Corruption Crackdown, Charity Law May Dampen Rise of Philanthropy in China

Corruption Crackdown, Charity Law May Dampen Rise of Philanthropy in China
Photo Credit: Bill Gates
What you need to know

China's billionaires are starting to embrace philanthropy, but will the new Charity Law and an anticorruption campaign stand in their way?

China ranked second worldwide in 2015 for the largest population of billionaires, and the level of philanthropy in the country has been improving, albeit slowly.

In 2010, U.S. business magnate Warren Buffett and Microsoft co-founder Bill Gates hosted a banquet in China to persuade millionaires in the country to embrace ideals of charity. However, it was reported that only a handful of the 50 invited guests attended the event.

Among those who showed up were Sohu CEO Zhang Chaoyang (張朝陽), Alibaba chairman Jack Ma (馬雲), Baidu CEO Li Yanhong (李彦宏), and SOHO China founders Zhang Xin (張欣) and Pan Shiyi (潘石屹). But not one of the few participants committed to making a donation at the event, Hong Kong's Ming Pao reported.

After the event, Jack Ma said what happened at the banquet “was not because the rich in China are stingy, but because the charity industry in China has just started to grow.”

The 2015 CAF World Giving Index ranked China 144 out of 145 countries, and “philanthropy contributed only 0.17 percent to China’s GDP in 2014, while in the U.S. it accounted for 12 percent,” reports Forbes.

Despite these statistics, compared to six years ago charity in China is undoubtedly on the rise.

U.N. Secretary General Ban Ki-moon says participants at a charity event in Beijing last month were enthusiastic to share their wealth, unlike the banquet six years earlier.

The Economist reports that generational change is a reason for this progress with the emergence of “a crop of youngish technology billionaires, keen to ‘democratise’ philanthropy,” and being “much more likely than older ones to give money to more politically sensitive areas such as the environment and public health.” These young entrepreneurs are also helping charities improve their operations through technology.

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Photo Credit: Reuters/達志影像
Charity Law

Earlier this year, China passed a new Charity Law allowing non-profit groups to legally register and raise funds. The law also improves tax incentives to encourage the wealthy to establish charitable organizations or make donations.

Although some have said the new law is an indication that the country has realized the importance of philanthropy, there are concerns that local governments could choose to resist the new law, which will come into force next month, because they “don’t understand or are suspicious of charitable activities,” the Wall Street Journal reports. “With Mr. Xi [Jinping (習近平)] pressing an aggressive anticorruption campaign, many local officials are also afraid to be seen as being too cozy with wealthy donors.”

The Chinese Human Rights Defenders also reports that “With the Charity Law, the government has added more legal restrictions on Chinese NGOs’ abilities to raise funds, which could in turn lead to repercussions for groups that seek and receive financial support.”

All online fundraising is restricted under the new law.

There are also voices saying the new law could further restrict international NGOs that are already facing difficulties with draft amendments made to China’s NGO laws also earlier this year.

First Editor: Edward White
Second Editor: J. Michael Cole