(Calvin Chin, Founder of Qifang. Photo by Elliott Ng)

Social enterprise has rapidly become the business model of the future, whether bundled into traditional corporate structures or formed by entrepreneurial not-for-profit organizations. At this year’s Clinton Global Initiative Annual Meeting, it certainly appeared that nearly every nation in the world was working to harness social enterprise as a way to do good, fuel innovation, guarantee sustainability and generate new jobs. Well, almost every nation in the world… Thank goodness for Calvin Chin, Founder of the China-based microfinance venture Qifang and one of the very few who carried China’s torch at the 2009 Clinton Global Initiative Annual Meeting. This collaborative interview with Calvin, conducted together with Elliott Ng of CNReviews, explores Qifang’s new CGI commitment and the emergence of social enterprise in China while addressing the question that Elliott, Calvin and I were all asking: “where was China anyway?”

Aimee: Tell me about Qifang’s commitment with CGI.
Calvin: The commitment is essentially something pretty new for us. In the past, everything we had been doing focused mostly on China, so the sponsors for the loans have been in China as well. The CGI commitment is a cooperation [with a not-for-profit organization] based here in the US called the 1990 Institute. It’s made up of some pretty successful Chinese-Americans who [organized] in 1990 and had a heart for working and giving back to China. About ten years ago they created a particular project called the Spring Bud program for three counties in Shaanxi Province, where they chose 1,000 schoolgirls and sponsored their education through primary and secondary. Now, most education is free- for compulsory education- but of course there are other expenses. So, we sponsored these 1,000 schoolgirls and the first class is graduating this Spring. We are working with the 1990 Institute to ensure that these girls have a chance to have higher education. For us, it’s quite new in that we are working with an international non-profit- in this case, the US- and we’re going to give tax deductions to people who are lending into the platform, into the loan. Basically, sponsors will make a gift to 1990 Institute and we won’t be able to take those funds out, but those gifts will fund loans. Spring Bud actually introduced this interesting hybrid in that, not only will these schoolgirls get these loans but that after two years, there will be loan forgiveness. We’re trying to cultivate community leaders in these disadvantaged areas. We’re very excited about it! It’s kind of a new, deeper engagement than we’ve done in the past.
We’re talking to another partner that could help us set up tax deductions to people outside of the US as well-like Korea, Taiwan, Hong Kong, Singapore-countries that seem to overlap nicely with the Chinese diaspora and will have a heart to give back.

Aimee: Over the past few years, non-profits have started to pop up all over China. You’re running Qifang- a for-profit business- as a social enterprise. So, have you considered filing for a non-profit as well?
Calvin: While non-profits have started popping up in China, it’s still extremely difficult and a long process to get a formal non-profit recognized. A lot of interesting things in China’s civil sector are happening, specifically unregistered NGOs or NGOs that are registering as for-profit companies instead. I think it’s an interesting phenomenon and will point to some innovation. Organizations like us that have been targeting social impact from the beginning face this push and pull. We want to be a social venture, and we want to be a for-profit company because we want to grow quickly and use business discipline. We believe that we have a sustainable business model that obviates the need to raise donations each year for our operations… All the standard reasons as to why social ventures make sense. But, then you also have this push factor. It’s extremely difficult to set up a non-profit venture in China. Unlike the US, where you can set up a company, register as a non-profit and then prove your non-profit status to the IRS, in China we’ve heard that it’s taken five or six years- even for billionaires- to set up their own foundations. There will be a lot of people that will set up non-profits in nature, but will register them as formal companies with capital registration requirements and tax liabilities. There will be a natural gravitation towards looking for sustainable business models. [In China], I anticipate a lot of social innovation because of this added pressure- we can’t go for the typical non-profit models. The analogy that comes to mind is the way that video games in China faced a constraint, which was the inability to sell physical copies or cartridges because console games were illegal, or CDs/DVDs because people would just pirate them. So, there was a lot of creativity. It’s hard to do a non-profit in China, but socially-minded entrepreneurs and philanthropists will look for models elsewhere, as we did. We looked at Kiva and Grameen for inspiration, but to make it work in China requires fitting into [the country’s] constraints.

Aimee: We’re curious to hear about your experience at Clinton Global Initiative.
Calvin: It’s been a really good meeting for us. We’ve met some phenomenal people, including some that we’re going to explore collaboration with in different regions and how they approach different problems. I would say that China is underrepresented here. Aside from there not being many Chinese people [at CGI], there are not many organizations that are active in China here. Someone joked that you’d be hard-pressed to remember that Chinese makes up to one-fifth of the population of the world if you only looked at this meeting.

(Elliott Ng, CNReviews)

Elliott: Who else have you met from China at this meeting?
Calvin: Raefer Wallis from Giga is here; he’s doing some very cool stuff. The Rural Development Institute is here- they’re from China. Diane Geng from the Rural China Education Foundation- these guys are great. Schoenfeld Foundation is based in Hong Kong- they’re here as well. That’s about it. You can see that it’s relatively small.

Aimee: Do you think lack of China attendance is because of CGI Asia, held in Hong Kong in December?
Calvin: Having had CGI Asia you would think that more people would be participating because then they would have a network in Asia that they could point to and say, “remember all of the value that you got out of attending in Hong Kong?” But, that’s not the case. Generally speaking, a lot of Chinese entrepreneurs, businesses and NGOs are really focused on China and while this is a great platform, they really would not think of attending. It’s expensive, for one. Second, there’s the language barrier- everything is communicated in English here and there’s really no Chinese language. Then, as we were talking about earlier regarding the civil sector being a lot of informal, small NGOs registered as companies, you don’t really have the audience of well-established non-profits who have the means, awareness or visibility to the CGI group either. It’s all of those factors.
CGI has this great contact who acts as a mentor to NGOs, and she was talking about how those of us here who are active in China can encourage others to get active in China. Last year, Schoenfeld Foundation sent a bunch of Chinese university students to last year’s CGI U meeting- the CGI for college students. We had a great chat with them and will try to help them find more young people who are interested in these models of social entrepreneurship.

Elliott: Obviously because there are so few people from China here, you’ve probably had a lot of interesting conversations with folks who are interested in learning more about China. What do you think you’re sharing that’s most interesting in terms of helping people understand the social enterprise environment in China?
Calvin: That’s a great question. It’s easy for people not engaged in China to think only of the Olympics, the economic miracle, this idea of the G2 and China being a developed country, a world leader. So, when you talk about needs in China, it’s not always obvious. Along those lines, you hear [questions like] “how does China grow in a sustainable fashion” or “how does China manage the demand for 300 million cars?” These types of issues are about wealth. [The conversations are] much less about the rural poverty issues that are more commonly spoken about regarding South Asia, East Africa and Latin America.

Elliott: So, you’re helping them have a more balanced view of these issues?
Calvin: I think so. I wouldn’t overstate how much people don’t understand, but it’s much less talked about. We’re reminding them about the 800- to 900- million people who live in rural China. The second important thing that we’re trying to share is about social ventures, particularly that there is a lot of creativity, there is a lot of innovation, and there is a lot of dynamism in China. It’s not about the typical questions [regarding] government control or “isn’t education free?”- these types of things that point to the typical idea of a “socialist” or “communist” China. That’s the other thing that we can try to help people understand.

My many thanks to Calvin Chin and Elliott Ng for this interview and of course, to Clinton Global Initiative for inviting me to be a part of this year’s meeting. Be sure to check out CNReview’s interviews with Calvin Chin here and here. If you’d like to make a commitment to Clinton Global Initiative, learn more about the organization, or spread the word in China, visit the CGI website at http://www.clintonglobalinitiative.org/

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