MATT KIRSCHNER discusses the history and development of philanthropy in China.
Philanthropy is not new to China. Fan Li (范蠡) served as an advisor to King Gou Jian (勾践) of the state of Yue during China’s Spring and Autumn period (771 – 476 BC). Generations of Chinese remember Fan Li for his work streamlining administration in the state of Yue, building a formidable army, and helping conquer Yue’s rival state of Wu; however, few people remember Fan Li for his contributions in the realm of philanthropy. After conquering the state of Wu, Fan Li resigned from his post and amassed a large fortune as a successful merchant. Over the span of 19 years, Fan Li redistributed all his wealth to locals—especially the impoverished. Fan Li believed that wealth should cycle between rich and poor the same way water cycles between land and sea. Fan Li’s reputation spread far and wide, and Chinese people today revere him as the legendary God of Wealth (财神).
Confucian thinkers embraced concepts of welfare as early as the Zhou dynasty (1047 BC – 772 BC). The philosopher Mencius, one of Confucius’ disciples, once said, “In poverty, one should still hold himself to a high standard; and when prosperous, one should contribute to the well-being of all.” Religious institutions such as Buddhist monasteries furthered philanthropic initiatives by providing food, medical relief, and care to impoverished people. Inspired by Buddhist teachings, two princes from the Southern Qi dynasty (479 – 502 CE) established China’s first philanthropic organization—the Liuji Guan—to assist China’s sick and destitute. Chinese philanthropists continued to emerge throughout history long after Fan Li’s death.
Philanthropy, nonetheless, encountered more than a few roadblocks in China, foremost being the Chinese Communist Revolution of 1949. The Chinese Communist Party (CCP), under the leadership of Mao Zedong, aimed to redistribute wealth and power away from old elites to the rural poor by seizing landowners’ property, abolishing private enterprise, and banning free markets. In order to take full control over wealth distribution, the CCP annihilated private philanthropic initiatives and charities and monopolized the right to provide for all public goods. The CCP also renounced religious and cultural institutions, such as Buddhism and Confucianism, which posed a threat to the CCP’s supremacy. China’s crusade against free markets continued until Deng Xiaoping, one of the CCP’s central leaders, implemented sweeping economic reforms through his 1979 Open Door Policy—a new policy to open China’s doors to foreign business. Investment flowed into China like a swift river, rapidly expanding China’s economy from $178 billion USD in 1979 to nearly $15 trillion USD today. Open markets flourished alongside a strong upper and middle class, whose investment capacity and ability to provide public goods far exceeded previous capacities.
Despite growing wealth and greater economic freedom after 1979, philanthropy did not rebound immediately in China. Once the CCP took over, most financial giving in China occurred through personal networks as opposed to in the public sphere. The Chinese government has a history of cracking down on non-governmental organizations and charities that tackle sensitive issues like AIDS, or become embroiled in corruption scandals. Furthermore, the government made it more difficult for China’s ultra-wealthy to donate by stipulating that charitable foundations be established with cash and that their earnings be taxed similarly to for-profit companies.
In China the tides did not turn in favor of philanthropy until a magnitude 4.7 earthquake hit Sichuan Province in 2008. The earthquake caused more than 6.5 million buildings to collapse and led to the death of almost 90,000 people, including over 5,300 children—the bulk of whom were attending classes. Allegations arose regarding corrupt local officials who ignored civil engineering standards, saved materials, and took shortcuts during the construction of schools in the province. Besides the destruction the Sichuan earthquake left in its wake, its legacy is also defined by the support it inspired. Volunteers and donations from across China poured into the hardest-hit areas of Sichuan. Overall charitable donations reached 100 billion yuan for the year (about $15 billion USD), triple the figure from the previous year. The Sichuan earthquake drew attention to the need for more equitable wealth distribution in China and proved to be a catalyst for increased philanthropy.
Seeing the massive help brought by charitable contributions during the earthquake, the Chinese government began changing their tone on philanthropy. In 2016, the National People’s Congress (NPC) enacted the Charity Law, which has played a key role in boosting charity. The law eased procedures for registering foundations and introduced improved tax incentives for making charitable donations. The law also expanded the definition of “charitable activities” and granted more organizations the right to raise funds directly from the public. More recently on Aug. 17, 2021, the government announced a new goal to “adjust excessive incomes and encourage high-income people and companies to give back more to society.” The new goal aligns with President Xi Jinping’s plan for Chinese society to achieve “common prosperity.”
After the government’s recent backing of philanthropy, Chinese entrepreneurs and companies—especially those related to Big Tech—fell head over heels to pledge to charitable causes. The boom in philanthropy coincides with Beijing’s crackdown on the growing influence of China’s Big Tech companies, suggesting that entrepreneurs are donating billions to win the government’s favor. Tencent and Alibaba both announced 50 billion RMB (about $7.5 billion USD) donations to support causes ranging from rural revitalization to inclusive education programs. Unlike in the U.S. where most charitable donations come from individuals, 80% of charitable donations in China come from corporations. Over the past decade, philanthropy in China has grown at an average rate of 20% per year, and charitable donations reached almost 147.4 billion yuan in 2020.
Despite recent progress, private philanthropy still only makes up 0.03% of GDP in China compared to 1.44% of GDP in the U.S. China consistently ranks in the bottom half of more than 100 countries surveyed for charitable giving, according to the World Giving Index. China’s low levels of contributions relative to other countries is often attributed to a lack of transparency from the government. In recent years, a series of scandals among major state-run charities, including the Red Cross Society of China, have undermined the Chinese government’s credibility. The government still exercises comprehensive control over most charities, allowing only a small number of government-affiliated organizations a free hand in philanthropic work. Chinese government officials are also selective about what types of organizations can maintain a charitable status, and they often exclude organizations that engage in advocacy, such as those for gay rights and against sexual harassment. Equally important is the need for the Chinese government to build a culture of philanthropy among the Chinese people and make giving more acceptable and more common among the larger Chinese population.
Ultimately, China has a long way to go before the government and social organizations can reestablish public trust and build giving. For philanthropy to become more widespread, China must incentivize the population to give and demonstrate the importance of the nonprofit sector to the overall success of the economy. It must improve the governance and management process of social organizations. Nonprofit management and fundraising are not established sectors in China the way they are in the U.S. Nonprofit professionals provide essential guidance and assume responsibility for public trust. Without competent professional leadership that can properly run these organizations, and incentives in place to motivate giving, philanthropy will continue struggling to grow beyond the billionaires and large corporations.
Matt Kirschner can be contacted at email@example.com. Matt is a junior at Yale in Ezra Stiles College from Bethesda, Maryland. He is double majoring in East Asian Studies and Economics and is interested in research and writing on contemporary China.