China – Indicators of International Philanthropy from Asia

China – Indicators of International Philanthropy from Asia

This is the third in a series of twelve articles looking at factors influencing international philanthropy across ten Asian countries, paying particular attention to giving in the areas of international aid and education.

The study identifies nine country-specific factors affecting the propensity of people to give offshore funds to these two causes. By using nine general indicators and adding the aid or education indicator, organisations working in either sector can assess background issues determining their ability to raise philanthropic gifts in a particular country. For a full explanation of indicators used, please refer to Article 1: Introduction to the series.

 

Assessment of international philanthropy from China

 

Political & Economic Security

Rating: 3.5

Comments: Strong growth economy. The Chinese economy is now the world’s fastest growing economy and has the world’s second largest nominal GDP. Some political instability. The government in China is based on a single party, socialist, republican framework. The Communist party of China (CPC) dominates the Chinese Government. There are high levels of government corruption. [1]Euromoney Country Risk

Capital Accumulation

Rating: 4.5

Comments: 11,475 ultra high net worth individuals with collective wealth of $1,650 billion. China could have a higher rating on the basis of its dispersed character, with wealth across many cities. [2]Wealth-X. 2011. World Ultra Wealth Report 2011: Uncovering Pockets of Opportunities

Incentives

Rating: 3

Comments: Moderate level of tax incentives available to donors. Individuals receive a maximum tax deduction of 30 percent of their donations to qualified charities. Corporate tax deductions for donations were raised from 3-12 percent to encourage giving. Corporations enjoy tax incentives that encourage corporate giving and major gifts from individual donors by way of companies owned by donors. High level of government control over not-for-profit sector which can impact effectiveness of incentives offered. Deductions are only available to approved charities and there are significant bureaucratic obstacles to organisations seeking such status. [3]The Council for Advancement and Support of Education. 2010. Across Frontiers: New International Perspectives on Educational Fundraising [4]Wang, Lili, Elizabeth Graddy and Donald Morgan. 2011. “The Development of Community Based Foundations in East-Asia.” Public Management Review

Trust in NGOs

Rating: 2

Comments: The charity sector in China is highly regulated, and the government has maintained strong control through its registration and management process. To register as a not-for-profit in China an organisation must first obtain approval from a sponsorship organisation, usually a government agency. Charity organisations have limited autonomy as these agencies retain managerial oversight. Charity organisations are often perceived to simply be an extension of the government. There is strong distrust of charity sector in China due to level of control the government has maintained over sector. Recent media articles have suggested strong belief in community that there is corruption in prominent charity organisations and that they are misappropriating funds. [5]Wang, Lili, Elizabeth Graddy and Donald Morgan. 2011. “The Development of Community Based Foundations in East-Asia.” Public Management Review [6]Wong, Edward. 2011. “An Online Scandal Underscores Chinese Distrust of State Charities.” The New York Times, July 3.

Priority of Human Development

Rating: 3

Comments: Strong focus in China on human development and helping less-privileged communities. Most national foundations focus their efforts on these causes as they are seen to align with traditional Chinese values. Six percent of giving from family philanthropies is to poverty alleviation and development. Areas such as higher education, arts and the environment receive less attention and investment. [7]The Council for Advancement and Support of Education. 2010. Across Frontiers: New International Perspectives on Educational Fundraising [8]UBS Insead. 2011. Study on Family Philanthropy in Asia

Propensity to Give Internationally

Rating: 3.5

Comments: Indication there is a growing interest in government and individual donors to donate to international causes. China’s foreign aid grew by 29.4% between 2004 to 2009. [9]Baker, Christopher. 2011. “Relationships with the Asia-Pacific Region: Wealth and philanthropy.” Presented by the Asia-Pacific Centre for Social Investment and Philanthropy, Swinburne University of Technology

 

Overall Level of Philanthropy

Rating: 3

Comments: Mixed evidence for China for overall level of philanthropy. Some sources suggest that economic development has fuelled a re-emergence of philanthropy in China. The Chinese Academy for Social Sciences reported that giving in China in 2010 totalled RMB70bn (US$10.3bn), more than double the RMB33bn (US$4.9bn) donated in 2009. Studies have also shown that individuals are now giving more than business. There is a high concentration of wealth in region, with large population of ultra high net worth individuals. In 2010 China’s top ten donors pledged US$1.2bn in donations, which was more than 50% more than a year before. Other studies such as the World Giving Index suggest low overall level of philanthropy. China ranked 147 out of 153 in the World Giving Index for 2010, with only 11% of the population donating to charity. [10]Baker, Christopher. 2011. “Relationships with the Asia-Pacific Region: Wealth and philanthropy.” Presented by the Asia-Pacific Centre for Social Investment and Philanthropy, Swinburne University of Technology [11]Asia-Pacific Centre for Social Investment and Philanthropy. Swinburne University. Wilhelm, Ian. 2009. “Chinese Philanthropy Continues to Grow.” The Chronicle of Philanthropy, September 21 [12]Wang, Lili, Elizabeth Graddy and Donald Morgan. 2011. “The Development of Community Based Foundations in East-Asia.” Public Management Review [13]The Asia Foundation. 1997. Funding Civil Society in Asia: Philanthropy and Public-Private Partnerships [14]The Economist, Economist Intelligence Unit. 2011. Something’s gotta give: The state of philanthropy in Asia. [15]Charities Aid Foundation. 2010. The World Giving Index: 2010.

 

Fundraising Practice

Rating: 1.5

Comments: Low to moderate level of fundraising practice in China due to immaturity of charity sector. The charity sector only began to develop in the mid-1990’s, following moves by government to scale back social services as part of the shift to a market-driven economy. Media articles on fundraising in China do suggest that in some areas of fundraising practice the Chinese market is quite advanced, specifically in soliciting donations from corporate organisations and corporate partnerships, however fundraising regulations can be complex, even contradictory. Some fundraising permits are given only for short periods. [16]McKinsey & Company. 2006. Developing China’s Nonprofit Sector. [17]Wasley, Paula. 2009. “Fund-Raising Lessons from China.The Chronicle of Philanthropy, March 29. [18]The Hauser Center For Nonprofit Organisations. 2011. New Regulation Allows NPOs to Raise Funds in Guangzhou

 

Development of Giving Foundations

Rating: 4

Comments: China has seen an explosive growth in private foundations, a function of both recent liberalisation of the sector and low public trust in existing charities. Prior to 2005, there were only a few hundred private foundations, but figures taken in 2010 suggest there are now more than 1000. These foundations are estimated to have a total capital exceeding 10 billion yuan and annual capital collection of more than eight billion yuan. [19]The Economist, Economist Intelligence Unit. 2011. Something’s gotta give: The state of philanthropy in Asia. [20]China Daily. “More rich Chinese to dabble in charity: research.

 

Financial Openness

Rating: 1.5

Comments: China received a score of -1.14 in the Chinn-Ito (KAOPEN) index for financial openness, with the lowest score being -1.83 and the highest 2.50. This indicates a very low score for capital account openess, and a high level of control for cross-border transactions. China exercises some of the most restrictive capital controls in the world. These controls are used to reduce cross border capital transfers and encourage foreign direct investment. Recent media articles suggest the Chinese government is very gradually starting to relax some of these controls. [21]Xiao, Fengjuan and Donald Kimball. n.d. Effectiveness and Effects of China’s Capital Controls. [22]Otani, Ichiro, Tomoyuki Fukumoto and Yosuke Tsuyuguchi. 2011. China’s Capital Controls and Interest Rate Parity: Experience during 1999 – 2010 and Future Agenda for Reforms. [23]Bradsher, Keith. 2012. “China Quietly Relaxes Controls on Foreign Capital.” New York Times, March 20. [24]Chinn, Menzie D and Hiro Ito. 2008. “A New Measure of Financial Openness.” Journal of Comparative Policy Analysis: Research and Practice 10 (3): 309-322. [25]Chinn, Menzie D and Hiro Ito. 2010. “Notes on the Chinn-Ito Financial Openness Index 2008 Update.

 

Giving to Education

Rating: 2.5

Comments: There is a low to moderate focus on giving to education in China. A study by UBS-Insead showed that 28% of giving from family philanthropies in 2010 was directed towards education. [26]UBS Insead. 2011. Study on Family Philanthropy in Asia

 

 

The total scores for China are:

  • Index of International philanthropy for aid from Asia 29.5

  • Index of international philanthropy for education from Asia 29

Jacqueline Cameron

Jacqueline Cameron

Consultant & Research Manager at AskRIGHT
Jacqueline is a dedicated, motivated and results oriented fundraising professional. She enjoys the variety in fundraising, and brings broad experience to clients on all aspects: from identifying prospects to liaising with donors, advising on collateral, writing case statements and bequest brochures, data mining and analytics, and developing fundraising strategies.

To find out how Jacqueline can help your organisation, email j.cameron@AskRIGHT.com.
Jacqueline Cameron

Dr Daniel McDiarmid

Dr Daniel McDiarmid

Principal Consultant at AskRIGHT
Daniel is a highly experienced and innovative fundraising professional with more than 30 years of success raising funds for higher education, research, religious and other organisations in Australia and New Zealand.

To find out how Daniel can help your organisation, contact d.mcdiarmid@AskRIGHT.com.
Dr Daniel McDiarmid


Our fundraising consultants and our prospect research team create and select resources to help you develop your fundraising and raise more money for your nonprofit organisation. You are welcome to use these resources for your non-profit organisation, but acknowledgement of the source and ©AskRIGHT is appreciated.

References   [ + ]