Little was reported but China has launched a new Social Enterprise Certification in 2015 during the China Charity Fair (CCF), the largest national level charity event held in China on an annual basis. This SE Certification is an unofficial accreditation initiated and supported by five heavy weight Chinese organizations including two academic institutes: Peking University, China Global Philanthropy Institute; a research centre: Social Enterprise Research Centre; a foundation: Narada Foundation and CCF’s organizing committee – Mshan.
Leading up to the 2016 CCF, AVPN had the opportunity to be part of the nine-member selection committee deliberating on the second batch of accredited social enterprises. The 16 selected organisations were announced and celebrated at the 2016 CCF, making a total of 23 accredited organisations in China to date.
Once the SE is certified, it is valid for three years. Although at present the SE certification is not recognized by the government, the accredited SEs will enjoy financial and non-financial supports from the community. They are also entitled to use SE certified logo on products or in any marketing materials.
Eligibility for China SE’s Certification
As part of the expert judging committee, AVPN had a unique insider’s view of the selection processes. In order to be accredited for the SE certification, the social enterprises must fulfil four criteria：
- Social Mission: The organization must have well defined social objectives in its articles of associations.
- Registration: The organization can be registered either as corporate or charity for more than one year.
- Governance Structure: The organization must have clear governance structure and have no fewer than three full-time employees.
- Revenue Source: The organization has sustainable revenue income, of which no less than 50% must come from sales of products or services (including government purchase).
One notably absent topic in the above criteria is profit. We learned in this session that historically the predominant belief in China was that in order to be a social enterprise all profits must be ploughed back to the business. In other words, funders could not profit from the enterprise either through operations or at the time of exit. This position was however relaxed more recently to help encourage more participation of businesses in the social sector.
This was of particular interest to the AVPN team having just wrapped up an Asia Policy Dialogue session in Myanmar on the definition of Social Enterprise, where the question of profits was a polarizing factor for participants. It is encouraging to see China taking this effort forward without letting black and white definitions stall the process.