The year 2008 was hailed as China’s “First Year of Charity” after public donations for the Wenchuan Earthquake disaster exceeded 100 billion yuan ($14.88 billion) — an unprecedented amount.
Along with this historical charitable event, there was also the incident of Vanke Group’s stock price plummeting due to negative public sentiment surrounding donations.
A public outcry ensued after Wang Shi, the chairman of the real estate giant, expressed his willingness to donate only 2 million yuan at the beginning of the disaster relief operation, publicly asking his employees to donate no more than 10 yuan, in order “to prevent charity from turning into a burden on people”.
Within four trading days, Vanke’s share price fell from 22.50 yuan to 19.88 yuan, and the group lost 15.4 billion yuan.
The incident did not end until Wang Shi himself visited the disaster area and publicly apologized for his remarks. In addition, the real estate boss donated 100 million yuan to the relief effort.
Here arises a moral question: are rich people obliged to give to charity? Should a person be blamed for not donating when they have the money?
The origin of large donations
The primitive accumulation of capital will inevitably lead to the long-term existence of different property classes: one group with great wealth, and the other with less and less.
The basic logic of charitable donations is not because of the existence of poverty, but because people of insight choose to do good deeds.
When wealthy people realize the importance of social value and public recognition of their own survival and development, they begin to practice how to maximize the value of their wealth through philanthropy.
The formation of the tradition of making large donations originated from the changes and institutional design of wealth management in the capitalist world more than a hundred years ago.
Following a period of economic development during the 19th century, the first group of world-renowned wealthy businessmen was born in the United States. Later, in the early 20th century, visionary consortium leaders among this group, such as John Rockefeller, Andrew Carnegie, and Henry Ford, all set up private foundations, turning themselves into respected philanthropists.
The occurrence of this change was related to many factors: the rise of small and medium-sized enterprises and farms putting a competitive pressure on the previous wealthy class; the vigorous development of the labor movement causing social unrest; a series of reform regulations formulated by government, including anti-monopoly legislation, taxation of the rich, and anti-corruption measures.
Participating in philanthropy can bring many benefits to the wealthy, such as tax relief and capital gains.
Donations from foundations set up by the wealthy have effectively helped solve social problems. The Union Medical College in China and the University of Chicago in the United States are all supported by the Rockefeller family.
The huge potential of Chinese philanthropy
The Hurun Rich List counts entrepreneurs with total assets exceeding $1 billion every year.
According to the 2021 data, this group now numbers 3,228, of which 1,058 are from China, providing the possibility of sustainable development for Chinese philanthropy.
China Philanthropy Times conducted a domestic study on 3,068 entrepreneurs and 8,936 companies that made large-scale donations from 2004 to 2021, and found that the choice of specific charitable fields was mainly based on government advocacy and social needs, and that compared with direct donations, China’s wealthy are more and more inclined to become deeply involved in philanthropy, including by setting up their own foundations.
Benefiting from the development of the economy, there is sufficient impetus for the continued development of society. What China needs, is to be innovative.