Philanthropy in China: Part II

This is a guest post from Dien Yuen, Director of Philanthropy at Give2Asia. The New York Times recently ran an article titled In China, Philanthropy as a New Measuring Stick. I thought that as Chinese philanthropy evolves, the Tactical Philanthropy community would be well served to understand the history and stay on top of new developments.

Read Part I of this series here.

By Dien Yuen

Philanthropy during the Sichuan (Wenchuan) Earthquake

Even before the Sichuan Earthquake, charitable giving was becoming a trend in China. Social needs, shifts in government policies and the existence of new private wealth contributed to the growing trend. During disasters, the outpouring of assistance from individuals and corporations were beginning to increase and the number of donors making large donations was rising. Newspapers report that more than 11 billion yuan (US$1.3 billion) was collected for philanthropic purposes during the Yangtze River’s catastrophic flood in 1998. In addition to domestic giving, Chinese donors were also interested in supporting disaster relief overseas. US$18.11 million was raised from individuals and corporations in China to support the Asian tsunami relief efforts.

In a report prepared by the China Charity & Donation Center for Give2Asia’s Beijing Philanthropy Forum, the amount of China’s charitable donations had sustained an annual growth rate above 65%. In 2007, the top 50 donations from individuals totaled RMB2.58 billion (US$377 million), representing 62% of total donations by individuals. Contributions that year supported education (37%); poverty alleviation (14%); disaster relief (12%); medical treatment and public health (9%); culture, sports and the arts (6%); and environmental protection, women and children (22%).

On May 12, 2008, the Sichuan Earthquake dramatically changed the philanthropic and CSR landscape in China. The earthquake claimed 70,000 lives and left five million homeless. That year, China experienced unprecedented giving due to the earthquake and Olympic Games. The total charitable donations in China reached RMB107 billion (US$15.7 billion), three times what it was in 2007. 72% of donations from the top 100 corporations and top 50 individual donors went to support disaster relief, including the snow storm disaster relief in January 2008 and the Sichuan Earthquake relief later in the year.

While the amount of donations is staggering, several trends also emerged. First, the Chinese are beginning to use innovative ways to raise the funds. China Mobile organized a donation hotline linking five charities to subscribers who can donate one or two yuan by simply sending a text message. Ten days after the earthquake, mobile users donated nearly 100 million yuan (US$14 million) using this method. Since there are 641 million Chinese cell phone users, text messaging has proven to be a very effective fundraising tool.

Second, philanthropy is now fashionable. Movie-star Jet Li was able to leverage his stardom and is bringing media attention to charitable giving and volunteerism in China. Dubbed “China’s Philanthropy Champion,” Jet Li is encouraging more people to give – even if it is just a small amount. Jet Li’s One Foundation has raised $13.7 million since July of this year.

Third, the Chinese government learned that it was easier to raise funds than to spend them efficiently. Working with private funds and being transparent about how the organization spends it, is still a new concept for many NGOs in China. During the earthquake, China’s NGOs jointly made a statement of self-discipline in disaster relief efforts. However, the NGO sector is still growing and faces many challenges, including restrictive laws, weak internal management and governance structure, lack of full-time professional staff and unstable funding sources. While the Chinese people responded generously to the appeal for aid, they are also worried about misappropriation of their donations. 95% of Chinese participated in donations of various forms during the disaster and over 50% of them were worried about the misuse of funds.

Fourth, corporate citizenship and accountability are taken very seriously in China. Many foreign corporations announced gifts in line with their CSR policy to support disaster relief efforts. Unfortunately, the popular perception was that the international firms’ contributions were small in terms of scale or they did not respond in a timely manner compared to the responses of the local Chinese companies. Chinese consumers quickly organized or threatened to boycott their products and a list of “iron roosters” appeared. The U.S. – China Business Council began recording donations of its member companies and published them on its website to encourage transparency. One year later, there was a threat to publish a “black list” of all the corporations that had not fulfilled their pledges.

Philanthropy Post-Sichuan (Wenchuan) Earthquake

The earthquake fast forwarded China’s charitable sector development and activated ideas of how and what Chinese philanthropy could become. The 2009 First Half –Year Report on Charitable Donations in China was released recently. It is not surprising to see that giving is down by 78.4% compared to the same time frame last year as disaster giving is usually a one-off event.

At Give2Asia’s Beijing event last year, Dr. Wang Zhengyao, Director General of Social Affairs & Charity Promotion at China’s Ministry of Civil Affairs said that while some believe that disaster giving is an unsustainable spike, he believes that the disaster has helped leapfrog philanthropic development forward in the country to a new level of permanent growth. Prior to the quake, volunteerism was a foreign concept for many Chinese. However, there are now 100 million volunteers in China.

Those of us in the field are fascinated. We watch, wait and anticipate  how Chinese philanthropy will evolve in the next wave.