Government Funding and Nonprofit Revenues in China: A Cross-Regional Comparison

Abstract

This study examines the various effects of government funding on nonprofit revenues in China through a cross-regional comparison. We argue that central government funding increases nonprofit revenues by improving nonprofits’ legitimacy/reputation and competitive capacities. Based on a dataset of 2,058 questionnaires and 65 interviews with nonprofits receiving central government funding to participate in social service projects from 2013 to 2017, we find that having more central government funding enables nonprofits to raise more revenues through local government funding, private donations, and commercial revenues. A cross-regional comparison shows that central government funding has more effects on nonprofit revenues in the non-western region than in the western region. Our interviews suggest that resource accessibility and marketization institutions determine the various effects of central government funding on nonprofit revenues in western and non-western regions. The findings reveal nuances in the effects of government funding on nonprofit revenues through a cross-regional comparison under authoritarianism.

Keywords:

• China
• cross-regional comparison
• government funding
• nonprofits
• revenues

Acknowledgments

An earlier version of this article was presented at the 2017 ARNOVA-Asia Conference in Beijing, China. The authors wish to thank Editor Kaifeng Yang and the three anonymous reviewers for their thoughtful comments. We also acknowledge the participants at Zhejiang University for their useful input. Shuai Chen, Zhihong Yu, and Zihang Zhu provided excellent research assistance. All of the usual caveats apply.

Notes

1 “Crowding in” here means that an increase in revenue from government funding leads to growth in revenues from other sources. (See Payne, 1998; Schiff, 1990; Sokolowski, 2013.)

2 “Crowding out” here means that an increase in revenue from government funding leads to a decrease in other sources. (See Andreoni & Payne, 2003; Borgonovi, 2006; Brooks, 2000)

3 Data from the Ministry of Civil Affairs of China, http://www.mca.gov.cn/article/sj/tjgb/2017/201708021607.pdf

4 Data from the Ministry of Civil Affairs of China, http://www.mca.gov.cn/article/sj/tjgb/201708/20170815005382.shtml

5 Data from China Social Organizations, http://www.chinanpo.gov.cn/xiangmu; China Government Procurement, http://www.ccgp.gov.cn/gpsr/zhxx/df/201709/t20170925_8894410.htm

6 The support of central government funding for nonprofits takes place in the presence of matching funds, including local government funding, private donations, and commercial revenues.

7 The corporatism model is a one state-society model that incorporates all societal groups into state organizations as “transmission belts” transferring information between the state and society. (See Schmitter, 1974; Teets, 2014, p. 7)

8 The Project “Central Finance Supporting Nonprofits to Participate in Social Services” started in 2012. The annual project is operated by the Ministry of Civil Affairs of China and funded by the Ministry of Finance of China. Chinese nonprofit organizations that work in the fields of social assistance service (社会救助服务), social welfare service (社会福利服务), community service (社区服务), and social work service (社工服务) are all welcome to apply for the project grants each year. There are four types of project grants. The first type (Type A) is for developmental demonstrations targeting nonprofits in underdeveloped regions of China. The second (Type B) is for delivering social services and is available to nonprofits from all regions. The third (Type C) is for social work and is available to nonprofits from all regions. The fourth (Type D) is for supporting nonprofits’ personnel training and is also available to nonprofits from all regions. In this article, we choose Type A, Type B, and Type C (concerning the delivery of public services) as our data sources, and we exclude Type D (regarding nonprofits’ personnel training projects). For more information, please see http://www.chinanpo.gov.cn/xiangmu

9 Social groups (SAs) (社会团体) are the equivalent of membership associations.

10 Social Service Organizations (SSOs) (社会服务机构) are similar to service providers. Before 2016, they were known as Civil Non-Enterprise Units (民办非企业).

11 The Chinese government divided 31 provinces (or cities) in China into three regions—the eastern region, the middle region and the western region—based on geographic location and economic development level. The eastern region includes Beijing City, Tianjin City, Hebei Province, Liaoning Province, Shanghai City, Jiangsu Province, Zhejiang Province, Fujian Province, Shandong Province, Guangdong Province, and Hainan Province. The middle region includes Shanxi Province, Jilin Province, Heilongjiang Province, Anhui Province, Jiangxi Province, Henan Province, Hubei Province, and Hunan Province. The western region includes Inner Mongolia Autonomous Region, Guangxi Zhuang Autonomous Region, Chongqing City, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Hui Autonomous Region, and Xinjiang Uygur Autonomous Region.

12 The term GONGO refers to a government-organized nongovernmental organization.

Additional information

Funding

National Natural Science Foundation of China (71704156); National Social Science Foundation of China (18ZDA116); The Fundamental Research Funds for the Central Universities in China.

Notes on contributors

Yongdong Shen

Yongdong Shen is a researcher in the School of Public Affairs and Deputy Dean of Academy of Social Governance at Zhejiang University. His research interests include government-nonprofit relationship and collaborative governance within the context of China. He has published articles in such journals as China Quarterly, China Review, Journal of Chinese Political Science, China: An International Journal, and The Environmental Science & Policy.

Jianxing Yu

Jianxing Yu is an accredited professor of “Cheung Kong Scholar”, the Dean of School of Public Affairs and Academy of Social Governance at Zhejiang University. His research focuses on government-nonprofit relationship, nongovernmental organization governance, and local governance. He has published articles in such journals as VOLUNTAS, Australian Journal of Public Administration, Journal of Contemporary China, and The China Review. His recent editing book is “The Palgrave Handbook of Local Governance in Contemporary China” (2018).

Yong Li

Yong Li is the Assitant Dean of Institute for Philanthropy Tsinghua University (IPTU), as well as the Director of Social Innovation Lab of IPTU. His research focuses on social innovation, government purchasing public service and nonprofit management in China. His latest book is Social Innovation in China.

Biao Huang

Biao Huang is a postdoctoral fellow in the Lee Kuan Yew School of Public Policy at National University of Singapore. His research interest lies in public sector innovation, policy experimentation, and local governance.