Philanthropists and Trust in Mainland China

Text by Johann Loh
Photo by Wikicommons

When Chinese Billionaire Jack Ma set out to establish charitable trusts worth more than US$3 Billion, the last thing he probably expected was to be criticised for it. In a blog post dated February 2015, he wrote about his dismay from reading an “authoritative report” which had stated that 80 per cent of Chinese charitable giving was being channelled overseas. The report, said Ma, earned him a great deal of criticism, with even government officials paying attention. His blog post, written in Chinese and posted on Sina, was titled “doing a public service by donating money, but ending up broken-hearted”. Ma’s experience is hardly unique, reflecting a general spirit of distrust for philanthropy and philanthropists within China.

Certainly, philanthropy in China has been growing, burgeoned by past economic growth and an increasing number of high net-worth individuals. 2013 saw 208 philanthropic donations that exceeded US$1 million in value, for a total value of US$2.65 billion. In comparison, the value of such donations in 2012 was less than half of that, at US$1.18 billion. But while the rate of growth appears promising, the total amount remains at a fraction of more-developed donor markets – the total charitable donations in China in 2012 was approximately 4 per cent of that of the US.

Public distrust in charitable institutions was first precipitated in 2011, following a series of scandals. In April 2011, an invoice for the equivalent of over US$1500 was posted on social media, paid for by the Red Cross of Shanghai Luwan District for meals at a high-end restaurant. Two months later, public outrage was again provoked by Guo Meimei, who identified herself as a general manager of the Red Cross Society of China while posting photos that flaunted her wealth and material possessions. These scandals, amongst others, revealed issues in the perceived lack of transparency and accountability of charitable institutions. And in the case of private philanthropy, individuals have also received adverse publicity, with people questioning their motives and levelling accusations of showmanship and the flaunting of wealth. Examples include recycling tycoon Chen Guangbiao, whose controversial acts of philanthropy have drawn the flak and ire of netizens on Weibo. In 2014, a photo of Chen’s business card went viral. The card listed 10 honorary titles for Chen, including “Most Influential Person of China” and “China Top Ten Most Honourable Volunteer”. While the online backlash to Chen’s business card may have been warranted, it was nevertheless a stern reminder that philanthropy, if seen in the eyes of the public as inappropriate, could lead to negative publicity for the philanthropists.

Public opinion aside, the government’s position on non-profit organisations also appears to suggest a number of misgivings. A new national security law, released in draft form in May 2015, seems to be aimed at providing security forces and courts with greater control over both Chinese civil society organisations and foreign NGOs. The draft law cites ‘ideological security’ and ‘cultural security’ as imperatives for increased regulation from the Public Security Ministry, highlighting fears from the government that non-profit organisations, far from being simply altruistic, may have ulterior motives in promoting doctrines contrary to those of the state.

This phenomenon of governmental distrust for non-profit organisations is not unique to China. In April this year, the Indian government instituted a series of crackdowns and restrictions against charities and activist groups, cancelling the registrations of almost 9000 non-governmental institutions, suspending the registration of Greenpeace India for affecting the “economic interest of the state”. It also placed the Ford Foundation on a watch list of donors, requiring official approval for any grants issued. Despite an apparent shared motivation towards improving the conditions of the public, the conflict of ideology between the government and the NGOs led to a breakdown of trust, and potential repercussions for a large number of developmental programmes across India.

But adding further to the problems philanthropists face in China is the difficult regulatory environment for non-profits looking to set up. Private non-profits and philanthropies have difficulties gaining official recognition without partnerships with Chinese governmental organisations. Without such recognition, non-profits are unable to hold fundraising activities or gain tax-exemption status. At the same time, having a partnership with a governmental organisation would mean losing a degree of control over philanthropic activities and funds. As it stands, there is little reason for philanthropists to actively donate money, an act which would potentially garner unwanted attention and accusations of ulterior motivations.

Yet not all hope is lost. Even as China increases restrictions on civil society activity, a long-discussed Charities Law has been gaining momentum, with a draft law prepared earlier in the year. This Charities Law would provide charities with greater means for raising funds from the public and lower barriers for social organisations. In the annual Government Work Report to the National People’s Congress, it was mentioned by Premier Li Keqiang that the government plans to promote charities in 2015. It is clear that the Chinese government recognises the potential of philanthropy in promoting desirable outcomes. Nevertheless, without a history of trust towards philanthropy, the state has chosen instead to institute a regulatory environment which may deter potential philanthropists.

As a result, philanthropists have been slowly working towards gaining trust by proving to both the Chinese public and government that they have a shared identity and a shared set of motivations. In one interview, Jack Ma noted that while he did want to influence government policies, he aimed to do so in a collaborative way; sitting down to work with the government rather than confronting them. Other philanthropists have also recognised that promoting philanthropy may in itself be an effective use of their funds. In 2005, Yang Lan, known informally as the Oprah of China, started her Sun Culture Foundation, which aimed not only to improve education in China, but also to create a culture of charity and a supportive environment for philanthropy. Other organisations, such as the China Foundation Center, aim to bring greater transparency to philanthropic foundations in China.

Building trust will require a great increase in the visibility of tangible positive impact – and that may be difficult, given that philanthropists and foundations want to remain discreet. In some ways, it’s a chicken and egg problem – philanthropists fear repercussions, and so they stay quiet. But only when trust is built will these repercussions subside and philanthropy flourish and this perhaps requires more outspoken and credible Chinese philanthropists such as Ma himself.

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