Can Bill Gates and Warren Buffet start a philanthropic revolution in China?

October 1, 2010

On September 29, two days before National Day, the Bill and Warren show came to town to engage with some of China’s richest men and women about philanthropy. Their timing was good. As I’ve said in previous postings, the growth of private foundations is one of the brighter stars in the firmament of civil society in China, so it’s good to hear it getting attention from two of America’s biggest boosters of private philanthropy. News of this philanthropic gathering created quite a buzz in the Chinese media world, and it must have created quite a stir in the Chinese business world as well. But will it start a philanthropic revolution here in China?

Well as any student of revolutions knows, a revolution requires at least three things. It needs participation by elites, a weakened system, and participation by the masses.

We’ve already seen a significant number of entrepreneurs participate in private philanthropy since 2004, and this trend has been pushed forward by the establishment of the China Foundation Center and other similar initiatives, as well as the Bill and Warren show. There is still a ways to go, and the media reports of entrepreneurs who reportedly refused Bill and Warren’s invitation to attend certainly reflects a widespread assumption that many Chinese businesspeople are not yet ready to let go of their money. But progress in this area is probably the most promising.

The system however remains strong and does not favor the growth of private philanthropy at this point. There are new tax incentives that came out in 2008 giving tax benefits to enterprises that donate, and there are also tax benefits to individuals, but it’s unclear how much these tax incentives are actually used. Also, enterprises and individuals only get tax benefits if they donate to legally-registered NGOs. Thus, many grassroots NGOs that are registered as businesses do not benefit from this law. More importantly, according to the 2004 Foundation Law, private foundations cannot raise money publicly. Neither can other NGOs. Only public foundations, which are GONGOs, can do so. After the Wenchuan and Yushu earthquakes, we’ve seen the Chinese government maintain their near-monopoly on public donations, even going so far as to insist that some private foundations and NGOs transfer any of their donations to GONGOs or to the government. The system may change a little when and if the Charity Law, and other pieces of legislation relating to public donations, comes out, but I wouldn’t bet on any earth shattering changes.

Finally, participation by the masses has a long ways to go. The 2008 Wenchuan earthquake was certainly a watershed, but most of the public donations went to the government or GONGOs because of the above-mentioned systemic restrictions. When foundations and NGOs are prevented from fundraising publicly, and public donations go to the government, citizen participation and awareness suffers. Charity and philanthropy are seen more as a duty to the state than as a voluntary act. We see this after every disaster when people are pressured by their work units to cough up a donation. Still, one can see some movement in society. For example, the same day China’s richest came together to hear Bill and Warren speak, a group of about 90 “commoners” came together at a buffet dinner costing 38 yuan to show that philanthropy not only requires participation by the rich but also by the masses. Apparently, the response was much bigger than expected and organizers had to turn people away because of lack of space. But their point was well taken.

So I applaud Mr. Gates and Mr. Buffet for coming to Beijing and spreading awareness among China’s richest, but we should see this as only one prong of the revolution. Still it’s an important prong, and the only one these foreigners could possibly hope to influence, and it may eventually lead to changes in the system and in mass participation in and awareness of philanthropy.