Domestic Affairs

Philanthropy in China: Time for answers

By Katie Chan (chinadaily.com.cn)
Updated: 2010-10-26 13:20

Two wealthy Americans pitched their concept of philanthropy to the newly wealthy of China at a banquet in late September. Although the lavish and exclusive gala did not conclude with much observable progress, the discussion of doubts, hesitation and hopes about China's own concept of philanthropy have been raging outside the banquet hall across the country.

The author is the chairman of Katie Chan Foundation, Special Advisor of Association of Former Diplomats of China and Director of China Women's Development Foundation.

Few were able or willing to talk about what happened inside the ballroom of a suburban Beijing hotel, which features a European castle theme, on the evening of Sept 29, 2010--only that 50 deep-pocketed guests joined the gala dinner hosted by philanthropist investor Warren Buffett and Microsoft founder Bill Gates, who came across many thousand miles just to pitch the philanthropy cause called Giving Pledge.

The idea was simple--donate as much as you wish to those who need it. Let go the argument that one percent of their wealth is adequate to flood many bank accounts with dollar notes, or the taxation convenience to divert money into non-profit-making foundations in the United States, they did present a few noble statement to undermine the conspiracy theories: Mr. Buffett says, "I've worked in an economy that rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions." Bill and Melinda Gates elaborated their goal for the pledge, "Now the task is to make sure that every student gets the same opportunity to succeed in college and in life."

The nobility of a person is more than a noble statement. Gates' monopolistic software firm only happened to live in the shadows of Google and Apple in the past few years, without losing much of the most profitable businesses in the industry--Google Docs works great on Google Chrome, but they are conformed to Gates' Windows system to reach 91% of households in the world. Buffett, on the other hand, has proved his principle on taxpayers' responsibility with his opposition of a proposed abolition of the inheritance tax in the United States.

How the Chinese tycoons made their wealth amid the complex, sometimes informal, rules of China's business world was also a legitimate question to raise, but the more relevant question in the ballroom among the potential donors was the mechanism that accompanies the donated wealth. We are generous in the face of desperate needs, proven by the overwhelming response to calls for natural disaster relief and countless schools built in rural China that have made education more accessible than ever.

But like education in China, the infrastructure itself has discouraged the practice of philanthropy. The first non-governmental charity foundation started in China only six years ago, and they have yet to build a reputation or a scale compelling enough for the potential donors. The charity organizations running under official affiliation, which can be dated back to a longer history in China, were not helpful to relieve the skepticism over improper handling of donations as scandals of fund diversion are not unheard of. Bureaucracy, anywhere in the world, is subject to a decrease in efficiency and lack of transparency.

In the face of these systemic shortcomings, many donors have to go the extra mile. A 46-year-old tycoon, identified as Wen in the China Economic Weekly, told the magazine that he has sponsored education and living expenses for dozens of children through his own methods, as he was "not too knowledgeable" about existing charitable organizations. He prefers to pass the cash straight to those in need.

Even if the pipelines and treatment plants are laid, we still depend on the rain to fall to supply water into the taps. Liu Chuanzhi, founder of Lenovo, believes reinvestment of profits into China's developing businesses is the right thing to do at this stage of China's growth. "Naked donation" -- a term the Chinese press adopted to describe a total commitment to philanthropy -- is not a timely concept in his opinion. Traditional value that treasures strong family ties has, naturally, prompted more Chinese to leave the wealth for their children, which is true as demonstrated by the best-known tycoons in Hong Kong and Macao. Li Kar Shing, however, has already committed to donating over half of his wealth in response to the Giving Pledge. Things are easier in Hong Kong though, where he can funnel his donation through numerous secured and reliable means to change the lives of many people.

With all the questions laid out on the table, you may not want to realize that philanthropy is not only a handout of cash or establishment of an ambiguous poverty aid called the Community Care Fund with more money, simply because money is not everything. An organized solution to poverty requires science and creativity, like the Nobel-winning Gremaan Bank in Bangladesh, who finances the rural poor to build better lives with their own hands. Buffett and Gates have done their part to start the debate that is growing bigger than expected in the past weeks--it is our turn to close the question session and give the answer now.

Editor's note: The views expressed in this article are those of the author and may not necessarily represent the views of, and should not be attributed to, the China Daily website.