In August, Nora and Zoey (from the SVG team) attended a seminar sponsored by the nonprofit Spirit of Enterprise (SOE) on the topic of “How Social Enterprises Can Have Better Partnerships with the Government and Corporations.” (Nora was also part of a panel during the seminar.) SOE is an international organization that promotes entrepreneurship in NGOs and social enterprises, as well as, communication among entrepreneurs, NGOs, and the general public. In addition to social enterprises and NGOs, SOE invited people from a variety of disciplines to the seminar including university professors, government officials, and foundation representatives.
NGOs and the Government
Most attendees at the seminar were NGOs. For these organizations, one-time funding accounts for a significant portion of their financial support. The concerns they voiced at the forum focused on how to find and maintain long-term and stable funding channels. Interestingly, it was government representatives who had an answer for them.
Government representatives shared ways the NGOs could utilize governmental resources. They explained that the government is willing to support NGO development and discussed how the Shanghai municipal government already has a track record of collaborating with NGOs to outsource services. For example, last year the Shanghai government opened up 23 projects in which they outsourced services from local NGOs. Three hundred NGOs participated in the bidding process and approximately RMB 40 million ($US 6 million) worth of services were contracted out.
As NGOs are close to the communities where they work, they have a lot of services to offer the government. Mr. He Sicong, chief editor of Zhi Ai Magazine, a publication that covers news in the nonprofit sector, highlighted two important points on this issue. One is that NGOs have to be responsible to research and understand the kinds of services that the government is interested in and to be aware of government policies. Two, they need to spend time building relationships--first with the government so that officials understand the kinds of services they can provide and second with the media who can increase their social influence.
Some NGOs hold the opinion that “grassroots” means isolation from the government and the media. So while they do lots of great work, they also miss out on some key resources that can help them achieve their missions more effectively. Even though the government is in a much stronger position than NGOs, they still have much to offer each other. The trick is how to balance this delicate relationship. NGOs cannot overlook the government as an important stakeholder in the nonprofit sector. All of the participants agreed that communication between these two entities is crucial to effectively implementing social change.
Social Enterprises, Profits, and Collaboration
During the seminar, social enterprise representatives expressed concern about how to balance their dual objectives of making a profit and holding on to their social impact objectives.
Compared with other ordinary commercial companies, social enterprises build social and/or environmental responsibilities into their business model. In China, people commonly think that “doing good” precludes profitability. The “enterprise” part often gets ignored, even to the point of confusing social enterprises with NGOs. Consequently, it is assumed that social enterprises should offer their services free of charge. As a social enterprise ourselves, SVG believes that there is no conflict between being a profitable enterprise and also having a social mission. We also realize that conveying this concept to the public will take time as the sector itself matures in China.
During the seminar, we were pleased to see that several investment firms have begun to show interest in social enterprises in China. Mr. Song Xueguang, CEO of Hechuan Capital said he was cooperating with Shanghai University of Finance & Economics to conduct initial research and feasibility studies in this market. They eventually plan to build a model to evaluate social enterprises.
We were interested in this initiative primarily because venture capitalists seek quick, high returns that most social enterprises would be hard pressed to deliver. Mr. Song said he was hopeful that some balance between financial and social returns could be struck, but it is still too early in the discussion to determine what form that might take.
Overall, the seminar provided us with an up-to-date view of the relationships between NGOs, Social Enterprises, and Commercial and Government powers. We anticipate more positive developments as these entities embrace the collaboration.
-- Nora & Zoey