Harnessing the philanthropy and finance sectors for social good

Qing Gu

Limited assets among Chinese foundations restricts their ability to bring about change – but it may also act as a catalyst for other resources

When the Narada Foundation announced plans to contribute 50 million RMB ($7.072 million) to the Yuhe Fund, an impact investing special fund initiated by Ehong Impact Capital at the China Social Enterprise and Investment Forum in May 2018, it distinguished itself as a standout in asset management among the country’s foundations.

With the sluggish economy in recent years, Chinese NGOs tend to rely on government procurement. This has exacerbated the shrinking space for NGOs.

Although China’s philanthropic sector has witnessed rapid development since the catastrophic Wenchuan earthquake in 2008, less than 1 per cent of Chinese foundations are grantmaking. Most are operating or hybrid foundations without endowment and are dependent on fundraising rather than asset management to sustain their operations. According to the China Foundation Investment Report 2018 compiled by the China Philanthropy Asset Management Forum, from 2010 to 2016 about 67 per cent of Chinese foundations had passively gained asset increases from bank deposits as the only channel for investment. The average investment return of less than 2 per cent is lower than the interest rate of one-year fixed-term bank deposits.

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