This month’s China Economic Review (CER; requires a subscription to view) has a special feature on the growing trend in private philanthropy amongst China’s wealthiest businessmen (featuring our own Managing Director, Grace Chiang.) Philanthropy has traditionally been kept on the down low in China, largely for cultural reasons; however, the growing number of private foundations has set the public on edge. Many people are distrustful of the wealthy and consider the rise in philanthropic endeavors as a thinly veiled way to evade taxes or plump up their own image and that of their business.
The complexity of setting up a foundation under China’s current system; however, diminishes the former excuse significantly. Setting up a foundation requires nearly US$3 million, official backing from a government department, and a minimum of 8% must be paid from the endowment each year. In general, the public has a shady understanding of charitable foundations at best. As CER points out, “the first mainland Chinese private foundation was set up as recently as 2005…As a result, many Chinese are unfamiliar with how charitable foundations operate.” The matter is further muddied by the vague to nonexistent distinctions between family, company, and individual giving.
Private foundations such as Jet Li’s One Foundation have the potential to enact great changes in China, but before they get very far, two things need to happen, suggests CER. In addition to better laws concerning the set-up and management of foundations, “people also need to learn about the social function of charitable foundations.” Second, entrepreneurs must give with clear focus and intentionality. With time, good communication, and transparency foundations and the public just might see that they both desire the same thing: a better China.