Chinese Version

Concept of Neo-Philanthropy Venture Capital

Neo-Philanthropy venture capital is based on the cool-headed observation by Chairperson Wang Ping on the social reality, philanthropy and YouChange’s strategic position in today’s China.

Compared with developed countries, philanthropy in China has just begun. Like economic development, social organizations in China should not blindly follow foreign development models. Nor should they stick to traditional models and refuse to move forward. Rather, we should learn international experience and explore a development path for philanthropy in China in light of China’s national conditions and in an inclusive and innovative spirit. Based on this understanding, YouChange put forward the model of neo-philanthropy venture capital.

As a platform private foundation, YouChange is different from both many foreign grant-making foundations and traditional project operating foundations. YouChange invests in social organizations and charity projects consistent with its philosophy and priorities through neo-philanthropy venture capital in order to realize its vision and promote philanthropy in China. YouChange does not directly provide charity products and services in the traditional sense.

According to its operating model, YouChange provides financial support and allocate resources in its cooperation with other charity organizations to jointly implement YouChange’s projects, or provide financial assistance and guidance to other organizations to implement their projects consistent with YouChange’s philosophy. This operating model enables YouChange to achieve wider objectives at a lower cost in a more effective way. It not only helps YouChange make its resources more available to its partners, but also helps grassroots Chinese organizations grow healthily. YouChange hopes this open and interactive model will integrate social resources to meet China’s needs in philanthropy and promote its development.

On the other hand, YouChange’s own team has learned from and been encouraged by its neo-philanthropy venture capital. Rather than a simple donor-recipient relationship, YouChange has developed a “passing on love and compassion” model which involves multiple stakeholders and a wide, deep, interactive and win-win relationship. Not only charity organizations, but also businesses and academic institutions and even government departments are included to mobilize as many resources as we can. Neo-philanthropy venture capital has the following features:

First, diverse ways and approaches. In addition to investing in projects and personnel, YouChange has built a cross-sector platform by integrating social resources. A host of approaches have been used, such as promoting philosophy, spreading model, offering strategic consultancy, designing projects, providing resources, introducing channels, holding professional training, giving rating service and communication support, and coordinating relations. YouChange’s efforts are not confined to traditional practices of making grants and implementing projects.
Second, long-term financing. Taking human development as the greatest philanthropy, YouChange stresses passing on love and compassion as well as capacity building. YouChange hopes that its assistance will help the recipient grow by itself and increase the capacity of sustainable development, rather than make it dependent on assistance. It does not just aim at the survival of the recipient organization or the short-term financial need of the recipient project. Therefore, YouChange is very willing to be more engaged with other charity organizations and work towards the same objective. Therefore, YouChange’s neo-philanthropy venture capital is usually long-term or it will exit only when the recipient has more funding sources and become capable of independent development.
Third, tailor-made. YouChange will provide financial assistance to different degrees in light of the conditions of the recipient party and project.
In general, recipient projects can be divided into the following four categories according to their features and different levels of YouChange’s involvement.
Category I: projects proposed and launched by YouChange. YouChange will hold tender or selection process in which it invites qualified charity organizations to bid. Project partners will be selected after review. In this category, YouChange usually has a high degree of involvement and 50%-80% project budget will be used to support other charity organizations.
Category II: projects initiated by other charity organizations. YouChange will hold tender or other process through which it will provide support in money and kind to projects consistent with YouChange’s philosophy and priorities. YouChange’s involvement in these projects tends to be lower.
Category III: charity organizations and projects in the seed-stage or the initial stage. YouChange will act like a venture capital firm in the commercial world. After receiving application from founders of these organizations or projects, YouChange will help them in in-depth development in light of actual conditions. It will help them in getting access to information and material resources from the government, business community, media, NGOs and all sectors of society. If possible, YouChange will help them in project cultivation and provide financial assistance in project implementation on a pilot basis to test hypothesis, identify problems, promote innovation and sum up experience. In this category, YouChange usually has a high degree of involvement.
Category IV: relatively large and mature operational models as well as influential and fast-growing charity organizations and projects. In financing projects of this category, YouChange does not have any equity on recipient organizations. It looks forward to the emergence of solutions to major social problems and/or real influence. YouChange’s involvement in these projects tends to be lower.
By July 2012, YouChange has received 281 million yuan in donation, an increase of more than 14 times from its registered capital of 20 million yuan in 2007 when it was founded. In the past five years, YouChange has spent 110 million yuan in donation, accounting for 35.28% of all its revenue in this period. From 2008 to 2011, expenditure on philanthropy on average accounted for 20.8% of its previous-year net assets, much higher than the 8% level required by the government.

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