Experiments for Public Service: The Transparent Fish Lab

[China Weekly 1-5-12] The only prerequisite for grassroots NGOs to receive free assistance from the Transparent Fish Lab is that they must play by its rules. NGOs must make public all their funding and expenditures, becoming financially transparent.

The five staffers of the Transparent Fish Lab sit on the floor cross-legged during a meeting. Taken by reporter for China Weekly/ Pan Wang.

Yi Yang’s job is to “chat” with grassroots NGOs everyday.

“We hope to provide you with free assistance, including a free texting platform, web promotion, marketing, staff training, and funding etc.”

On the other end of the line, a hesitant voice carefully repeats the same question,  “it’s really for free?”

“Yes, but, you must promise to make your finances transparent, organizing and publishing your accounts online every month.”

At this point, Yang gets a little nervous. In her experience, when the conversation gets this far, the other party may remain silent for a while, hang up the phone abruptly, or ask her “what do you really want?”

She must patiently explain: she is not investigating them; if the NGOs accomplish financial transparency, it will improve their credibility, allowing them to garner more funding and support, why not?

Yi Yang is a member of the Transparent Fish Lab. The man who founded and currently funds this organization is named Ping Chao. This condition (of financial transparency) to receive assistance is instigated by Chao.
Chao told a reporter from China Weekly that he hopes to make the Transparent Fish Lab website a school for Chinese grassroots NGOs, helping them to form the habit of transparency through three years of training.
As someone who funds more than a dozen NGOs in China, Chao does not care about other people’s opinions on his “conditional aid.”

Some have asked him, is conditional aid still truly public service? He says, of course, transparent mechanisms allow the money to be delivered to those who need it most, “this is what’s most lacking in Chinese NGOs, and the most important.”

A Transition towards Philanthropy
In the Fall of 2007: From the view of the airplane window, the Qinghai highland and the boundless desert around it appear in a shade of yellowish brown, empty, yet mysterious. The plane descends upon the city Sining.
This is the first time Mr. and Mrs. Chao set foot in mainland China. In the piercing autumn wind, they put on green army coats sent by the locals. They were filled with curiosity.  

In 1976, Ping Chao left Taiwan to study in America. After graduating from U.C. Berkeley, he stayed in Silicon Valley to pursue a career. The three companies Chao has started have been either listed on the market or purchased.

After he retired in 2005, he founded the Ping & Amy Chao Family Foundation, starting a new career. The chair of the Asian Liver Center at Stanford University contacted Chao, looking for funding for a project in China.
So Chao donated 1 million dollars to help school-aged children in Qinghai to receive hepatitis B vaccination; this marked the beginning of his commitment for public welfare in mainland China.

Landing in Qinghai, Chao did not come for the accolade. Several decades of entrepreneurial experience shaped his work habits. He investigates his first project like a business enterprise, with attention given to the efficiency and results. He pondered ways to guarantee the safety and affordability of the vaccines as well as methods to allow more students to enjoy this service.

Ping Chao calmly observed it all in Qinghai, constantly bringing his questions to the Stanford team. He even traveled to Beijing before coming to Qinghai, specifically researching with the partner organizations of the project.
As an onlooker and financial supporter, Ping Chao is satisfied with this project.

But as he devoted more energy to public service, he became increasingly troubled and puzzled.

In 2008, the story of a young Gansu woman spread through the American-Chinese philanthropy community. Her two-year-old child was diagnosed with congenital heart disease. With the help of an American foundation, they traveled to the States for treatment at the Stanford Hospital. The Chinese community in the area began to fund-raise for this cause. Ping Chao was one of the donors. “Regrettably, the treatment came too late, and there were too many complications. The child passed away.”

Then, the Gansu woman packed her things and returned home. She gave the rest of the money to children who had the same disease. She relayed to the American community that there are many more cases of sick children in Gansu who urgently need medical care.

After learning this information, Ping Chao took the initiative to create Little Red Scarf in Gansu, trying to help children with congenital heart disease. He transformed from a purely financial supporter to a fully active participant.


The Revelation of the Little Red Scarf 
Silicon Valley and Lanzhou, Gansu are two entirely divergent worlds.

Starting in 2008, the Chaos, on average,  go to Lanzhou 3 to 4 times a year to follow up on the progress of their project. Even so, they still felt that it was difficult to change from outsiders to insiders of the project.

Ping Chao realized that it was very hard to obtain accurate, complete information. “This type is inquiry is unlikely to be turned down, but also unlikely to be satisfied.” Even when he acquired the information, he could not understand it. This drove him crazy. Several decades of business management and thousands of cases never frustrated him as much as the undertaking at hand.

This is also why he can turn Transparent Fish Lab into a sizable seminar. He event walked people through the accounting process personally, step by step.

“I encountered many challenges, so I think other people may have the same problems as well. I hope to establish transparent mechanisms and improve the project’s credibility.”

He used the simplest methods to concentrate accounts into a single form, a monthly report, a seasonal report, and a yearly report. Coming from the perspective of a donor, asking grassroots NGOs to provide specific information.
Back to the Little Red Scard, Ping Chao’s first step. He harbored great hopes but also had to face the disappointments of reality.

How the patient’s money is spent is accessible and clear in America. Because most people use credit cards, the transaction of money leaves traces. Chinese people are accustomed to using cash, especially the most needy families plagued by poverty.

This led to his problem, “money comes and goes, who took some, how much, we don’t know.”
Due to a matter of policy, in Lanzhou, the children with congenital heart disease who received funding needed their families to first pay for the medical expenses. After they were released from the hospital, the money was reimbursed to the family members.

This was because the rural areas had a new medical insurance program in which the federal government covers a portion of one’s medical expenditures. As for the rest, Ping Chao reimbursed the families proportionally .
The family members who lived in the countryside would come to the hospital several weeks or even a month later for the money. Sometimes, they asked friends who were going to town to get the money for them.
But after the money was distributed, who was present, who assumed responsibility, and who signed? there were no records.

Ping Chao disliked this practice.

He insisted that there must be someone to sign and take responsibility after the money is drawn. He even took a roster and visited households on the list at random. While visiting a family in the countryside, he discovered that the money they received was different from what was reported from the hospital, which took him by surprise.
What was even worse was when a staffer told him that a sum of money was donated to the wrong people.
After the anger subsided, Ping Chao learned that it is understandable that mistakes happen, especially in such a large project. However, malpractices must be put to an end, “I’m not someone who just muddles through things.”
Starting with modifying the system, he slowly closed up the loopholes in the project. At the same time, he expanded the number of partner hospitals from one to two. This helped widen the range of promotion; at the same time, it created a natural competition. The two hospitals may have similar cases. With a comparison available, it became easier to surmise the amount of funding necessary.

In three years, Little Red Scarf helped more than 600 children with congenital heart disease by funding their surgeries.

But there are still more people who need continuous aid. Ping Chao utilized his international website to spread awareness about these sick children.

However, another problem appeared --- how to get foreigners to believe in this Chinese project.
“Reform from the government is one way, but I am not the government, I cannot do that. Outside of it, the best incentive comes from conditions set by donors. So we enunciate the conditions through the donors. It’s not just giving money and letting it be.”

In October of 2011, more than 30 grassroots NGOs came together in Beijing to witness the birth of the Transparent Fish Fund, a representative of transparent institutions. This is Chao’s hopes from Little Red Scarf and beyond Little Red Scarf. In this way, he is willing to solve the conundrum of many donors like him, pushing china’s movement for transparent philanthropy another step forward.

Auditing Accounts
Ping Chao spent much time in discussion with relevant parties when it comes to the name of the Transparent Fish Fund.

Lifu Shang recalled, "Why the transparent fish? It refers to the ability to see and touch, from the inside out."

“A lot of places have two account books, an internal one, and another for the public. We do not want that.”

Lifu Shang, assistant dean of the School of Social Development and Public Policy at Beijing Normal University, served as an intermediary, allowing the Transparent Fish Lab to find its home at Beijing Normal University.
In 2007, he went to University of Pennsylvania as a visiting scholar. Due to public service education projects in China, he found the Chao Foundation and met Ping Chao. Chao became immediately supportive of his educational initiatives. The two shared their common understanding of the environment for public service education in mainland China.

“In mainland China, there lacks a system for comprehensive public service education, unlike children abroad who receive this kind of education at school, slowly forming the habit that public service is a part of life,” says Lifu Shang.

The Transparent Fish Lab practically built an online community. In Chao’s views, it is a school for public service education, serving as a platform that cultivates an awareness of transparency and forms transparent policies for grassroots NGOs.

This included Chao’s intention to choose NGOs with great potentials, offering to provide them with better (more consistent) funding and resources. What type of NGOs need help and are also willing to play by the rules? They are grass-root NGOs with an annual budget of less than 1 million RMB.

“Too big, they don’t need our help, and it’s hard for us to change their habits. Small, grassroots NGOs are more inclined to accept new things.”

Basically, one can imagine the Transparent Fish Lab as a large, virtual office, in which there are many grassroots NGOs. They can register on it, log in, and “work.” Everyone can share her experiences, write journals, learn to do account reports. Professional staffers and volunteers are always available to mentor them.

Some instantly followed this guidance.

Yi Yang remembers, her smoothest case was an NGO that helped northwestern herders purchase shepherd dogs. She taught them to take photos and choose informative images. More importantly, they developed methods to record pertinent facts such as identification of the household that received the shepherd dog, its cost, the source of funding, the expenditures of buy-back, and so on. Every transaction is clearly noted with words and pictures to prove. Both parties enjoyed working together a great deal.

But most NGOs Yang contacted remain in silence, never calling her back.

For Chinese grassroots NGOs, there are a lot of donors eager to contribute to their projects but not administrative fees.

What kind of project does not require administration? This led to a lack of differentiation between administrative and project-specific expenditures in the account book of many organizations.

“Writing it down is difficult.” On some level, Yang understands where they are coming from.

Financial transparency is the principle of the Transparent Fish Lab. Then, the Lab may even play the role of the inspector. If an NGO registers and purchases a printer, Yang would make them take a photo of the printer and double-check the price online.

Someone actually got caught in this inspection. A particular NGO claimed that some admissions tickets were were 100 rmb each. But Yang found out that the tickets could be purchased at 70 a piece.

She called the NGO. Their accountants immediately sought out responsible parties and corrected the mistake.
There is more than genuine harmony here.

Trust
“Trust is behind transparency. Mutual trust leads to cooperation.”  This is the truth that Ping Chao came to understand.

“Official records show that there are tens of thousands of NGOs in China. The unofficial number is even higher.” FuLi Shang says.

At present, over 100 NGOs have registered on the Transparent Fish Lab. This number appears infinitesimal compared to the total number in NGOs in the country. Clearly, they are a minority.

But FuLi Shang believes that openness and transparency is the trend for the growth of NGOs. The Transparent Fish Fund has the right direction. As long as smooth communication across cultures is ensured, it will do well.
Ping Chao not only proposed the idea of transparency but also serves as a example of the practice.

On the website of the Transparent Fish Fund, one can find the dozens of NGOs to which Chao has donated as well as a record showing the flow of each sum of money.

Ping Chao plays two roles here.

One is the intermediary who promotes projects from the Transparent Fish Lab to an international audience, guiding them to form the habit of transparency.

The other is the fundraiser. If a given NGO stays active in the Transparent Fish Lab for longer than three years, rising from follower/ friend to business partner, the Transparent Fish Fund will sign a contract with them. As long as the other party promises to respect the conditions set by the Transparent Fish Lab, they will receive a sum of seed money.

“In the long term, I hope more and more nonprofits graduate from here, and begin to effect the nonprofit sector in all of China.”

Currently, money is not what worries Chao. He is worried about trust.

Ping Chao says, “I live in Silicon Valley, coming to the rural area of Lanzhou feels like crossing into a completely different world. In America, a hero could be like Steve Jobs or Mother Teresa. A good environment can have many heroes, and a diversity of values. It wouldn’t make anybody nervous. But who is the hero for people in China? I don’t know. Chinese people do not have a sense of security. Without a sense of security, how can you trust anybody, how could you be willing to help anybody? What I do, on one side is to mold people’s beliefs, another is to use “money talks.” The Transparent Fish Fund wants to utilize both aspects to push for transparency. We can only try to change people’s beliefs, but they must do what we tell them to. If you call that conditional charity, then there’s nothing I can do about it.”


Article Published by China Weekly Qian Yufang, Translation by TFish U.S. Intern Sarah Chang