Hui Yin Bi: The Philanthropists’ Banquet

Philanthropy in China faces some unlikely challenges writes Cecilia Fan from Beijing.

In the golden autumn of Beijing, Bill Gates and Warren Buffet decided to host a dinner inviting wealthy and influential Chinese people, not to discuss business and investment, but the less popular subject of philanthropy.

The Chinese had been taking guesses on why Gates and Buffet would take on this project and what the outcomes might be.

Scenario A: Gates and Buffet host a dinner to educate wealthy Chinese on the subject of philanthropy and encourage them to step up on their pitifully poor track record.

China’s top 47,000 richest millionaire’s have combined assets of more than US$2,000 billion in assets, yet the sum of individual donations only totals approximately US$3 billion in an average year.

Scenario B: Gates and Buffet press their guests to donate everything they have – to donate until they are “naked”. However, Chinese billionaires believe they need to invest every cent of their profits back into their businesses rather than divert their wealth into charity. The average rich person in China is in their early 40s and represents the first generation of wealth since the founding of the PRC. In contrast, rich Americans are on average 15 years older and can draw on a system of philanthropy that stretches back 100 years.

Scenario C: Gates and Buffet know China is still not ready to embrace philanthropy with open arms but they want to play missionaries, like the Christians who arrived in China a century earlier. If they start converting the Chinese now, perhaps they’ll see results in a hundred years or so.

To understand why the concept of philanthropy has yet to gain widespread acceptance in China, we have take a look at how the rich have accumulated their wealth and the challenges they face. Many Chinese entrepreneurs fail to provide fair working conditions for their employees, pay proper corporate and individual income tax, or to have any goal in life other than maximizing their profitability and income. Some have made their fortunes from exploiting child labor or illegal mining operations with substandard safety measures. It is no wonder philanthropy often sounds like an alien concept.

To be fair to the wealthy, China currently lacks strong legal and tax frameworks to encourage philanthropy. The system does not provide sufficient security to protect individual wealth and private ownership, and tax incentives for charitable donations are missing in both theory and practice. There is barely any legal framework allowing charities to operate independently of the government, few requirements for charity transparency and the government often levies “forced” donations from the rich. It is not a convincing and reassuring environment for nurturing philanthropy.

The media and public may possess the compassion required to drive philanthropy but they certainly lack the consideration required to channel funds effectively. After the Sichuan Earthquake, Wang Shi, a reputable businessman, encouraged his employees not to over-donate on a single event because he said he believes charitable efforts need to be sustainable over the long-term.
There was a public outcry and the company’s share prices plummeted, forcing Wang Shi to rethink his stance and donate RMB100 million to end the business crisis and satisfy public opinion.

This media-driven, emotionally-charged environment means many worthy causes are insufficiently covered or even completely ignored by philanthropists, simply because they are not championed by the media. Causes such as the endless battle with poverty, the helpless health system, assistance for mentally and physically disabled people, compensation for victims of historic political decisions are overlooked in the current environment.

Like many things in China, the concept of philanthropy appears to have been accepted on the surface fairly quickly but it is taking a long time to reach a certain depth.

Although Chinese billionaires such as Chen Guangbiao and Feng Jun have already announced 100 percent wealth donation plans, for a real philanthropic banquet to occur in China there are a number of conditions which need to be met, among those; an acceptance on the part of the Chinese Government that there are opportunities to have assistance from wealthy third parties in contributing to areas such as education and health; an understanding by wealthy Chinese of the consequences of leaving all their wealth to their children and foreseeing the consequences of the growing gap between the rich and poor; an emphasis on donations in the belief of contributing towards a more sustainable society rather than donating to enhance ones media profile; a media which provides a serious platform for discussions on philanthropical ideas and to become an advocate for government policy changes in accelerating the maturity of the public mentality; as well as educating the pool of China’s talent to grasp the theory and practice of philanthropy.

Mr Gates and Mr Buffett may have felt they left China with few accomplishments, but the publicity generated in the Chinese press and the public discussions which have ensued since their visit, are a positive step for philanthropy in China. 

*Hui Yin Bi, the Echo Wall, welcomes all feedback.
Contact Cecilia at cfan@bjconsultinggroup.com

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