THE EVE OF CIVIL SOCIETY'S ARRIVAL: NPI PROMOTES

UNCLAS SECTION 01 OF 02 SHANGHAI 000159

SIPDIS

SENSITIVE
SIPDIS

STATE ALSO FOR EAP/CM, DRL

E.O. 12958: N/A
TAGS: PGOV SOCI PHUM CH
SUBJECT: THE EVE OF CIVIL SOCIETY'S ARRIVAL: NPI PROMOTES
ESTABLISHMENT OF NGOS IN SHANGHAI


(U) This cable is sensitive but unclassified and for official
use only. Not for distribution outside of USG channels.


1. (SBU) Summary. According to Director of the Shanghai
Pudong-based Non-Profit Incubator (NPI) Simon Lu, the Pudong
District Government began to "outsource" some social services to
local non-government organizations (NGOs) as a part of its
comprehensive coordination pilot reform program approved by the
Chinese State Council in late 2005. Local government officials,
including municipal level ones, have realized NGO can be a good
supplement to their work and would like more NGOs to provide
social services in Shanghai. However, NGOs are unable to
compete with government-operated NGOs (GONGOs) in getting
charitable resources. Though China in Lu's view is on the "eve
of the arrival of civil society," Chinese NGOs should develop a
"strategic development plan" - not only work closely with
open-minded government officials, but also create alliances with
local private enterprises to ensure they can conduct work in a
stable fashion. End summary.

History and Work of NPI
--------------

2. (SBU) On April 15, Political Assistant visited the Non-Profit
Incubator (NPI) headquartered in Shanghai's Pudong District and
discussed the NPI's development and programs with NPI Director
Simon Lu. In late 2005, the Chinese State Council approved the
Pudong District as a test bed for many types of government and
administrative reforms. The NPI was officially registered at
Pudong District Civil Affairs Bureau in early 2006 and set up
its office in April 2007. Major donors to NPI include the Ford
Foundation, the World Bank, Hong Kong Oxfam and the Chinese real
estate company-affiliated Narada Foundation. At present, NPI
has 49 full-time staff members, including 37 people working at
Pudong's Sanlin community, site of a huge new community social
services center. In addition, NPI hires part-time consultants
from local offices of enterprises such as McKinsey and Company
and Ogilvy and Mather and works with East China University of
Science and Technology and Fudan University to encourage student
volunteers to participate in NPI activities.


3. (SBU) According to Lu, NPI provides offices and facilities,
registration assistance and small grants for newly established
small and medium size non-government organizations (NGOs). More
importantly, NPI helps these NGOs with their capacity building
so that these organizations can carry out their programs more
efficiently and communicate with local authorities more
effectively. NPI's training program covers a wide range of
topics including strategic planning, fundraising, leadership
development and financial supervision. Up to now, the NPI has
helped establish six NGOs in Shanghai and plans to complete
registration and training for another eight NGOs in the upcoming
year. In this regard, NPI welcomes more opportunities for
exchange programs and technical training with overseas NGOs,
which would be more helpful than financial contributions,
according to Lu.

NPI's Programs and Relationship with Local Government
-------------- --------------

4. (SBU) According to Lu, in follow up to the State
Council-approved comprehensive coordination pilot reform program
for Pudong, the Pudong District Government launched a new policy
to support development of social organizations in 2006. In an
effort to build a service-oriented government, the policy not
only provides tax benefits for these organizations, but also
encourages local governments to seek opinions and purchase
services from NGOs. In 2007, NPI produced two research reports
for the Pudong District Government. One report sets up a
standardized procedure for the government to purchase NGO's
services. The other report provides the Pudong District Finance
Bureau with a framework with which to evaluate financial
investments and a work performance evaluation system, both to
support provision of services to the elderly in Pudong. Lu added
the Shanghai Municipal Government is trying to "outsource"
supply of some social services to local NGOs because government
employees sometimes lack motivation and relevant experience. In
October 2007, the Pudong District Government sent bidding
invitations to local NGOs on a community management project in
Sanlin, where a 12,000 square meter World Expo Citizen Center
was completed in 2006. NPI won the tender and will begin to
work there soon.


5. (SBU) Lu asserted that NPI maintains good relations with the
local government. On March 5, an official delegation including
Shanghai Vice Mayor Hu Yanzhao, who is in charge of the city's

SHANGHAI 00000159 002 OF 002


civil affairs, visited NPI. During a discussion with NPI staff
members, the officials stated that the Pudong District
Government will promote NGO development from three aspects,
namely, increasing government purchase of NGO services,
encouraging NGOs to develop the capacity to provide a broader
range of social services, and developing a recruitment system
for NGO professionals.

China's Future Charities Law
--------------

6. (SBU) When asked what China's future Charities Law should
address, Lu asserted the Law should emphasize equal competition
for charity resources among NGOs and government-operated NGOs
(GONGOs). Lu said Shanghai has over 3,000 NGOs but only ten
organizations are independent from the government - that is, in
his view, nearly three thousand of the NGOs are in fact GONGOs.
The GONGOs do not have the right to speak views different from
established policies and are unable to bargain with the
government. Though the GONGOs are more reliable and often have
influential executives, as a whole their insufficient attention
to supervisory issues, especially in the financial area, has
resulted in many problems. In addition, most of China's policy
makers do not understand the ability of NGOs to play a positive
role in society. Therefore, Lu suggested, China should not rush
to pass an inadequate or immature Charities Law. Regarding the
future plan for NGO development in China, Lu said that China is
on the "eve of the arrival of civil society." Chinese NGOs
should have "strategic development plans." NGOs should
establish close relationships with open-minded government
officials, on the one hand; on the other hand, NGOs should
create alliances with local private enterprises to ensure their
ability to conduct work and promote their views of social
service is stable and safe from top-down government changes of
policies or acceptable points of views.
JARRETT