Let's change lens to see nonprofits

By Erik Nilsson (China Daily)
Updated: 2009-12-30 07:39
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The government should take greater measures to propel the growth of the countries' NGOs.

While Chinese society's enthusiasm for the nonprofit and volunteer arena has been growing, especially since last year's Sichuan earthquake, too many easily removable, mostly bureaucratic, obstacles stifle its advancement.

These include overly stringent requirements groups face to become officially designated as NGOs, limited avenues for organizations not formally listed to mobilize resources and low caps on tax-deductible donations.

And while awareness of the nonprofit sector's potential is growing, greater publicity is needed to make it a more viable force for positive change.

Currently, most nonprofit groups aspiring to become NGOs cannot satisfy the lofty criteria to register officially. These include at least 100,000 yuan in capital and employment of at least two full-time workers.

It is a vicious circle, in which most organizations cannot get the NGO designation that would open more channels for them to meet such high requisites.

Many insiders say there is a plethora of grassroots groups striving to become agents of positive social change but they largely lack the means to do so.

If these smaller organizations were made eligible for either a more attainable NGO designation or a similar, perhaps lesser, government categorization, it would endue them with greater capabilities to gather and mobilize resources.

It is remarkable that in the world's most rapidly developing country - that is, also, one with a population of 1.3 billion and millions of enterprises - only 22 nonprofit groups are eligible for full tax exemptions.

Since the 2007 Law on Corporate Income Tax's adoption, companies have enjoyed tax deductions on donations of up to 12 percent of their annual profits, an increase from 3 percent.

It is understandable the government does not want to decrease the tax coffers it needs to perform its functions. But investing its money, especially additional income from an even higher cap, in the nonprofit sector could help it fulfill many of its purposes - and do so in ways it can't now.

While conflicts of interest sometimes exist, the government and NGOs overwhelmingly share the same missions - improving social welfare, assisting development and promoting social harmony. Both agents have strengths and weaknesses in achieving these goals, so finding a balance in resource allocation would optimize progress. But the scales are currently tipped too far away from the nonprofits.

These organizations accounted for a measly 0.3 percent of added value from the tertiary sector in 2007, Ministry of Civil Affairs figures show.

And while the sector also offers job-creation opportunities, particularly for the swelling ranks of university graduates struggling to find work, nonprofits accounted for 0.3 percent of the service sector's employment rate - about 1/30th of the global average. The figures correspond to the fact that after the recent increase in donations, they still account for about 0.35 percent of GDP, compared to more than 2 percent in the US.

The ramifications of China's anemic nonprofit sector could be seen after last year's quake. Every survivor I've met in Sichuan's quake zone gushed with gratitude for the government's extraordinarily effective disaster relief and subsequent recovery work - that is, in terms of materially providing for those affected.

But many lamented a striking dearth in counseling for the extremely traumatized. This is something that typically originates in the social work sector, which largely comes from, and overlaps with, nonprofit's realm.

The government saved their lives, and rebuilt their homes and schools. But nobody could bring back those lives lost when those homes and schools collapsed. But effective counseling, such as that a strong nonprofit sector can provide, could have enabled them to cope with their losses.

Trimming the bureaucratic red tape that binds the hands of China's nonprofits, while promoting a culture of volunteerism and investing in the NGO sector would accelerate the country's development. And strengthening this pillar of social welfare will provide a more solid base to support national advancement.

(China Daily 12/30/2009 page9)