A Chinese teaching holds that the highest good is “like water which underlies and benefits all without striving for competition or fame,” perhaps a more modest counterpart to the Western idea that a high tide lifts all boats.
The tide is certainly rising in the Chinese economy, and it’s lifting up a growing potential donor class of wealthy individuals. The number of billionaires in the country has reached nearly 500, a cohort that’s second in size only to the United States—and is the fastest growing. Meanwhile, the total number of high-net-worth individuals is expected to reach close to 3 million by the end of this year. But will that translate to a flood of philanthropic giving?
So far, numbers on regional philanthropy show that it’s still an emerging practice. A recent study by the United Nations Development Program (UNDP) reports that charitable donations represent only 0.17% of China’s GDP, well behind the U.S. rate of 2.2%.
But that may change as greater numbers of wealthy Chinese donors gain the means and impetus to engage in significant giving. The ways they could ultimately impact the philanthropic ecosystem in the Asia-Pacific was explored at a recent forum, which shared a research report on the philanthropy of Chinese ultra-high-net-worth families, conducted by the Global Family Business Research Center at Tsinghua University People’s Bank of China School of Finance (PBCSF).
Supported by the Bill & Melinda Gates Foundation—and recently published for the first time in English—the report captured in-country research that began in 2016, focusing on entrepreneurs and families with business and private enterprises in mainland China who had “actively participated in philanthropic activities.”
Top line takeaways include an affinity for place, shifting donor composition, a growing generational transition from business to philanthropy, and a degree of volatility in funding priorities—all factors with the potential to significantly shift regional philanthropy.
Like many of their counterparts across the world, Chinese donors have shown a clear loyalty to home provinces. According to 2015 data from the China Foundation Center, more than 43% of total donations were place-based. Fifty-three percent reached other provinces nationwide, while just 3% were directed internationally.
PBCSF researchers believe Chinese social structures are the basis of that mindset, citing Confucian teachings that place individuals at the center of concentric circles of social influence. Spheres radiate out from blood relations to neighbors and strangers, within the context of demand, relationship and fairness—and the underlying structure of the teaching’s relationship networks, principles and moral system.
A push toward professionalism
A full half of philanthropy centers on progressive parts of the country. Fifty percent of national giving consistently hugged four coastal provinces: Jiangsu, north of Shanghai; Zhejiang, with both rural and urban centers; Fujiian; and Guangdong, which borders Hong Kong. All are characterized as pioneers of China’s four-decade-plus reform-and-opening-up agenda. And all are known for their economic progress and private sector development.
Researchers say these areas’ business-minded, practical point of view attracts like-minded foundations, which prefer a professional management model of philanthropy.
That comes as the sector is undergoing an overall push toward professionalism. A 2016 China Charity Law promoted a formalized practice of philanthropy, providing a clearer framework and guidelines for qualification status. Subsequent regulations introduced registration, financial, fundraising, project and operational requirements. The National People’s Congress officially launched revisions in March of 2021, so much of that work continues apace.
As the financial drivers of wealth shifted from manufacturing to real estate and tech in the decade between 2010 and 2020, so did the composition of ultra-high-net-worth donors.
Data from the 2009–2010 Forbes China Rich List and the 2009–2020 Forbes China Philanthropy list shows a steady trend of wealth accumulation, led by real estate industry tycoons. By 2014, the tech sector surpassed traditional manufacturing, and is expected to continue its ascent. On average, per capita donations from tech donors well surpass other sectors.
That’s evident across the Harvard Kennedy School Ash Center’s 2018 lists of China’s Most Generous. Among the 10 highest-giving individuals, as measured by absolute giving, are Pony Ma, chairman of CEO of internet service leader Tencent, and two women: Lucy Peng, a co-founder of Alibaba, and Ma Dongmin, a doctor of biology and the wife of Robin Li, founder of the AI and search engine platform company Baidu.
Still, the list remains remarkably varied, drawing top leaders in real estate, energy, finance and retail.
The next generation
The PBCSF study predicts that large donations will increase as personal priorities shift. First-generation Chinese entrepreneurs of the 1950s and 1960s are now retiring—and transitioning to first-generation philanthropists. A rise in young entrepreneurs in philanthropy has also been noted, raising hopes for intergenerational succession.
New generations are also helping to structure the space. Lu Weiding, CEO of Wanxiang Group, one of China’s largest non-governmental businesses, ranks first among individual donors. He created the country’s first equity-based charitable trust. With total assets of $2.2 billion, it’s currently the largest philanthropic fund in China. Its largest commitment to date is a $90.7 million agricultural trust named for Lu Weiding’s father, Lu Guanqiu, to boost rural development and modernize farming and agriculture.
National influences on priorities
Support for top causes has shown a degree of volatility. The center expects that to continue in reaction to policy changes and major events like the Charity Law and a state poverty plan. But the top categories, education, poverty alleviation, healthcare and social welfare, will continue to dominate.
Education ranks as the top priority. According to a “Philanthropy in China” report by the Rockefeller Foundation and AVPN, 40% of the top 100 Chinese philanthropists support education, with many directing gifts to their alma maters, typically to expand facilities like libraries and research labs, or support scholarships.
Pony Ma donated $30.2 million to his alma mater, Shenzhen University, and encouraged students and teachers to study abroad. Zhang Wenzhong, founder of supermarket chain Wu Mart, donated $15.2 million to Nanakai University in 2018 for scholarships and library renovations. Chen Dongsheng, chairman of the Taikang Insurance Group, donated $12.1 million to Wuhan University’s talent acquisition fund the same year.
Yang Guoqiang, founder and chairman of real estate leader Country Garden Holdings, donated $15.1 million to Hangzhou Westlake Educational Foundation to establish a university and research institute.
Zhang Lei, Hillhouse Capital Group founder and CEO, also supported Westlake University development with a $6 million contribution, and gave $3 million to his alma mater, Renmin University. Renmin and Zhejiang universities are the top two recipients overall; each have received more than $100 million.
Family foundations also invested the most in education, again through prestigious universities. But data shows they are also beginning to pay attention to advancing medical, healthcare and eldercare solutions.
Alignment with national strategy strongly influences China’s donors. Poverty alleviation and social welfare ranked second in the report, with a total of 18% percent of donations. That giving goes hand in hand with a national commitment to eradicate poverty by 2020, a Targeted Poverty Alleviation Plan that drew widespread support, especially from corporate donors.
The plan achieved significant success in poverty reduction by setting clear goals and conducting first-time data collection. It also created five targeted alleviation strategies, from industrial development to education, and established seven institutional systems to increase accountability, assistance and mobilization.
Developing the philanthropic sector ranked third—tidings of better things to come for all involved in philanthropy and fundraising the Asia Pacific.