by Helena Malchione:
When Diane B. Dixon, senior vice president of communications and corporate affairs at information and brand management firm Avery Dennison, set out to create an Avery Dennison-sponsored scholarship program in China several years ago, she faced a major problem. She had no way to transfer Avery Dennison’s funding into a non-governmental organization (NGO) to implement the program. “The concept of NGOs in China is a misnomer,” explained Dixon. “They are typically state-owned organizations. The normal funding mechanisms do not exist.”
Fortunately, Dixon connected with the Institute of International Education (IIE), a nonprofit organization that, among other programs, provides the on-the-ground support for the Fulbright scholarship. With a financial infrastructure already established in China and knowledge of local agencies and universities, IIE both vetted the schools with which Dixon wanted to work and served as a financial intermediary, transferring funds from Avery Dennison to the universities implementing the project. “If it weren’t for IIE,” Dixon admitted, “we wouldn’t have been able to get this project off the ground.”
Practicing corporate social responsibility (CSR) is, if nothing else, good public relations. Large philanthropic donations, charity work, and environmental stewardship are common practices among multi-national corporations. However, Dixon’s experiences typify the challenges that CSR-conscious corporations face in China. While the country has leapfrogged economically, its judicial system lags behind, turning acts of corporate kindness into regulatory nightmares. China’s underdeveloped and over-regulated legal infrastructure also hampers the NGOs with which corporations seek to partner. Beijing requires them to register through the Ministry of Civil Affairs with government organizations as sponsors. Authorities sometimes pressure activists to stop working for particularly provocative NGOs.
“It’s most important for a foreigner to understand that the legal frameworks don’t exist here,” explained Holly Chang, CEO of Golden Bridges, a Beijing NGO that creates partnership opportunities between Western corporations and Chinese non-profits. A lack of legal infrastructure makes it “much more challenging to match the agenda of the corporation, the agenda of the government, and the agenda of the non-profit or the community organizations.”
The most promising option for such matchmaking is for corporations to work through an intermediary. In China, the business of social-commercial mediation is booming. “For a meaningful interaction or engagement,” explained Chang, “I think you really need somebody who has been studying the non-profits and the corporations for a while to come up with a solution, an activity that would match both.” Organizations such as Golden Bridges and IIE connect NGOs and corporations, working to empower nonprofits while also understanding corporate agendas.
Increasing numbers of corporations have internalized their CSR consulting. For example, Clare Pearson, law firm DLA Piper’s CSR manager for Asia, sets up legal contracts between corporations and NGOs, alleviating some of the legislative confusion emblematic of Chinese business. In her work at DLA Piper, she has seen the unique political implications for CSR work in China. “Sino-U.S. relations aren’t perfect,” explained Pearson, “but this is an area where there really is common ground.” Former Microsoft CEO Bill Gates, for example, committed his company early to socially responsible business in China. Microsoft works with Chinese technology corporations to support development of sustainable local IT infrastructures. Recognizing his contributions to Chinese society, “[Chinese president] Hu Jintao met Bill Gates before he met George W. Bush,” Pearson pointed out. “CSR and government relations will become less and less distinct. Bill Gates won’t be the exception — he’ll be the rule.”
In a socialist country that leaves many social issues unresolved, thoughtful matchmaking on the part of intermediaries can maximize the impact of corporate largesse. With the help of the Institute of International Education, Avery Dennison donated $60,000 to the China Youth development Foundation, whose program Project Hope will use the money to build an elementary school in the impoverished area near Avery Dennison’s facilities in Jiangsu Province. This CSR initiative meets everyone’s needs: Project Hope gets funding, China gets a new school, and Avery Dennison builds its reputation as a socially responsible company.
Such mutually beneficial partnerships align the incentives of NGOs and foreign corporations and will hopefully help to expand the capacities of NGOs in a country where their vital social work is often hindered by the tangled legal infrastructure in which they operate.
Helena Malchione ’12 is an East Asian Studies and Economics double major in Jonathan Edwards College. Contact her at helena.malchione@yale.edu.