At 7:00 a.m. on a Sunday morning in December, volunteers from the Buddhist Compassion Relief Tzu Chi Association are preparing breakfast for a group of impoverished people at a park in Sunnyvale, Calif., in the heart of Silicon Valley. Douglas Ling, who leads the volunteers, is an immigrant from Taiwan. He settled in the area more than two decades ago and has led the Sunday breakfast in Sunnyvale for the past five years. Before he started hosting the breakfast, he never would have believed that there were so many people in need in such a wealthy area.

Tzu Chi members serve free breakfast in Sunnyvale, Calif. (Photograph by Douglas Ling)

Ling warmly greets everyone who comes. Nearby, Abram Aznive, an Iranian hair stylist who offers free haircuts to breakfast attendees, says she discovered Tzu Chi's activities by accident and was moved. The weekly breakfast is one of the numerous activities that Tzu Chi’s volunteers have undertaken in the San Francisco Bay Area and around the globe.

Tzu Chi is one of the most influential civil and religious organizations in the non-Western world. Established by Cheng Yen, a young Buddhist nun, and several women in Taiwan in 1966, the humanitarian organization has evolved from a small local charity into a global NGO that operates in more than 90 countries. Tzu Chi works in both the wealthiest nations in the world, like the United States, and in countries facing the brunt of the most serious natural and human-made disasters, such as Afghanistan. The group’s activities range from charity service to relief work after disasters such as the 1991 flood in eastern China, the 2005 tsunami in South Asia, and hurricanes Katrina and Sandy in the United States.

In 2009, Tzu Chi became the first overseas NGO the Chinese government officially approved as an independent private foundation, following its more than 20 years of disaster relief and education work in rural areas in China. And during the organization’s 50th anniversary in 2016, President Barack Obama sent David Myers, director of the Center for Faith-based and Neighborhood Partnerships in the US Department of Homeland Security, to Taiwan to express the US government’s gratitude for Tzu Chi’s long-term engagement in disaster relief work. Given the rare prominence of Asian civil society associations in the global and transnational philanthropic field, Tzu Chi’s achievements are remarkable.

Beyond the Cultural View

One of the more popular ways to explain Tzu Chi’s success is “cultural perspective”: the idea that culture functions as a self-regulating system. In this view, when government provides certain social functions below the requisite level, society will supplement these functions. Tzu Chi thus has gained momentum by, in many ways, replacing certain social welfare functions of the governments of many countries where it operates and continuing Chinese religious traditions of welfare provision.

This cultural perspective offers a convenient explanation for Tzu Chi’s rise, but as several critics have pointed out, it has many weaknesses. Most significantly, it often regards new social organizations as a continuation of tradition, while ignoring their new elements. It assumes that cultural values and institutions are relatively stable, and that significant cultural changes are difficult for a society to absorb, thus making social innovation hard to achieve.

From this perspective, the prevalence of traditional Chinese religious culture in Taiwan may seem like an obstacle to social innovation. And indeed, many scholars have viewed Tzu Chi’s emergence not as an innovation but rather as part of a resurgence of traditional values in reaction to the unrest brought about by the democratization of Taiwanese society from the late 1970s through early 1990s. However, this popular view leaves many things unexplained, because it overlooks the importance of organizational innovation in the rise of Tzu Chi.

Most researchers agree that early organizational structures can play an important role in determining the way that social change progresses. For example, Stanford sociologist Woody Powell, in a series of groundbreaking studies, argues that highly flexible academic and industry networks were fundamental to the rise of biotech companies in the 1990s. Similarly, University of Chicago political scientist John Padgett shows how certain innovations of the modern financial system developed due to the structure of medieval Florentine families and their business networks. Padgett and Powell elaborate on this paradigm in their 2012 book The Emergence of Organization and Market. In contrast to the cultural perspective, the organizational innovation perspective they put forward provides the necessary tools to understand Tzu Chi.

The Organizational Innovation Behind Tzu Chi

The majority of traditional Chinese religious institutions, such as temples, rely on limited sources of funds. One of the most common is “incense oil money,” which believers donate after visiting the religious site. Religious organizations use some of this money to do charitable work. East Asian nonprofit organizations in China and beyond also frequently depend on government funding to support their daily operations, and government grants often become the most important source of revenue in their budgets. Although this public funding helps nonprofits solve the immediate problem of insufficient resources, it has the negative effect of discouraging them from developing their own fundraising capacity.

On the other hand, government funding has never been a major source of revenue for Tzu Chi. Instead, the organization has achieved financial autonomy through an organizational innovation that I call “the decentralized funding system.” This system differs from that of traditional religious charities in its approach to both fundraising and decision-making. People who join the organization have both the responsibility to fundraise and the right to participate in the decision-making process. They are called “commissioners,” a term with a meaning similar to “board member” in a private company.

Early Tzu Chi commissioners, who were primarily women, came from diverse sectors. Many of them had experience in business, while others worked in government. This diversity in backgrounds, and most commissioners’ relatively high social status, encouraged a democratic culture and fostered a sense of shared responsibility. Commissioners were decision-makers, fundraisers, and social workers all at once.

This volunteer model was new to Taiwanese society and attracted attention from outside the traditional religious realm. Its significance as a new organizational system is evident in the differences between the way Tzu Chi and traditional culturally Chinese religious organizations conducted charity work. These traditional religious organizations did not carefully evaluate the impact of the relief they offered. They were not held accountable to their donors, and the donors often had no right to question how the temples used their money or to influence its distribution. Poverty relief work was considered an aspect of religious practice and usually occurred on New Year’s Eve.

In contrast, Tzu Chi held itself accountable to its donor-members and thus focused on building an effective system of poverty relief that measured its own impact. To demonstrate that a cause was worthy of receiving aid, a commissioner who supported it had to collect evidence and make the case at a monthly commissioners’ meeting. Gradually, the organization developed a procedure that guided the investigation process and criteria to determine the amount of assistance it would provide. If the commissioners approved it, the organization gave aid to help recipients return to a normal life after a setback, and, in some cases, long-term financial support to those who were unable to provide for themselves.

This decentralized authority structure also helped the organization build a relatively egalitarian and pluralistic organizational culture in its formative period. The organization took on the slogan “competing for social good.” Beyond the requirement that its members follow basic moral principles, it allowed them to design their own fundraising procedures and encouraged them to develop innovative ways of solving social problems. For example, some members began to collect information about the poor in their neighborhoods to facilitate their charity work. Largely due to its inclusivity and flexibility, this small charity was able to quickly scale up its activities to become a regionally influential civil society organization in less than 10 years.

Iranian immigrant Abram Aznive gives a free haircut to a Tzu Chi breakfast attendee in Sunnyvale, Calif. (Photograph by Douglas Ling)

The Limits of the Organizational Innovation

These crucial innovations in the early Tzu Chi organization help explain why it has been able to achieve its current global status. However, from an organizational evolution perspective, it is difficult to sustain innovation while maintaining a continuous pattern of growth. As an organization develops, the growth of its bureaucratic system can serve as an iron cage, locking its members into a rigid structure that does not give them incentives to offer fresh ideas, try out new practices, or interact with people outside of organizational boundaries.

Most successful large organizations find it difficult to avoid this decline in creativity. And as many have pointed out, it seems that even an organization as successful as Tzu Chi may not avoid this fate. Tzu Chi's organizational culture seems gradually to have become more rigid. It now requires people to clear more hurdles, such as completing an internship, before they can become full members. It is also now more dependent on a small number of wealthy donors. However, the same organizational features that helped Tzu Chi take off, such as its diverse membership, put the organization in a better position than most to cope with the tendency toward declining creativity.

In a recent healthy development, Tzu Chi helped create Taiwan’s first B Corp, DA.AI, a technological social enterprise that manufactures environmentally friendly products. Developments such as this show the continued engagement of this Asian philanthropic giant with new ideas and suggest a promising future for philanthropy in Asia.