The venture philanthropy model has now reached a phase where it has proven itself to the government, so local officials are now more willing to back it up, according to Tao Ze, co-founder of social sector transparency database China Foundation Center.
In 2012, dozens of local governments committed manpower and capital to set up venture philanthropy funds, according to several venture philanthropy sources in China.
Most recently, the governments of Jiangsu Province and the City of Tianjin have set up private funds to run philanthropy projects like private equity funds would run businesses. According to local media reports, the government funds are particularly interested in projects that help the elderly, the disabled or abandoned children.
The Jiangsu government has already committed RMB 5 million (€623,000; $803,000) to its fund, and the Tianjin fund has collected RMB 10 million from the city’s government and domestic corporations, according to local media.
However, government officials want these philanthropy projects presented like business proposals. “If they want to help the sick, they must list out the kind of diseases, the number of sick people, and the per capita subsidy of money required,” the deputy director of social organisations in Jiangsu Province’s Ministry of Civil Affairs branch told local media.
“We hope that we can help and encourage public welfare structures to be self-sustaining, and not stay in the traditional ‘palms down’ mode of charity,” co-founder of the Tianjin fund Hongyan Zhang was quoted as saying in local media.
The concept of venture philanthropy has struggled to take root in China because it often takes venture philanthropy projects more than five years to start turning a profit, according to Ding Li, vice president of NGO supporting organisation NPI.
With private equity investment and fundraising dropping off, many investors are choosing to focus on the short-term projects instead.
“Chinese donors like to separate charity and business,” explains Tao Ze, co-founder of social sector transparency database China Foundation Center.
However, he believes that is beginning to change as social leaders – such as Yongguang Xu, the vice-director general and the secretary-general of the Narada Foundation, one of China’s largest charity organisations – begin to promote venture philanthropy.