09/10/17

Chinese and Chinese-American billionaires’ philanthropy rising at ‘astounding’ rate

(South China Morning Herald) -- Chinese entrepreneurs in China, Hong Kong and America are giving back to society in ways unheard of even a few years ago, with Ronnie and Gerald Chan and Li Ka-shing among the big donors

They are among the more sizeable donations made by Chinese businessmen in recent years, but they are not anomalies. Major philanthropic giving by Chinese and Chinese Americans is soaring.

In China, the number of registered charitable foundations surged 430 per cent from 2006 to 2016 to 5,545. In the US, the number of Chinese-American foundations saw a similar increase, jumping 418 per cent from 2000 to 2014 to nearly 1,300. And major gifts by Chinese Americans rose nearly fivefold from 2008 to 2014.

“We were astounded by the results,” says Stewart Kwoh, who led a recent study by the Global Chinese Philanthropy Initiative.

Kwoh was in Hong Kong last month as part of a road trip to share the findings of the report, “Chinese and Chinese American Philanthropy”. Speaking on the side-lines of the one-day conference at the Asia Society, Kwoh said the extent of giving by Chinese and Chinese Americans is largely unrecognised.

 “I know for a fact that philanthropic associations were very surprised at the growth of Asian-American philanthropy,” he says.

The Los-Angeles-based lawyer and founding president and director of Asian Americans Advancing Justice says there is a common misconception about how Chinese and Chinese Americans give.

Two years ago, he was involved in a study by the non-partisan group Committee of 100 looking into attitudes between Americans and Chinese and Chinese Americans. It found about 25 per cent of Americans thought Chinese American were takers rather than givers, and found them self-centered and focused only on their families.

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“Part of this initiative is to show that’s not altogether true – Chinese are giving back in major ways that was unheard of even a few years ago. We want to uplift the image of Chinese and Chinese Americans as givers not takers, and [show] that they are building productive, harmonious, healthy and vibrant societies,” Kwoh says.

That the surge in philanthropy is a natural consequence of the rapid wealth creation was a sentiment echoed by a number of the high-net-worth individuals speaking at the conference, including Ronnie Chan and John Long, founder and CEO of investment company Highridge Partners. China is now home to 609 billionaires, more than the 552 in the US.

Hong Kong entrepreneur Ronnie Chan (pictured) and his brother Gerald donated US$350 million to Harvard University in the US. Photo: Edward Wong

“It’s natural that philanthropy is going to follow the tail of the wealth,” says Long, indicating his fellow panellist Niu Gensheng. The co-founder of China Mengniu Dairy Company is one of the richest men in China and a major philanthropist.

“I’m particularly focused on education, providing tools, empowering the second generation because the wealth that’s been created is largely going to be the responsibility of the next generation and [in the future] it’s going to be a democratisation of philanthropy,” says Long.

Education gets the lion’s share of this giving. In Hurun Research Institute’s 2016 analysis of China’s top philanthropists, 46 per cent of donations were made to education.

Why are Hong Kong’s philanthropists so blinkered?

“Many philanthropists are the first generation of big wealth, first generation of big philanthropy. They got their big break through their college experience or their postgraduate degrees and so it is natural they want to invest in those institutions that gave them their break to help others,” says Kwoh.

He says much of the giving is often centred around a philanthropist’s personal success story or business.

Take Walter Wang, who emigrated from Taiwan to the US when he was six, and his wife Shirley. The Wang family made their fortune manufacturing plastic pipes and fibreglass doors, and own one of the largest pipe manufacturing companies in the world. They have donated more than US$20 million, mostly to education, public health and environment projects, and recently donated 400 miles [643km] of plastic pipes to bring water to 350,000 people in eight African countries.

 “But for having that knowledge on plastic pipes, how would they have done that? It’s not just money – people are using their expertise to figure out how they can benefit society,” says Kwoh.

The report acknowledges that philanthropy is not new to China – it’s just different. As far back as the Zhou dynasty (1046-256 BC) there are reports of Buddhist monasteries giving out food, medical relief and care to orphans and benevolent societies, and they were sources of charity in the Late Ming and Qing dynasties.

“My wife is a Lee and the Lee family villages would have donations both from the better off people in the Lee family locally, but they would also get donations from the Lee family in the US,” says Kwoh.

The report also looked at outstanding philanthropists in Hong Kong – Li Ka-shing and Robert Ho Hung-ngai – and how they have benefited society. Speaking at the conference, Roy Chen Yang-chung, chairman and CEO of Grace Financial, said Hong Kong has a unique role to play given its long history of learning from the West and as part of China.

“We are the perfect place – for example, governance standards can be introduced more into China – we can blend the best of both worlds and come up with something that’s better than either,” says Chen.

In China, philanthropic ventures are often expressed in stark contrast to the US. For example, the often close relationship between philanthropists and the government means that in disaster situations it’s often the charitable foundations that step in first, while in the US the government is expected to take the first steps and the foundations come in later to support the recovery.

“Some people in the West think that’s not good, but when there is a good collaboration between government and philanthropy you can achieve scale and help so many more people. Even the more innovative experiments by foundations in the US never achieve that scale,” says Kwoh.

This is just one of the areas Kwoh believes the US can learn from China, just as China has much to learn from the US.

“As an American, [I can say] we need to appreciate we don’t know it all, we can learn from the Chinese experience and tradition as well,” he says.

China’s new Charity Law – passed in early 2016 by China’s National People’s Congress – shows how the country has been able to learn from the West.

Before the implementation of the law, China’s tax policies limited philanthropic activity by requiring initial foundation requirements to be in cash and taxing income earned from foundation at the same rate as for-profit enterprises. But the sweeping new regulatory changes – in many respects similar to those in the US – do away with a lot of those restrictions. It eases the way for non-profits to legally register and raise funds, and encourages giving by improving tax incentives.

Students of Harvard University in the US benefited greatly from Hong Kong entrepreneur Ronnie Chan and his brother Gerald’s donation of US$350 million to the university. Photo: AP

“That will be another spur to have more foundations set up in China,” says Kwoh.

Chen, who inherited a huge family fortune with his siblings in the 1990s and has since embraced the philanthropic world, believes technology stands to impact philanthropy just as it has disrupted businesses. He expects to see crowdfunding initiatives – “a legitimate source of funding and involving the masses” – take off in China.

“I’m for more giving and more people involved. It doesn’t matter the motivation – if they want their face on the wall, then so be it – but more people involved in philanthropy as a lifestyle, as part of their core values,” says Chen.

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The increased philanthropy is a trend that is set to stay. Kwoh expects to see it continue to soar.

“The main growth will come from entrepreneurs – some will have some Western education, but the majority will be from China, educated in China,” he says.