In addition to Caroline Hartnell and David Drewery from the Alliance team, our international team of bloggers includes:

• Bhekinkosi Moyo (TrustAfrica)
• Charles Keidan (Pears Foundation)
• Diana Leat (independent consultant)
• Filiz Bikmen (Sabanci Foundation)
• Halima Mahomed (independent consultant)
• Jenny Hodgson (Global Fund for Community Foundations)
• John Harvey (Council on Foundations)
• Prabhu Rajagopal (King Baudouin Foundation)
• Terry Odendahl and Chet Tchozewski (Global Greengrants Fund)

You can follow the EFC conference through our blog in various ways: on twitter and facebook, via RSS feed or by signing up to receive email updates. Please share posts you find particularly interesting with your own networks. Whether or not you are attending the conference, we welcome comments on all of our posts.

Alison Bukhari

Re-envisioning capitalism is a constant theme at the moment. As the global economy continues to reel from a financial crisis that seems to have no end in sight, people are starting to question what ‘traditional capitalism’ can deliver. If this isn’t a mere recession (or ‘double dip’), but a more fundamental restructuring of the global economy, then the spotlight is going to fall increasingly upon social enterprise. This has to be a great thing.

The last two months have seen Dasra’s executive education program graduate 42 social entrepreneurs. We have also seen over 700 individuals gather in Mumbai for Sankalp, a conference that is gaining a global reputation as the stage for dialogue around Indian social enterprise. Never before has the sector in India received such attention.

There is no doubt that momentum is building and it is refreshing to see the sector finally admit failures and fully articulate the myriad challenges it is facing. Now that social enterprise has been around for a few years, we are in a position to not just trumpet hopes and potentials, but analyze what is required for the sector to flourish.

For a few years the microfinance industry was hailed as the only example needed to support the argument that poverty can be addressed through market-based solutions. Although recent scandals have knocked the industry’s reputation, the basic premise – that microfinance can alleviate poverty while delivering returns to investors – is undeniable. However, this was not always the case.

Microfinance was successful because of years of philanthropic funding. It did not get there through upfront commercial investing. Grameen Bank took 17 years to get to an operating break-even. 22 years later, SKS broke even after six years of operations, but the success of younger MFIs is built on validation that took $20 billion of grants, soft loans and guarantees to reach maturity. This reliance upon ‘blended capital’ is something that a number of investors are not always willing to admit.

The investor community continues to talk of a lack of ‘pipeline’ and ‘investable’ business plans, but the social enterprise community is no longer talking about a lack of capital. Rather they talk of a lack of access to that capital, knowing full well that there are close to 200 impact investing funds globally looking to supply funding. Sadly the two communities are not yet on a trajectory that meets, because of expectation issues.

Perhaps some of the expectation issues revolve around definition. A social entrepreneur is basically an individual with an innovative solution to society’s most pressing social problems. He or she is persistent, tackling major social issues and offering new ideas for wide-scale change. A social entrepreneur could work in government, non-profit or business. The term ‘social enterprise’ is not as clearly defined. It should mean an organization that is solving a social problem using an enterprise approach. But the level of return that many investors expect leads one to believe that a lot of impact investors are expecting to invest in a relatively mainstream business that can demonstrate some level of social impact, rather than a business that is genuinely seeking to solve a social problem.

Perhaps we have to differentiate between social enterprise and BOP consumer-facing business? On the one hand there is a call to government to create a new legal entity that regulates reporting on social impact – a true social ‘company’. On the other hand, many are calling for the term ‘social enterprise’ to be dropped entirely. Let business be business!

Perhaps social problem-solving should be allowed to thrive without the commercial pressures that are currently stagnating the market place, and we should bring the social back into social enterprise and make a concerted effort to promote the blended capital approach. This way forward will demand that philanthropists play a critical role. They will have to provide at least some of the $20 billion funding that went into creating the microfinance industry through grants, patient debt and guarantees. This will require a problem-solving approach and an appetite for risk – in fact it will necessitate that the investor adopts the character of a social entrepreneur!

Monitor Group, in their excellent report Blueprint to Scale, call this important development ‘enterprise philanthropy’. The sector perhaps needs less jargon rather than more, but it is quite a succinct description of the kind of risk capital that will be critical to social enterprise realising its true potential. In India we face a difficult situation – there are millions of potential impact investing dollars from international players waiting to come in, and yet it is proving very difficult to value companies and structure the kind of equity deals that satisfy the investor and nurture the social business. Equity capital is of course welcomed and will eventually be a tremendous force for good. However, at this stage of the learning curve, when hundreds of entrepreneurs are still experimenting in order to work out the exact model that is going to balance social impact and return, subsidy is needed to accelerate the development process.

Despite India opening up to foreign direct investment in the commercial sector, investment in the social sector is highly restricted and the international repatriation of debt funding is not permitted. Local investors and philanthropists have to be persuaded that a great use for their philanthropic dollars would be an Indian debt fund, structured to catalyse the very social businesses that could take on return-seeking capital, but not just yet. Debt capital is required to fund a critical need for working capital, human resources, training, technology, market research and market creation through behaviour change programs. Dasra’s recent report for the Action for India Forum, Growing Social Innovation, leveraging technology and government, identifies some of the key areas where philanthropists could provide the carefully targeted subsidy necessary to kick start successful social businesses. Above all, these organizations need blended capital and mentoring support, improved data collection to make better business decisions, skilled human resources, and help with the high upfront costs of behaviour change.

The potential for impact investing in India has to be celebrated and as the sector matures, it is exciting to see a focus on the kinds of reports and analyses that will help us to invest in support infrastructure rather than just the enterprises. If Dasra can encourage a debt fund in India and more funders can be persuaded to become enterprise philanthropists, then the future for market-based poverty solutions is rosy indeed!

Alison Bukhari is director of investor relations at Dasra

Iona Joy

Back in March, NPC surveyed 750 top UK charities to uncover their experiences of public sector commissioning. This week, we’ve published our findings, in partnership with Zurich, in the report When the going gets tough. Unsurprisingly, it depicts a sector facing much greater risk. 90% of charities say they face more risk now than they did a year ago. This risk is coming from three areas: new types of contract, new ways of working, and cuts to government spending.

Charities are uneasy but not totally negative about the new types of contract coming into play – including payment by results, personal budgets and spot contracts. These impact on finances and can lead to problems with cashflow, and charities are split on whether they will be good for those they help – only 50% think payment-by-results contracts will lead to better results for beneficiaries. The main issue seems to be having the reserves and skills needed to participate in such contracts in the first place.

The new ways of commissioning services – with long supply chains headed up by a lead provider who subcontracts to others – are causing disquiet. The publicity around poor referrals in the work programme, which have caused charities such as St Mungo’s to flounce off, is a case in point. Interestingly, our survey found charities are fine being subcontracted by other charities – 80% have a good relationship with charity lead providers, compared to 41% with private organisations. They have more confidence in the bidding process if other charities are conducting it. At the same time, 80% of charities subcontracting work say they are confident they have the right skills and capacity to manage the process. However, this presupposes that the tendering process is sufficiently fair to charities to allow them to participate – 51% are not confident that government commissioners run bidding processes in a way fair to them.

Encouragingly, 67% think working in consortia has a positive impact on their ability to deliver, so there is a role for charities clubbing together to play in this market. Partnership requires time and effort, and complementary skills and knowledge. As one of our case studies, Open Age, said: ‘Unless you’ve got very different skills, what is the point of creating more meetings and bureaucracy to agree work that could just as easily be done independently?’ But when this collaboration works, it works well, and allows smaller organisations to take part in bigger contracts.

The government cuts are harsh, with a third of our respondents reporting a loss of government income, especially from local authority funding. This has had a dire effect on reserves: 60% have used or plan to use reserves to make up shortfalls in income, and we worry this may send charities over the cliff. They are finding ways of overcoming drops in income: developing volunteer programmes or working more collaboratively. But they need more access to capital to plug reserves – and this is where funders come in.

Charities need core funding while they adapt to new ways of working. For instance, cash to maintain sufficient senior staff to put together and manage consortia to bid for contracts, or hire extra expertise to manage contracts and sub-contractors if they decide to bid as a lead provider. Charities expanding their offer to beneficiaries with personal budgets will need new admin systems and enhanced IT. In both cases there will be a period of investment where the revenue doesn’t immediately come in, and so the funding needs to bridge this. Funding for programmes like volunteer development costs money, but could work well.

If pursuing a payment-by-results contract, working capital will be needed. The contracts will be paid in arrears rather than upfront, and the charity may not have reserves to fund staff salaries during this period. Social investment might be the answer here, but investors may need to share the risk with the charity if the outcomes specified in the contract aren’t met sufficiently to trigger a payment. Lack of experience and expertise in setting outcomes targets – on both the commissioner and charity side – means that these contracts carry considerable risk of being structured in a way that doesn’t work.

For the less technically minded funders, topping up charities’ reserves would be a very valuable contribution to the problem. But first be sure you believe in the charity’s strategy and be prepared for some charities to go to the wall. This is not an environment where success is guaranteed for anyone.

Iona Joy is head of funder effectiveness at New Philanthropy Capital and co-author of the report When the going gets tough

The CLA’s submission also remarked on the advisability of permitting ‘mixed-motive investment generally’ – a reference to the Commission’s own CC14 guidance introduced last year. This allowed charities to make investments based on a combination of furthering their charitable objectives and securing a financial return, where before they were only permitted to invest based on one or the other. The guidance has been a bone of some contention within the sector, earlier versions having been criticized as being confusing for trustees and likely to obscure, rather than clear, the ground for social investment, which was one of its original intentions and though the final version released in November 2011 has been generally well received, unease at the idea of mixed-motive investment persists.

In its own submission to the government’s review, the National Association of Voluntary and Community Action (NAVCA) flagged up a ‘real risk that charities would be pressured into maximizing the return for investors rather than furthering the interests of charities’. The CLA acknowledged in its submission that allowing mixed-motive investments without prior authorization by the Commission held ‘potential risks’ and suggested incorporating the requirement for trustees to ‘be clear at the outset as to their purpose in making the investment’.

Source
Civilsociety.co.uk, 24 May 2012, 13 April 2012

Lucia Cote

In our work at the Gates Foundation, we are in constant contact with grantees and vendors. We all experience a great sense of urgency given the magnitude of our work, which often leaves little time to pause and reflect on the quality of our interactions with our partners, whom we rely upon for achievement of impact. In the past, we haven’t always asked for specific feedback regarding our approach, processes or even grantee experience – and assumed that if there were a problem, we would know.

Gary Darmstadt

We are working to change that!

It’s imperative to our work that we make time for regular, open and honest communication between the foundation and our partners, all in service, ultimately, to the pressing matters at hand.

We have been brainstorming internally and have some promising ideas in the works to encourage open dialogue and to improve the quality of interactions on a day-to-day basis. However, it’s time to take a step back and hear from you. We want to ensure that all external partners working with the foundation feel comfortable enough to share their experience personally with their program coordinator, program officer and even the division director.

What forum makes you most comfortable to share feedback? Is it a personal email or phone call, or an anonymous survey site, such as SurveyMonkey®? Does it depend on the type of feedback and your relationship with the foundation? These are all important questions we ask when contemplating our complex working relationships. It always leaves us wondering if we’re getting the most honest responses.

It’s imperative to our work that we make time for regular, open and honest communication – all in service, ultimately, to the pressing matters at hand.

In response to feedback from grantees, partners and vendors, the foundation as a whole has created an initiative to be more engaging and transparent. Within the Family Health division, we have changed some of our internal procedures to enhance our communications with partners – from guaranteeing an orientation call for new grantees and vendors and sending a welcome letter with relevant contact information, to hosting grantee trainings and creating a dialogue around expectations of engagement level with your project. We aim to empower our partners as much as possible.

Have you noticed these changes? We recognize that the foundation wields a lot of power, responsibility, and influence – are we getting your most honest and insightful responses? And if not, why?

One of our commitments is to create a feedback loop, rather than a one-way communications channel. We experimented with this in the Family Health Checkup blog series and the #FHChat discussions, providing lots of opportunity for networking and conversation online, and found the engagement refreshing and enlightening. Did you participate in either the blog series or the Twitter chat? Do these formats work for you?

MC Escher’s ‘Drawing Hands’ image is a continuous loop with no distinguishable beginning or end. It’s a powerful metaphor for our interdependence in striving to achieve impact together. We should feel comfortable enough to continually share our experiences, knowing that it will only improve future interactions and experiences for others.

The question we have then, is how do we find the natural points for sharing ideas, both critical and complementary?

We want to hear your pain points and brainstorm together. There are many steps we can take that could improve our partner relationships and ensure we do our best work. However, if we remain too internally focused without direct and honest feedback, it is impossible to implement real and effective change. Simply put, we cannot do it without you.

We welcome your comments, or you can provide anonymous feedback on the foundation website if that’s the most comfortable method for you.

I am reminded of Mahatma Gandhi’s quote: ‘Happiness is when what you think, what you say, and what you do are in harmony.’ The Family Health team is committed to increasing quality interactions, engaging in clear and consistent communications, and continuing to solicit your feedback in service to improving the health and lives of the millions of people around the world.

Lucia Cote is a program coordinator within the Family Health division, and Gary Darmstadt leads the Family Health division of the Bill and Melinda Gates Foundation. This article was first published on the Gates Foundation’s Impatient Optimists blog.

Maria Chertok

‘There is a war against Russia. It is an announced information war which involves hundreds and thousands of people, agencies and organizations. Taking advantage of the imperfect and out-dated Russian legislation, multimillion dollar budgets come through international foundations to jeopardize the unity of our country, stability of the political structure, to destroy the peaceful life of our citizens.’ This is the opening paragraph of a petition of five GONGO-type organizations, which was published on the Internet a couple of months ago.

The petition proposes to introduce a piece of legislation that would force recipients of foreign funding to register as agents of foreign influence – something that is happening in the US under Foreign Agents Registration Act. The petition so far has been supported by over 85,000 Internet users and, given the promise of new Russian President Vladimir Putin to legitimize citizens’ initiatives that get support of over 100,000 people, it has raised concern among the Public Chamber and NGOs that receive foreign funding.

Russia has a very long paranoid tradition with regard to foreign influence. Thousands of people were convicted as foreign spies and killed or sent to prison during the Stalin era. Nowadays, political opposition and human rights and campaigning NGOs have been many times suspected of being agents of foreign, primarily US, influence. Orange revolution in Ukraine and other recent political regime changes in the former Soviet Union countries and the Arab world add to this inborn fear. In 2006, right after events in Ukraine, additional reporting requirements were introduced for international NGOs working in Russia and recipients of foreign funding. The statistics obtained through this reporting and revealed recently by the Ministry of Justice, suggest that Russian NGOs received over $300 million from foreign sources in 2011 – a figure that seems far bigger than we could possibly imagine. Still, even if this figure is correct, it could hardly all go to support politically charged action or human rights work.

Although I don’t think that there is any real threat of this petition making any impact on the legislation, it raises again topical issue for Russian NGOs involved in campaigning, democracy building and human rights actions. Basically, close to 100% of this activity is still funded by foreign donors. Combined with very low public awareness of what human rights organizations do, it does present a problem of legitimacy and challenges the way human rights groups see their financing strategy.

The good news is that this stipulation has been true until recently, when all of a sudden Russian citizens developed an appetite to giving towards these causes. As we have written before, the famous anti-corruption activist and blogger Alexey Navalny was successful in raising considerable amounts for legal action on corruption cases via his blog. Expenses of the spring demonstrations were crowd-funded. And now legal aid to the victims of police abuse during the most recent street protests have been paid by private donations.

This latter case was described by the Russian Forbes magazine as an example of the successful application of entrepreneurial talent by a young activist, Maxim Katz, who invested his own money and mobilized professional lawyers on the same day the arrests happened. He was successful in raising enough funds to get back almost all of his initial investment. While lawyers were paid according to the market standard, the project was managed by volunteers and helped by others who drove the lawyers to police stations and brought them back with the rescued protesters. Forbes presents this case to demonstrate the power of social entrepreneurship for human rights work.

The second recent news from the same area that almost scandalized the Moscow community is the announcement that Alexei Navalny’s Anti-Corruption Foundation has formed a partnership with a mid-size private bank to issue a co-branded credit card that will allow users to give 1% from all transactions to the foundation. If this and other initiatives come true, foreign funding may become a mere add-on to strong domestic giving to progressive causes. When this happens, our concerned politicians will face a new problem: they will have to accept that Russian people act on their own will when going on the streets and putting forward demands for more transparency, fair elections or freedom of association – rather than doing it because they are being paid with US dollars.

Maria Chertok is director of  CAF Russia

Paul Penley

High-performing non-profits develop careful strategies for creating consistent revenue to sustain operations. Donors do not want to support an organization one year and see its programs collapse the next year from insufficient funding. Great organizations with bold visions and effective programs understand that sustainable revenue streams are mission-critical.

Finding out if organizations you support will sustain themselves is step three in our six-step process for evaluating nonprofit performance. As a reminder, the six steps involve measuring charities against 30 standards for non-profit performance arranged in the following categories: (1) Leadership, (2) Financial Management, (3) Sustainability, (4) Leverage, (5) Strategy, and (6) Impact. We explored the first two categories of Leadership and Financial Management in my last two articles.

Signs of sustainable revenue streams

To make sure an organization can create consistent revenue to sustain operations, ask these five questions:

•     Does a single donor account for over 15% of annual expenses?

•     Has funding increased during the last 3 years?

•     Is the budget % funded by the board greater than 1%?

•     Does the donor retention rate exceed the average of 55%?

•     Has the number of annual donors increased in the last 3 years?

The answer to all five questions about sustainability would ideally be YES! A negative response to any of these cursory questions should lead to follow-up questions with the organization’s Chief Development Officer (or CEO for smaller operations). Why do these questions matter? Here is what we’ve learned at Excellence in Giving over the past 10 years.

Stable support base: Does a single donor account for over 15% of annual expenses?

If one major donor accounts for more than 15% of annual expenses, then the organization’s operational funding is at risk. I have evaluated charities where 86% of the annual expenses came from three major donors. If one or two of those major donors cannot or do not support the organization one year, the result is a 25-50% cut in capital to spend. I have seen it happen – the cessation of two major supporters essentially invalidated the gifts from another 140 donors whose support could no longer sustain the organization’s programs.

The risk of depending on a few donors for the majority of a non-profit’s support has a clear parallel in the commercial sector where businesses mitigate customer concentration. Annual revenues cannot fluctuate wildly and still support consistent, quality program delivery. A stable support base will have the majority of an organization’s funding originating from diverse, small donors. Compassion International is a perfect example of a stable support base: 66% of annual expenses come from donors of less than $1,000 annually.

Funding increase: Has funding increased during the last three years?

Increased funding does not ensure the organization is doing great work or managing its finances properly. It only provides the confidence that the non-profit will be here for a long time doing what they are doing. Increased funding demonstrates that either more people are buying into the value proposition or the same people are investing bigger dollars in an organization that has impressed them.

To be sure some non-profits do have better marketing plans than program services. So increased funding may speak more to the quality of the fundraising and communication departments than the substance of the programs or long-term outcomes. It is important to remember that no individual standard of organizational health is adequate for making a judgment on the whole of the organization. What this one measurement communicates is a history of sustainable revenue that gives confidence to donors that the organization’s work will go on.

Board support: Is the budget % funded by the board greater than 1%?

Non-profit boards play a critical role. They craft strategy and maintain fiduciary responsibilities. Boards also raise money and invest in the organization. When a board isn’t contributing toward an organization’s mission, it raises one of two concerns. First, the board may not have wealth and therefore a network of potential major donors to point toward the organization. Second, the board (who has the closest view of the organization) may lack confidence in its ability to put money to work well. Either interpretation makes me apprehensive to invest money. Make sure organizations you support are also supported by those who know them best.

Donor retention: Does the donor retention rate exceed the average of 55%?

If an organization loses more than half its donors from year to year, be concerned. Although a brand new fundraiser or the PR from a headline can attract a number of one-time donors, a sustainable organization will focus on cultivating long-term relationships with supporters. Too many non-profits focus all their efforts on donor acquisition and not enough on donor retention. They end up wasting time and money getting new people in the door each year while last year’s supporters slip out the back door.

In many cases, a substandard donor retention rate means the organization does a poor job of reporting their impact. I have definitely experienced making grants to organizations that fail to communicate the results. If you’re concerned, just ask a non-profit leader if they have a separate line item for donor retention or reporting. You’ll have your answer in a second if it all goes toward fundraising and donor acquisition. If you want an organization with good reporting that doesn’t waste money on pursuing one-time donors, make sure the donor retention rate exceeds 55%, preferably even above 65%.

Growing donor base: Has the number of annual donors increased in the last three years?

If an organization expands its donor base each year, it makes the budgeting process easier and confirms that the communications and development teams are doing something right. It gives you the confidence as a supporter that you are supporting an organization with momentum that has the potential to fulfill its mission.

Halfway there

Analyzing the above-mentioned health indicators for sustainability gets us past step three of the six-step nonprofit evaluation process. The next post will explore the generally applicable standards I recommend for evaluating ‘leverage’. I will define exactly what I mean by ‘leverage’ in that post. If you are wondering where to find the data needed for this cursory evaluation, www.IntelligentPhilanthropy.com provides it to subscribers in 2-page Analytical Overviews that can be acquired for any US-based 501(c)3.

Remember these six steps and 30 standards comprise only a cursory evaluation. It’s not the level of due diligence appropriate for major gifts. But we do hope the simple questions related to publicly available data empower donors of all sizes and sophistication to get informed quickly and give more wisely.

Paul Penley is director of research at the philanthropic advisory firm Excellence in Giving and creator of IntelligentPhilanthropy.com

Matt van Poortvliet

Last November youth unemployment in the UK broke the 1 million barrier. As the recession rumbles on, the job market continues to shrink, and public spending cuts – to youth services, post-16 education and training – are not letting up. In this climate the work of charities in encouraging and inspiring young people, particularly the most vulnerable, to develop and enter employment is more vital than ever. But they are under increasing pressure to prove their value, at a time when their income is most stretched.

Without better evidence, the youth sector as a whole, and ultimately young people, will lose out. This sector is receiving larger cuts than other areas of services – something the Education Select Committee has linked to a lack of evidence and the ‘extraordinary failure’ of the sector to explain the difference it makes. Is there anything that funders can do to help charities working with young people to prove their value? NPC believes that some of the challenges can be met – without spending a lot of money – if charities and funders work together on measurement.

Almost all the charities NPC speaks to are trying to measure their impact in isolation. They rarely talk to peers about the challenges they face or share their approaches or expertise. Yet measurement is one area where charities really can collaborate successfully (see NPC’s report Improving prisoners’ family ties, published last year). Charities working in similar fields often have similar approaches and are trying to achieve the same aims, so why not develop the processes and tools they need for measurement together?

Funders can play a powerful role in encouraging this. However, at present, most funders – like charities – develop their approaches to monitoring and evaluation in isolation. A charity with ten funders is likely to receive ten different monitoring forms, with ten sets of requirements, outputs and outcomes to measure. There is no shared understanding of what commissioners and funders want to see in terms of measurement. Charities express frustration at the lack of clarity and consistency around measurement expectations, and how many varied approaches created substantial reporting burdens for them. They often spend large sums of money on tools and evaluations only to be told by commissioners that ‘this is not the right type of evidence’.

NPC’s latest report looks at measurement for charities in the NEETs sector. Working with a group of charities, we found a promising level of consensus around the key outcomes to measure, and a willingness to collaborate to develop a shared framework. From the funders we spoke to, we also found an interest in working together more closely to reduce reporting burdens on charities. Could a group of funders tackling the same issue get together and develop a common set of outcome measures for the charities that they support? Could they work with charities to design something that is proportionate, and measures the outcomes that charities feel are important?

NPC believes there are many potential benefits for both charities and funders in working together on impact measurement. A shared approach to outcomes could reduce the burden on grantees by harmonising reporting requirements; it could encourage collaboration by showing how charities contribute to shared goals; it could help to generate comparable information on impact and aggregating this data could help to build evidence for the sector as a whole. A group of funders and charities working together to develop a shared outcomes framework could provide a powerful voice in speaking to statutory funders that impose unrealistic reporting burdens – the chief source of frustration for the charities NPC spoke to.

Of course, it is not all as easy as this. There are challenges in ensuring that any joint approach is flexible enough for diverse organisations and does not stifle innovation. Charities and funders all have distinct approaches. However, our research suggests that there is willingness to develop some consensus on what to measure and how it should be done, rather than charities individually battling on in the dark to prove their worth. There is a role for funders in leading this process, ensuring that reporting is developed in a way that is proportionate, sets clear expectations and benefits the sector as a whole.

Matt van Poortvliet is a Senior Consultant at NPC and author of the report Measuring Together: Impact measurement in the NEETs sector

Karla Simon

A colleague of mine recently commented that the Chinese government seems to be determined to do all it can for opening space for civil society right here and right now! It is difficult to keep up with everything for this blog, but I will do my best.

April and May have been months filled with developments. On 24 April the Ministry of Civil Affairs (MCA) released two major documents – one was a draft set of ‘normative rules’ for public fundraising foundations that are expected to provide the legal underpinnings for disclosure and other guidelines that were finalized in December 2011. The draft was provided for public comment, and the comment period lasted until 3 May. It deals with issues of transparency and accountability and envisions new reporting procedures for public fundraising foundations. More information will be provided once these regulations are finalized. They are not intended to be a substitute for the foundation regulations (one of the three or san tiaoli) pending at the State Council.

Also on that day MCA released the results of a competition for outsourced funds for social services from a special 200 million RMB (US$31.7 million) fund administered by MCA. The awards made were aimed at reaching CSOs in the Western areas and almost 70% was allocated there. While many of the recipients were the traditional GONGOs, it is clear that some of them are expected to use the funds to build capacity for grassroots CSOs. As suggested in last month’s blog, this is an important step taken toward shrinking the size of government. MoCA also noted in private conversations that an additional 150 million RMB has been set aside for a competition that will be administered through the Chinese Academy of Social Sciences, presumably for social research on the sector.

In early to mid-May there were several additional policy changes and announcements. One was the press conference held to announce the China Charity Fair, to be held in Shenzhen from 12 to 14 July. Announced at a Beijing press conference, it has been dubbed China’s No. 1 charity fair; it is co-organized by the Ministry of Civil Affairs, the state-owned Assets Supervision and Administration Commission of the State Council, the All-China Federation of Industry and Commerce, and the Guangdong and Shenzhen governments. The exhibition will cover 15,000 square metres and will feature forums, charity festival celebrations and online exchanges.

‘The fair will showcase China’s latest achievements, innovative social construction and management. It will serve as a platform for the exchange of charity resources, promote the development of charitable organizations and enterprises, and open new channels for the public to participate in charitable activities,’ Shenzhen Mayor Xu Qin said at the press conference.

Of considerable note with respect to the press conference and the Q&A after it were three items mentioned by Minister of Civil Affairs Li Liguo and picked up by the press. One was the significant decline in the amount of money contributed to charity in 2011 – a 20% reduction by year end, with all of the information recently collected and available to the China Charity and Donation Center. Minister Li made clear that changes in charity governance must be made to ensure that scandals like the Guo Meimei link to the Red Cross do not occur, thus preventing the trend from continuing.

Another important point was that all CSOs will be permitted to directly register with MCA, including ones engaged in ‘political and human rights’ work. Minister Li said specifically that if such organizations are involved in social and economic development, they will also be permitted to register directly.

The final point was also important because he addressed an anomaly in the current regulations that permits a locally registered foundation to raise money only in the locality in which it is registered. Controversy has arisen because the One Foundation, registered in Shenzhen, raises money throughout China through web platforms. Minister Li said specifically that the new foundation regulations will solve this problem. Click here for more on the press conference and Minister Li’s statements in the Q&A period (in Chinese).

The issue of direct registration of CSOs is quite significant as MCA moves toward advancing this as national policy. Accordingly, a large-scale meeting was held in Tianjin on 11 May to discuss and exchange views on different practical experiences with registration of CSOs. MCA officials from provinces and municipalities throughout China attended the event.

In another development, the Ministry announced a ‘second batch’ of nationally registered foundations that are qualified to issue tax deduction receipts pursuant to special rules issued in 2008 and 2010. The new group numbers 114 and includes private foundations as well as public ones. This brings the total to 120, with six having been announced previously.

Meanwhile, the wait for the promulgation of the three regulations continues and probably will for some time as the higher echelons of the Party sort out issues having to do with Bo Xilai and Chen Guangcheng. What was already a highly-charged political atmosphere, with the upcoming change in leadership in October, was clearly made more difficult as a result of these two eye-catching events.

Karla Simon (奚文雅)  is professor of law and director of faculty development at the Catholic University of America and has worked in China for over 16 years

Priyanka Saha

There are many things India is infamous for and one of those is Dharavi. What is the first thing that comes to your head when you hear the word ‘Dharavi’? For most, it’s one of the largest slums in the world; for frequent fliers, it’s the view from the flight as it descends into the Mumbai Airport; for movie buffs, it’s the prime location for filming a chase scene of an Oscar-winning movie; for migrants, it’s the cheapest possible accommodation the city has to offer; and for builders, it’s prime property land going to waste. However, very few know that Dharavi exports goods worth millions of dollars not just to India, but around the world!

Over a recent engagement activity for its Payroll Giving corporate partners, GiveIndia, through Reality Tours, facilitated an experiential tour to the slums of Dharavi. While the tour was angled at generating more awareness and exposure towards the livelihood opportunities at Dharavi, what we experienced was clearly more than mere observation. It was, rather, an insight in terms of really knowing more about Dharavi than what most of us Indians usually reckon with.

If one were to walk through the slum’s narrow, dark alleyways, the conditions would seem no different from any other slum – scarcity of sanitation facilities, a million people housed in a total space of 0.67 square miles and inadequate drinking water supply. However, what one doesn’t fail to ignore is the way dwellers seem or behave – content, comfortable, preoccupied yet at ease. As Asim, our knowledgeable tour guide, reveals: ‘The dwellers may be poor but they work to contribute towards the richness around here.’ We learn that the flourishing leather and recycling industries, along with a string of small scale industries such as pottery, embroidery, bakery and poppadum, contribute to a whopping turnover of approximately US$650 million a year!

Asim goes on to further explain that within the 1 million dweller base at Dharavi, 70 per cent of the worker population comprises of migrant workers. These workers are from across the sub-continent, and come to the city to make a living. While most of them live in single-room factory floors and undergo hazardous working conditions to earn a daily wage of US$1-3, their business owners stay in posh localities, drive around in BMWs and don’t even bother to make frequent visits to the slum.

This economic disparity serves as a classic case of an inequitable wealth distribution that is characteristic across the country. Does this mean the government hasn’t made any attempts to curb it? Projecting an upliftment in living standards, the state government has been at an urban redevelopment plan since 2004. According to a Wall Street Journal report, the plan involves the construction of housing, schools, parks and roads to serve the 57,000 odd families of the slum. However, the plan has faced more opposition than support, primarily because it has been drafted to offer resettlement only to families who lived in the area before 2000. According to another report, by BBC News, concerns have also been raised by communities that fear that some of their small businesses in the ‘informal’ sector may not get relocated under the redevelopment plan. Given an undying spirit of unity among the residents, some say that the plan may never materialize. What then does the future of these communities lay in?

Several local non-profits operating out of Dharavi are confident of making an impact as they encourage education, computer literacy and hygiene at the residential areas.

The Dharavi project, an initiative of Acorn Foundation (India), focuses on the betterment of the rag-picking community by organizing health clinics, and cultural workshops through which young children engaged in rag picking get informal education in music, photography and other arts. In the past, the NGO has engaged at creating awareness through several high-profile celebrity fundraisers and currently partners with schools for waste management programs for engagement with the rag-picking community.

With the goal of personal and community development for the slum residents of Dharavi, NGO Atma partners with NGO Reality Gives to provide services in education and extra-curricular activities such as arts and sports.

The Child Health and Nutrition program, started by the NGO SNEHA complements the government’s Integrated Child Development Scheme (ICDS) and helps government daycare workers, who are responsible for delivering a range of health, nutritional and educational services in Dharavi, through groups of community link workers.

Reality Gives, a sister NGO of Reality Tours, partners with NGOs such as Educo and Muktangan and several others to facilitate curriculum development, language support, youth empowerment programs, kindergarten and night school facilities at Dharavi.

Though these initiatives are hopeful of making a strong impact in the residential areas, hazardous working conditions in the commercial areas still remain worthy of concern.

As we ended our tour through those dimly lit areas and started to interact with the residents, we couldn’t help but notice how their proud and gleaming faces bring richness to the world of perpetual poverty at Dharavi. Certainly, they do not demand much – with only the hope to live in an equitable society soon enough.

Priyanka Saha is manager of marcom for the payroll giving team at GiveIndia