Written in China

While we were planning our holiday in Beijing I saw an article in the US Chronicle of Philanthropy reviewing the significant increase of charitable activity in China.  Private giving was banned as a symbol of class in a classless society under Chairman Mao and (theoretically) everyone’s needs from cradle to grave were met by the Communist Party.  But this is no longer the case.  In Beijing I twice saw mothers with small children trying to sleep in the street in freezing weather.  The same day I read about very wealthy individuals who are benefiting from state sponsored capitalism and are giving millions to inspire a Culture of Giving.  Both are familiar to visitors from the West.

 For example, I read of Wen Xinjie, heiress to a family property development business, who dreams of opening a school, a hospital and a home for the elderly in part as a not-for-profit venture following the lead of her late father’s lwho set up the firm and made the first moves as an innovative philanthropist.

The government of China has introduced regulations, including a minimum distribution of 8% of assets per year, similar to the 5% rule for private foundations in the USA.  [It’s zero percent in the UK, so trustees can save it instead of spending it on good causes - is this public benefit I wonder?  Public Benefit is the new litmus test for charities in the UK.] 

 In January 2008 the Ministry of Finance and State Administration of Taxation in China is introducing requirements that a “non-profit public welfare association” must meet in order to qualify for tax deductible donations.

However almost all foreign non-profits are banned from registering in China.  I did see an advert in the China Daily (an English language newspaper) for the United Nations’ Children’s Fund, but without any mention of a tax deduction or any other donor tax break.

The most striking indication of charitable activity I saw was an article in the Beijing Review:  “Should Charity Fundraisers be rewarded with a Commission?”  The discussion was similar to others that I have read in the USA and the UK.  The very existence of this discussion demonstrates how far Chinese philanthropy has come in the three decades.  The answer was a qualified Yes.

New China not only appears to encourage philanthropy but also services for major philanthropists.  The China Merchant Bank has announced that it is setting up a Private Bank in Beijing - for the mega-wealthy.  (We didn’t visit the tomb of Chairman Mao; it was closed because he was turning in his grave!)  The bank is targetting those with over £10 ($20) million in assets and already has £6 billion ($12 billion) under management.  Reassuringly for someone like me 25% Scottish the China Merchant Bank is partnering in the venture with the Royal Bank of Scotland.

There is a large advert for the Private Bank in the International Airport which gave me an unworthy thought.  Could this all be window dressing for Olympic visitors?  Impossible I mused.  China is investing a billion US dollars a day via its Sovereign Fund in the West according to the World Bank, so the money is really there. 

Philanthropy in China could be an important catalyst for democratic change.

 (Reading what I wrote over 3 weeks ago, I also wonder what impact the US subprime mortgage fiasco is having on the plans of charities and donors in China.)