) develop a sustainable product of service based revenue stream, was its primary source of income event based (fundraisers, grants, etc), or had it developed a hyrbid model

Being perhaps the two that we could agree on, we decided to start there.... btu what do you think?  If you were going to try and develop a definition of what is a social enterprise vs. an NGO, what would you look at? 

What are the areas that make for a successful organization, and should the primary focus be one of legal structure a nd financial models, or more focused on programs and impact?

Let us know by leaving a comment

In the last 12-18 months, interest in China's social entrepreneurs has really heated up. 

Nothing new to China, what is interesting about this new group of people is that there are so few people or groups identified who would fit any classic EU/ US definition of this structure, but there has yet to be a group within China who has put forward their own "Chinese" definition either.  Something my many conversations with members of the community, inside and out of China, only continue to support.

Recently, through the development of a Social Entreprenurship Committee (we held the last meeting 2 weeks ago), we are trying to change that.  That, through engaging the various stakeholders, we will help develop a framework that will help to define who/ what is a social entrepreneurs, what drives these people/ organizations to exist, and what are the organizational issues they face as the move forward (hint: there are bigger problems than money).

We hope you will continue to follow us through this process, and while we will be releasing some of our notes the the readers, we will also be asking you for your help in asking the big questions that we are debating.

Why shouldn't one expect to see more companies follow google's lead? simple.. The people who runs the worlds largest firms are by and large not invested in their firms beyond their pay package.  Executives are commodities whose decisions are made by the short term equation that with profits comes opportunity (for them), and is not about building companies.  On the whole.

That, for all the arguments about whether or not the decision was made to comply with a firm's motto, or what influence the founders upbringing had in complying with chinese law, the fact remains that the founders of google are still the largest shareholders of the company.. And more importantly have built and retained a culture whereby they can make choices that do against the commonly accepted business rules that they are often measure by.

Which sadly leaves me to believe that few firms will ultimately put the firm's codes and values out in front of their profit motive. that, when they entered China they made peace with any moral objections that may have existed ( we should not assume that everyone has a moral objections to china, its policies, or those in power).

So, before looking to others to make such morally uprightous decisions, keep in mind that some organizations are better structured for such decisions.