x Abu Dhabi, UAESunday 23 July 2017

Donor dilemmas for the super rich

As the ranks of dollar billionaires swell, the number of Chinese philanthropists also grows. But the Chinese are not accustomed to charitable donations and many are suspicious - with gallery.

Cao Dewang. Position: chairman of Fuyao Glass Industry Group. Total wealth: $1.8bn. Donations last year: $158m. There is little wonder Mr Cao feels comfortable giving some of his fortune away, as his total net worth has increased $700m in the past four years. 
Cao Dewang. Position: chairman of Fuyao Glass Industry Group. Total wealth: $1.8bn. Donations last year: $158m. There is little wonder Mr Cao feels comfortable giving some of his fortune away, as his total net worth has increased $700m in the past four years. 

The Chinese businessman Chen Guangbiao is certainly not shy about letting the world know how generous he is. Mr Chen has been pictured beside a mound of his own money that he later gave away.

He has posed with earthquake victims, each clutching handfuls of 100 yuan (Dh57.4) notes he has given them, and has been pictured at the site of natural disasters, where he has even been credited with digging out victims.

In his own words: "No other billionaire has reached my level of charity."

Mr Chen, the chairman of Jiangsu Huangpu Renewable Resources Utilization, said in an interview last year that in China "people have only just started to get rich" and that charity was "still in the early stages of development".

"Business people are only now starting to learn about giving from the West," he said. "People are willing to hand over money. The question is how to do it well."

As near double-digit economic growth swells the ranks of the super rich - with the number of dollar billionaires in China growing from 189 to 271 in the past year alone in the Hurun Rich List - the number of philanthropists is likely to increase.

In fact, there is already no shortage of the super generous in China, with the Forbes magazine list of China's top philanthropists this year showing that a dozen businessmen gave away at least US$20 million (Dh73,4m) last year. The most generous, the property magnate Wang Jianlin, donated close to $200m.

In April last year, meanwhile, the octogenarian property entrepreneur Yu Pengnian became China's first billion-dollar philanthropist when he put the remaining $470m of his fortune into his Hong Kong-based charitable foundation, bringing the total to $1.2 billion.

Yet, as Mr Chen has said, those who choose to give money away are faced with the challenge of finding ways of philanthropy that genuinely bring benefits.

Simply handing over money to groups that solicit donations is not necessarily the way to go, some believe. The Communist Party, ever wary of any alternative sources of power or influence, strictly regulates the charitable sector to the extent that most organisations that raise money are extensions of the government.

According to Chan Kinman, an associate professor at the Chinese University of Hong Kong who has written about the development of non-governmental organisations, this means that the motives of those who donate to charity are often questioned.

"Many people still believe that many business people are just doing this to create better connections with the government, because most of the donations will go to the government departments," he said.

"No matter [whether the] donations are from the public or the entrepreneurs, most go to the government departments instead of the non-governmental organisations in China."

He also pointed out that many business people were donating money to establish guangxi, the web of influence so crucial to commercial success in the country, or to build connections with government officials.

"So many people will suspect the motivations behind these donations," he said.

Philanthropists have also faced criticism from those who think the money they give away could be spent in better ways.

After Mr Wang's $197.4m handout last year, the majority of which went towards rebuilding an ancient pagoda and monastery complex, some said he should have used the cash to help the poor.

As for Mr Chen, he has had to face suggestions that his company has suffered because of his commitment to good causes, and he has also been asked why he does not give handouts to his brother and sister, who both work in modest jobs. He insists he has helped them in the past but that they squandered the money.

The way Mr Chen donates, sometimes simply handing over cash to individuals, has also faced scrutiny.

"If he is really concerned about the problem of poverty, he should establish a foundation and find a better model to help people in need, rather than give money to some people because they appeal to his emotions. It will just worsen the situation," said Prof Chan.

One reason some philanthropist business people might be wary of donating money to government-linked charities is their lack of transparency.

A recent scandal involving China's Red Cross, with allegations that an employee of an associated organisation had channelled funds to a mistress, demonstrated the lack of trust people have in the sector. Officials promised greater openness in future as they sought to rebuild confidence.

"Many of these foundations have very poor practice of transparency … People worry their money will be used in some corrupt way," said Prof Chan.

It is perhaps no surprise then that many business people have decided to create their own foundations to manage their charitable work. It is easier for a philanthropist to establish a foundation into which his or her donations are channelled than it is to set up one that solicits donations from the public.

Despite the multiple reasons why China's nouveau riche might choose not to be generous, not least the frequent questioning of their motives and methods, there are big names from outside encouraging them to be generous.

In particular, last year the Microsoft founder Bill Gates and the investor Warren Buffett hosted a dinner in Beijing where the guest list was said to number 50 of China's super rich.

Their initiative followed the two men's efforts in their native US to encourage the wealthy to give more to charity. Dozens of individuals and wealthy families, including many worth billions of dollars, have signed The Giving Pledge, which commits them to donate at least half of their worth to good causes when they die.

In China, Mr Gates and Mr Buffett seemed to be having a tougher time, with reports saying many business people declined invitations, although the pair insisted the event was a success and was not about soliciting donations.

Yet even if The Giving Pledge has yet to strike a chord in China, the energetic Mr Chen for one has promised to go one better and give all of his fortune away when he dies. His two sons, he has said, should make their own way in life.

business@thenational.ae