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It’s a Given: the State of Chinese Philanthropy

by Ida Knox

June 7, 2017

Last November 11th, as billions of dollars in sales were being racked up during Alibaba’s eighth annual Single’s Day online shopping spree, the company’s founder Jack Ma saw his name flying around the internet for a different reason: A child from a poor family with an uncanny resemblance to him had suddenly become an online viral sensation. Internet users throughout China were calling for Ma to help this “Mini-Ma,” culminating in reports that Ma had pledged to cover the cost of the child’s entire education through university.

The report turned out to be false, but the premature joy expressed at Ma’s supposed largesse served to highlight the shaky realities of charity in China. While China ranks second only to the US in number of billionaires, it ranks 144th out of 145 countries on the 2015 CAF World Giving Index, which measures engagement in charity and willingness to help strangers. Similarly, the Hurun Report, a Shanghai-based wealth-research firm, reported that in 2014 China’s top 100 philanthropists gave $3.2 billion—which sounds impressive until you learn that the sum is less than the amount given by just the top three givers in America.

And the philanthropy gap isn’t limited to China’s top 1%. China’s per capita GDP is about one-seventh of America’s, but according to the Economist, China’s per capita giving is roughly one-hundredth of America’s.

“This whole sector is underdeveloped compared to other sectors,” said Zhong Zhenxi, the Executive Director of Shanghai Roots and Shoots, the local branch of the global nonprofit focused on environmental education and humanitarian care.

The numbers aren’t encouraging, but there are reasons to believe philanthropy is on the rise in China. Although Jack Ma declined to fund the education of his diminutive double, he did host the inaugural Xin Philanthropy Conference in Hangzhou last year, which brought together luminaries like former UN Secretary General Ban Ki Moon to discuss philanthropy issues. Moreover, Ma created a charitable trust with a partner five months prior to Alibaba going public in 2014, seeded with $50 million in share options. Those trusts are now worth nearly $3.5 billion, and are doing tangible good, for example through its rural education projects, which subsidizes schools and cultivates teachers.

“Each rural teacher will be given 100,000 RMB ($14,454) and each rural schoolmaster will be given 500,000 RMB ($72,270),” says Ge Shangqing, who helps manage the effort. The grants give teachers that have shown outstanding commitment to education the means to continue their work. “Teachers and schoolmasters will also have access to skill improvement and leadership promotion training.”

State of Giving

One factor that plays into China’s low rank is relative poverty—until recently people simply did not have a lot of discretionary funds available to donate. In addition, generosity in China is different from the West.

“[Charity] was a concept that no one was familiar with,” says Zhong. “In our culture we understand that we’re supposed to help our family members and our neighbors, but to help people that are complete strangers to us, that’s not a custom.”

The question becomes how to translate a traditional cultural approach that stopped somewhere around kindness to the modern concept of charitable giving. This has been made more difficult by high-profile fraud cases.

“We have [had] some bad cases… that led to some distrust in the whole nonprofit sector,” Zhong says. “If there’s a scandal about any charity or any individual abusing another person’s kindness, it hurts us all.”

Few can forget Guo Meimei, a teenager in 2011 who caused one of the biggest scandals in the social media era by fraudulently claiming employment by the state-run Red Cross Society of China. More recently, tech giant Tencent launched its “99 Public Benefit Day” in 2015, a charity fundraising project that collected RMB 600 million in just three days, but faced heavy skepticism about where the money was really going, highlighting the problem of transparency.

“There’s a lot of suspicion in China around charity, more than a lot of other places that I’ve seen,” says Ange Cruz, former Director of Charity Link, an organization that provides networking opportunities for over 50 NGOs in the Shanghai region. “There have been a lot of scandals in the past, but also… people like to give a lot of credence to gossip here.”

Generosity is the Law

Another factor in China’s relative lack of charity is strict government regulation, which has presented various problems when it comes to giving away wealth. In fact, the China Philanthropy Research Institute estimated that about 80% of donations by the wealthiest Chinese go to charities outside mainland China because the legal framework makes organizing a charity troublesome, including an insistence that virtually all NGOs take on government partners.

But last year, China passed a new charity law that has very important implications, both positive and negative. According to IRIN News, a portal for the humanitarian community, the law “includes improved fraud protection, relaxed registration requirements, and incentives such as tax benefits,” which it says may encourage charitable giving in China. The new law also removes the need for a government sponsor, replacing it with regulations for legal compliance and competent governance. Other regulations include a 10% cap on administrative spending and potential tax breaks.

The law is not without precedent or need. China currently lacks the basic institutional infrastructure necessary to promote philanthropy, with nine out of ten charitable organizations failing to meet basic standards for transparency, according to a recent report from Peking University’s Center for Participation Studies and Supports, that evaluated 93 charities across 31 Chinese provinces.

However, although regulation is necessary, the law has also prompted harsh criticism, particularly in that it still requires government registration.

“It’s been really difficult because [some NGOs] are not registered, and then this law brought forward that the organizations that they work for should be registered,” says Cruz. “Corporations are not willing to take the risk now that they know the government is paying attention to the non-profit sector.”

Impulse Giving

However, one unquestionably positive development is a surge in charitable activity by ordinary people boosted by technology.

In 2016, The China Charity Alliance (CCA) reported “a 127% increase in small-scale donations made via China’s top four online donation platforms last year.” In fact, over $140 million was donated through the top four platforms run by internet giants Sina Weibo, Tencent, and Alibaba subsidiaries Ant Financial and Tmall.

“The most positive thing about China’s modern philanthropic environment is just the level of enthusiasm from people from all sorts of backgrounds,” says Toni Friedman, the charities specialist at Community Center Shanghai. The center runs three charities: Giving Tree, which has donated over 100,000 bags of school supplies and winter clothes to children in need, River of Hearts, which helps place donated items, and Charity Link. “I feel like people are always trying to find ways to give back, which is awesome.”

When it comes to encouraging charitable donations, Friedman says what leads to a successful campaign is “being able to show donors the direct impact of their contribution, and connect them personally to your cause.”

Organizations like Teach for China do just that by bringing volunteer teachers to understaffed schools. In seven years, TFC has worked with over 90,000 students in Yunnan and Guangdong.

Philanthropy on Weibo, China’s answer to Twitter, has also grown in popularity. Campaigns have raised up to $6 million. It hasn’t been without struggle, as Ge notes, “People often challenge or query the charitable fundraising projects, even for the certified online fundraising platforms.”

But donations are coming in, and although Weibo charity only makes up a small part of China’s overall giving, it speaks to a general shift in the culture—people want to give back.

“What we’ve seen over the past year is a shift in giving,” said Tom Stader, the founder and Board Chair of The Library Project, which has donated to over 2,000 libraries throughout China in the past ten years. In 2016 alone they donated to 274 libraries in 53 regions, a total of over 1,376,650 books. “We’ve seen a shift in giving from foreign currencies to Chinese yuan. There has been an uptick in Chinese volunteers and a huge uptick in Chinese companies wanting to get involved as donors and volunteers.”

Stader adds: “The last 12 months have been nothing but positive with regards to the direction that the country is going.”

Zhong, whose 18 years working with NGOs in China have made her optimistic, feels similarly.

“People’s mindsets have changed over the years,” she says. “They find peace and happiness in giving, and they want to set an example for their children.”

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