China Is ‘Doing Okay’ in Terms of Philanthropy and Private Social Investment, Says Report

This article by The China NGO Project, a new platform from ChinaFile, focuses on China's performance in the 2018 Doing Good Index.

The China NGO Project

The Doing Good Index 2018, a benchmark study by the Centre for Asian Philanthropy and Society (CAPS), collected data from more than 1,500 non-profit organizations across 15 Asian economies and mapped the environment for philanthropy and private social investment in each. The Index looks specifically at groups it calls “Social Delivery Organizations,” which refers to “organizations that are engaged in delivering a product or service that addresses a societal need.”

The index comprises 35 indicators, grouped into four sub-indexes, showing all aspects of the supply and demand for philanthropic giving. Using these indicators, the 15 economies are filtered into four broad clusters: “Doing Well,” “Doing Better,” “Doing Okay,” and “Not Doing Enough.” Each cluster denotes the distance left for each economy to work towards achieving a conducive environment for philanthropic work. According to the report, China comes in under the “Doing Okay” category. It falls short of Thailand, Hong Kong, and Singapore, stands on the same level as India and Pakistan, and performs better than Indonesia and Myanmar.

The Index is a broad survey of Asia generally; below are some of the report’s findings on China.

Regulatory and Social Impediments to Philanthropic Giving
–  Implementation of the Foreign NGO Law since January 2017 has introduced greater hurdles to foreign NGOs looking to operate in China.
–  Domestic non-profits face restrictions on receipt of foreign cash. As stated in the report, organizations in the education and health sectors in China are “more sensitive to this drop and may need to scale back or look for alternative funding sources” to continue operating.
–  A low tax deduction rate hinders more charitable giving. Tax deduction rates serve as a signal of government priorities in addition to reducing donors’ tax liabilities. In China, tax deduction rates for charitable giving are 30 percent for individuals and 12 percent for corporations, as compared with rates of 100 percent in economies such as the Philippines, Vietnam, and Sri Lanka. The report notes that this measure brought down China’s overall score in the index, but that reforms to tax deductions could potentially be “game-changers in unleashing private social investment.”
–  A lack of faith in non-profits drives low levels of individual charitable giving. This trust deficit could stem from a lack of transparency about organizations’ agendas, their methods for distributing funds, as well as high-profile scandals associated with charitable organizations. Two-thirds of the Chinese respondents to the Doing Good Index survey reported that they still feel the funding effects of a widely-reported scandal involving the Red Cross in 2011.

Nurturing a Healthy Ecosystem for Philanthropy
–  China provides a number of incentives for philanthropy, including awards and volunteering and training programs.
–  Chinese social delivery organizations ranked first among the 15 economies surveyed in their use of crowdfunding, which aims to raise small individual donations from a large number of people through the Internet. 57 percent of surveyed non-profits said they currently using crowdfunding and 80 percent said they intended to use it in the near future. The report made note of Tencent’s annual crowdfunding charity event as a key example of the large amounts of money that can be raised through this mechanism.
–  Chinese non-profits are much more likely than other regional economies to be the recipient of government social service delivery contracts. 64 percent of surveyed non-profits had fulfilled government contracts. Government procurement offers non-profits the opportunity to generate revenue and to supplement donations with a reliable source of additional funding; it can also allow the government to test out new service delivery methods and promote innovation.