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Will Xenophobia and Cynicism Obstruct Chinese Philanthropy?

Bill Gates and Warren Buffet have arrived in Beijing to meet with some of China’s richest tycoons and discuss philanthropy. Gates and Buffet have been visiting the world’s richest people to sell the idea of “The Giving Pledge”—a commitment to donate a large majority of one’s wealth, either during their lives or upon their death, to charity.

Bill Gates and Warren Buffet

Since beginning this campaign, they have convinced over 40 U.S. billionaires, including Michael Bloomberg, Larry Ellison, George Lucas and David Rockerfeller, to pledge giving at least half of their fortune to charity. While Gates and Buffet have been very clear that the objective of the meeting with the Chinese is not to ask for contributions, but instead to share their experience, xenophobia and cynicism seem to be a major obstacle to establishing a Chinese rival to western philanthropy.

According to CNN, China boasted 477,000 millionaires (in U.S. dollars) at the end of 2009, a 31-percent increase from the previous year and trailing only the United States, Japan and Germany, according to a report jointly released last June by consulting firm Capgemini and investment bank Merrill Lynch.

CNN also reported that wealthy Chinese seem unwilling to open their purse strings for charitable causes, however. In 2009, a government-sponsored honor roll listed 121 Chinese philanthropists who donated a combined $277 million, less than half of what a single family — American financier Stanley Druckenmiller and his wife — gave away in the same year in the United States.

So what is it that is keeping the Chinese from opening up their wallets and giving? Recently, Economic 30 Minutes has released a three-part series on Chinese philanthropy. The first part examines the reactions of some who were invited to the meeting. Below are reactions to the invite, as well as some insightful comments by Zhang Xin, CEO of Soho China.

Translation

Chen Guangbiao

Chen Guangbiao, Chairman for Jiangsu Huangpu Recycling Resources: I hope to learn from their experiences. [Hopefully, they] can enlighten more Chinese entrepreneurs on philanthropy. I gladly accept their invitation.

Wahaha Group Co., Ltd. Chairman, Zong Qinghou, respectfully declined the invitation, saying, “As I’ve recently been invited to attend a Forbes CEO meeting, the timing is inconvenient. I hope no one misunderstands. I’m not afraid of being pressured into making a contribution. It’s just that I don’t have the time [to attend].”

Fuyao Glass Group Chairman, Cao Dewang, said, “There’s still sometime before the event. I’ve yet to decide on whether or not I’ll attend.”

Soho China CEO, Zhang Xin, said, “This is an opportunity to advance my own experience by studying from foreign philanthropists. I will certainly attend.”

Zhang Xin: Recently there have been a number of official groups which have come and discussed with us philanthropic opportunities and channels which exist. I feel that these channels are not very affective. Realistically, philanthropy isn’t about just donating money. It’s about donating your experience, your compassion and your spirit. It’s about identifying those within society who need to be identified [and helped]; this is the quintessence of philanthropy.

Zhang Xin, CEO Soho China

Zhang Xin: [One of the largest problems is that] there is really no system. Today, we come across this opportunity, so we donate. Tomorrow, we come across another opportunity, so we donate [directly to that cause]. Sometimes we donate to orphanages, sometimes we donate money for surgeries to repair hare lips in pediatric cases. After some time of donating, and realizing that net contributions were starting to increase, we had to begin doing some serious research to consider how to go about continuing our philanthropic causes. [Since the start] we’ve really just been crossing this river stone by stone. [We’ve had to consider], do we simply just write a check to a charity that’s already established, or do we try and do something on our own.

Analysis

Clearly, there are a number of Chinese who are genuinely concerned and actively involved in philanthropy. Of notable mention, Chen Guangbiao, worth an estimated US$440 million, has pledged his entire fortune to charity upon his death. Chen commented, “I don’t want to become a slave to my wealth. Every dollar I made was with the help of others — so I want to give it back to society and make my life more meaningful and valuable.”

But why isn’t this charitable line of thinking more prevalent in China? If China is home to the second largest group of billionaires, why aren’t more Chinese stepping up to challenge charitable groups such as the Gates foundation and others?

The answer likely lies in China’s xenophobia and cynicism to giving to charity, both foreign and domestic.

What will China's wealthy do with their money?

In regards to how the banquet has been portrayed by many invitees as well as the media, many are referring to the Gates-Buffet event as the “Hongmen Banquet”, a reference to an episode in Chinese history where guests were lured to a fancy dinner which turned out only to be a ploy to murder the attendees. The idea propagated here by the media is that Gates and Buffet are trapping China’s rich, and will pressure them into making large donations.

Another red flag for many would-be philanthropists is the skepticism that money donated would even reach the cause. Jet Li said in a recent interview that, “The main reason [why Chinese are skeptical about donating is] because there is an inherent mistrust in giving your money to any third party to pass it on. They’re convinced that for every 100 that they give, the end party won’t receive anything near that 100.”

Such an example can be found in reports that have been filed on how Sichuan earthquake relief funds have been seized and misappropriated by corrupt officials. Such acts not only hurt those who would be directly benefiting from such donations, but also further cynicism amongst the rich and discourage them from donating.

Zhang Xin and others have commented that transparency amongst domestic charities is an issue. According to Wang Zhenyao, director of the Center for Philanthropy Research at Beijing Normal University, “The environment is not ready in China for rich people to donate large sums of their fortune, where the progress is mainly led by the government and driven by the public…. Chinese rich people cast doubt on the transparency of charity operations. For example, very few of the country’s growing number of charity organizations and foundations offer feedback to the donors or publish the money flow.”

If transparency and a lack of systems is the leading excuse for China’s rich to keep their wallets closed, then the Gates-Buffet banquet should prove to be an excellent opportunity for potential donors to learn about what charitable causes and opportunities exist, channels they can use for making charitable contributions, as well as systems which can be used to established independent charities in China and develop trust amongst the public.

But it seems many wealthy Chinese are more willing to take a chance giving to domestic charities, as a recent pledge head by Chen Guangbiao suggests. While only a small number of the Gates-Buffet invitees accepted the invitation to attend the dinner, Chen had persuaded more than 100 entrepreneurs to donate all of their personal wealth to charity ahead of the Gates-Buffet dinner.

Is China willing to learn from western philanthropists?

Does such a pledge suggest that Chinese pride is also an obstacle to giving—that the Chinese do not want to admit that their charities and donation systems are underdeveloped compared to that of the West’s? Such sentiment seems to be evident, “We don’t need foreigners coming here to tell us how to be charitable,” sniffed one anonymous Chinese philanthropist.

Regardless of the reasons why more wealthy Chinese aren’t giving, they would do a tremendous amount of good in living up to their long-standing virtues of modesty and humility and learning from others with substantial philanthropy experience, regardless of race and nationality. After all, it was the Chinese who coined the term, “One World One Dream”. Perhaps its time that they start putting their money where their mouth is.