As China Rises, its New Billionaire Class is Turning to Philanthropy

Jack Ma, China’s richest man, recently retired from business to focus on philanthropy. feelphoto/shutterstock

Jack Ma, China’s richest man, recently retired from business to focus on philanthropy. feelphoto/shutterstock

Last year, a study by UBS estimated that nearly one in five of the world's billionaires are now from China and that the country “has overtaken the U.S. as the place where exceptional wealth is created at the fastest rate.” This vast accumulation of riches at the top of Chinese society has led to record levels of inequality; it's also fueling a rapid rise in private philanthropy in China.

Over the past few years, several pathbreaking reports have analyzed China’s philanthropy boom, such as these published in 2017 by Global Ethics and the Global Chinese Philanthropy Initiative (GCPI), as well as the 2019 report from the China Philanthropy program at the Ash Center for Democratic Governance and Innovation, located at Harvard University’s Kennedy School, which includes data from 2017.

The Drivers

The GCPI and Global Ethics reports both note that philanthropy is rooted in Chinese tradition. Descriptions of Buddhist monasteries providing food, medicine and care to orphans can be found as far back as the Zhou dynasty (1046-256 BC). Benevolent societies and private individuals provided charity in the late Ming (1368-1644) and Qing (1644-1912) dynasties. The ancient tradition of Confucianism elevates the value of benevolence (Ren), especially the pursuit of altruistic deeds that bring honor to the family.

But there is nothing like a communist revolution to disrupt tradition. As the Global Ethics report notes, the transformation eliminated the wealth gap that is necessary for philanthropy. The 1991 Chinese Encyclopedia described philanthropy in less than flattering terms:

Through sympathy, pity, or religious belief, send money or material goods to those in need, or provide other practical aid to social programs […] with a heavy religious or superstitious hue, its aim is to do good things for good press […] for a small number of people, it is only a kind of temporary passive relief […] the social consequences are still disputed.

During this time, philanthropic organizations were dissolved or subordinated to government control.

Chinese philanthropy only revived with the onset of the Open Door reforms in 1979 and the transition to a market-based economy. The primary driver of the current wave of philanthropy is China’s remarkable economic growth since liberalization. In 2017, China’s GDP was about $12 trillion, second only to the U.S., according to the World Bank.

But the benefits of this growth have been distributed unequally. Although China has lifted more than 500 million people out of poverty over the past 30 years, income inequality has also increased. “Let some people get rich first,” exhorted Deng Xiaoping, and indeed, they have. Recent research by French economist Thomas Piketty and his colleagues shows that while the top 10 percent and bottom 50 percent both shared 27 percent of national income in 1978, they diverged dramatically thereafter; by 2015, the share of the former had increased to 42 percent while the latter had decreased to 15 percent. According to the Forbes 2019 list, there are now 324 billionaires in China.

But an analysis of the structural drivers is insufficient. Over the past two decades, politicians have gradually altered the legal and ideological landscape, making it more hospitable to the resurgence of philanthropy. The GCPI report notes that in 1994, the People’s Daily, the mouthpiece of the Central Committee of the Communist Party, published a commentary titled “To Eradicate the Prejudice Against Philanthropy,” which argued that philanthropy was compatible with socialism.

Since then, a raft of laws and regulations were adopted that gradually legitimated—and even incentivized—private giving. Most importantly, the 2016 Charity Law instituted a set of sweeping regulatory changes to the philanthropy sector. The law makes it easier for nonprofit groups to legally register and raise funds, encourages giving by improving tax incentives, and makes it easier to establish charitable trusts. It also provides a tax credit for businesses that make charitable donations. In addition, it removes restrictions on the number of organizations that can operate in an administrative area.

At the same time, another law passed in 2016—the Foreign NGO Law—promises to shift the balance of power in philanthropic activity. The law requires foreign NGOs to register with the Ministry of Public Security. In an interview, Edward Cunningham, the China Programs Director at the Ash Center, told me that he believes this law will constrain the work of foreign NGOs and result in a gradual shift from advocacy to services, and from foreign NGOs to local NGOs.

The Givers

These drivers have fueled a dramatic increase in Chinese philanthropy over the past decade. Between 2006 and 2016, the number of registered foundations in China increased from 1,046 to 5,545—a rise of 430 percent, according to the GCPI. The UNDP notes that the total amount of charitable donations increased by 66 percent between 2009 and 2014.

So who are China’s biggest givers? First, let’s be clear that this is not an easy question to answer. If you think it is difficult digging up information on American philanthropists, the task is exponentially more arduous in China, a country not exactly known for freedom of information and transparency. One challenge, according to Cunningham, is that “you have the dogs that bark and the dogs that don’t bark. A lot of the giving is religious giving, and this is not reported, so it is invisible.” An additional challenge is that the current political agenda of anti-corruption has “pushed a lot of giving underground,” because the wealthy are nervous about increasing scrutiny. Finally, Cunningham advises a “a massive grain of salt” regarding media reports of gigantic philanthropic pledges. Pledges can be part of a public relations or corporate strategy used to curry favor with party officials.

Only the Ash Center report attempts to rank Chinese donors in terms of absolute giving; it is notable that their methodology deliberately excludes pledges and instead counts donations only when they are actually disbursed. They distinguish between two types of donors—individuals and organizations. Here are the top 10 individual donors in 2017, although the list includes 13 people, because six people tied for eighth place, with donations of RMB 100 million (or about $15 million USD):

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Here are China’s top 10 organizational donors in 2017:

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Among the Chinese philanthropists drawing attention in recent years is China’s richest man—Alibaba founder Jack Ma, who is No. 19 on the list of individual donors, and recently announced he was retiring from his company to focus on education philanthropy. While Ma made his $37 billion fortune in tech, the Ash Center analysis reveals that the largest percentage of donors—both in terms of number of donors and donation value—come from the real estate sector.

The Recipients

Where is all this cash going? According to the Ash Center, in 2017, about 25 percent of the total donation value went to the education sector, while another 25 percent went to poverty alleviation. Despite recent high-profile pledges to environmental causes, such as the $1.5 billion pledge by He Qiaonv (No. 4 on the individual list) to wildlife conservation, the Ash Center data shows that, in 2017, only 3.5 percent of actual donations went to environmental causes. The report notes that most philanthropists believe that environmental protection is the responsibility of the state, not individual citizens.

The report also found that nearly half of all donors (44 percent) give within the same provincial jurisdiction as their corporate headquarters. Only five donated to recipients outside of mainland China.

Another striking finding is that the vast majority of donors focused their giving on a single cause. The authors speculate that this may be a feature of early-stage philanthropy, where giving is shaped mostly by personal experience and donors support the cause that most transformed their lives.

The Institutions

As Chinese philanthropy matures, a new philanthropic infrastructure is slowly emerging, with organizations sprouting up to gather data, facilitate peer learning and train donors to become more strategic in their giving.

In 2010, the China Foundation Center was created, which collects and provides data on foundations to decision-makers across all sectors. The Global Chinese Philanthropy Initiative was created in 2014 by five Chinese and U.S. philanthropists, including Bill Gates and Ray Dalio, the founder of Bridgewater. It aims to promote collaboration between Chinese and American philanthropists and cultivate the next generation of Chinese and Chinese-American givers. Around the same time, Dalio also funded the creation of Harvard’s China Philanthropy program in order to focus on research and training Chinese philanthropists—in essence, a philanthropy school for China’s new class of super-rich.

Several new online platforms—such as the Tencent Online Donation platform, Sina Micro-Philanthropy Platform, and Alipay E-Philanthropy—have also empowered new donors and grantees, making it possible to donate while playing League of Legends, shopping on Alibaba, or WeChatting with friends.

The Meaning

But looking beyond the numbers and the institutions, is there a larger cultural and historical significance to the growth of Chinese philanthropy? Cunningham suggests that there may be conflicting implications of this phase of China’s evolution. “Historically, philanthropy has been strong when the state was weak and unable to provide,” he says. In an interview with Town and Country magazine, Orville Schell, the director of the Center on U.S.-China Relations at the Asia Society in New York, also articulated a nuanced perspective: “Harshly put, largesse reduces its recipients to beggars. This tectonic shift in the world of philanthropy signals China’s moment of arrival. Remember that it was once called ‘the sick man of Asia.’ There is a deep and complex psychology behind China’s rise, and philanthropy is just its newest form.”