8
Address: C-601, East Building, Yonghe Plaza, 28# Andingmen Dongdajie, Beijing, 100007, P. R. China Tel: 64097888; Fax: 64097607; Email: [email protected]; Website: www.cango.org 1 New law aims to give charity a lift How Policy Entrepreneurs Convinced China’s Government to Start Procuring Public Services from CSOs Brief News INSIDE THIS ISSUE Editor-in-chief: Haoming Huang Executive Editors: Wu Ke, Sun Liping Published by bimonthly since 1999 Lawmakers are debating new legislation to encourage the development of the charitable sector and repair a tarnished image, as Luo Wangshu and Cao Yin report. On March 4, the day before the start of the annual session of China's legislature, a reporter asked the New law aims to give charity a lift -----By Luo Wangshu/Cao Yin (China Daily) country's top legislators why they planned to review the final draft of a new charity law in preference to "more important" legislation. Given the weighty subjects under discussion at the annual gathering, the question was appropriate, but it also revealed the mainstream Chinese view of philanthropy: For many people, charity is irrelevant to their lives. However, the draft of a new law that was submitted for review on Wednesday aims to regulate and develop the sector, and is expected to provide a vital shot in the arm for charities. "What has impressed me most is that the draft aims to create a more supportive environment for charitable activities. It will simplify the registration procedures and allow people, resources and organizations with the desire to undertake charitable acts to enter the field," said Li Jing, secretary-general of the One Foundation, China's first private charitable fundraiser. "Meanwhile, supervision will be strengthened to regulate and manage social organizations to prevent illegality," he said, adding that the new law will promote competition in the sector. Wang Ming, president of the NGO Research Institute at Tsinghua University and also a member of the National Committee of the Chinese People's Political Consultative Conference, called the proposed legislation a "milestone" in Chinese philanthropy. "In the past decade, the boom in philanthropy has mostly been driven by the market, but it has also been driven by society as a whole, including private companies, enterprises and public enthusiasm. But without laws or regulations, problems may arise," he said. China has more than 600,000 social organizations On March 16, 2016, the 12th NPC session passed the draft Charity Law, 2636 votes in favor.

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Page 1: New law aims to give charity a lift COOPERATION FORUM 2016_3-4.pdf · According to the 2015 CAF World Giving Index, published in November by the Charitable Aid Foundation in London,

Address: C-601, East Building, Yonghe Plaza, 28# Andingmen Dongdajie, Beijing, 100007, P. R. China Tel: 64097888; Fax: 64097607; Email: [email protected]; Website: www.cango.org 1

★ New law aims to give charity a lift

★ How Policy Entrepreneurs Convinced China’s

Government to Start Procuring Public Services

from CSOs

★ Brief News

INSIDE THIS ISSUE

Editor-in-chief: Haoming HuangExecutive Editors: Wu Ke, Sun LipingPublished by bimonthly since 1999

Lawmakers are debating new legislation to encourage the development of the charitable sector and repair a tarnished image, as Luo Wangshu and Cao Yin report.

On March 4, the day before the start of the annual session of China's legislature, a reporter asked the

New law aims to give charity a lift-----By Luo Wangshu/Cao Yin (China Daily)

country's top legislators why they planned to review the final draft of a new charity law in preference to "more important" legislation.Given the weighty subjects under discussion at the annual gathering, the question was appropriate, but it also revealed the mainstream Chinese view of philanthropy: For many people, charity is irrelevant to their lives.However, the draft of a new law that was submitted for review on Wednesday aims to regulate and develop the sector, and is expected to provide a vital shot in the arm for charities."What has impressed me most is that the draft aims to create a more supportive environment for charitable activities. It will simplify the registration procedures and allow people, resources and organizations with the desire to undertake charitable acts to enter the field," said Li Jing, secretary-general of the One Foundation, China's first private charitable fundraiser."Meanwhile, supervision will be strengthened to regulate and manage social organizations to prevent illegality," he said, adding that the new law will promote competition in the sector.Wang Ming, president of the NGO Research Institute at Tsinghua University and also a member of the National Committee of the Chinese People's Political Consultative Conference, called the proposed legislation a "milestone" in Chinese philanthropy."In the past decade, the boom in philanthropy has mostly been driven by the market, but it has also been driven by society as a whole, including private companies, enterprises and public enthusiasm. But without laws or regulations, problems may arise," he said.China has more than 600,000 social organizations

On March 16, 2016, the 12th NPC session passed the draft Charity Law, 2636 votes in favor.

Page 2: New law aims to give charity a lift COOPERATION FORUM 2016_3-4.pdf · According to the 2015 CAF World Giving Index, published in November by the Charitable Aid Foundation in London,

Address: C-601, East Building, Yonghe Plaza, 28# Andingmen Dongdajie, Beijing, 100007, P. R. China Tel: 64097888; Fax: 64097607; Email: [email protected]; Website: www.cango.org2

and 65 million registered volunteers. In 2014, direct donations totaled more than 100 billion yuan ($15 billion), overshadowing the 10 billion yuan donated in 2004.In response, the government is aiming to standardize the sector. In October, the first draft of the new law was submitted to the National People's Congress, the nation's top legislative body, and the second draft was open for public consultation until Jan 31. NPC deputies will vote on the final draft on March 16, the last day of this year's two sessions."The importance of the charity law cannot be underestimated," said Fu Ying, spokeswoman for the Fourth Session of the 12th National People's Congress, adding that it will be the country's first fundamental and comprehensive law on philanthropy.With the fast development of philanthropy, China urgently needs a comprehensive charity law that will protect the rights of donors and the needy, and punish fraudulent operators, she said.

Negative perceptionsLi Yuling, honorary president of the China Charity Federation, said the sector has been harmed by negative publicity and a poor public image, especially as some entrepreneurs conduct their businesses under the guise of charity, which has resulted in misunderstandings and mistrust."What is philanthropy? In many foreign countries, children learn about philanthropy at primary school, but many people in China are still unaware of it or they consider philanthropists to be hypocritical or fake," she said.Kan Ke, deputy director of the Legislative Affairs Commission of the NPC Standing Committee, acknowledged the problem: "We have to admit the public has had doubts and lost some trust in the charity sector after a number of donation scandals in recent years. That's why we decided to solve the problems through legislation."We don't want to see charitable organizations using money donated by the public to fund businesses, neither do we want to see people pretending to be managers of charitable organizations," he said, referring to a 2011 scandal that prompted a backlash against philanthropic organizations.The case involved a young woman, Guo Meimei, who posted photos of herself with luxury cars and expensive handbags on Weibo, China's Twitter-like social media platform. Guo's claims that she was employed as a

manager of an organization associated with the Chinese Red Cross Charity made national headlines as outraged members of the public criticized what they saw as misappropriation of donated funds.Although it was later revealed that Guo had no links with the charity, public trust had been undermined, resulting in a severe decline in donations to the Red Cross Society of China. The organization still hasn't fully recovered from the incident. In 2010, the Red Cross received donations totaling 7.63 billion yuan, but the figure fell to 4.198 billion yuan in 2011. Donations continued to decline year-on-year, and in 2014, the Red Cross received just 2.6 billion yuan.

'One bad apple'"In the charity sector, one bad apple spoils the whole barrel. Illegal behavior jeopardizes the whole sector, so it's very important that supervision is strengthened to make philanthropy more popular with the general public," said Li Jing from the One Foundation.Kan said the proposed legislation aims to improve the development of the charity sector, raising public awareness and encouraging more people to donate money."Over the past few years, the total amount donated annually has been about 100 billion yuan. That may sound a lot, but in fact, it's not a huge sum," he said.According to the 2015 CAF World Giving Index, published in November by the Charitable Aid Foundation in London, Chinese people are reluctant to donate money to charities or volunteer to help. The survey ranked China next from last on a list of 145 countries and regions, only above Burundi."The reason lies in the public's low awareness of charity, and distrust of charitable organizations. We hope the new legislation will regulate the founding, operations and the methods of donation of charitable organizations, because the more regulated the industry is, the more donations we will receive," Kan said.Fung Danlai, a CPPCC National Committee member and a former member of the board of the Tung Wah Group of Hospitals, said: "Just as many international NGOs play important roles in helping governments take care of people in need in their countries, it should be the same in China. Charitable organizations should play their roles to care for the underprivileged," she said."Hong Kong has the Tung Wah Group of Hospitals with a history of 150 years, which is the oldest and the largest charitable organization in Hong Kong. Not a single Hong Kong family can say they have never

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received help from the Tung Wah Group. This is what a non-profit organization should be; the government's right-hand man, helping people in need," she said.A comprehensive legal framework will be an essential factor in improving transparency and funding for social organizations in the Chinese mainland, according to Fung: "Charitable organizations and the people involved should follow the law. It must be planned correctly. Charitable organizations should be run scientifically so they use donations correctly and help people."Kan, from the NPC, said the complicated registration procedures for char i table organizat ions have discouraged both individuals and organizations from joining the sector. The new law has been drafted to reduce red tape and simplify the entry procedure. It also includes a number of favorable tax policies for charitable organizations, and will provide tighter supervision."That's a good thing. After all, the donated money is not the organizations' money, so they cannot use it as they want. The public has a right to know whether the money is being used effectively," he said.According to Li Yuling, from the China Charity Federation, the new law will streamline administration of the sector. "All social organizations are currently required to register with the civil affairs departments, but they also have to register with a related government department, which acts as their supervisor. That's very inconvenient. The new law will change that, which is good news."Li Jing, from the One Foundation, believes the legislation will give organizations greater independence. "There is no doubt that the coming charity law will be excellent news and a milestone in the improvement of philanthropy in China. The draft specifies that charitable foundations and donors will be allowed to enter into agreements about administrative costs," he said.Under the current legislation, the cost of administering individual donations, which includes salaries of staff members, cannot account for more than 10 percent of the total annual donation. For example, only 50 yuan of an annual donation of 500 yuan can be set aside for administrative costs. The new law is likely to allow the parties to reach a bilateral agreement on the proportion of a donation that can be used to pay salaries and other expenses.

Interest overseasThe proposed legislation has also attracted attention outside China.

"We see the new law as a very positive development. The proposed law seeks to promote a culture of charity, as well as to protect the rights and interests of charitable organizations, donors, volunteers, beneficiaries and others who work in the field of charity," wrote Pia MacRae, country director of Save the Children in China, in an e-mail exchange with China Daily.MacRae emphasized that effective regulation and supervision will boost public trust in the sector: "Our greatest hope for this new law is that it is a catalyst in the further development of China's philanthropic sector, through both recognizing and encouraging the role that charities can play in social development, while also ensuring that the sector is well-managed and transparent."Meanwhile, Diana Tsui, head of Global Philanthropy for Asia Pacific at JPMorgan Chase, said the legislation will provide greater clarity and supervision. "We need reputable and strong local NGO partners to help deliver on commitments. With the new law put in place, our local partners will become more transparent and accountable in delivering impact on the ground," she wrote in an e-mail to China Daily.While charity sector professionals have been debating the implementation of the new law, and many NPC deputies have submitted proposals and suggestions during the two sessions, Li Jing said implementation will just be the first step in the process, and charitable organizations will have to play their part, too."The big questions that remain are how to carry out charitable activities according to the provisions outlined in the new law, and how to revise the current outdated regulations so they adapt to it. We need to continue looking into them to find the right answers," he said.Su Zhou contributed to the story.Contact the writers through [email protected]

“The Charity Law is the ‘milestone’ in Chinese philanthropy”, said by Wang Ming, president of the NGO Research Institute at Tsinghua

University

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Address: C-601, East Building, Yonghe Plaza, 28# Andingmen Dongdajie, Beijing, 100007, P. R. China Tel: 64097888; Fax: 64097607; Email: [email protected]; Website: www.cango.org4

(Continued from Vol.103 No.1)

How Policy Entrepreneurs Convinced China’s Government to Start Procuring Public Services from CSOs

---By Yang Tuan, Huang Haoming and Andreas Fulda.(After authors’ consent, this article is reprinted from the Book: Civil Society Contributions to Policy Innovation in

the PR China.

Notes from the field: 8.1

Government-sponsored environment-management and protection project in Beizhuang Town

I was invited to share our government procurement project, 'Environmental Management and Protection Project’s implemented in Beizhuang Town. ... Compared with other procurement projects, the Beizhuang project is a special case. ... [In] a narrow sense, the Beizhuang project is not exactly a government procurement project, but rather a project 'supported’ by the government. There are still some formal differences between the two. Nevertheless, it is an NGO project in cooperation with the government....[The] Environmental Management and Protection Project in Beizhuang is a one-year project launched in April 2011. It was implemented in 11 administrative villages in Beizhuang Town of Miyun County, located north of Beijing. The project adopted the cooperative model of ‘government leadership; NGO participation’ and chose environmentally friendly construction as a breakthrough point. The aim is to establish a natural conservation culture and harmonious countryside consisting of the following key elements - harmonious society, beautiful environment and sweet life.The cause of this project is closely related to an important public figure, Mr Wang Haibin, mayor of Beizhuang Town. Before he took his current position, he was a friend of Global Village of Beijing for many years. He has paid close attention to our projects and always had tried to cooperate. In 2011, Beizhuang Town was appointed the key township of a 'water-based leisure and tourism environment in the ‘twelfth five-year plan’ of Miyun County. At that lime the social, economic and ecological construction had already started in the county. According to local government advocacy and requirements, the county should give guidance to environmental NGOs or institutions taking part in ecological construction and in environmental management and protection work. This should be done by means of outsourcing contracts or commissioned projects. Since Global Village of Beijing has been committed to ecological education and model innovation for more than ten years, the goals were consistent with the develop¬ment direction of Beizhuang Town. Hence,

the cooperation started.When the Global Vil lage of Bei j ing s igned a government cooperation agreement on 1 April 2011, it became responsible for the management of the ecological environment in the 11 administrative villages of Beizhuang Town, with an ‘Office for Six Protections’ established with the town government and village committees. The head of the Environment and Pubilc Health Institute of Beizhuang was appointed office director. Every village assigned one public-health officer who worked with Global Village of Beijing staff as project implementers. The Environment and Public Health Institute is in charge of environmental governance assignments, stakeholder communication, and the coordination of relations between different government departments, including highway stations and local police stations. Global Village of Beijing was responsible for daily environmental maintenance, personnel management, convening meetings between public- health officers and ecological workers and mediating disputes the project activities triggered among villagers.Global Village of Beijing used the seamless management model and divided the 11 villages in Beizhuang Town into 86 areas for 86 ecological workers to manage, so that everything has a responsible person and dead ends could be avoided. These 86 ecological workers were again divided into three further groups assigned respectively to protect the river, road or village.Global Village of Beijing staff spent most of their working hours on daily patrol to check every project area and engage in one-to-one in-depth exchanges with every ecological worker, listening to their opinions and strengthening their awareness of environmental protection, making outstanding ecological management officers out of them. In addition to our own work, we were also responsible for promoting environmental protection in the neighborhood. We should lead by example in everyday life to influence more people, so as to achieve the great goal of ‘everyone loves the environment, everyone cares for the environment’. To raise people’s awareness of environmental protection, the Global Village of Beijing implemented a series of activities, such as waste classification, individual composting, recycling of plastic bags, issuing brochures, and urban and rural exchanges.

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We also organized a Beijing volunteers’ team. During weekends or holidays, the volunteers provided services for free. They not only brought fresh blood to our team, but more importantly, they could bring the news of a new Beizhuang to more people, which was a major contribution to the project’s publicity.After the one year project, the Global Village of Beijing has helped the Beizhuang Town government win first prize in the four Miyun County quarterly inspections for environment and comprehensive public-health appraisal.Not all the experiments in the government procurement of CSO services have, however, been successful. There is in fact a clear indication that government organizations and Chinese CSOs still need to develop imple¬mentation protocols that delineate the roles and responsibilities of the cooperating partners more clearly. The second case study illustrates how policy entrepreneurs managed to use a failed experimental project to engage in policy learning.

Guangdong government purchases social services for monitoring in Air and Water Environment

Learning by doing: the case of CSO participation in government-funded poverty-alleviation projectsIn 2006, the Asian Development Bank (ADB) cooperated with the State Council’s leading group on poverty alleviation to develop new models for civil society participation in poverty reduction. This initiative aimed to find new ways to mainstream CSO participation in poverty alleviation in rural China by providing government funding to CSOs. The China Association for NGO Cooperation (CANGO) was initially selected to nominate a member for the evaluation committee. Its executive director Mr Huang Haoming, however, decided to give up the chance of sitting on the evaluation committee in favour of participating in the project bidding. CANGO was eventually one of the six selected bidders.Participating Chinese academics and civil society practitioners by and large agree that this initiative failed

to meet its ambitious goal. All the participating CSOs were GONGOs that received RMB 500,000 for each poverty-alleviation project from the Chinese State Council. ADB provided a management fee of RMB 50,000 to each participating CSO. Given the lack of local CSOs in Jiangxi province, CSOs that came from other parts of the country, such as CANGO, had to travel to project sites and send staff to Jiangxi on long secondments. CANGO soon saw that its organizational expenses exceed the allocated management fee. Project implementers from outside Jiangxi also found it difficult to establish cooperative relationships in local communities, which have their own distinct languages and customs. Since poverty alleviation is a long-term process, participating CSOs struggled to make a difference during the project period. Eventually, CANGO solved the problems by cooperating with a local partner, the Ningdu County Poverty Alleviation Association.Although CANGO did not benefit financially from implementing this project, it learnt a lot about designing, managing and supervising projects. Such experiences also informed MoCAss drive to start procur¬ing public services from CSOs in 2012 and 2013. This indicates that a failed project from which all stakeholders learn important lessons can be considered the foundation for improved practices and institutional frameworks.

The shortcomings of government procurement in ChinaCivil society practitioners have generally welcomed the advent of govern¬ment funding for Chinese CSOs. At an EU-China Civil Society Dialogue forum on the government procurement of CSO services in January 2013, Mr Huang Haoming, the executive director of CANGO and one of the three authors of this chapter, applauded the government procurement of CSO services as a chance to promote the healthy development of CSOs. He sees it as an opportunity for them to increase their organizational capacities and to professionalize their services. According to Huang, it also leads to a change in the government’s role as a referee (caipanyuan), a new intermediate role that could potentially help combat corruption.On the other hand, cr i t ics of the government procurement of CSO services have pointed out that the Chinese government may use CSOs to ‘manage society’ (shehui guanli), a code word for the previous Hu/Wen administration’s stability-preserving policy (weiwen). Besides the danger of co-optation, they fear that government- affiliated organizations (shiye danwei) may benefit disproportionately from government funding. This would be problematic because government-affiliated organizations already provide between 80 and 90 per cent of the public services in China, thus blurring the boundary between funding provision and service production. Even when the government decides to procure the services of CSOs, many technical and

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administrative problems remain. Mrs Zhang, the legal representative of a university alumni association, which is an officially- registered social organization, reported the following challenges over managing projects procured by Chinese government organizations:

Notes from the field: 8.2After the Spring Festival in 2009, a MoCA officer came up to me and said we did a great job improving schools in a rural area of Sichuan province and hoped we would apply for a project that the government can procure. After doing our calculations, we sub¬mitted a project budget of about RMB 80,000. The money was to be used mainly for the travel costs of volunteers. Between May and June 2009, MoCA approved our project proposal. At the same time, it requested us to start the project prior to funding approval. We needed to submit the project and the audit report before we could receive any funding. Since we had used our own money to implement the project, we were concerned about this approach. We finally spent RMB 50,000. In November 2009, we submitted the project and audit report to MoCA, but it only approved RMB 30,000 and said that we must pay 5.5 per cent in business tax before they would transfer the funding to our account- By January 2010, we had only received RMB 20,000 into our account [this note from the field was written in July 2011]. Although MoCA has rated our project as outstanding, we have decided that we will not engage in government procurement again in the future.

The emerging trend towards government procurement of CSO services will thus produce winners and losers. CSOs focusing on providing general community and health services, as well as specialist services for children, the elderly and the disabled, will be the main beneficiaries of the new government policies. Service-delivery CSOs can find areas of mutual interest, which makes government procurement more likely. Despite such possibilities, there are still numerous institutional bottlenecks on the road to a more cooperative state-society relationship. In this keynote address to a symposium on social innovation organized by MoCA and the Yunan provincial government on 18 July 2013, Professor Junkui Han from Renmin University of China made the following observations (note from the field, July 2013):

Notes from the field: 8.3There exist eight problems for the government p r o c u r e m e n t o f p u b l i c s e r v i c e f r o m s o c i a l organizations: the government procure¬ment of public service does not include an administration fee; therefore, social organizations will suffer losses if they increase their amount of work. There is no tax exemption for participating social organizations; this comes as a surprise since the funding for the

government procurement of public services from social organizations relies on fiscal revenue generated by taxes. Nevertheless, social organizations need to pay turnover tax when they receive funding. This can be considered double-taxation. The government plans the procurement from top to bottom; the government uses the management approach of a planned economy to manage social-service demands. Generally, the government only purchases public services in areas about which it is concerned; this will crush the living space of social organizations. The financial settlement of government procurement occurs in accordance with the financial year; however, the implementation of a project often takes longer than a financial year. The government aims to foster low-capacity social organization and to restrict competition among social organizations across regions. Laws and regulations need to be improved; some laws are difficult to enforce. There is a lack of evaluation for the government procurement process. A withdrawal and complaint system is not established.Against the backdrop of first the evolution of the Chinese government’s procurement of public services from CSOs in the first part of this chapter, our discussion of models and key characteristics in the second part and our overview of their shortcomings in the third and final part, we would like to outline four major challenges that both the Chinese government and China’s CSOs currently face. To address these four challenges, we conclude with five recommendations to the Chinese government and five to Chinese CSOs. We start with the first of the four challenges.

Lack of uniform and standard regulation on government procurement There are no agreed regulations on models of government procurement at present. The China Foundation for Poverty Alleviation (CFPA) launched the State Council’s poverty-alleviation office’s call for project proposals. The CFPA set up a 16-member committee to review the proposals it received. The poverty-alleviation office of Jiangxi province gave the final approval, which it based on the judgment of the committee and a 'no objection, confirmation from the Asian Development Bank (ADB). The CFPA also invited experts at home and abroad to organize training for the winning bidders before they started the project implementation in the target villages.There is no uniform, nationwide law or policy regulation to cover such procurement and, in most areas, no institutionalized or standardized operational rules. In 2011, MoCA issued 11 documents, including a project handbook, implementation plan and project-management rules. These clarified (1) project type and scope, (2) responsibilities, (3) operating procedures, (4) means of procurement, and (5) assessment method. We argue, however, that in most instances, the procurement process lacks detailed regulation and provides

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insufficient evaluation and monitoring.Currently, the promotion of government procurement mostly relies on the initiative and creativity of individual government-department leaders instead of on the whole state system. Government procurement, which has been developed in just some pilot areas but not promoted further or been given practical institutional help, is undoubtedly facing dilemmas. This is especially distressing in an environment in which the levels of participation by civil society actors are relatively low. CSOs tend to be more passive and have little or no opportunity or rights to enter a critical and constructive dialogue with authorities to address these shortcomings.

Remaining doubts about the wisdom of government procurement creating long-term dependencies?As we have argued, government procurement of CSO services in China differs from the situation abroad. Professor Deng Guosheng has pointed out that 80 per cent of the public donations following the Wenchuan earthquake in 2008 went into government coffers. According to Shiew and Deng, because ‘NGOs cannot fundraise publicly, almost all of the record- shattering RMB 65.252 billion in public donations raised for the earthquake in 2008 went to government departments and GONGOs’. This shows that Chinese CSOs are still at a disadvantage when calling for the government to procure their services.CSOs also face their own challenges in terms of their credibility, professionalism, competitiveness, vitality and public exposure. They feel concerned about whether their service can gain the trust of the public, whether they have the organizational capacities to fulfill the requirements of government procurement, and whether they can regard the public interest as the objective of the service they provided.At present, CSOs are relatively uncompetitive. But are they more competitive than corporations or government institutions? Or are they becoming overly dependent on the support of local and national govern¬ment procurement? Will CSOs survive when government projects come to an end? An urgent task therefore is to foster the development of CSOs working on social and public services, to improve the capacity of CSOs to gather public donations and gradually to reduce the percentage of civil charitable resources the government uses. Only when the above conditions are met, can the government procurement of CSO-provided public ser¬vices become more meaningful and beneficial.

Social organizations need to be more independent of the government The government has a tendency to procure services from CSOs with a government background, such as social-welfare institutions that cater for orphans, patients with mental-health problems, the elderly and

other disadvantaged groups. Social-service delivery organizations that offer shelter or other provisions to orphans, the sick, the elderly, the mentally ill, the homeless and the destitute are more likely to receive support than environmental or advocacy groups. In many cases, we can regard such social-service organizations as extensions of the government’s function, as the government’s third hand. In Guangdong province, only 9 per cent of successful bidders could be considered grassroots NGOs, which indicates an obvious bias and imbalance in the bidding and selection process.In closely watched instances, it is often difficult to distinguish between the roles of government bodies and those of CSOs. At present, only the Pudong New Area of Shanghai has come up with ideas on how to separate government and civil society functions and to promote interaction between the two bodies. There is a need for further clarification of the boundary line between the functions and duties of the service provider (the government) and of the party that undertakes the service (the CSO).There is no context in which government and CSOs can develop genuine partnerships. It is strongly suggested that local governments and CSOs should establish community-based citizen centers to provide a platform for public participation in local policy making.

Lack of regulations in the government procurement of public services Our research suggests that the government may be moving too fast and be too eager to provide CSOs with opportunities to grow. Government officials willing to procure the services provided by CSOs are sometimes overly enthusiastic, too anxious and impatient to succeed. This can lead to disappointment when they realize that the CSOs are not prepared or sufficiently qualified to meet the government’s needs.Sustainability cannot be assured by depressing the costs of labour and management. When the government procures the services of CSOs, it usually ignores or downplays the organization's operating costs and this can create serious financial strains. The more projects are procured, the higher the costs to CSOs and the larger their financial losses. In addition, the assessment system for bids is still unsound. At present, there is no integrated system for assessing projects for government procurement, especially in terms of detailed and measurable indicators. Concerns about the independence of the assessing organization, how to promote inde¬pendent accounting and auditing and ensure fairness, objectivity arid transparency are also controversial points. We should regard government procurement of public services from CSOs as an important service to society. We suggest that the Chinese government pay greater attention to the following five suggestions.

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Address: C-601, East Building, Yonghe Plaza, 28# Andingmen Dongdajie, Beijing, 100007, P. R. China Tel: 64097888; Fax: 64097607; Email: [email protected]; Website: www.cango.org8

• Leaders at all levels of government should raise their awareness, strive to complete the system and establish a policy that allows the govern¬ment to finance the procurement of public services from its own budget. The goal should be to legalize, systematize and normalize the whole process;• recognize the benefits of classified and diversified management and confirm the scope of procurement. The government should encourage the development of CSOs; adopt a rule-based management approach and issue a special license to allow certain CSOs to receive public donations; and allow citizens to organize and establish interest groups without registration;• clarify the respective functions of the government, enterprise and CSO. This would accelerate the separation of government from society and help construct a system of community independent of the government;• reform the management system of CSOs and pave the way for the government to procure public services from CSOs; and• complete the supervision system and create a favorable environment in which to procure public services from CSOs.

We would also like to make five recommendations to CSOs willing to engage in the government procurement of their services. They should:• complete their governance structures; establish a facility for conveying information and publicizing their service; enhance their internal and external governance capacities; and improve their social credibility;• reconsider their organizational ethicsand standards. The question of ethics is particularly important in ensuring cooperation between CSOs and other enterprises;• establish a comprehensive governance structure of CSOs;· strengthen their ability for capacity development; and • establish transparent, open and accountable operation mechanisms. In the future, set up a system that ensures transparent organizational operations and standardized financial management; accept that they are accountable to the government, their donors and the beneficiaries of their services; and strive for openness to the public. (END)

Contact: [email protected] ; [email protected]

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