Good news: The dramatic rise of China’s market economy has driven many newly rich people to give away money for the public good.
Bad news: There is no effective way to do that in China.
The Chinese government regulates its nonprofit sector heavily. Registering as a nonprofit is extremely difficult, so a robust charitable infrastructure has not had a chance to develop. People wanting to make a difference with poverty, the environment, or the arts wind up throwing money at individual initiatives and programs hodgepodge.
To learn how to strategize the philanthropic impulse in a more sustainable way, members of China’s Ministry of Civil Affairs are visiting a handful of American foundations, including the Pew, the William Penn Foundation, and the Philadelphia Foundation.
The Philadelphia Foundation manages 800 individual funds ranging from $10,000 to $20 million, investing and distributing according to an open, communal process.
R. Andrew Swinney, foundation president, does not believe philanthropic models based on successful business plans can be used to solve social problems.
“It happened here in the ’90s, when you had the dot-com boom,” said Swinney. “A lot of those successful entrepreneurs thought they could just jump into philanthropy and use the same appliance to an issue. In the end they said, ‘This is a lot harder than I thought,’ and went back to traditional grant-making.”
During a two-hour meeting Wednesday in the offices of the Philadelphia Foundation, Swinney advocated for community-based philanthropy. The 15 Chinese delegates asked about tax benefits, wanted a clarification of nonprofit versus private foundations, and pushed for details about how nonprofts operate.
“The government does want to have a lot of problems resolved at a community level and by the community,” said Liu Zhenguo, deputy director of the Chinese Ministry of Civil Affairs. “So maybe this model could be useful in the future, and we will see how they can draw more support from the community, and serve the community.”
Liu said the problem with that model is that it’s complicated. Most Chinese non-governmental organizations get their money directly from philanthropists while, in the U.S., a lot of money is distributed through foundations that act as liaisons between funders and recipients.
The delegates asked if the Philadelphia Foundation does any of the actual work that it funds. The answer was no.
WHYY receives funding from the William Penn Foundation.