China is a land of contrasts. There are more dollar billionaires here than in the US, but at the same time serious challenges to be faced when it comes to lifting up to 40 million people in Western China out of poverty. In addition, a long-standing one-child policy and a rapidly growing elderly population mean that in a few years the younger generations will face a significant burden in terms of caring for the elderly. Now, young single people may have to support not just their two parents, but also four longer-living grandparents. In addition, there is the obvious challenge of restructuring the country’s energy production, moving away from a reliance on some of the world’s most polluting coal-fired power stations towards more sustainable energy.
Alongside these challenges, market reforms have accelerated in the new millennium creating new conditions for philanthropy in China. These challenges create an urgent need for philanthropic foundations to play a bigger role in Chinese society. Between 2010 and 2016, charitable donations and philanthropic activities among China’s top 100 philanthropists alone more than tripled. According to the China Social Enterprise and Social Impact Investment Development Report, published in 2017, more than 40 of China’s 200 richest people have established charitable foundations.
While philanthropic trends in China are in line with the global trends, during my recent visits to China as a foundation professional, I’ve noticed five tendencies reflecting the country’s unique roots and traditions.
1. Focus on education and social harmony
Employing education as a lever to lift children and young people out of poverty is one the priorities of philanthropic activities in China. This is partly because this is an area where there is evidence of the impact of invested funds and partly because it is a politically ‘safe’ area compared to activities in areas such as human rights, freedom of expression and support for certain minority groups. Another popular charitable aim is the promotion of ‘social harmony’, a traditional Chinese notion rooted in Confucianism. One of the main players in this philanthropic field is the Guangdong Harmony Foundation, a private fund established in 2009 by a group of like-minded entrepreneurs from the Pearl River Delta region.
2. New legislation helps and hinders
In early 2017, China introduced the so-called Charity Law, which aims to increase transparency and professionalism in Chinese foundations. The goal is to bring more legitimacy to the sector after a series of national scandals hit charities such as the Red Cross Society of China and the China Charity Federation after the earthquake in Sichuan in 2008. The law has been effective in creating legitimacy in a new growth industry, but has been criticised by many for making it harder even for reputable foreign foundations to operate in the country and for preventing many NGOs from receiving resources.
3. Lack of competences and qualified employees
In China, the state has set a limit for administrative costs of 10 per cent. This makes it challenging for many foundations to recruit qualified staff who can manage their ongoing tasks and help professionalise the individual foundations and thereby the overall sector. In tough competition with the commercial, market-driven jobs, the charitable sector is struggling to attract top people – and unfortunately often loses out, since it offers neither the prestige nor the salaries of the commercial market.
4. Centre educates and strengthens the sector
Despite the obvious challenges and barriers in the Chinese foundation system, recent years have seen the development of a new professionalism and a new ecosystem for supporting philanthropic activity. An important venture in this context is the establishment of the China Global Philanthropy Institute, a knowledge and skills development centre, initially established in Shenzhen and later also Beijing. The centre was founded and is financed by five prominent philanthropists from the United States and China: Bill Gates, Ray Dalio, Niu Gensheng, He Qiaonyu and Ye Qingjun. It provides training and services to foundations throughout China and operates as a think-tank to promote philanthropic development in China and generate new knowledge. The goal is to enhance innovation, professionalism and participation in charitable activities, both in China and the rest of the world.
5. A Facebook for philanthropy – technology as a driver
China currently has the world’s largest number of internet users and is the fastest growing market for e-commerce. In addition, many of China’s wealthy people earned their fortunes through technology and e-commerce companies, such as the successful e-commerce portal Ali Baba, which today is the world’s largest e-retailer with operations in more than 200 countries, where it provides consumer-to-consumer, business-to-consumer and business-to-business sales services via the web. Today, technology is also a driver for the increase of philanthropic donations. For instance, after the earthquake in Sichuan in 2008, the internet service provider Tencent developed an online platform where ordinary Chinese people could donate to emergency relief efforts. Tencent rapidly raised 20 million Chinese Yuan and subsequently managed to retain donor engagement. The vision was to create a Facebook for philanthropy.
Whither Chinese philanthropy?
Given these trends and developments, what’s next for philanthropy in China?
From the age of the ancient temple clans, there has been a tradition in China of the country’s richest helping the less well-off. However, private charity stagnated after the Communist revolution in 1949, when all forms of private initiatives were shut down and foreign NGOs were expelled from the country. It was considered the Maoist regime’s task and exclusive right to support China’s population. Helping society’s most vulnerable people became an internal matter, and foreign aid was no longer wanted or lawful. However, the market reforms carried out through the ‘90s and ‘00s changed China markedly in a relatively short time.
Despite these reforms and the new market forces, there are also foundations in China, such as the Tzu Chi Foundation, which are based on Buddhist principles and microfinancing, and whose funds derive from small amounts collected among the lower middle class. These amounts are donated based on the philosophy that it is the giver who is the lucky one. For this reason, the volunteers bow to the recipients of aid when they distribute food and blankets after an earthquake, or when a new school is opened. In keeping with Buddhist tradition, the volunteers don’t distinguish between whether it is a Catholic or Muslim school that is being built. Here the higher end of compassion justifies the means.
What the future holds for the philanthropic sector in China remains to be seen.
On one hand, the sector is being given a strong boost through increased cash flows. On the other, the considerable amount of regulation hampers many initiatives and limits the opportunities for NGOs to act. So what does China need from other countries to strengthen and stimulate its charitable sector? The short answer is that the greatest need is not necessarily more foreign capital for initiatives and projects. What’s needed most is inspiration and experience from the long American and European tradition of charitable foundations in order to build the capacity for a strong and transparent foundation sector.
Susanne Dahl is director of Copenhagen Philanthropy and an advisor to charitable foundations in Denmark and abroad. This is an edited translation of an article which appeared first in Danish publication Altinget.