Bill Gates administers a polio vaccine in Chad as part of his work with the Bill & Melinda Gates Foundation. Gates is calling on more of China's ultra-wealthy to donate to charity. (Flickr/Gates Foundation)
Bill Gates may be the world's richest person, but he's become more famous in recent years for his massive philanthropy efforts and campaign to convince the world’s ultra-rich to donate the majorities of their vast fortunes to charity—and he’s made it clear that China’s wealthy aren’t exempt from his call to action. However, individual philanthropy remains low in China, and the challenge of convincing the rich to give as much as their counterparts in the United States is more complicated than he may think.
During a visit to Singapore this week, the billionaire founder of Microsoft and the Bill & Melinda Gates Foundation called out China’s wealthy for not doing their part to give back to society. "When you have something like a disaster (in China) you see the basic generosity, but if you look at systemic things like giving to health causes, giving to universities to do research, giving to handicapped people, it's not there yet," he told Reuters.
The statement comes more than three years after Gates was snubbed by the likes of Wanda Group head Wang Jianlin and Wahaha Group Chairman Zong Qinghou—China’s two richest people—when he and Warren Buffet traveled to China to pitch their “Giving Pledge,” a promise that they will donate most of their wealth to charitable causes. The trip turned out to be a disappointment: out of 50 Chinese billionaires invited, one third turned down the invitation. So far, the pledge has less than 10 signatories from Asia.
Gates’ assertion touches on a topic of widespread debate within China over why the country’s wealthy aren't handing over the vast sums being given by their peers in other parts of the world. The difference between China and the United States is stark: last year, Mark Zuckerberg gave away more money than China’s top 100 philanthropists combined. While China has the second-highest number of dollar billionaires and third-highest number of millionaires in the world, contributions to charity lag far behind those of the United States. According to the Hurun Report, total charitable giving by China’s wealthy actually decreased by 44 percent from 2012 to 2013, reaching $890 million. In contrast, the top 50 U.S. philanthropists gave $7.7 billion in the same year. In 2012 and 2013, Hurun found that China’s wealthy gave an average of 0.8 to 0.9 percent of their income to charity, compared to about 9 percent for American millionaires between 2009 and 2011, according to a Bank of America study.
Looking at the huge disparity in numbers may prompt one to ask: do America's billionaires just have a greater sense of altruism than those in China? Probably not. While it may sound cynical, differences in tax policies between China and the United States likely play a sizable role in encouraging (or discouraging) giving. Tax breaks for charitable donations are easier to receive in the United States than in China, where deductions for giving to charities are small, and only apply to a handful of government-approved groups. In addition, the significant inheritance taxes that encourage the establishment of charitable trusts in the United States simply do not exist in China.
Pictured above with David Cameron (R), Hong Kong businessman Li Ka-shing is one of Asia's biggest philanthropists. (Li Ka-shing Foundation)
There are several other factors at play preventing the proliferation of Chinese philanthropists willing to sign Gates’ pledge. First, concern over fake charities and misuse of funds has been on the rise, and the government's wariness toward NGOs means China’s wealthy face red tape in setting up their own foundations in the style of America’s biggest givers.
Furthermore, since many organizations in China are government-backed, attitudes persist that the government—not individuals—should be the one to provide services offered by charities. In a 2013 Hurun survey of China’s wealthy, paying taxes was listed as the most important way one could give back to society, followed by donating to charity.
Some experts believe that there are also fewer social pressures on China’s wealthy to donate. A 2010 Caixin article states that many of China’s newly wealthy are entrepreneurs, focused on “making quality products” and building their fortunes rather than giving them away, according to an interview with Narada Foundation Founder Xu Yongguang. In Xu's view, China’s rich prioritize “treating employees well, managing investments, being good to the environment and paying taxes. If they achieve all of these, they are considered respectable entrepreneurs, even if they don't donate money to charity." Furthermore, many are worried about “showing off” in the vein of eccentric multi-millionaire Chen Guangbiao, who is known for both noble efforts, such as his assistance after the Sichuan earthquake, as well as antics such as giving out cash on the streets and printing a less-than-modest business card.
Charitable giving certainly exists in China, but the majority of it is made through corporations with an interest in corporate social responsibility. In China, 80 percent of all charitable donations come from the corporate sector, while that same percentage applies to individuals from the United States. Public opinion plays a key role in corporate gifts. After the 2008 Sichuan earthquake, the chairman of property developer Vanke sparked angry reactions online when he said that a donation of 2 million yuan (US$322,748) was “feasible” for the massive corporation, prompting him to apologize and quickly hand over 100 million yuan for the recovery efforts.
Bill Gates shouldn't lose hope entirely, however. Outside the mainland, Hong Kong businessman Li Ka-shing is considered one of China’s most generous philanthropists, and has pledged to donate one-third of his assets to philanthropic projects. Wang and Zong may have skipped out on dinner with Gates and Buffet in 2010, but they are both currently listed among China’s top 10 philanthropists. The question of how to convince them to make bigger gifts, however, may be one of both policy and culture.