Philanthropy's New Frontier: China

Philanthropy's New Frontier

Once reviled, charitable giving is growing in China, thanks to a new generation of wealthy individuals

By Ian Wilhelm

http://philanthropy.com/free/articles/v19/i23/23000701.htm

Mao Zedong formed the People's Republic of China in 1949 after a long and bloody civil war. Among

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the revolutionary leader's many victims was philanthropy.

In the communist nation he established, the government oversaw citizens' welfare from cradle to grave, while private giving was reviled as a symbol of elitist wealth and an affront to the classless society Mao preached.

Six decades later, Chinese philanthropy is re-emerging.

Thanks to its state-run capitalism, China is experiencing massive economic growth. New millionaires are being created at roughly the same pace as in the United States. While many of the affluent are known for their lavish way of life, members of this growing generation of wealthy Chinese are developing a taste for charity.

From 2003 to 2006, mainland China's five most-generous individuals gave at least $640-million to charitable causes, says the Hurun Report, an Asian personal-finance magazine that creates an annual list of the country's biggest donors.

Perhaps the best-known philanthropist is East Asia's wealthiest man, Li Ka-shing. Mr. Li, who lives in Hong Kong, which is part of China but operates under different laws, has donated more than $1-billion during the past four decades in hopes of inspiring a "culture of giving" among Chinese.

"I respect anyone who is willing to contribute his time, energy, and resources to helping the needy," he said in an interview with The Chronicle.

Cultural Differences

The rise of Chinese giving has piqued the interest of American fund raisers. While almost all foreign charities are barred from soliciting within mainland China, U.S. universities and other large nonprofit institutions are sniffing out opportunities to inspire Mr. Li and other Hong Kong tycoons to support their work.

The University of California, for example, in August announced that it had established a fund-raising arm in Hong Kong, to allow Asian donors to receive tax benefits for gifts to any of the system's campuses.

But while such efforts have borne fruit, experts in Asian philanthropy caution that charities need to be savvy about the cultural differences between East and West before expecting windfalls.

Within China itself, the government has gingerly promoted giving and charity work to help close the gap between the haves and the have-nots. While the nation has a growing rich upper class, about 10 percent of its 1.3 billion citizens continue to live on less than $1 a day.

To encourage antipoverty work and other efforts, in the past few years the government has set up regulations to govern nonprofit activities. In 2004, the government ordered homegrown foundations to donate at least 8 percent of their assets each year — U.S. law requires 5 percent — and in January the Ministry of Finance and the State Administration of Taxation set the requirements that a "nonprofit public-welfare social association" must meet to receive tax-deductible donations.

China, however, is wary of giving too much financial and political independence to the country's nonprofit groups, which number around 340,000, though other estimates place the number around two million.

'Mother-in-Law Rule'

The largest and most high-profile nonprofit organizations often are run by retired government officials, and the Ministry of Civil Affairs requires charities to be sponsored by a different government agency to apply for nonprofit status. The regulation, known informally as the "mother-in-law rule," often serves as a barrier to receiving state recognition.

"You need to find a supervisor first, before you can register. But many government organizations will refuse to supervise you," says Yiyi Lu, an expert on Chinese charities and a researcher at the Royal Institute of International Affairs, in London.

Red tape is not the only obstacle facing philanthropy in China.

Other problems include the lack of public information about nonprofit groups, the perception that some donations are bribes to government employees, and the view that wealthy individuals make gifts to benefit their business interests.

Despite these challenges, the Asian nation's economic success and emerging status as a global superpower mean it will have a huge influence on the nonprofit world.

Indeed, some financial analysts predict that China will surpass the United States as the world's largest economy in 20 years. And if the country's cultural and bureaucratic obstacles to charity fall, Chinese philanthropy in the future may someday overtake the storied generosity of the West