No Philanthropy Boom to Match China’s Economic Fortunes

Print Share on LinkedIn More

October 23, 2010; Source: Time | Thanks to China’s economic fortunes, the country is only second to the United States in the number of billionaires—at least 189 so far. But the amount of money being given to charity by billionaires and others pales in comparison with this country.

For instance, donations last year of $7.5 billion are a fraction of the $300 billion in annual giving in the United States. Although such high profile U.S. givers as Warren Buffett and Bill Gates have visited with wealthy Chinese and participated in events designed to encourage more personal giving, “the awareness for philanthropy is still relatively low,” Deng Guosheng, director of Innovation and Social Responsibility Research Center at Tsinghua University, tells Time magazine.

Along with the lack of a cultural impetus to give, government policies also aren’t providing much motivation. While there is a national tax deduction for Chinese givers, that policy only applies to what the magazine describes as “the very few government-sanctioned charities, which are commonly blamed for lack of transparency or even corruption.” Fearing his pledge of $30 million to help low-income households would be diverted to other than charitable purposes, Cao Dewang, CEO of Fuyao Group, the biggest glass manufacturer in China, made the China Foundation for Poverty Alleviation sign a contract pledging that the money go to the intended beneficiaries.

Also complicating the growth of Chinese philanthropy are laws that don’t allow private foundations to accept and distribute money, leaving them with little to do to help address social issues or demonstrate the potential for philanthropy to help do good in the country.—Bruce Trachtenberg

  • Jay Frost

    Why is American philanthropy so large in comparison to other countries? The answers are relatively simple: First, we have a large and robust third sector with organizations of sufficient scale and history to successfully solicit and accept large donations; and, Second, we have tens of thousands of fundraisers who are effectively making the case for support. These two elements are still largely absent everywhere else in the world. Where those elements are changing, as they are so rapidly in Canada, the UK, Australia and other places where governments have simultaneously pulled back on their support for higher education, health care, the arts and social services and made it easier for civic organizations to form, conduct business and raise private contributions, giving is growing quickly. China’s third sector may be transforming faster than almost anywhere else in the world. Just as they have gone from bicycles in Beijing to becoming the world’s largest auto market last year–with some predicting 50 million auto sales annually by 2030!–Chinese nonprofit sector growth is likely to continue at a very fast pace in the coming years. According to McKinsey & Company, “like most segments of China’s economy, the nonprofit sector has grown at a heady pace over the past few years, expanding from roughly 6,000 registered groups in 1999 to about 150,000 in 2005.” That number is already far higher today. And with the introduction of each new organization, more fundraising activity generates more contributions. But will Chinese philanthropy become as large as that in the US? Certainly not right away. But it is quite logical to assume that, barring any major new interference from the Chinese central government, the growth in personal wealth, expansion in the number of nonprofits and professionalization of fundraising are all likely to drive a volume of giving that could easily dwarf that in the United States in the future. We may well already be experiencing a major shift in the future of philanthropy.

  • Melody Song

    As a native Chinese and a prospect researcher in Canada, I think China still have a long way to go and need to grow the middle class (which is still a very low percentage comparing to the rest of the population) to support non-profit organization. China also needs a more democratic environment and more transparent government (corruption is seeping through every corner of the Chinese society) for non-profits to flourish.