Introduction

Under the profound transformations taking place in China since the 1970s, economic development and social changes have provided large spaces and tremendous vitality for the third sector, non-governmental organizations (NGOs) becoming indispensable forces in filling the vacuum left by the withdrawal of the state. NGOs have long been regarded globally as strategically important participants in the search for a ‘middle way’ between the market and the state because of their unique position outside the market and the state, their generally smaller scale, connections to citizens, innovative approaches, flexibility, capacity to promote private initiative in support of public purposes, and their contribution to building ‘social capital’ (Salamon and Sokolowski 1999).

However, there have been many global threats to NGOs, as reflected in official restrictions in their work in countries as diverse as the USA, El Salvador, Uganda, and Egypt; the accusation that some have been infiltrated or manipulated by terrorist groups; and, following more critical consideration in recent years, the fact that ‘the representation of civil society as inherently harmonious and working for the common good has been replaced by a more chaotic and often conflictive picture of self-interested, co-opted, or misguided entities’ (Borgh and Terwindt 2012, p. 1068). Commentators have pointed to a number of ‘voluntary failures’ that reflect Salamon’s 4-fold taxonomy of voluntary failure: philanthropic insufficiency, particularism, paternalism, and amateurism (Salamon 1987). At the same time, they have been increasingly criticized on the basis of having being co-opted into neo-liberal economic prescriptions, the donor-led poverty agenda in international aid, and Western security agendas (Mitlin et al. 2005).

China’s NGOs are facing much criticism as they exist within limits defined by the state, and the state can both enable and impede their development through statutory policy and instruments. Under authoritarian governance, NGO activities that may threaten the interests or authority of the government, and those that give support to dissenting voices are likely to be restricted. NGOs in China are also criticized for closer relations with the state than their Western counterparts do because of the historical and political culture in which they have developed. Whether initiated by government agencies or by individuals, the great majority of NGOs are either choose or are required to remain affiliated with government and its agencies for administrative and financial support. As a consequence, some commentators assert that these NGOs lack autonomy and therefore, that genuine civil society does not exist in China (Ma 2002a; Xiao 1993; Simon 2013).

While the Chinese government remains the most decisive component in the development of NGOs, it is gradually withdrawing from many responsibilities, initiating policies that allow civil society to expand. The most significant change in China’s official policy toward NGOs since the late 1970s is the abolition of dual administration for trade associations and chambers of commerce, and NGOs working for technology, social welfare and community services (State Council 2013a). This policy cedes greater autonomy to NGOs as they are no longer required to affiliate with a professional supervisory agency (‘yewu zhuguan danwei’ and/or ‘guakao danwei’) before they register with the Ministry of Civil Affairs (MOCA)—a positive development that allows NGOs to make independent decisions on program operation and organizational management with a much higher level of autonomy.

However, during this transitional period, the abolition of dual registration brings with it many challenges. For many NGOs, the tie with ‘yewu zhuguan danwei’ and ‘guakao danwei’ with regard to financial support is broken. They thus have to depend on membership fees and charitable donations for funding. Self-governance brings new responsibilities and demands new areas of expertise, around the forging of positive NGO–state relations, based on partnership, on improving the legal framework and on strengthening NGO networks of support. Clearly, therefore, particularly in the short-term, the abolition of dual registration is a double-edged sword.

Within the context, this article first reflects upon the government-dominated NGO governance in China and its transformation since the 1990s. It goes on to assert that the abolition of the dual administration system brings many challenges for NGO governance and development. Finally, it puts forward suggestions for new approaches to NGO development, from the perspective of a partnership between NGOs and the government, taking into account the need for supportive legislation, the imperative of public trust and the viability of NGO network organizations.

Government-Dominated NGO Governance and Transformation

NGOs in China

The concept of NGO varies in different contexts with diverse political systems. Thus, a clarification of issues relating to organizations that might be considered NGOs in China is required prior to opening a discussion of Chinese NGOs in the international context. According to official documents, the term ‘NGO’ in China, which is commonly referred to as ‘social organization,’ includes all organizations and institutions that are outside of the state system and that operate as non-profits (Ministry of Civil Affairs 2013). In other words, NGOs are referred to as non-profit organizations that are not government managed, with the knowledge that many of them are actually government organized NGOs (GONGOs). This definition is quite vague in comparison with the internationally accepted definition that a NGO is an organization possessing the following characteristics: formally organized, private, self-governing, non-profit-distributing, socially oriented, public benefit promoting, and voluntary (Salamon and Anheier 1992; Ware 1989). According to the Western model of a well-developed civil society, NGOs are also assumed to be autonomous and to have the freedom to be oppositional to the state.

China’s most recent official classification divides all entities that are not government managed and that operate as non-profits into three groups: SUs (social units), NGNCEs (non-governmental non-commercial enterprises), and Foundations. SUs include various associations, chambers of commerce, and federations. NGNCEs are institutions that do not make profit and provide social or professional services. Foundations aim to raise funds for charitable purposes and they provide financial support for SUs. By the end of 2012, there were approximately 499,000 NGOs in China, which was 8.1 % more than the previous year. Among them, there were around 271,000 SUs, 225,000 NGNCEs, and 3,092 foundations (Ministry of Civil Affairs 2013).

Prior to the communist victory in 1949, there were an estimated 26,126 social organizations (such as guilds, academic, and religious groups) in Nationalist-controlled areas of China (White et al. 1996). During the immediate aftermath of the civil war, most of those organizations were abolished so that by 1965, only 100 remained at the national level and 6,000 at the local level. All were government-dominated (Heurlin 2010; Chan 2005). The political control loosened after Deng Xiaoping’s reforms of 1978 and organizations of various forms flourished. Indeed, it was not until the advent of the 1989 student movement that the government reverted to increasing their controls over the development of NGOs by introducing a dual system of registry (Ma 2006). Based on the new registry system, a NGO could not receive its ‘birth certificate’ from the MOCA until it had obtained the approval of its ‘professional’ supervision agencies. Despite these regulatory restrictions, NGOs grew rapidly, reflecting mounting social needs. In order to curb their rapid growth and influence, a new series of administrative regulations were promulgated (State Council 1998a, b). These granted MOCA’s Bureau of Management of NGOs the power to oversee all NGNCEs, they were more comprehensive, more detailed, and much stricter than the 1989 system of regulations.

In today’s China, NGOs are playing essential roles in the building of the ‘harmonious society,’ first officially proposed under the Hu–Wen Administration during the 2005 National People’s Congress, that changed the national focus from economic growth to overall societal balance and harmony. NGOs provide complementary and supplementary services where previously public provision was absent or under-developed. They target services at disadvantaged groups in society and devise innovative approaches to address the stresses and strains associated with the government’s rapid modernization strategies: poverty, water and energy shortages, pollution, inadequate health care, and massive internal migration. Operating within the context of authoritarian governance, NGOs in China are policy oriented. In contrast to their Western counterparts, some of which play crucial roles in policy advocacy, Chinese NGOs focus their energies on executing the plans of the government or contributing to service delivery. Thus, activities which are not favored by the government are restricted, such as those related to policy advocacy, human rights, and religious issues.

Dual Administration and Its Limitations

From the 1990s, the centerpiece of the NGO governance strategy has been the ‘dual administration’ (or ‘dual registration’ as it is commonly termed) system. This requires NGOs to find a relevant government department or official social organization which will serve as its ‘professional supervisory unit’ (or so-called ‘mother-in-law’ agency) and which must also register with the MOCA at national or local levels (State Council 1998b). The MOCA is primarily responsible for registration procedures and the compilation of statistics. Before registering with MOCA, each social organization must first receive approval from a government bureau which exercises professional leadership and guidance in its field. This government professional department (yewu guikou bumen) is responsible for determining the suitability of the establishment and day-to-day control of social organizations within its bailiwick (Ma 2006).

The Dual Administration system ensures that NGOs work within strict parameters. Once the guikou bureau approves the establishment of a social organization, the professional relationship stipulated by the regulations often one of leadership and direction (Kang and Feng 2006). NGOs depend on their government counterparts in order to gain access to housing or office space, and to facilitate their passage through a broad range of bureaucratic procedures, such as the authorization for foreign travel. In addition, the government counterparts often provide at least partial funding and part-time staff members for the affiliated social organizations. The government counterpart is also responsible for approving the NGO’s choice of both leaders and activities. It is a key mechanism for maintaining governmental control over charities.

Moreover, another consequence of the Dual Administration system is that those many small or grassroots NGOs existing outside of it face a constant struggle for survival. State bureaus are not inclined to take political risks and government departments and official social organizations are unwilling to take on board the responsibility of ‘mother-in-law’ to NGOs perceived as such, leaving them unable to register with MOCA. Those independent NGOs not favored by government departments, either because of their limited size or sensitive charitable purposes, have instead to register as for-profit business firms. A large number of grassroots NGOs operate illegally and they thereby face many obstacles in their operation, for example, they cannot open a bank account as an organization, neither can they obtain benefits from NGO supporting policies.

Dual registration limits the autonomy of NGOs in terms of their finances, personnel, and decision making. Fisher (1998) emphasizes autonomy as the defining criterion for NGOs because it vitalizes an NGO’s functions and enables it to influence government, and thus to play a part in the advance of political pluralism. According to this definition, most Chinese organizations, those at the national level in particular, cannot be defined as legitimate NGOs (Ma 2002b). Thus the abolition of dual administration would seem an essential prerequisite to the inception of a genuine civil society.

However, considering the deeply embedded influence of the political and the cultural on various aspects of society, and the history of complicated relations between NGOs and the government, a number of changes to related policies and arrangements will be essential for a gradual and stable transition in the post-dual administration environment. In order to tackle the challenges this would bring, it is necessary to look at: What is the relationship between NGOs and the Chinese government? How is that relationship influenced by Chinese political culture and history? Do ties to the government benefit Chinese NGOs and if so, how? The complicated context of China would suggests that one-dimensional prescriptions are unlikely to be found wanting.

NGO–State Relationships

Scholars have established two rather conflicting frameworks for interpreting current state–society relationships in China: civil society and corporatism. The basic characteristics of ‘civil society’ are voluntary participation, self-regulation, autonomy, and separation from the state (White et al. 1996). Howell (1996) asserts that ‘civil society implicitly assumes an oppositional relation with the state, neglecting the cooperative dimensions… (further that) Discussion about civil society was and still is largely concerned with the desire to limit state power’ (p. 107). Unger and Chan (1995) reject civil society as an appropriate analytical framework because ‘it assumes too much independence in associational life in Deng’s China’ (p. 31). State corporatism, they argue, provides a more accurate description of circumstances in China. State corporatism originates from the ‘rapid, highly visible demise of nascent pluralism that occurs when the state is a late, dependent capitalist country’ which offers a general definition of corporatism (Schmitter 1979, pp. 93–94). In a state corporatist system, the state is likely to co-opt the leaders of organisations, to pre-empt the articulation of demands by establishing compliant organizations in key issue areas, to engage in ‘clientelistic and patrimonialist practices,’ and it is likely to use ‘physical repression and anticipatory intimidation’ (Schmitter 1979, p. 154).

Pearson (1994) refers to ‘socialist corporatism’ to describe a state corporatism in socialist China, where the state acts to pre-empt the emergence of autonomous groups and where the role of the Chinese Communist Party (CCP) remains crucial (Pearson 1994; Whiting 1991). White et al. (1996), on the other hand, dispute the state corporatist approach. They view the increasing diversity of social organizations, the decline of government control, and the effective expression of social interests as indicators that civil society provides a useful framework for thinking about China’s third sector (Ma 2002b).

Although state–NGO relations are indeed changing in China, the broad picture would suggest that NGO governance in China remains government dominated. The domination is shaped by Chinese history, tradition, and political culture. The adoption of corporatist policies on the part of the Chinese state has been legitimized by an intellectual tradition which accepts the notion of the state, rather than NGOs, as the sole locus and guarantor of the general interest. In traditional Chinese political thought, the Confucian concept of ‘Li’ pursues a universal order established by the government. In addition, the distinction between the public realm of gong and the private realm of si has never been clear. In Confucian society, the officials were called Fu Mu Guan (parent-like officials). On the basis of Confucian precepts, therefore, the state was perceived as the guarantor of the public interest, and as such, Chinese NGOs have not come to be seen as representing the interests of the public. They are assumed, instead, to be state subsidiaries, whose authority is derived from and complements that of the state (Fewsmith 1983). Thus, the government portrays their control toward NGOs as the responsibility of a strong government.

Further, China as a state that pursues strategies of socialist development has little incentive to allow NGOs to exist as independent entities. Social welfare services are typically provided by either local governments or state-owned enterprises, thus limiting the space in which social welfare NGOs could operate. Again, socialist development strategies emphasize the importance of state-led investment in rural development, thus reducing the scope for independent development NGOs in that key sector (Heurlin 2010). Similarly, the work units (‘danwei’) in cities and communes in rural areas operate as self-sufficient entities providing ‘cradle-to-grave welfare,’ again filling the space that NGOs often inhabit in capitalist states (Ma 2002a).

Indeed, today many NGOs are actively seeking closer relations with the state (Foster 2001; Chan 2005; Ma 2006). Under corporatist systems, NGOs are provided with strong incentives to seek embeddedness, and interdependence with the government may be the most conducive relationship for the achievement of positive socioeconomic impacts (Esman and Uphoff 1984). Certainly, obtaining independence is not the top priority for most NGOs in China today, where it is well established that ‘some NGOs deliberately invite government officials to join their boards of directors and turn themselves into semi-official organizations just to get access to official resources in terms of direct subsidies or political connections that may facilitate their development’ (Chan 2005, p. 26). Moreover, without an adequate legal foundation, autonomy may not always be a positive factor in the development of NGOs. The absence of sufficient government supervision and legal regulation has allowed corruption to flourish, especially for local NGOs.

NGO–state relations have been evolving since the 1990s in China when facing an array of social problems brought by urbanization and modernization, such as increasing unemployment, an aging society, insufficient social and health insurance, social dislocation, substantial levels of migration and unprecedented environmental degradation (Ma 2006). With the slogan of ‘Small Government, Big Society,’ and in the acknowledgment that the state could not provide sufficient social services to meet every need, the Chinese government endorsed and promoted a different approach, under the auspices of ‘socializing social welfare,’ by devolving some functions to NGOs.

With the abolition of dual registration in 2013, the Chinese government made clear its intention to transform government-dominated NGO governance to society-oriented NGO development. A key consideration for NGOs is to generate sufficient resources from government and public alike, while maintaining a balanced and positive relationship with both. This will require flexibility and innovation in a positive and proactive manner when meeting new challenges.

Beyond the Abolition of Dual Administration: Challenges and Solutions

Under the pressure of increasing social needs, the dual registration was abolished in 2013, if not completely. According to the Scheme for Institution Reform and Function Transformation of the State Council (guowuyuan zhineng jigou he zhineng zhuanbian fangan) announced during the ‘Two Conference’ (National People’s Congress and Chinese People’s Political Consultative Conference) in 2013, dual administration was abolished for trade associations and chambers of commerce, together with NGOs working for technology, public welfare, and community service. From this point, these four categories of NGOs were allowed to directly register with MOCA without being approved by professional supervision units or ‘Mother-in-law’ agencies (State Council 2013a). This was a major step toward genuine civil society, reflecting a loosening of government controls over society. This policy provided a large degree of autonomy for these four categories of NGOs as they were in addition no longer required to be supervised and managed by their ‘Mother-in-law’ agencies. Thus, they could operate independently and recruit personnel freely.

However, the abolition of dual administration has brought with it many new challenges. In the first instance, it has increased the difficulties for the MOCA in relation to NGO governance. Because of the insufficient capacity of the MOCA and local bureaus to oversee NGO operations, ‘Mother-in-law’ agencies are necessary to help the government to control NGOs politically and legally. While the abolition of dual registration encourages the government to explore new state–NGO relations, there are difficulties, in that China’s legal system is not well developed to regulate and discipline NGOs. As such, breaking off with previous supervisory institutions requires completing the legal system to ensure an environment in which NGOs may thrive. Specifically, there needs a careful consideration of the bar and regulations of NGO registration and regulations related to the taxation of donations. Meanwhile, with their loosening of ties with governmental supervisory institutions, NGOs have, of necessity, to shift their focus to the public and their constituencies to elicit resources; thus obtaining public trust becomes central to the survival and prosperity of NGOs. Last but not the least, the lack of supportive capacity among NGOs makes the situation more severe. Thus, strengthening NGO network organizations is also necessary. The following sections examine these key challenges and propose frameworks to address them.

Value-Based Partnership Between the Government and NGOs

Although the dual registration is partly abolished, NGOs still maintain close relations with the government. There are no truly autonomous non-governmental organizations in China on the basis of the idealized Western model, as all institutions must conform to the CCP’s ideological principles, and all NGOs require the government’s political approval as a precondition to registration. A form of ‘constructive interaction’ is proposed by Deng and Jing (1992) as a negotiation between NGOs and the state in China, wherein civil society is ‘a private sphere where members of society engage in economic and social activities following the rule of contract and voluntary principle as well as based on autonomous governance; it is also a non-governmental public sphere for participation in policy discussion and decision making’ (p. 5). It emphasizes a partnership of equals, rather than the subordinate position of NGOs. However, this partnership is underdeveloped in China. The Chinese government summarizes its official NGO policy as ‘nourishment, development, supervision, and regulation’ (peiyu, fazhan, jiandu, guanli), but current policy is heavy on regulation and supervision while rather light on nourishment and support.

NGO–government partnerships are difficult to manage even in Western society, where NGOs are socially and historically well established. It is not possible for NGOs to be totally unaffected by the government in partnership, particularly when in receipt of government funding. There is clearly a power imbalance when the sector collaborates with either the government or the business sector, but that uneven relationship may actually be beneficial for NGOs. According to Schiller and Almog-Bar (2013), in some cases, NGOs view ‘weak positioning’ in these relationships as an important strategy enabling them to collaborate with a wide array of different partners, thus to access a large pool of potential business donors and collaborators. In this sense, the focus is no longer about how much independence or autonomy that a NGO might have, if there is any in the collaboration.

It can be argued, however, that the key factor to a successful partnership is that in collaboration, parties operate to achieve the same goals and they work to the same value system. Salient value similarity (SVS) is important in the cooperation between organizations, because it is a key component of trust, and also a significant predictor of it (Poortinga and Pidgeon 2003). People or institutions perceiving that they share similar values tend to trust each other more than those that do not (Siegrist et al. 2000; Cvetkovich and Winter 2003; Walls et al. 2004). Earle and Cvetkovich (1995) assert that where there is low familiarity, value similarity takes on a particular importance. Therefore, in government–NGO relations, where similar values exist, control is replaced by trust, and the government places more confidence and faith in NGOs, leading to increased levels of financial or policy support and looser control over their program.

Value-based collaboration is particularly important for NGOs as it helps them to maintain their charitable values and reach their charitable goals (Knutsen 2013). Charitable organizations are perceived to be ‘value-driven organizations’ that prioritize principled outcomes, which places them in a more esteemed position than for-profit organizations, whose emphasis is on enhancing shareholder value or profit, ‘this prioritization gives NGOs a competitive advantage over for-profit and public sector organizations’ (Chen et al. 2013, p. 861). There are cases in which NGOs have been criticized for compromising their values in order to draw down government funding (Gaskin 1999). There are clear dangers in this to NGOs, both in relation to retaining their reputation for integrity and independence—and therefore maintaining the support of their constituency and the wider public, but also in relation to the quality of their program.

One means to formalizing the relationships between NGOs and the government is to create a framework for partnership, as epitomized in the UK’s voluntary sector Compact process (Alcock 2010). Any such framework should clarify the following areas of collaboration between government and NGOs: service purchase, policy consultation, capacity building, funding support, and project evaluation. It should be established and implemented in the spirit of respect for independence and autonomy. In China, progress has been made in this direction. The General Office of the State Council enacted the Guidance of Government Purchase of Social Services in the October of 2013 (State Council 2013b). This directive illustrates the principles of social service purchase by the government concerning: purchase subject, service provider, purchase content, purchase mechanism, financial management, and performance management. However, while these are generous principles on article, what is lacking is guidance on the details of implementation. Therefore, establishing a framework is an important first step, improving the legal framework by which partnership arrangements are implemented is also essential for meaningful progress.

Improving the Legal Framework

The regulation of NGO activities in China lags far behind the development of the organizations themselves. Current NGO policy is largely based on executive documents and the speeches of high officials. This provides ample room for the government to interpret the policy according to the CCP’s current agenda or the political situation, and at times official actions are based on incomplete legal authority (Ma 2006). Moreover, official policy in relation to NGOs varies from time to time, from place to place, and from one type of organization to another. This places NGOs in a vulnerable position.

Current operative official documents on NGO governance are: the ‘PRC Law of Trade Unions’ (1992), the ‘Temporary Regulations of Non-governmental and Non-commercial enterprises’ (1998), the ‘Temporary Regulations of Foreign Chambers of Commerce’ (1998), the ‘Regulations of Registrations of Social Organizations’ (1998), the ‘Welfare Donation Law of the People’s Republic of China’ (1999), ‘Regulations on the Management of Foundations’ (2004), and ‘Temporary Regulations on Qualifications of Tax Exempt for National Social Organizations’ Charitable Donations’ (2011). Only two of these have legal force—the ‘PRC Law of Trade Unions’ and the ‘Welfare Donation Law of the People’s Republic of China,’ however, these are too general for their consistent or effective implementation. Therefore, an increasing number of Chinese scholars have begun to call for further legislation to regulate NGO activities (Wang and Jia 2002). Such legislation is necessary for establishing a legal framework within which NGOs can operate with confidence and with a level of certainty. It should formalize their rights and responsibilities, should promote good governance and would confirm their core mission to work for the good of society. There are positive signs, since 2013, the Chinese government has been preparing the Charity Law, which will be the first inclusive law regulating all NGOs. The outcome is eagerly awaited by the sector.

Some legal issues regarding the registration of NGOs and taxation of donations particularly need improvement since the abolition of dual administration. In contrast to the abstract regulations embodied in most of the current statutory framework relating to NGOs, the government is very strict in governing registration. NGOs have to straddle a high bar in order to obtain official approval. In line with the Regulations of Registrations of Social Organizations (1998), SOs must be corporate entities, and they must have over 50 members (or 30 institutional members) plus a minimum of 100,000 RMB in operating funds as a national organization, or 30,000 RMB as a local organization (State Council 1998b). For foundations, the required funding endowment is 8,000,000 RMB for national foundations and 2,000,000 RMB for private foundations (State Council 2004). These conditions effectively preclude many small and grassroots NGOs from becoming legal entities.

A large number of small or grassroots NGOs, which could not previously find a professional supervision unit under the dual registration system, are, with the abolition of the system, now legally eligible to register with the MOCA. However, with such a high bar of requirements in place, many of them may not be able to register, thus they will remain trapped in illegal status. The stated intentions of the abolition of the dual registration system are the promotion of greater NGO autonomy and the creation of legal status, but for this to happen, it is essential that registration requirements should be lowered. As a principle, based on the Western model, if NGOs are formal organizations working for charitable purposes within the legal framework that should be sufficient for them to be endowed as legal NGOs.

Again, current regulations do not adequately address issues concerning the taxation of donations. In 1999, The Welfare Donation Law of the People’s Republic of China made a general commitment to tax relief for charitable donations. However, this law does not stipulate the level of relief to be granted, nor does it provide clear guidance on which organizations are eligible to receive charitable donations (Ma 2006). Moreover, the tax relief on individual donations stipulated by this law has again, proved too imprecise in its specificity to implement. In 2011, the Temporary Regulations of Tax Exemption for National Social Organizations’ Charitable Donations was established. While this does make clear which social organizations are eligible for tax exemption, it still fails to stipulate the level of relief available (Ministry of Civil Affairs 2011).

With the abolition of the dual administration system, the direct link to professional supervision agencies in the government has been broken, thus NGOs have had to switch their focus to attract funding from the public and the business sector. Tax exemption for charitable donations is an important incentive to encourage the public and cooperates to donate to NGOs—it is therefore essential that in response to these changing circumstances, the Chinese government, with some urgency, puts in place a well-developed legal system on tax relief.

It is also worthy of note that some NGOs, particularly those of small scale, attract funding from overseas. Thirty-five years of reforms, openness, and economic growth have brought many funding and cooperation opportunities to NGOs in China. However, under authoritarian governance, NGOs that receive foreign funding are sometimes perceived as in competition with the government (Borgh and Terwindt 2012). The government is also suspicious that some overseas organizations may use their sponsorship of NGOs as a means to manipulate in China’s political affairs. Therefore, there is a very strict audit and supervision process for those NGOs that accept foreign funding. For instance, NGOs with religious purposes are forbidden to ask for funding from religious organizations overseas; any acceptance of funds from foreign religious organizations, and the usage thereof, must be sanctioned by the government at national or local level, according to the amount of the funding (State Administration of Religious Affairs of P.R.C. 1993). This decreases political risks, but in so doing, it hinders NGOs in China from obtaining the benefits of globalization. It seems clear, therefore, that over the longer term, significant improvements in the legal system will be necessary for the third sector to flourish and grow.

Securing Public Trust: Challenges and Opportunities

With governmental funding support shrinking since the late 1980s, an increasing number of NGOs in China are dependent on membership fees and service charges. Public donations are also playing an increasingly significant role in the survival and success of NGOs. However, obtaining public donations is highly dependent on NGOs being able to secure public trust.

Public trust supports the sustainable development of charities. Higher degrees of trust in a charity are associated with a greater willingness to become a donor and donate greater sums and they increase the possibility that a relationship will be entered into. Trust contributes to long-term partnerships and to the availability of volunteers. It is particularly important in times of economic recession or reductions in government funding, and in the face of scandals relating to the sector. Furthermore, in relationships where intangible services are provided, trust is particularly important, because objective criteria are not always available to assess the performance of the relationship (Sargeant and Lee 2004a, b). Again, a high level of public trust is helpful for charities to maintain a good social image, which is greatly beneficial both in their fundraising and in their day-to-day activities (Bendapudi et al. 1996).

In China, public trust in NGOs has been under great pressure in recent years in the wake of scandals involving very familiar, high-profile charities. A number of charities, for instance, the China Youth Development Foundation and Lijiang Mothers Association, have been sued for expending donations in a manner contrary to the intentions of donors and for falsifying financial records (Wang 2011), and this has inevitably impacted negatively on public trust in the organizations concerned. The Red Cross of China has been at the center of a series of scandals, including the 10,000 RMB tent incident during the 2008 Sichuan earthquake relief effort, and the 2011 Shanghai Luwan District Red Cross 10,000 RMB banquet (Liu 2011). When the scandal of Guo Meimei broke in June 2011, the Red Cross faced the biggest challenge in its history. Guo Meimei, an internet celebrity, displayed pictures online suggesting a lavish lifestyle and implied that it was funded through her fabricated position as ‘commercial general manager’ of the Chinese Red Cross. A public outcry followed, around the possibility that the public donations to the charity were being squandered (Liu and Yang 2012; Bannister 2013).Footnote 1 The reputation of the organization was damaged, resulting in a sharp decline in both donations and volunteers. The Guo Meimei affair appears to have had wider impact still, eroding public trust in the whole of the voluntary sector. According to statistics published by the Chinese government, the amount of total donations to the sector decreased dramatically from 6.26 billion RMB in May 2011 to 0.84 billion RMB in August 2011 (Ding 2011).Footnote 2

In an empirical study conducted by Yang (2012) in China, the level of public trust in charities was measured with a scale (15 items) developed in the study on the basis of in-depth interviews and questionnaire surveys. Items on the scale with scores ranging from 0 to 10 reflected the level of trustworthiness of charities. In the process of scale development, the research identified five components of public trust in charities: (1) the capacity of the charity staff; (2) the appropriate usage of money; (3) the image and reputation of charities; (4) the efficiency of management; and (5) transparency. The findings of the research revealed low levels of public trust in charities in China, with each component achieving a score of below six. The Components of ‘The image and reputation of charities’ and ‘Transparency’ received the lowest average scores (3.96 and 4.13, respectively), which serves to underline the necessity for NGOs to prioritize improvement in these two areas.

The abolition of dual registration brings with it great challenges but also new opportunities to generate public trust. The nature of the political culture in China encourages public trust in those NGOs with governmental affiliation and endorsement, and that is particularly the case for national NGOs. However, as is the case in the West, the relationship is called into question where NGOs are perceived to become subordinates of the government in order to obtain financial support. Many Chinese people would prefer charities to be less dependent on the government (Kang and Feng 2006; Yang 2012). The abolition of dual registration provides NGOs with the opportunity to evidence their ability to be effective and successfully independent of the ‘mother-in-law.’ Thus, there is the potential for a virtuous circle in which this visibly greater independence and autonomy generates greater levels of public faith, confidence and trust, while those higher levels of trust then provide NGOs with an increase in public donations and support, and thereby the resources and the internal confidence to make further strides toward independence.

A change is certainly taking place, whereby NGO’s are moving toward a Western model of philanthropy, in which NGOs no longer seek to secure the main part of their resources from government grants, but instead from their constituents, from public donations and from the business sector—these to be supplemented by contractual relationships with the government for specific areas of service provision. As such, it is clear that NGOs need to devote considerable attention to public perceptions of the efficacy and value of their work, to public needs, and to their level and means of communication with the public. In order to sustain themselves in the marketplace, NGOs will be wise to adopt some of the strategies employed by the business sector, such as customer (donor) management, public opinion surveys, marketing, and crisis management. Moreover, in the same way that chambers of commerce support and promote the business sector, there is clearly a role for NGO network organisations to encourage and support the sustainability of the sector.

NGO Supporting Network Organizations

With the abolition of the dual registration system, systems of mutual support will become increasingly crucial for the strength and sustainability of the NGO sector. These may be loose networks, between a small number of sector-specialist organisations, or they may take the form of larger umbrella bodies that provide information and consultative support and facilitate resource sharing and capacity building for all Chinese NGOs. There are precedents, this kind of umbrella body has existed in China since the 1990s, for instance, the China Association for NGO Cooperation (CANGO), the China NPO Network, the China Charity Federation, and the Federation of Social Organizations at the local level. These organizations have established a platform for cooperation among NGOs by organizing forums and training courses, and building networks. They also act as intermediary agencies that partner both international and Chinese NGOs for technical support and fundraising.

However, the existing network organizations are beset by several key problems. Some, such as the China Charity Federation and the Federation of Social Organizations at the local level, are directly linked with the authorities and continue to depend on government funding support. Their core function continues to be one of ensuring that member organizations comply with state agendas, and as such, rather than providing support, they act as supervisory agents to control the behavior of NGOs. In the current unhelpful policy environment, other NGO network organizations, such as the China NPO Network, are all too often hindered by insufficient finance. This limits their capacity to adequately service their constituent NGOs. In addition, existing NGO network organizations tend to remain smallish in scale, thus excluding many NGOs, and limiting their influence on sector development.

It is clear that network organizations in China bear a scant resemblance to their well-funded, well-developed and established Western counterparts, such as The National Council of Voluntary Organizations (NCVO) and Charities Aid Foundation (CAF) in the UK, which offer positive examples of what, in time, can be achieved. The NCVO, established in 1919, is the UK’s largest voluntary sector membership organization. It currently has more than 10,000 members, from the largest charities to the smallest community organizations. CAF was initially the Charities Department of the NCVO and became an independent organization in 1974.

These network organizations in the UK meet specific needs of the voluntary and community sectors by: (1) providing expert support and advice, saving them time and resources; (2) keeping them up to date with the news and developments that affect them; (3) carrying out research into, and analysis of, the sectors; (4) campaigning on issues affecting the sectors; (5) providing discounts for member organizations through Value for Money program when they purchase office stationary or training services; (6) providing help with fund raising, insurance, consultancy, loans and grants through the charity bank, namely CAF Bank; (7) channeling funding from the business sector to charities by providing a Company Advisory Service scheme that informs companies about charitable activities they can engage in, in conjunction with their corporate social responsibility (CSR) and corporate community investment (CCI) projects (National Council of Voluntary Organisations 2014; Charity Aid Foundation 2014).

The most effective of Western NGO network organizations are of a larger scale and represent a larger number of membership organizations. As a consequence, they hold a strong influence over government, the business and voluntary sectors. Moreover, they provide a comprehensive array of services to their members and they are held in high regard by the general public. In contrast, NGO networks in China wield precious little policy influence, the services they provide their member organizations are limited, and NGO and public perceptions of the sector are somewhat ambiguous. It is clear that existing Chinese NGO networks currently lag well behind the most effective of their UK counterparts on every level. It is also clear that there is much that they should attempt to emulate.

There are various ways in which NGO networks in China can improve their operations and their services. The most effective way forward will be to expand their scale, so that they have a stronger collective voice in their relationships with government and other forces in society. A precursor to that will be progress in two key areas. The first is a learning process—there is clearly much to learn from NGO networks in the West, and there is also a clear need to initiate research into the specific needs of indigenous NGOs and their constituencies, alongside detailed analysis of the potential opportunities and challenges for the sector. The second is around service provision. NGO networks must strengthen their capacity to provide high quality services, particularly with regard to financial support, such as insurance and loans. That will require a substantial resource base and it will also require that individual NGOs buy in to the notion that networks provide significant added value. The understanding that mutual cooperation and self-support are crucial steps on the path toward genuine independence from the state may well be a key driver in this process.

Conclusion

Taking account of the challenges brought on by the abolition of dual administration, this study underlines the necessity of building partnerships between NGOs and the government, of providing a NGO-friendly legal framework, of generating public trust and of strengthening NGO networks. Although the dual registration and administration system have been abolished for some categories of NGO in China, maintaining close relationships with the government remains a key survival strategy for them. It is clear that the way forward for future relationships is for the government to shift its role from that of parent to that of a client or partner of NGOs through building value-based partnerships. Further, with the increasing significance of public donations as funding sources, it is clear that the generation of public trust will be indispensible for the sustainable development of NGOs.

However, establishing value-based partnerships and the building of public trust will take time. The NGO sector is operating on shifting sands. China is in a transitional stage, experiencing probably the largest urbanization in human history. Mass migration brings together people with different value systems and different traditions. In particular, the rural/urban interface remains fluid and is still being negotiated. Compromises have to be made, consensus has yet to be reached and a cohesive understanding of national values has yet to emerge. Both the government and NGOs are having to adapt themselves to this swiftly changing society, and establishing value-based partnerships in these circumstances can be fraught with difficulties.

There is also the added factor that the emerging urban middle class, produced by China’s rapid economic growth, is generally more critical and makes higher demands of NGOs than previous generations. NGOs have to meet those expectations if trust is to be generated and maintained. There is, therefore, a pressing need for future research on how best to establish value-based partnerships between NGOs and the government and on how best to generate public trust for the sector in China’s dynamic and fluid society. That is one effective role that NGO networks in China can play. At the same time, it is essential that they assert themselves in a process by which a new framework of cooperation is negotiated between government and the sector and by which a new legal framework for the sector and its relationships is established.