How can charities cope with slump?

While corporate social responsibility is generally becoming more accepted in Chinese business circles, the impact of the global financial crisis is undoubtedly being felt in the country's charity sector.

China's charity industry developed greatly and public donations soared to a record high last year, mainly as a result of the Sichuan earthquake. But since October, the impact of the economic meltdown has already posed challenges to the industry.

As a major driving force in philanthropic activities, non-profit and non-governmental organizations (NGOs) were the first to be affected.

For instance, the Philanthropic Initiative, a Boston-based charitable agency, announced that around 75 percent of its clients planned to keep donations at their current level. Another 20 percent, including some major donors, planned to cut their contribution after losing money in the economic meltdown.

Some local NGOs also reported that donations slumped by as much as 30 to 40 percent.

"There is a wait-and-see attitude before people make any decisions to increase or decrease their charitable giving," said a senior official from China Youth Development Foundation, one of the country's major philanthropic organizations and the initiator of Project Hope.

As a result, a number of NGOs have already started experiencing budget cuts, while some projects have been suspended.

Uncertainty about donations, coupled with a weak organizational and financial structure, makes it difficult for NGO leaders to plan ahead.

However, there remains a desire across the industry to tackle social problems.

Despite the crisis, many people are still actively engaged in raising awareness of corporate social responsibility issues, said Ma Jianrong, director of the CSR Department of Lenovo Group.

In fact, some experts said that the current global economic crisis actually offers opportunities for China's NGOs.

The current global financial crisis is always compared with the economic crisis of 1929, Gu Yuan, an industry insider, said recently.

"We should realize that the crisis in 1929 actually promoted the faster development of charities in most developed countries," Gu added.

At the moment, in this difficult situation, "they (local charitable organizations) can now strategically rethink their programs' management structures regarding vision and mission, effective partnerships, improving and expanding social involvement, and strategies for raising more social elements to support the whole industry," said Sean Gilbert, a senior official from Global Reporting Initiative.

Running a charity is the same as running a company. Leaders should understand that long-term success depends on sustainable practices, according to Gilbert.

For charitable organizations, given the current difficulties, planning for long-term development is more important than scheduling quarter-to-quarter, because most of their services are related to needy groups such as disabled, young people, and the elderly. In fact, some NGOs have a responsibility to help the authorities tackle growing social problems resulting from the economic difficulties.

According to a study conducted by AT Kearney, in 16 of the 18 industries examined, companies recognized as having a long-term focus performed outstandingly in their industries.

"The spirit of seeking sustainable development will better drive China's NGOs to win in the longer term," Gilbert said.

He added that the sustainable strategy should involve sustainable means of collecting money from a larger cross-section of society, enhancing economic capabilities, and spending money to ensure greater social inclusion.

(China Daily 03/02/2009 page10)