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| China's Philanthropic Industry Needs Improvement |
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Comparison with developed countries
China is a developing country. There are more than 20 million urban population living on social security payment, tens of millions of rural population living in poverty, more than 60 million disable population and almost 2 million children dropped out from school. All these people are in desperate need for assistance. But philanthropic causes in China have not yet been well recognised and supported by its citizens, especially by wealthy groups. There are a few reasons for the slow development of philanthropic causes in China:
First of all, the public is not active. The public is usually the main body of philanthropic causes, which would be sustainable only when the public is mobilised. For example, people in Hong Kong are very active in philanthropic activities, with philanthropic performances, dinners and auctions every week. And in the US, 85% of charitable donations come for its citizens, and average donated amount per family is about US $900 per year, equal to 2.2% of US household income. But in China, only 10% of charitable donations come from ordinary households, and average donated amount is only about $1 per person per year. There are very few voluntary donations from individuals, so most of the donations are from levies by workplaces, schools and communities. While US' GDP per capita is about 35 times of China's, its donation per capital is more than 7,000 time of China's. In addition, charitable volunteer associations in China are still at an early stage, with only 3% of China's population participating in voluntary social services, while the figure in US is as high as 44%.
Secondly, the rich donate relatively less in China. In developed countries, rich people are usually active in philanthropic causes, regarding charitable donation as an important means to give back to the society and help the poor. But in Mainland China, there is a common view of "rich people heartless". According to China Charity Foundation, rich people in China possess 80% of the society's wealth, but only share less than 15% of charitable donations. |
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Thirdly, there are not enough charitable organisations and institutions. There are more than 320,000 non-government organisations registered in China, but only about 700 are dedicated for charitable causes. Due to the lack of regulations and systems, charitable organisations normally have issues such as opaque processes, unstandardised operating rules, incomplete scrutiny mechanism and confusing managements. Many charitable organisations, which do not have trustworthy profiles among the public, are incapable of mobilising social resources.
Suggestions
Development levels of charitable causes is directly related to a country's economic development level and the public's philanthropic awareness, and it is also closely related to a country's legislations and policy incentives. Therefore, multiple measures are needed to improve China's philanthropic causes. Strengthening the public's charitable awareness. In Western countries, philanthropic education is usually a mandatory study, hence better philanthropic awareness and social values. But Chinese culture traditionally places emphases on families, historic ties and inheritance, so it is natural to pass possessions to next generations. On the other hand, as China's philanthropic industry is still in infancy, and many people have not fully understood and formed philanthropic views. Therefore many Chinese people regard philanthropic causes as government assistance and unrelated to individuals. More seriously, donation activities by the rich have not yet been understood by many people, who tend to think donations from the rich are "show off" and satire on them. Such distorted social views will make the rich feel unethical for charitable causes, and the current "rich hatred" caused by income inequality in China also deters wealthy people from practising philanthropy.
Therefore, while many relevant authorities and charitable organisations in China are focusing on raising charitable funds, they should also pay attention to cultivating the public's social responsibility and philanthropic awareness. Local governments should view promotion of charitable causes as a responsibility, include them into social planning and organise necessary human, monetary and physical resources
Developing charitable organisations. The government should actively nurture charitable organisations in urban and rural areas, encourage social institutions and individuals to participate in charitable causes, and promote the development of non-government charitable organisations. Charitable organisations should be helped to establish internal management systems, develop operating mechanism with independent decision-making, execution and supervision functions, establish standardised and open financial management systems, introduce systems for tracking, feeding back and disclosing the use of donated funds, and regularly publish philanthropic activity results to the public.
Improving taxation incentive policies. First we need to amend tax relief policies, which should be learned from the US, by significantly improving the tax benefits for corporate donations. Meanwhile, the procedures for donors to receive tax benefits should be simplified and standardised. Furthermore, inheritance tax should be introduced when it is appropriate. Inheritance taxes in Western countries are usually high. In the US, inheritance tax is based on progressive rates of inherited amount, and beneficiaries have to pay the tax before taking the inherited wealth. That is one reason why many American riches are more willing to donate their wealth to philanthropic causes. Therefore, China should also introduce inheritance tax, in order to encourage and lead wealthy people to participate in philanthropic causes and undertake more social responsibilities.
Improving philanthropy-related legislations. So far, China hasn't got a dedicated law for promoting charitable causes. The current legislations have not yet clearly defined the nature of philanthropic organisations, procedures and supervision of philanthropic activities and regulatory bodies for philanthropic causes. And regulations for access, evaluation, monitoring, property ownership transfer, investment and financing and exit of philanthropic activities are also yet to be standardised. Take the example of taxpayer incentives on philanthropic causes. In many developed countries taxpayers can readily enjoy meaningful tax benefits by making donations. But in China currently, taxpayers can obtain a meagre 3% tax credit only by donating to a handful of government-designated philanthropic organisations, and the claim procedures are cumbersome and complicated, hence low incentives for corporate donations.
From international experience, charitable causes can have the positive effect of coordinating social developments, narrowing wealth inequality, improving social stability, enhancing public responsibilities and cohesion. Therefore, developing philanthropic activities is of great significance to China.
Source: China Economic Weekly
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