Policy context of registered non-government organisations

As a background to the research, this section introduces multidimensional accountability theory and the policy context relevant to registered NGOs in China and contracted social services. It defines registered NGOs, describes their regulation and summarises the problems in the sector identified in other research.

Mattei's (Reference Mattei2009, Reference Mattei2007) multidimensional accountability framework, combines democratic and managerial concepts of accountability in relation to public policy. Extending the theory to NGOs providing social services that are otherwise provided by government, democratic accountability theory emphasises external NGO accountability to social service users, the public and the state; and managerial theory emphasises NGO accountability for the service outcomes and internal processes of the organisation. In relation to social service provision, these multidimensional accountabilities include the management of financial, professional and social outcomes. We propose that applying this framework to NGO activities can inform understanding about current limitations to democratic and managerial accountability for the provision of quality social services.

As part of the changing social welfare system in China, the quantity and proportion of social services provided by NGOs are increasing. The reasons for this change include social welfare system reform away from reliance on employer-provided support; increased total supply of social support by government and other sources; changing demands from the public for social support to meet their needs; and citizens forming new social organisations to provide these services. Some of these reasons overlap with similar historical trends internationally, where governments increasingly contract out social services (Schmid, Reference Schmid2004). Others coincide with broader democratic processes in China, with which the formation and government encouragement of NGOs are consistent. Currently these reforms include rationalising structural change to bureaucratic systems, consulting with elite groups and increasing opportunities for the public to influence and participate in local level decision making (He and Thogersen, Reference He and Thogersen2010).

Chinese and international researchers have categorised and described the breadth of social organisations in China (for example, Wang and Liu, Reference Wang and Liu2009; Howell, Reference Howell2007; Lu, Reference Lu2008; Tang and Zhan, Reference Tang and Zhan2008). The number of social organisations providing social support services in China grew very slowly until the 1990s. Up to that time, the government preferred that social support be provided through workplaces or the government, and the NGO sector remained underdeveloped (Howell, Reference Howell2007). During the economic reforms of the 1990s the role of government changed and organisations supporting and representing the interests of vulnerable groups began to develop (Ru and Ortolano, Reference Ru and Ortolano2009; Saich, Reference Saich2000; Wong and Tang, Reference Wong and Tang2006). Wang and Liu (Reference Wang and Liu2009) attribute the reasons for the change in the importance of NGOs since the 1980s as due to growth in the public sphere and economic reforms. They summarise the current functions of NGOs as mobilising resources, providing public services, contributing to social governance and participating in policy advocacy.

The NGO regulations date from 1989, amended in 1998 (Edele, Reference Edele2005). Currently, registered service provider NGOs are regulated by three government departments (Table 1).

TABLE 1.

Types of registered NGOs providing support services in China, 2007

Notes: Not including unregulated non-government groups such as informal self-help groups or government organisations.

* Also regulates foundations that do not provide support services relevant to this research.

** Also regulates fully and partly funded institutions, functioning as government agencies.

*** No non-profit company regulation option is available, e.g. company limited by guarantee.

The first two departments, the NGO Administrative Bureau of the Department of Civil AffairsFootnote ¹ and the State Commission Office for Public Sector Reform,Footnote ² regulate social organisations, which since 1989 require sponsorship by a government department before they can become registered (Howell, Reference Howell2007). Wang and Liu (Reference Wang and Liu2009) describe them as private non-enterprise organisations under a dual management system. Dual management refers to the compulsory government department sponsorship within the NGO governance structure.

NGOs registered by the Department Civil Affairs are required to have the sponsorship from a district or subdistrict government organisation, such as Disabled Persons Federation (DPF), Department of Education or Department of Health. The two relevant NGO types for this article are non-government and non-business organisations, and social membership organisations. These NGOs can receive government funding for their support services, including project funding, social assistance to provide services to people without capacity to pay the fee, operational funding to support NGO functions and personal allowances for rehabilitation to spend on approved NGO or government services, such as community medical support.

The third regulator is the Department of Industry and Commerce. Because some organisations are unable to find a local government organisation prepared to sponsor their registration, they have no other choice but to incorporate as a company if they wish to be a registered organisation. While they describe themselves as NGOs, they have no accountability mechanism that requires a non-profit status. These company types are a proprietary limited company, a company run by an individual and a cooperative company. These organisations cannot receive Chinese government funding, although this is beginning to change and so they are included in this study, as relevant to NGO accountability of social services.Footnote ³ Their company registration is merely an artefact of the restrictive dual management NGO regulations described above. No option for a non-profit company status, such as a company limited by guarantee, is available.

Registered NGOs probably number less than 500,000 and the total number of social organisations is more than ten times that (Wang and Liu, Reference Wang and Liu2009). In recent years, registered NGOs have increased by 10 per cent per year (Ministry of Civil Affairs and CDPF speeches 2008–09). The Ministry of Civil Affairs (2008) reports that, to the end of 2008, they had registered 182,000 non-government, non-business NGOs and 230,000 social membership NGOs (Table 1). Seven per cent of this first type of NGO were social welfare and social philanthropy organisations, including disability service NGOs, the subject of this article.

Social support provided by NGOs in China tends to be funded by client fees and donations. Unlike Hong Kong, where most social services are funded by government and provided by NGOs (Ip et al., Reference Ip, Li and Yau2003), China does not have a tradition of contracted social services whereby government funds and is responsible for the social support system and contracts out some of the service provision to other organisations. Huque (Reference Huque2009) summarises the goals of contracting out of government responsibilities for social support as including increased efficiency and size of the market for services, and promoting competition (through positive effects on cost, productivity, choice and quality). He cautions that the risks of contracting out include increased cost to government and problems arising from the government's inability to manage contracts. It is in this context of a low but growing base of contracted social support that we explore the accountability for social support supplied by registered NGOs in China.

Previous research has identified the problems faced by Chinese NGOs as limited funding; poor government relations and support, such as the dual management restrictions, which prevent registration if no government department is willing to sponsor the organisation; limited governance, management and professional capacity; and negative public perception (Wang and Liu, Reference Wang and Liu2009; Lau, Reference Lau2009; Hasmath and Hsu, Reference Hasmath and Hsu2008; Cooper, Reference Cooper2006; Edele, Reference Edele2005). This article builds on that literature by framing the problems in terms of multidimensional accountability to analyse the barriers experienced by the organisations that call themselves NGOs, provide social services to the public and are legally incorporated (referred to as registered NGOs).

The reason for restricting our analysis to registered NGOs is that it is with this group of NGOs that government agencies are beginning to formalise funding and contract service relationships. Many types of social organisations are not relevant to NGOs that provide social services. We do not include unincorporated, unregistered or unregulated non-government groups, such as informal self-help groups. We also do not include government organisations, such as the DPF and its disability specific associations, which are incorporated as part of government. Other exclusions include charitable organisations, which is not a registration status in China; and foreign and foreign religious NGOs, which have registration resolved on a case by case basis, generally incorporating as a company or not incorporating at all (Edele, Reference Edele2005).

Disability social services and NGOs

This article concerns specialist services that support to people with disabilities who live in the community. Most disability support is provided by government (Fisher and Li, Reference Fisher and Li2008). In Beijing, examples of such support include education, institutional care, rehabilitation, training, community centres and social welfare centres. The extent to which some of these service types are available in China is very limited in most locations.

In 2006, nearly one million people with disabilities lived in Beijing (999,000 or 6.49 per cent of Beijing population) (BDPF, 2008a).Footnote ⁴ Chinese DPF is the central semi-government agency responsible for disability policy, nominally an NGO. Provincial and local DPF agencies implement the policy. The Beijing DPF, district and local DPF are the relevant semi-government levels in this research. Kohrman (Reference Kohrman2005) discusses the origin and role of the DPF as a semi-government organisation and how this limits its capacity to represent the interests of people with disabilities.

The first Chinese disability NGOs were formed in the mid 1980s. They were grassroots, self-help social organisations that eventually contributed to the formation of the CDPF in 1988.Footnote ⁵ Guangzhou Zhiling School, established in 1985, was probably the first Chinese disability service organisation, and its related organisation, Huiling, is now the most widespread disability service NGO, providing educational services for people with intellectual disabilities (Pearson et al., Reference Pearson, Wong and Pierini2002; Pierini et al., Reference Pierini, Pearson and Wong2001). Most disability service organisations were established after 2000 (Li, Reference Li2007). The NGOs provided services to supplement and complement government and private services. However, most people with disabilities still do not receive the support they need (Wang, Reference Wang2008; Fisher et al., Reference Fisher, Shang, Xie, Carrillo and Duckett2011b; Shang et al., Reference Shang, Fisher and Xie2011).

Few studies about disability non-government service organisations are available. Early literature about specific services focused on the service outcomes for clients (Pearson et al., Reference Pearson, Wong and Pierini2002; Pierini et al., Reference Pierini, Pearson and Wong2001). Recent disability NGO survey research commissioned by national and local DPF concern services provided in Beijing, Guangdong and to deaf children and people with autism (Hu and Li, Reference Hu and Li2010; Tang and Li, Reference Tang and Li2010; Li, Reference Li2009b). Their research describes the extent of service provision. The recent research identified problems such as inconsistent government policy implementation, limited funding opportunities and low availability of qualified workers (BDPF investigation reports; BDPF 2003a, 2003b, 2005).Footnote ⁶ The research instruments for our research are based on these findings. Previous research has been imprecise about NGO registration status or has been based on single case studies. No previous research has been conducted about the accountability of registered disability service NGOs in Beijing. In its absence, little evidence is available to inform research, policy and practice, in a context where the government is increasing funding to supply disability support services from the NGO sector.

Research method

The study asks the research question whether multidimensional accountability theory explains the barriers to the supply of good quality disability support services from NGOs in Beijing. We applied mixed methods of policy document analysis, questionnaires and interviews to analyse accountability processes and barriers experienced by NGOs providing disability support services in Beijing in 2007.

Previous research about disability social services and NGOs described above identified preliminary evidence about difficulties experienced by disability NGOs. In this context, Beijing Disabled Persons Federation (BDPF) commissioned research from the Institute of Sociology, Chinese Academy of Social Sciences to inform policy development about supporting NGOs. Descriptive results of a profile of registered NGOs were published in Chinese (Li, Reference Li2007; Yang, Reference Yang2008). Two of the researchers from that project re-analysed some of the BDPF-commissioned research data for this article by applying the accountability framework to analyse the barriers NGOs face when providing disability support services.

The research instruments were a questionnaire and case study interviews. The questionnaire included: basic information about organisations (history of establishment, supervising governmental agency and registration deposit); staff information (founder, staff, qualifications, training, experience and expertise for rehabilitation and special education); financial conditions (annual income and expenditure, staff monthly income, service fees, capital and debt); internal governance (board, regulations and policies); service beneficiaries (history and current total services, clients and characteristics); and general questions (future, needs and challenges). The case study interviews explored the same content in greater detail, using semi-structured questions and observation.

Initially BDPF identified 100 disability NGOs. However, only sixty-eight NGOs were relevant to the research (including one that has now ceased operation due to bankruptcy). The other thirty-two are government organisations or unregistered groups. Seven NGOs refused to participate, leaving sixty-one NGOs, to which we distributed a questionnaire, with the assistance of BDPF. Forty NGOs returned a questionnaire but two were incomplete (62 per cent valid response rate). Where necessary, we contacted the thirty-eight NGOs by telephone to clarify and complete missing data.

From the valid returns, we selected thirteen representative NGOs for case studies. These were selected according to the disability category, age of the clients, nature of the organisation and location. Researchers conducted semi-structured interviews at the NGO with the people who established the NGO. This also provided an opportunity to observe the operation of the NGO and speak to people with disabilities or their families if they were at the NGO when the interview was conducted. Observation data from other disability support research by the authors in Beijing are also included where relevant to the research question.

All results presented in the article relate to the thirty-eight respondents and case studies (Table 2). For the purpose of comparison, results are presented with respect to NGOs regulated by Civil Affairs and the State Commission (Ordinary NGOs) and NGOs regulated by Industry and Commerce (Company NGOs). We divide them this way because different financial accountability regulations apply to each of these categories of NGOs, which are likely to affect the multidimensional accountability analysis.Footnote ⁷

TABLE 2.

Beijing disability registered NGO respondents, 2007

Notes: *Department at Municipal government level or Bureau at District government level.

** Disabled Persons Federation.

*** Including one NGO insolvent at the start of the research.

The response rate was lowest for Company NGOs (42 per cent). They tend to be smaller than Ordinary NGOs. Non-respondents were probably less likely to trust the research process or to be operationally transparent. We also suspect that non-respondents are less structured. These differences would tend to accentuate the poor accountability identified in the research.

The findings are specific to the location because the policy context in Beijing is different to many other parts of China. Beijing is the capital, a large metropolitan area that includes rural suburbs, and has a high public funding base. Future research could include comparison with other parts of China, including similar large cities such as Shanghai, Guangzhou or Tianjin, which have a reputation for developing social services; Hong Kong; and also small metropolitan and rural communities. Such research would further inform the research question, particularly about directions of change and predictions for trends in NGO and government provision and funding.

A further qualification to the findings arises because most NGOs in the sample were established after 2000 (79 per cent). Indeed, 37 per cent were established in the year before the survey. The findings cannot be conclusive about the longer-term stability and quality of the NGOs.

Our research methods take a disability rights perspective when analysing the accountability of the supply and quality of disability support services by registered NGOs. China was one of the first countries to ratify the UN Convention on the Rights of Persons with Disabilities in 2008. The Convention commits the government to enabling the equal participation of people with disabilities in Chinese society. Specifically, this informs the concept of good quality support (Fisher et al., Reference Fisher, Shang and Blaxland2011a; Fisher et al., Reference Fisher, Parker and Purcal2009b).

Findings about Beijing disability NGO accountability

The next part of the article presents the findings about the profile of the disability NGOs, internal accountability limitations relating to their capacity and external accountability limitations concerning relations with government.

Financial management

The findings include three aspects of financial accountability: annual income and expenditure, profit and loss and registration capital. The financial data relates to their position in 2006 (US$1 = 7Y). In 2006, the average income for Ordinary NGOs was twenty times that of Company NGOs (Table 3). The main reason for the income difference between the two NGO types was the size of the organisations. There were more small Company NGOs, although both NGO types included large NGOs with incomes over 2,000,000Y per year.

TABLE 3.

Income and expenditure of disability NGOs, 2006

Notes: * US$1 = 7Y.

** Includes income from selling products or services.

*** Does not include salary of the founder.

Most NGO income was from service fees and some organisations of each type relied only on this income source. Only Ordinary NGOs are eligible for government support and less than 10 per cent of their income was in this form, which is consistent with Wang and Liu's (Reference Wang and Liu2009) national research. One Ordinary NGO relied entirely on government support. Income from projects funded by government and international NGOs was also less than 10 per cent, but one Company NGO relied entirely on this income source. Donations were almost negligible (less than 5 per cent), although one Ordinary NGO relied on donations for almost half its income. This average for donations is less than the national average (10–15 per cent) (Wang and Liu, Reference Wang and Liu2009).

In 2006, the average expenditure was 624,000Y for Ordinary NGOs and 357,000Y for Company NGOs (Table 3). Expenditure varied enormously from less than 2,500Y to over three million per year. One-third to one-half of expenditure was wages. The other operating costs included the large salary for the person who founded the organisation.Footnote ⁸ The case studies showed that in-kind support such as rent-free premises from the government reduced the costs for some organisations (three of the thirteen case studies). In contrast, one organisation paid 850,000Y in annual rent, and at least one NGO of each type spent over 40 per cent of expenditure on rent. In the previous three years, at least half of Ordinary NGOs experienced a loss (Table 4).

TABLE 4.

Profit and loss of disability NGOs, 2004–06

Notes: * Higher percentage because many new organisations.

The case study NGO founders reported that they covered losses with their own money or money given by their friends, without borrowing from banks. NGO regulations do not include requirements about profits and losses of Ordinary NGOs. The regulations only stipulate that during operation an NGO should not make a profit and that, if the owner chooses to close, it should transfer its resources to another non-profit organisation. In contrast, corporation law requires that Company NGOs should cease trading after three years of losses, although no NGO in this study reported that they have considered closing down. In one case study, the Ordinary NGO ceased operating because of ongoing losses. It operated in a remote suburb of Beijing providing support for people with intellectual disability. It was too geographically isolated and did not have qualified staff to provide good quality services.

NGOs are required to maintain a minimum cash reserve of at least 30,000–100,000Y, depending on the incorporation type (referred to as registration capital; Table 5). Most NGOs reported that they have only the minimum required capital.

TABLE 5.

Registration capital by NGO type, 2006

Human resource management

The second aspect of the NGO profile is their human resources (Table 6). The proportion of trainers and social workers compared to other staff is higher in Company NGOs (83.2 per cent) than in Ordinary NGOs (69.1 per cent). Over one-third of staff were recruited in the last year, which reflects the recent incorporation of one-third of the NGOs, staff leaving the organisation and growth within the organisations. Company NGOs had almost double the proportion of staff who had been with the organisation less than one year.

TABLE 6.

Human resources of disability NGOs, 2006

Note: * Does not equal total staff types above because total staff was asked as a separate question.

Service types

The third aspect of the NGO profile is the types of services they provide in terms of the type of support, the type of impairments and the age groups of the people supported (Table 7). No information about outcomes for service users was available.

TABLE 7.

Service types of disability NGOs, 2006

Notes: Impairment types include learning, intellectual, physical and sensory.

Company NGOs are more specialised – each NGO provides fewer service types to only one impairment group. It seems that Company NGOs have a more specific service definition. This could be one explanation why they are in a better financial position than Ordinary NGOs. Without the backing of a sponsoring agency and no access to rent-free premises, they may be more thorough in their strategic and financial decision making.

Few of the services provide individualised support. The NGOs provide similar services to all their clients. Few professional specialists are available in most of the NGOs, whether Company or Ordinary NGOs. The description of the service types shows that NGOs attempt to fill gaps in support provided by government. Examples include education and training for teenage young people, where government services tend to be for children under fourteen or adults. NGOs also provide education and training for children with autism; no government education was available for these children.