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Home > Brief News > 2015

2015

Opportunities and Challenges

Cooperation between Social Organizations and Enterprises-1
 
HUANG Haoming
Vice-Chairman and Executive Director
 
 
Abstract
This article emphasizes on analyzing the opportunities and challenges when social organizations and corporations establishing partnership, starting from the bases of enterprises seeking for cooperation with social organizations to a win-win situation which forms the new stage of cooperation between corporations and social organizations; whereas the role of social organizations changing from supervisor to service provider then to value sharer, which means the positive progress of social organizations in establishing partnership with business. Through analyzing and comparing different objectives of enterprises and social organizations in products and services, this article points out seven basic principles for cooperation, which provides insights for research on different patterns of cooperation, and also further discusses on in-depth cooperation between future partnership of the second sector and the third sector.
Key Words
Social Organization, Corporation, Common Value, Cooperation Mechanism
 
According to Social Service Development Statistics Post 2014 issued by the Ministry of Civil Affairs on June 10th 2015, by end of 2014, there are 606, 000 social organizations in total, increased by 10.8%; absorb 6,823,000 persons for employment in all kinds, increased by 7.2%; the formulation of fix assets up to 15.606 billion Yuan; the added value of social organizations is 63.86 billion Yuan, increased by 11.8%, taking 0.21% of the added value from the third industry; receiving 52.49 billion of social donations in all kinds; there are 4,117 foundations across the country, increased y16% with 568 foundations more than the year before, including: 1470 public foundations, 2610 private foundations, 9 foreign foundations, and 28 foreign foundation representative offices. There are 227 foundations (including foreign foundations) are registered with the Ministry of Civil Affairs. The total donation received by both public foundation and private foundations amounts 37.43 billion Yuan.
 
 
Based on China Charity Development Report, a research carried out by Ma Xin, Cheng Gang and Wang Jun, the total donation from foundations registered at the Ministry of Civil Affairs and provincial administrations of civil affairs (Guangdong, Gansu, Hainan, Beijing and Tianjin are not included) amounts 24.58 billion Yuan, 27.8% is raised from the public (6.838 billion Yuan) while the rest is not from public donation. The donation from individuals 11.3%, means 2.768 billion Yuan, while the donation from legal representatives contains 88.8%, which is 21.829 billion Yuan. This shows that the majority of funds raised by foundations is from enterprises and other organizations, only a little from public donations. (2015-69 Yang Tuan) At the same time and by end of 2014, the total number of private foundations is 2724, 64.69% of all foundations in China. Among all these foundations, 546 foundations are corporate foundations, 20.04% of all private foundations. (2015-65 Yang Tuan) 
 
The above data shows the close cooperation between social organizations and enterprises, then what does it imply? Viewing from the perspective of enterprises, why do they need to cooperate with social organizations? In another word, what are the reasons for business to involve in social charity of public welfare?
 
I.                   Initial Analysis of Enterprises in seeking of Cooperation with Social Organizations.
 
In their process of market expansion and economic development, enterprise has strong power of communication to build up its brand and corporate identity. Therefore, when enterprises spend big amount of money on advertising, everyone believe its commercial behaviors. All entrepreneurs still enjoy the shining words of Corporate Social Responsibility, which, on one side, requires them to take more social responsibilities; while, on the other side, the share holders push them for utmost profit in short-term. Therefore, most of entrepreneurs are in dilemma. Then, what is the base of cooperation in the process when enterprises are seeking cooperation with social organizations? What does the cooperation benefit enterprises?
 
1.       The Maximum of profit remains as the first priority of those who running enterprises. There are three main patterns of cooperation with social organizations in public welfare activities. First, the company cooperates with a social organization without any condition in public communication or market influence; in this case normally the owner of the company requires being anonymous in any of the related philanthropy activities. Some experts believe that this brings double effect: on one side due to their anonymous contribution, it’s difficult for social organizations to find those enterprises who do not reveal their background and endeavor. On the other side, those entrepreneurs who contribute to the society also need a mental compensation which can bring further motivation for them to make more profit. Secondly, the cooperation between enterprises and social organizations are under certain conditions. In this case the social organizations are asked to make a lot promotion for the philanthropy activities to expand the social impact and build up the corporate brand. The entrepreneurs will receive the acknowledgements from the society as well, not because of their image in commercial achievements but for being together with the disadvantaged groups in the society. The third situation is the company cooperates with social organization in seeking of common value and joint action to social innovation in reducing poverty, providing legal aid, or help poor children and college students. The above three cooperation patterns revealed the complex of motivations, but the only thing clear in this is: the enterprises are still in seeking of maximum of profit and the public welfare involvement serve the corporate development strategy.
2.       The company is developing towards the direction of a leading company in their industry. With the progress of economic globalization and application of information technology in business management, the philanthropy strategy application closely relates to the success of business competition and whether the company could gain the leading position in the industry. The monopoly of industry is reflected not only in the aspects of technology and market, but more importantly in seeking of monopoly in other aspects. For instance, one company involve in a public welfare activities, the other company will follow as well. Then the company will turn to cooperation with a leading or innovative social organization which could bring a win-win situation for the maximum effect of cooperation.
3.       The planned donation is built on the overall corporate development strategy, but not once-for-all donation. The corporate philanthropy strategy, which seems hard to understand, closely combines with different development stages of the company, especially with the personal background and education of the entrepreneurs and the policy environment where enterprises are running. The application of corporate philanthropy strategy makes the corporate donation more reasonable and scientific. This is called planned donation. The objective of planned donation is consistent with the corporate development strategy. When the company carries out regular donation activities, they must have conducted a complete needs assessment in some social occasions or by their department of public affaires. This is a long-term process, which will not gain obvious effect in a short time but providing consistent subtle support in pushing the corporate strategy. Both their CSR commitment and looking for cooperation with social organizations show this.
4.       The demand of corporate image is closely relates to the products, consumers, credibility of social organizations. With the accumulation of capital and in looking for public acknowledgements to ensure the expanding of market, the products and public benefits are very closely connected. Of course, not every company will spend lots of money for philanthropy activities. For example, the competition in beverage industry relies on individual consumers. Then some food and beverage producers will design and separate part of the profit from the products and count for public welfare activities. This brings a lot impact when consumers clearly know that they are contributing while consuming. While in the other industries, such as mechanics manufacturing, their direct clients are not public, but contributing to promote social production. Therefore they will not looking for cooperation with social organizations for public welfare.
5.       The human resources are closely relates to the social capital of a company. In dealing with labor issues, human resources problems and social public welfare involvement, the business managers propose donations together with employee volunteer initiative; this also shows the planning for human resources development strategy to build sense of social responsibility for employees, and their concern and observation of social problems, which will help facilitate labor conflicts in due course. Especially in some situations, the employees are encouraged to visit organizations of disabled people, children helping center, orphanage, places of natural disaster, etc, the involvement and communication are very helpful. In the cooperation, communication and action together with the social organizations, the employee will find their own position and value; this will also motivate the employees. Employees may also make reasonable recommendation. For example, some employees may care about the environment, when they are asked to join a donation to environmental organizations and encouraged to join the activities, this will bring a positive social interaction among business, employees, and social organizations all together.  
6.       The enterprises carry out social activities in order to improve establish a good partnership with local communities. It seems that the enterprises are considering of rewarding the community in order to improve the competitiveness. However, we often see that some energy enterprises in heavy industry release a lot of pollution in production, which influences the inhabitants of local community. In order to balance the relationship and reduce the conflicts with local community, enterprises located in the community will carry out some public welfare activities to help the local community in seeking of understanding and support from the local community. If there is a tense relationship between the company and the community, this rewarding process can be bridged by social organizations.
7.       The enterprises also communicate and expanding its social image through public welfare advertisement. In business management, the enterprises need to promote and products and expand production for making the maximum of profits. When they use the cooperation with social organizations, the advertisement may have a better effect than the normal commercials, sponsorships, and promotion activities. The public welfare always brings a lot of moving stories which will lead consumers in purchasing the products.