The Wall Street Journal-20080115-Beautiful Country- Understanding American Philanthropy- Online edition
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Beautiful Country: Understanding American Philanthropy; Online edition
The Wall Street Journal Online
Note to readers: The Chinese version of this column is available here.
Recent statistics about the growth of Chinese wealth caught mainstream-media attention in the U.S., with both The Wall Street Journal and the New York Times gasping at the number of Chinese billionaires (106, second only to the U.S.) and the number of Chinese households with investible assets of at least $1 million (310,000, fifth after the U.S., Japan, U.K. and Germany).
But both newspapers also raised this question: What will China's new wealthy do with their money and influence?
My colleague Robert Frank, the Journal's Wealth Report columnist, noted in his blog that many of China's rich made their fortunes from cozy ties with the government. "That's made it hard for the Chinese rich to improve their reputations," he wrote. "What's more, they have yet to take up U.S.-style philanthropy, which is still frowned on by the government."
To be sure, rich Chinese have been stepping up their philanthropic efforts in recent years. Between 2003 and early 2007, the top 100 entrepreneurs on the Hurun Report -- China's version of the Forbes list -- donated about $9.5 billion. Yet it's true that philanthropy remains a relatively new concept in China, with few participants and even fewer privately-funded charities.
But Robert's question led to one of my own: What is U.S.-style philanthropy, anyway?
My understanding is that it's a national sport. Americans' deep- rooted idealism and individualism leads many to believe they can change the world through individual efforts, sometimes as small as giving a buck to the homeless on the way home.
In 2005 more than 67% of U.S. households donated to charity, and nearly 98% of high net-worth households (those with incomes of greater than $200,000 or assets in excess of $1 million) donated to a charitable organization, according to a survey by the Center on Philanthropy at Indiana University. In fact, over the past 40 years Americans have donated, on average, about 1.8% of their annual gross domestic product.
This couldn't be further from the traditional Chinese belief that "fertile water should be kept to your own soil" -- wealth should be passed down through families. Confucian belief also holds that charitable donations should be done quietly, and a man of virtue should shy from fame.
Chinese argue that business people only build village schools and roads to have a better relationship with their local government -- which makes good business sense in China. A friend in Beijing once asked me, "What did Bill Gates and Warren Buffett gain from donating tens of billions of dollars?" (I don't know if there's anything in the world worth so much.)
In the U.S., as soon as you become rich, powerful or famous, you also face pressure to become a philanthropist. Attending charity events is an important part of these people's social lives: Newspapers run photos of black-tie dinners in which people are all dressed in couture gowns and tuxedos, and such events can raise millions of dollars. Rooms in big museums are usually named after big donors, and sitting on the board of a big museum is a huge social honor. For example, the board of trustees of the Museum of Modern Art in New York is studded with names such as Rockefeller, Pulitzer, Lauder and other big names that are not yet well-known in China. (Critics say these rich people's motives are less about supporting the arts than they are about avoiding taxes and elevating social status.)
But how about ordinary Americans?
For many of them, the most-important reason for donating to charities is probably reducing their taxes. The U.S. is one of the few countries to allow givers a tax deduction. Americans have a national aversion to taxes and consider it natural to lower their taxes by giving away money for good causes. You can even get tax deductions by donating old clothes. There are critics of such deductions, but many Americans believe charities are better at utilizing their money to change the world than the government is.
But tax deductions aside, what else do ordinary Americans get from giving?
I asked a few people this question, and got a range of answers.
A colleague's husband walked dogs for an animal shelter before their marriage; she joked that he wanted a way to meet single women with dogs.
Another colleague reads books to elementary-school students every Friday morning; her childhood dream was becoming a teacher.
A top executive at a multinational company whispered to me at a cocktail party that he participates in charity events to network with useful people.
Financial analyst Mark Sue is organizing a charity to help new Asian immigrants. As an immigrant from South Korea himself, Mr. Sue says he wants to give back to the society that has given him opportunities to succeed.
Robert Laikin, chief executive of cellphone distributor Brightpoint, said he and his wife donate about 10% of their annual income to religious and charitable organizations. He said giving makes him feel happy.
Mark Carroll, a Goldman Sachs managing director, took a year off in 2005 to work at a job-training program for the homeless in Chicago, giving up bonuses worth millions of dollars. He said working with homeless people made him realize how lucky he was to be born in a white, middle-class family with a great support system.
Americans also give for religious reasons. In English, there's a word for the tradition of religious giving -- "tithing," which means giving 10% of your income to the church. Many Americans go to church regularly; 45% of households donated to their church in 2005. In 2006, Americans gave an estimated $97 billion to congregations, almost a third of the country's $295 billion in charitable donations, according to Giving USA Foundation, a nonprofit educational organization. Almost every person I interviewed for this column said his or her first memory of philanthropy was parents donating to or volunteering at their churches.
There are also plenty of ways to give in the U.S. Unlike in China, where the government is suspicious of any privately funded and organized institution, here it's quite easy to set up a charity or foundation. There are numerous stories about how the death of a family member prompted a rich person to establish a foundation for medical research with millions out of their own pocket.
It's also hard not to be philanthropic in this country. Public radio and TV stations keep reminding you over the airwaves that you should support them. Around Christmas and New Year's, newspapers and magazines offer page after page of advice on how to give wisely. And your friends will enlist you in their own causes. Raising several thousand dollars for a charity can get you a guaranteed entry in the New York City Marathon -- which is how my friend Piya ran in 2006.
And then there's the mail. Looking through it one recent weekend, I found letters from Amnesty International, UNICEF, the United Nations Children's Fund, and the Smile Train, which provides free cleft-palate surgery to children in developing countries. Robin, a filmmaker, told me over Thanksgiving dinner that the letters make her feel that she's not giving enough.
Sometimes I'm still puzzled by the fact that some Americans are as generous as they could be to strangers half a world away, but reluctant to help out their immediate families. But while I wouldn't want Chinese people to lose our tradition of filial respect, I think we could benefit from expanding our horizons in thinking about who really needs help.
With social unrest looming amid the growing income disparity in China, it might be in the interest of the rich to have their wealth benefit more than their offspring. I hope they would have more freedom to set up foundations and other charitable organizations. I also hope that they wouldn't be shy about lending their names to charities, and that the public would spend less time judging whether or not their philanthropic acts are done completely out of altruism. What does it matter if their motives are pure or not? The most-important thing is that those in need are getting help.
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Write to Li Yuan at [email protected]
