Six Insights From The New Forbes China Philanthropy List

The 2019 Forbes China Philanthropy List published last week (link here) contains many insights into the world of Chinese philanthropy.  Here are six trends in China’s philanthropy I spotted:

*The second generation of families that became well-off during the country’s reform era is becoming more involved in philanthropy. Real estate developer Country Garden‘s founder Yeung Kwok Keung ranks No. 2 on this year’s list and shares billing with his family. As part of the family's activism, Yeung, his daughter Yang Huiyan and his son-in-law Chen Chong last year pledged 2.2 billion yuan to China’s elite Tsinghua University;  Chen, a Tsinghua graduate, leads the endowment. Yeung and his daughter have received the "Chinese Charity Award" eight times. Huiyan also supports education, medical research and other charity programs.

*Though foundations are still the most common structure for donations, some families start to use a "charitable trust + foundation" duel system. Midea Group's billionaire founder He Xiangjian has set up the He Xiangjian Charitable Foundation, and has contributed 429 million yuan to establish a charitable trust, making it the biggest charitable trust in China set up with a cash donation. This duel system leverages the asset management capabilities of a trust, and makes use of a foundation for specific project management skills.

*Donations for education remain popular; donations to university education funds named after individuals or enterprises have become increasingly popular. These funds create an ecosystem that begins with research and talent training, and later feeds industry development. Students, universities and businesses all benefit. The Peking University Fashu Medicine Development Fund established by Chen Fashu of XinHua Capital, the Peking University Ge Li & Ning Zhao Educational Fund esatablished by Ning Zhao and Ge Li of Wu Xi Apptec, the Peking University Foreign Language Institute New Oriental Educational Fund created by New Oriental founder Yu Minhong, and the Sequoia-Shanghai JiaoTong University ACM Course Educational Fund Scholarship set up by Sequoia China leader Neil Shen were all founded by individuals or families that appear on the 2019 Forbes China Philanthropy List. Donors with an industry background often integrate charity into their business strategic roadmaps. Among other notable donors to education, the Dunhe Foundation‘s chairman Ye Qingjun, who ranks 22th on the 2019 Forbes China Philanthropy List, plans to provide philanthropic support to 100 educational institutions within 10 years.

*Donation behavior between first and second generation entrepreneurs varies. Although first-generation entrepreneurs usually make bigger donations, most are not heavily involved in foundation management. Second-generation entrepreneurs, by contrast, are more likely to integrate philanthropy with their own business. Peng Guoyuan, the founder of NWY Group who ranked 58th on the 2019 Forbes China Philanthropy List, provides Internet education services based on cloud computing technology. He aims to build social enterprises to mitigate the imbalance of educational resources in society. Social enterprises focus not only on revenue and profit growth; they also target other causes such as the environment, social responsiblity and corporate governance, or ESG. I met Dean Peter Tufano from Oxford Saiid Business School this year, and learned that scholars at Oxford have started a global ESG research project that looks at the activities of family business owners. They are interviewing Chinese family businesses with more than 10 billion yuan in annual turnover and doing quantitative analysis based on an ESG rating.

*Hence, impact investment is an emerging new part of of Chinese philanthropy. The Rockefeller Foundation in 2007 first coined impact investment as a novel investment concept, advocating that businesses participate in charity. In 2010, Morgan Stanley and the Rockefeller Foundation jointly released a paper, "Impact Investments: An Emerging Asset Class," that defined impact investment as a specific type of asset and highlighted its unique position in investment and charity.

*Increased research into family philanthropy will help China‘s families rejuvenate themselves in changing times. Several weeks ago, I attended the "Double 70 Project“ seminar hosted by Tsinghua University´s Social Governance and Development Research Institute. The project will research 70 donation cases above 100 million yuan that were made during the last 70 years. This is an example of how philanthropy and family inheritance have become important research fields at top universities in China itself. Although an old Chinese proverb says that wealth lasts only three generations, I believe that Chinese families will be able to harness the power of philanthropy to assist with family inheritance and help rejuvenate, re-unite, and reposition themselves for new successes as economic circumstances inevitably change over time.

Source: Forbes.com

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