Last year was a bittersweet one for Beijing-based Maple Women's Psychological Counseling Center.
There was bad news when an overseas foundation, which had been the non-governmental organization's major financial backer for many years, ceased its donation after deciding to change tack and refocus its efforts on Africa.
Then came the good news. After 24 years, studded with compromises and setbacks in dealing with the authorities, the services of the grassroots organization were funded by Beijing's local government for the first time.
The NGO received 100,000 yuan ($16,000) to fund its hotline counseling service and a further 100,000 yuan for a program designed to help migrant workers interact with their children more effectively.
Although the organization still struggled to make ends meet, the staff was "thrilled to learn about the positive change".
However, the money was not the main cause of their joy.
"To be honest, we just gave it a shot when applying; we didn't have any expectations. The successful bid really came as a surprise," said Wu Qunfang, a project manager.
"But it indicates that the government acknowledges the value of our services. The money serves as solid proof."
The two programs were among 363 outsourced by the Beijing government last year, resulting in NGOs collecting fees of 52.96 million yuan.
While grassroots organizations are happy with the trend, which has helped to ease their financial straits, local governments also benefit as it lightens their load.
"It is impossible for the government to provide all kinds of services to citizens, especially in a city as big as Beijing," said Wang Xiangping from the Beijing Social Construction Office, which is in charge of the local government's outsourcing project.
"The expertise and experience of NGOs really help us a lot," he said, adding that other outsourced work included an education program for the children of migrant workers and matchmaking services for the elderly.
From elderly care to crime prevention, the practice of outsourcing public services to civil society organizations has been growing in China during the past five years. The scale has risen from tens of thousands of yuan to hundreds of millions in the fiscal budgets of large urban centers such as Shanghai, Shenzhen and Beijing, said Wang Ming, director of the NGO Research Center at Tsinghua University in Beijing.
The central leadership has also repeatedly voiced its support for the transformation, with Premier Wen Jiabao backing the move at China's national civil affairs conference last month. "Some public services can be provided by NGOs, intermediate agencies and local communities. So, outsourcing should be properly adopted to save costs and improve the quality of services," said Wen.
In Beijing, widespread outsourcing started in 2010 as the government spent 43 million yuan on 398 programs. This year, the budget has almost tripled, rising to 120 million yuan, but that's still only enough to provide funding for around one-fourth of the 1,629 applicants.
"Our judging panel really has a headache when choosing between so many good proposals," said Wang from the Beijing Social Construction Office. "Beijing's fiscal revenue was 300 billion yuan last year, so the money for outsourcing is still a very small portion of it. I believe that next year our budget will increase further."
Emboldened by its successful bid, Maple has applied to run the same two programs this year. Wu said she is pretty confident this time around and expects more government-financed services in the coming years.
But there's still a fly in the ointment - the "illegal" status of the organization. According to the current registration policy, organizations such as Maple are required to find a government department or agency to act as their supervisory body before they can legally register as an NGO. However, insiders say that it's almost impossible to find an agency willing to assume the role.
The past few years have seen Shenzhen, Shanghai and Beijing ease the regulations to some extent, but many organizations still have their applications rejected. For instance, Maple submitted all the necessary paperwork to the local authority early last year, but so far has received no reply.
China currently has approximately 460,000 registered civil society organizations, but another 3 million remain unregistered, according to Wang Ming from the NGO Research Center.
The problem is that if an organization isn't registered as an NGO, it is required to pay tax on the public funds and donations it receives at the same rate as a business.
Also, successful registration as an NGO is always a precondition of applying for the government-financed outsourcing program. As a result, many organizations, that have provided good services to the local community for years, are disbarred from participation in the program.
"The existing registration policy really shuts out a lot of NGOs that are able to deliver quality services. It's a pity," said Wang from the Beijing Social Construction Office.
On a positive note, in 2011 Guangdong province announced that as of July 1, all the NGOs in the region will be able to register directly without needing to find an official supervising body. The local government announcement noted that "special fields are an exception", but no details were disclosed. Moreover, the provincial government at all levels will be allowed to outsource public services to NGOs.
In March, the minister of civil affairs, Li Liguo, threw his weight behind the scheme and predicted its expansion in the years to come.
"In the past, we saw NGOs in a very political way. Nongovernmental organizations were seen as a threat to the government, one that could lead to instability. The fact that they provide much-needed public services has been largely ignored," said Wang Zhenyao, director of the Philanthropy Research Institute at Beijing Normal University.
Until 2010, he was a senior official at the Ministry of Civil Affairs, and he has sensed a change in the prevailing attitude when talking to his "old friends and colleagues".
"I think they now realize how helpful NGOs can be and that it's a wise choice to cooperate with them, rather than be suspicious of them," he said.
Another potential breakthrough would the inclusion of funds for outsourcing in the local fiscal budget, in place of the current system where the money comes from the national lottery foundation. "Inclusion in the budget would make outsourcing more consistent and would probably result in an upgrading of the scale of work, thus allowing NGOs to earn more," according to Wang Zhenyao.
"The fiscal revenue comes from the taxpayers and purchasing the best services for them is a highly efficient way of paying back," he said.
Wu Qunfang doesn't really care whether the money comes from the fiscal budget or the lottery fund, she just hopes the amount will increase. Government payments currently account for less than 10 percent of her organization's annual income.
"I've visited NGOs in Hong Kong and Taiwan and the financial support provided by their authorities is up to 60 percent. And that frees them from the task of finding new donors every year. I'm really jealous," said the 44-year-old, who takes her own laptop to work because the computer in her office is in such poor condition.
Wang Puqu, a professor at the Peking University School of Government, said the outsourcing of public services is still in its infancy in China. Transparency in the selection process and the program evaluation and monitoring system lag behind those in advanced economies and regions, which have more 20 or 30 years of experience in this field.
"But the good thing is that we've taken the first step," said Wang Ming from the NGO Research Center.
"In China, once ideas change, practices will follow pretty quickly. And as both the government and the public will benefit from the new trend, I think it will continue to flourish," said Wang Zhenyao from Beijing Normal University.
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