Trends in Overseas Philanthropy by Chinese Foundations

Abstract

In recent years, Chinese foundations have become increasingly involved in overseas charitable activities. This paper first describes the current status of Chinese foundations’ involvement in overseas charitable activities, including the development stage, the extent of participation, and the scale and scope of donations. Next, the paper analyzes the factors that impact Chinese foundations’ overseas donations. The study finds that fund size and the secretary general’s age and gender have no significant impact on overseas donations. However, factors such as the frequency of exchanges between foundations and foreign non-governmental organizations, the number of full-time employees in the foundations, and the number of years of education of the secretary general affect the amount of foundations’ overseas donations to various extents. Finally, policy recommendations are presented to promote Chinese foundations’ overseas charitable activities.

Résumé

Depuis quelques années, les fondations chinoises participent de plus en plus à des activités de bienfaisance à l’étranger. Le présent article décrit d’abord l’état actuel de la participation des fondations chinoises auxdites activités de bienfaisance, notamment la phase de développement, l’importance de la participation et l’échelle et la portée des dons. Il analyse ensuite les facteurs qui ont une incidence sur les dons des fondations chinoises à l’étranger. L’étude démontre que la taille des fonds et l’âge et le sexe du ou de la secrétaire générale n’ont pas de répercussions de taille sur les dons faits à l’étranger. Des facteurs comme la fréquence des échanges entre les fondations et les organisations non gouvernementales (ONG) étrangères, le nombre d’employés à temps plein au service des fondations et la durée, en années, des études du ou de la secrétaire générale influencent toutefois le montant des dons des fondations à l’étranger, et ce, de diverses façons. L’article présente enfin des recommandations en matière de politique pour favoriser les activités de bienfaisance des fondations chinoises à l’étranger.

Zusammenfassung

In den vergangenen Jahren haben sich chinesische Stiftungen vermehrt an wohltätigen Aktivitäten in Übersee beteiligt. Dieser Beitrag beschreibt zunächst den aktuellen Status der Beteiligung chinesischer Stiftungen an gemeinnützigen Aktivitäten in Übersee, einschließlich der Entwicklungsphase, des Umfangs der Beteiligung und des Spendenausmaßes. Anschließend werden die Faktoren analysiert, die sich auf die seitens der chinesischen Stiftungen getätigten Spenden in Übersee auswirken. Die Studie kommt zu dem Ergebnis, dass sich die Höhe der Geldmittel und das Alter und Geschlecht des Generalsekretärs nicht bedeutend auf die Spenden in Übersee auswirken. Allerdings beeinflussen Faktoren wie die Häufigkeit der Kontakte zwischen den Stiftungen und den ausländischen Nichtregierungsorganisationen (NROs), die Zahl der Vollzeitbeschäftigten in den Stiftungen und die Bildung des Generalsekretärs die von den Stiftungen vorgenommenen Spenden in Übersee in unterschiedlichem Maße. Abschließend werden politische Empfehlungen präsentiert, um die Spendenaktivitäten in Übersee seitens chinesischer Stiftungen zu fördern.

Resumen

En los últimos años, las fundaciones chinas se han implicado cada vez más en actividades benéficas en el exterior. El presente documento describe en primer lugar la situación actual de la implicación de las fundaciones chinas en actividades benéficas en el exterior, incluidas la etapa de desarrollo, la amplitud de la participación y la escala y el alcance de las donaciones. Después, el documento analiza los factores que afectan a las donaciones en el exterior de las fundaciones chinas. El estudio encuentra que el tamaño del fondo y la edad y el género del secretario general no tienen impacto significativo en las donaciones en el exterior. Sin embargo, factores tales como la frecuencia de los intercambios entre fundaciones y organizaciones no gubernamentales extranjeras (NGO, por sus siglas en inglés), el número de empleados a tiempo completo en las fundaciones, y el número de años de educación del secretario general afectan al importe de las donaciones exteriores de las fundaciones en diversa medida. Finalmente, se presentan recomendaciones sobre la política para promover las actividades benéficas en el exterior de las fundaciones chinas.

摘要

近年来, 越来越多的中国基金会开始参与海外慈善活动。本文首先从总体上描述了中国基金会在海外开展慈善活动的基本状况, 包括基金会参与海外慈善的发展阶段, 参与的程度、捐赠的规模和捐赠的范围。其次, 文章分析了影响中国基金会海外捐赠的因素。研究发现, 基金会的资金规模、秘书长的年龄与性别对海外捐赠没有显著的影响, 而基金会与海外NGO交流的密切程度、基金会的全职工作人员数量、秘书长的教育年限等因素对基金会海外捐赠有不同程度的显著影响。最后, 文章提出了推动中国基金会在海外开展慈善活动的政策建议。

要約

近年、中国の財団法人は海外の慈善活動に急速に関与している。本論文では、まず開発段階、参加規模、寄付の規模と範囲を含む海外の慈善活動の近況を説明する。次に、本論文では中国の財団法人が海外の寄付に影響を与える要因を分析する。本研究から、海外の寄付においては、資金額、事務局長の年齢、性別は重要でないことがわかった。しかしながら、財団法人と海外の非営利組織(NGO)のやりとりの回数、財団法人の正規職員数、事務局長の学歴の年数等の要因が、財団法人の海外の寄付から様々な領域に影響を与えている。最後に、政策提言として中国の財団法人の海外の寄付活動の推進を提示する。

ملخص

الخيرية في الخارج، بما في ذلك مرحلة التطوير، مدى المشاركة، حجم ونطاق التبرعات. بعد ذلك، يحلل البحث العوامل التي تؤثر على تبرعات المؤسسات الصينية في الخارج. وجدت الدراسة أن حجم التمويل والعمر العام والجنس ليس لهما تأثير كبيرعلى التبرعات الخارجية. مع ذلك، فإن عوامل مثل تكرارالتبادلات بين المؤسسات والمنظمات الغير حكومية (NGOs) الأجنبية، عدد العاملين بدوام كامل في المؤسسات، عدد سنوات تعليم الأمين العام يؤثر على مبلغ تبرعات المؤسسات في الخارج بدرجات مختلفة. أخيرا”، يتم تقديم توصيات السياسات لتعزيز أنشطة المؤسسات الخيرية الصينية في الخارج.

Introduction

China’s GDP surpassed Japan’s in 2010 and now ranks second in the world. In 2015, China’s GDP per capita exceeded US$8000 and made the list of upper–middle income countries. As China has gained more comprehensive national power and Chinese corporations have accelerated their pace of “going out,” international communities, especially some underdeveloped countries, have developed high expectations for help from China. The degree of the Chinese government’s foreign aid is in fact rapidly increasing (Huang and Ren 2012). As the drawbacks of the traditional “government-to-government” foreign-aid system become increasingly obvious, the government has gradually recognized the role of non-governmental organizations (NGOs) in foreign aid and global governance. Thus, the government has begun to place more emphasis on the role of NGOs in foreign aid. Therefore, NGOs in China, particularly foundations, are becoming substantially more active in launching overseas charitable activities (Yang and Deng 2014).

Because overseas charitable development conducted by NGOs in China is a new phenomenon, related research is still very limited, both domestically and internationally. Lai (2013) conducted a case study on the China Foundation for Poverty Alleviation’s (CFPA) aid to Africa. The author believes that the CFPA’s motives in launching charitable activities in Africa are political and economic opportunities. In political terms, aid to Africa is the focus of the Chinese government’s foreign aid. From the economic point of view, donations can indeed be obtained from overseas Chinese corporations. Yang (2013) analyzes the overseas charity experiences and challenges of four NGOs: the Global Environmental Institute, the Red Cross Society of China, the CFPA, and the China Youth Development Foundation (CYDF). Yang notes that lags in laws and regulations, a lack of funds, and domestic public misunderstanding are the primary factors that affect the degree of Chinese NGOs’ overseas charity. Huang (2011) analyzes the challenges NGOs in China face in going international. According to Huang, the lack of a legal basis, the small size of NGOs in China, a lack of funds, a lack of professional talent for international projects, and the lack of a communication mechanism between the government and NGOs are the primary factors that impact the internationalization of Chinese NGOs. However, the published research to date is based on either the results of a case study or qualitative analysis. An overall understanding of Chinese NGOs’ current situation regarding overseas charity is missing. In addition, certain case-based conclusions still require further examination. Therefore, this paper attempts to answer questions in two areas. First, what is the current situation regarding Chinese foundations’ involvement in overseas charity? For example, how many foundations have launched overseas charities? How large are the donations? Second, why do foundations launch overseas charities, and why do other foundations not launch overseas charities? What are the factors that affect Chinese foundations in launching overseas charities?

This paper comprises four sections. The first section introduces the research objects and methods. The second section introduces the basic situation for Chinese NGOs in overseas charity development. The third section analyzes the factors that impact foundations in launching overseas charitable activities. The fourth section concludes and provides recommendations.

Research Objects and Methods

According to current regulations, there are three types of NGOs in China: foundations, social organizations, and private non-enterprise units.Footnote 1 However, the literature shows that foundations are the primary system used by Chinese NGOs in launching overseas charitable activities for the following reasons (Deng 2013a). First, according to the Regulations for the Management of Foundations, a foundation is a nonprofit legal entity whose mission is to use donations from a natural person, a legal person, or an organization to engage in charitable activities. In other words, according to the law, a foundation must be an organization that only engages in charitable activities (Wang and Xu 2010). Thus, social organizations that are based on membership are primarily involved in mutual beneficial activities rather than charitable activities. Service fees account for 95.7% of private non-enterprise unit revenues in China, with 2.5% from public sectors and only 1.8% from donations (Deng 2007). Therefore, this revenue structure presents a significant hurdle for private non-enterprise units in launching charitable activities in underdeveloped countries. Second, annual donations to Chinese foundations are significant, enabling the initiation of overseas activities.Footnote 2 According to the China Charity and Donation Information Center, 2794 foundations in China received RMB 30.57 billion in donations in 2012, accounting for 37.4% of all donations made in that year (Peng and Liu 2013). Each foundation therefore received an average of RMB 10.94 million. The remaining 489,000 social organizations and private non-enterprise units received a total of RMB 2.961 million in donations, accounting for 36.2% of all donations. Thus, each NGO received an average of RMB 60.6 thousand in donations. Government and public institutions received RMB 21.55 billion in donations, accounting for 26.4% of all donations. Therefore, this study has identified foundations as the objects for research into NGOs’ development of overseas charitable activities.

In 2013, the China Foundation Center issued the Chinese Foundation 500 Directory that listed information on 500 foundations, representing 17.9% of the total foundations in China. The criteria to be included on the list were the following: First, the foundation had to be ranked among the highest in annual net assets; second, the foundation had to be very active in launching activities and offer open and transparent information. In other words, the listed foundations were the most active in China and had reached a certain asset size. Because many foundations in China are dormant, disclosed information is often very limited, and the likelihood of having questionnaires returned is low. In addition, the Chinese Foundation 500 Directory is the most recent list of foundations in China with current contact information. Therefore, the author decided to use the 500 foundations on the list as the objects for this study. The author started with individual case studies on some of the foundations on the list. Questionnaires were then sent out to the person in charge of each of the 500 foundations. A total of 82 questionnaires of 500 were returned (16.4%). According to the Regulations for the Management of Foundations, there are two types of foundation in China. One is a public funding foundation that can engage in fund-raising from the public. The other type is a non-public funding foundation, which cannot raise funds from the public. According to the original intention of the legislation, public funding foundations are public foundations primarily established by the government to raise funds from the community and assist government agencies in solving social problems, whereas non-public funding foundations are private foundations that raise funds from private endowments of enterprises and individuals rather than from communities. As listed in Table 1, the sample structure and population structure were similar. This observation implies that the returned questionnaires could adequately represent the 500 foundations that were relatively active with large asset sizes.

Table 1 Structure comparison of sample and population

Developmental Stages of Chinese Foundations and the Laws and Regulations that Enabled Foundations to Go Abroad

The development of Chinese foundations has passed through three stages. The initial stage was from 1981 to 1988. China’s first foundation was established in the 1980s (Xu 2010), when reforms and open-door policies had just started and the government was facing financial difficulties. Thus, based on other countries’ experiences, China hoped to resolve its social problems by raising funds from the community in the form of foundations. The prior literature indicates that one of the Chinese government’s goals in establishing foundations at that time was to raise funds from overseas. According to the Statistical Report on the Development of Civil Affairs, issued annually by the Ministry of Civil Affairs, before 1994, the Ministry only collected data on annual donations received from overseas; there were no statistical data on domestic donations. This disparity shows that at that time, China was primarily dependent on overseas donations. Domestic donations were so limited that they were even neglected in the government’s statistics. That is, in the initial developmental stage of Chinese foundations, foundation resources primarily originated outside China, and foundation activities occurred nearly exclusively within China. During this stage, due to a lack of corresponding laws, the development of the foundations was chaotic (Nie et al. 2016). The foundations were small in number and scale, and their governance structure was imperfect.

The second stage was transitional and lasted from 1988 to 2004. In 1988, the first Regulation for the Management of Foundations was promulgated in China. The primary purpose of the legislation was to strengthen the supervision of foundations and guard against financial risks. In the context of strict policies, foundations were still primarily managed by the government, and their number increased slowly. With the development of China’s economy, domestic donations increased, and the government began to collect data on domestic donations received by the Ministry of Civil Affairs for the first time in 1995Footnote 3 (Deng 2013b). Overall, during this stage, in addition to foundation donations from overseas, domestic donations began to rapidly increase. However, the scope of activities remained primarily focused on solving domestic social problems, with little involvement in overseas charitable activities. In fact, during this stage, Chinese foundations were relatively insular, rarely taking the initiative to assume international social responsibilities, and were not integrated into the global civil society movement.

The third stage was one of the rapid developments that began in 2004 and continues to the present. With the rapid increase in private wealth in China, to encourage enterprises and individuals to participate in charitable causes, the government revised the foundation management regulations in 2004. The highlight of the newly revised law was allowing private foundations to be established. Since then, the number of Chinese foundations, particularly non-public funding ones, has rapidly increased. During this stage, not only has the number of Chinese foundations quickly increased, but also, the scale has increased, with foundation fund-raising primarily relying on domestic contributions. A new trend in Chinese foundations has also appeared. That is, a small number of pioneering foundations have begun to go abroad to perform overseas charity activities. Starting in 2010, with more foundations beginning to develop overseas projects, the NGO Bureau of the Chinese Ministry of Civil Affairs began to require foundations to disclose information on their overseas development projects and donation sizes in their annual reports. Thus, the changes in the government’s statistics regarding donation data and annual report requirements demonstrate the gradual shift in the role of Chinese foundations from purely receiving overseas donations to making donations overseas.

According to the NGO organizational life-cycle theory (Dorothy 2010; Zhao 2013), NGOs typically pass through a sequence of developmental stages: from start-up to growth and formalization, maturity and sustainability, and finally decline, reinvention, or termination. After 30 years of development, a small number of Chinese foundations have moved from the start-up stage to maturity and sustainability. In the start-up and growth and formalization stages, due to economic backwardness in China and the limited capacity of foundations in the past, funding primarily relied on foreign sources, and foundation activities nearly always occurred within China. With China’s rapid economic growth, several foundations entered the stage of maturity and sustainability. A small number of pioneer foundations began to adjust their mission and strategy from a commitment to domestic social responsibility to international social responsibility, and the range of charitable activities expanded from domestic to overseas. In fact, after the government proposed the One Belt One Road Initiative in 2013,Footnote 4 the government’s foreign-aid strategy began to undergo a major adjustment, gradually focusing on and encouraging Chinese NGOs to go abroad. However, the internationalization of a small number of foundations in China had already begun before 2013. For example, since its inception in 1989, the CYDF founded an overseas cooperative to coordinate overseas fund-raising and international exchanges. In 1995, the CYDF officially proposed a strategy for international development. However, “at that time, we proposed internationalization, primarily for the purpose of mobilizing overseas philanthropic resources to develop the Project HOPE at home. In the 1990s, approximately one-third of the funds CYDF raised came from overseas donations or multi-national corporations.” “After 2008, because of the rapid growth in domestic philanthropic resources in China and the international financial crisis, the ratio of funds raised from overseas became smaller and smaller, accounting for approximately 10% of the annual funds raised” (Interview Yang 2013). In the new environment, the CYDF established an Africa Department in 2011 that was exclusively in charge of domestic fund-raising for the construction of schools through the implementation of Project HOPE in Africa. The establishment of the Africa Department demonstrates the tremendous changes in the CYDF’s internationalization strategy.

However, as increasingly more foundations have gone abroad, the constraints of laws and regulations have become increasingly prominent. There are no corresponding regulations on whether foundations can perform charitable activities overseas or establish representative offices, whether their overseas donations are tax deductible or exempt, or how their foreign affairs should be managed. Because of the lack of legal basis, foundations face a series of problems regarding overseas donations or projects, such as how to export funds, how supplies clear customs, and how personnel are dispatched abroad. In 1999, the government promulgated the Law on Donation for Public Welfare, which only regulated the content of overseas donation toward China but included no information on domestic donation toward regions abroad. While awarding more freedom to charitable activities and helping the development of charitable organizations such as foundations, the Charitable Act promulgated in March 2016 does not specify how charitable activities should be conducted overseas. However, in August 2016, the General Office of the CPC Central Committee and the General Office of the State Council jointly issued the Opinion on Reforming the NGO Management System to Promote Healthy and Orderly NGO Development, which clearly introduced the following ideas: “guiding NGOs to conduct external exchanges in an orderly manner”; “allowing NGOs to play supplementary and cooperative roles in international exchanges in the field of economics, culture, science and technology, sports, and environmental protection and be an important platform in non-governmental exchange”; and “if it is necessary to establish (representative) offices outside China, approval must be obtained from the authority in charge or the administration in charge of foreign affairs.” Subsequently, the Ministry of Civil Affairs, the Ministry of Commerce, the Ministry of Foreign Affairs and other relevant government agencies began to formulate relevant policies to implement the spirit of the opinion. It is expected that with the continuous improvement of policies that encourage and support NGOs going abroad, the overseas charitable activities of Chinese foundations will enter a new stage of development. The integration of Chinese NGOs into the global civil society movement and their participation in global governance will also enter a new stage.

Development Status of Chinese Foundations in Overseas Charitable Activities

Chinese Foundation Participation in Overseas Philanthropy has Increased

Chinese foundations have gone through various stages of development, from directly donating money and supplies to establishing overseas offices in the development of their charitable activities abroad.

Let us use the example of the CFPA, which was the first foundation to develop overseas charitable activities. The first stage involved direct donations overseas. During this stage, the CFPA simply donated funds to foreign NGOs, leaving to them the primary decisions on how to use and allocate the donations. The CFPA did not directly participate in the implementation of any aid projects or send staff to stations in the recipient countries. The first time the CFPA made an overseas donation was in January 2005. By working with Mercy Corps, the CFPA donated drugs to the tsunami disaster areas in Indonesia. In August, 2005, the CFPA worked with Mercy Corps again and donated funds to the disaster areas affected by Hurricane Katrina in the USA. After the earthquake in Pakistan in November 2005, with cooperation from the International Islamic Relief Organization, the CFPA donated supplies worth RMB 300,000. In 2007, the CFPA donated to the local NGO The House of Mothers in Guinea-Bissau, Africa. However, after 2008, the CFPA entered a second stage of development. In addition to providing donations, the CFPA also sent staff to the recipient countries for the direct implementation of charitable projects. In 2008, in collaboration with Chinese corporations overseas and local NGOs in Sudan, the CFPA assisted in the construction of the China-Sudan Abuausher Friendship Hospital (Lin 2012). The hospital marked the first time that the CFPA had sent staff to a recipient country to implement a charitable project. However, the CFPA staff returned to China after the completion of the construction, and the CFPA did not station any permanent staff in Sudan or establish any project offices at that time. In 2012, the CFPA entered a third stage of overseas aid work. The organization began to establish project offices in recipient countries and recruit professional staff locally. To further develop its aid work in Sudan, the CFPA hired a permanent staff member there. Preparations are now underway to establish another CFPA representative office in Myanmar in addition to Sudan.

According to the survey, 34.1% of the 82 active Chinese foundations had donated money or supplies overseas in recent years, 2.4% of the foundations had permanent staff stationed overseas for at least six months, and 3.7% of the foundations had offices overseas. Over one-third of the 82 foundations had made overseas donations, far exceeding our initial estimations.Footnote 5 This result may have occurred for the following reasons. First, foundations that had made overseas donations were more likely to answer the questions. Second, because certain segments of the general public do not support overseas donations, Chinese foundations rarely disclose information on such donations. Third, the survey only determined whether foundations had made overseas donations, not the frequency of overseas donations. In reality, further analysis shows that overseas donations made by the majority of foundations were of a non-routine nature or were one-time donations. The questionnaires show that 79.3% of the foundations made overseas donations only when there were significant natural disasters. In addition to the relief donations, 31% of the foundations have initiated poverty alleviation projects or projects for women and children. Some examples include the CFPA’s maternal and child healthcare project in Sudan, the COSCO Charity Foundation’s project to save children in Africa, and the China Friendship Foundation for Peace and Development’s project to provide free cataract operations to patients in the Republic of Zambia. Moreover, 17.2% of the foundations have launched funding initiatives for education and scientific research in overseas. For example, the China Friendship Foundation for Peace and Development launched a “Multimedia Education” project in Turkey, and the Huamin Charity Foundation donated research funds to Rutgers University in the USA. Approximately 10.3% of the foundations have made donations directly to foreign NGOs. In addition, 10.3% of the foundations have donated funds for other reasons. Overall, disaster relief was the primary driver for Chinese foundations in overseas donations, which is obviously related to China’s charitable culture. Chinese charitable culture is traditionally more concerned with emergency relief than helping the poor. China has been an agricultural society since ancient times. Due to frequent natural disasters, the idea of emergency food storage has existed since the Spring and Autumn and Warring States periods as a means to cope with disaster. Given the lack of resources in ancient times, those who faced sudden disasters were prioritized with respect to receiving help. It was more difficult to care for those in long-term poverty, and it was felt that laziness should not be encouraged by providing help. Even at home in China, the public only becomes enthusiastic about donating when there are catastrophic natural disasters. For example, total donations made in China after the Wenchuan earthquake in 2008 reached RMB 107 billion, or roughly three times the total for 2007. However, for the period from 2009 to 2013, though rapid economic growth occurred in China and social wealth increased dramatically, the average donation value was less than it was in 2008.

Because most of the overseas charity work of Chinese foundations is of the one-time relief donation nature, the vast majority of foundations do not have permanent staff or offices established overseas. Although some individual foundations have established offices, few have permanent staff stationed in them. For example, the China Women’s Development Foundation (CWDF) established a project office in Nevada, USA; the China Children and Teenagers’ Fund established an office in London, England. However, because of high operational costs, these offices have no permanent staff. Instead, the foundations typically appoint a local Chinese citizen, a committee of expatriate Chinese, or a volunteer to assist in management.

Chinese Foundations are Constantly Expanding Their Aid Overseas

According to the data from the China Foundation Center, Chinese foundations rapidly increased the value of overseas donations from 2008 to 2015 (shown in Fig. 1). Chinese foundations donated a total of RMB 330 thousand overseas in 2008. Donations increased to RMB 23.36 million in 2011 and quickly increased to RMB 399 million in 2015. Total overseas donations made in 2015 were even higher than the sum value for the previous 7 years. From 2008 to 2015, total cumulative overseas donations reached RMB 646 million (China Foundation Center 2016).

Fig. 1
figure1

2008–2015 Chinese foundations’ total overseas donations (unit: RMB $10,000)

Because the data provided on the China Foundation Center came from the foundations’ annual reports, the data may not be entirely accurate, and some variance might exist from the actual amounts. This occurred for the following reasons: Some foundations made overseas donations through the Chinese Red Cross, and thus, donations are counted as local donations rather than as overseas donation in the foundation’s annual report; additionally, foreign exchange control policies in China make overseas donations extremely difficult to complete. Therefore, some foundations donate overseas through a third party. For example, funds are disbursed directly from the donating corporation’s overseas branch to the overseas NGO that works with the foundation. As a result, donations made would not be shown as overseas donations in the annual report. Additionally, in response to fears that the public will not send overseas donations, some foundations are reluctant to disclose information on overseas donations. Finally, data inaccuracies are attributable to missing data. Because the government requires substantial information to be included in the annual reports and the foundations usually oversee many projects each year, missing data are inevitable. Therefore, according to the author’s estimates, the actual total overseas donations of Chinese foundations are much higher than the data shown on the China Foundation Center.

Overseas Aid by Chinese Foundations: Expanding Scope with Diversified Approaches

According to data from the China Foundation Center, Chinese foundations primarily provided disaster donations to a few neighboring Asian countries, including after the cyclone disaster in Myanmar. In 2009, in addition to providing disaster donations to Asian countries, Chinese foundations began to devote more effort to developing poverty alleviation projects in Africa. In 2010, the scope of the foundations’ overseas charitable activities further expanded to South America, including donations to earthquake disaster areas in Chile and Haiti. In 2011, Chinese foundations became even more active in overseas charitable causes. Not only did the number of recipient countries increase but also the scope expanded from poor countries to developed countries. For example, donations were made in response to earthquakes in Japan and New Zealand. In 2012, a significant change in overseas donations from Chinese foundations occurred when routine donations significantly increased. For example, sanitation projects were launched in Cambodia, Laos, and Myanmar, student projects were introduced in Pakistan, and capacity-building projects were developed in Mongolia. Nonetheless, disaster relief donations remained the primary form of overseas charity, including donations to support victims of Hurricane Sandy in the USA.

In summary, Chinese foundations’ overseas charitable activities primarily focused on neighboring countries in Asia and African countries through disaster relief donations. However, some new trends have emerged in recent years. First, the scope of charitable activities has consistently increased; Chinese foundations have begun to respond to catastrophic natural disasters in South America, North America, Oceania, and Europe. Second, although disaster relief donations are still the primary focus, more routine activities such as poverty alleviation projects, sanitation projects, education projects, and capacity-building projects have also been established. Thus, Chinese foundations have employed a variety of approaches to overseas charity.

Chinese Foundations Recognize the Necessity of Overseas Charity but are Unsure Regarding the Timing

The results of the questionnaire survey show that the proportion of Chinese foundations that considered it “very necessary” or “relatively necessary” to develop overseas charitable activities was high, at 56.8%. Only 14.8% of the foundations responded “not really necessary” or “totally unnecessary” (Table 2).

Table 2 Proportion of Chinese foundations with various views on overseas charitable activities

However, although over half of the surveyed foundations conceptually agreed that Chinese foundations should develop overseas charitable activities, only 17.2% of those surveyed recognized that the timing was “very mature” or “relatively mature.” In contrast, 45.6% of the respondents believed that the current situation was “not very mature” or “totally not mature” (Fig. 2). In other words, over half of the Chinese foundations believed that such foundations should develop overseas charitable activities, but less than one-fifth of the foundations believed that the time was right to act.

Fig. 2
figure2

Proportion of foundations opinion on whether the timing is right for Chinese foundations to develop overseas charitable activities

Analysis of Factors that Impact Foundations’ Overseas Charitable Activities

In recent years, an increasing number of Chinese foundations have begun to establish overseas charitable activities, including donation. However, the participation level is still relatively low, and the scale of donations is still relatively small. Therefore, what are the factors that impact Chinese foundations in their overseas charitable activities?

According to the results of studies by Salamon (2005), Hess (2005), Jalali (2008), Lai (2013), and Yang (2013), international missions, communications technology, social entrepreneurs, information exchange and networking, funding source, human resources, policy environment, and public support are important factors that affect INGOs in developing overseas charitable activities. Mesch et al. (2006) and Vesterlund (2006) have demonstrated that the demographic characteristics of individuals (including age, gender, income, education, and religion) also affect donation behavior. Due to the limited sample size of this survey, it was unsuitable to select too many independent variables. Therefore, the author attempted to choose key independent variables through case studies on Chinese foundations. The author conducted interviews with representatives of the CWDF, the Chengmei Charity Foundation (ChCF), the CFPA, and the CYDF. The four foundations were chosen because they had not only overseas donations but also overseas projects or offices. Currently, not many Chinese foundations have overseas projects or offices. However, due to a lack of official statistics, the specific number is unknown. According to the author’s snowball survey results, the estimated number of foundations that have overseas projects or offices in China is approximately ten. The CFPA is China’s largest and most charitable foundation that performs overseas charity activities. In 2015, the CFPA established representative offices in Myanmar and Nepal, and its overseas donations are approximately RMB 20 million, primarily in overseas poverty alleviation and disaster relief projects. The CWDF was the first Chinese foundation to establish representative offices overseas. In 2000, the CWDF established a representative office in Nevada, USA. However, at that time, the primary task of the overseas representative office was to help raise funds for domestic use. After 2011, the CWDF began to actively participate in overseas disaster relief donation, and the scale of overseas donations each year primarily depended on the amount of overseas donations. The CYDF is one of the first Chinese foundations to perform overseas charitable activities. For example, the CYDF has donated approximately RMB 35 million in Africa since the implementation of “Into Africa Project HOPE” in 2010. These interviews revealed that the relationship between the foundations and overseas NGOs and the demographic characteristics of the secretary general are important positive factors.Footnote 6 For example, a director of the International Department of the CFPA indicated that domestic fund-raising for overseas projects was difficult. The majority of corporations are more willing to donate to domestic projects than to overseas projects. The reason the CFPA established projects in Sudan was the international perspective of the foundation’s leaders and the good relationship between the foundation and the recipient NGOs. Some foreign NGOs were even willing to actively initiate fund-raising from the foundation (Interview Wu 2013). The secretary general of the Chengmei Charity Foundation indicated that the primary driver for the foundation to develop overseas charity projects was the foundation leadership’s strategy and courage (Interview Liu 2014). Moreover, the Chengmei Charity Foundation conducts projects in Nepal primarily because Chengmei has formed a partnership with Plan and can therefore implement projects through Plan branches. The minister of the CYDF’s Africa Department also believed that fund-raising for “Into Africa Project HOPE” became more difficult after the “Lu Meimei incident.”Footnote 7 In fact, the CYDF’s Africa Department was once almost closed down. In that situation, the attitude of the foundation’s secretary general became extraordinarily important. Finally, with the support of the secretary general, the project was able to continue with funds provided by the foundation (Interview Yan 2013).

The results of previous research and the author’s case studies reveal two factors that impact foundations in their overseas charitable activities: the external environment and the internal conditions in the foundations. The results of the questionnaire survey also showed that from the perspective of the external environment, 54.3% of the respondents believed that policy support was the most indispensable factor for Chinese foundations involved in overseas charity development. In addition, 27.2% of those surveyed indicated that understanding from the public was most desired, and 12.3% suggested support from overseas Chinese corporations. In addition, 6.2% of the respondents believed that improvement in other aspects of the external environment was most needed, such as media publicity. From the perspective of foundations’ internal conditions, 31.7% of the respondents indicated that increased fund-raising capability for overseas projects was the most indispensable factor for foundations in developing overseas charitable activities, whereas 24.4% cited talent in professional international projects. Another 24.4% indicated that leadership’s recognition of the importance of overseas charitable activities was most desired. Finally, 13.4% cited exchanges with overseas charitable organizations, and the remaining 6.1% referred to other factors.

Although the external environment was considered important, the policy environment and public understanding regarding overseas donations were the most significant factors for the Chinese foundations. Therefore, why do some foundations engage in overseas donations and others do not, even though they work under the same external environment? Why do some foundations receive more funding, while others receive less? Given the same external environment, the foundations’ internal factors must have the largest impact on overseas charitable activities. Therefore, this study focused on the foundations’ internal factors. Based on the interview results for the four foundations, the author selected three variables with high repetition rates from international missions, communications technology, social entrepreneurs, information exchange and networking, funding source, human resources, policy environment, and public support: the foundations’ founding assets, the foundations’ number of staff, and the extent of exchanges between the foundations and NGOs. Of the demographic characteristics of the secretaries general, gender, age, and educational level were retained as three independent variables, and the income variable was discarded due to excessive missing data. The religious beliefs and ethnicity of the secretaries general were also discarded due to their low differential power (Table 3).

Table 3 Independent variables and definitions

Analysis of Impact Factors on Overseas Donations

This study defined whether a foundation had overseas donations as a dependent variable.Footnote 8 Because “yes” and “no” options are ascribed to the dependent variable, a logistic regression model was used.

Table 4 shows the results of the different models. In the first model, the founding asset amount, number of full-time employees, and the exchange frequency between the foundation and overseas NGOs were selected as independent variables. The results from the logistic analysis reveal that the exchange frequency between the foundation and overseas NGOs had the most significant impact on overseas donations. When the other independent variables were controlled, every unit increase in the exchange frequency between the foundation and overseas NGOs yielded a foundation donation probability increase of 2.776 times. There are several possible explanations for this result. First, foundations that have close contact with overseas NGOs can access channels for overseas donations, and when natural disasters occur, these foundations can quickly link up with donors or cooperative partners. Second, through frequent exchanges, friendship and trust between Chinese foundations and overseas NGOs can be enhanced. Third, donations are an interactive process. When foundations and NGOs are in close contact, the possibility of the foundations being asked to donate is greatly enhanced (Alice 1993). These observations indicate that an increase in exchanges between Chinese foundations and overseas NGOs will greatly increase the possibility of Chinese foundations engaging in overseas donations. In recent years, overseas donations to Chinese foundations have rapidly increased, which is apparently due to more frequent exchanges between Chinese foundations and overseas NGOs. On the one hand, the government is actively promoting exchanges and cooperation between Chinese foundations and overseas NGOs. For example, China’s government established the China NGO Network for International Exchanges in 2005. The organization’s mission is to develop a wide range of contacts among international and domestic NGOs, to promote exchanges and cooperation between Chinese and international NGOs, and to enhance friendship among the citizens of all nations. Since 2011, the China NGO Network for International Exchanges has held an annual China–Africa civic forum to promote exchanges between NGOs in China and Africa. The organization also coordinates visits to China by NGO representatives from neighboring countries and other organizations from Europe, the USA, and emerging countries. On the other hand, the China NGO Network for International Exchanges also organizes exchange visits for Chinese NGOs to Africa and other neighboring countries. In addition, some international exchange platforms have been formed voluntarily at the civil level. For example, several charitable organizations from China and the USA, together with academic representatives, co-founded the China–US Strategic Philanthropy forum, which holds regular annual meetings and invites charitable organizations as well as scholars from China and the USA to participate. With more frequent exchanges and cooperation between Chinese foundations and overseas NGOs, the proportion of Chinese foundations participating in overseas charitable activities is expected to rapidly increase.

The results from Model 1 also show that the number of full-time employees in a foundation also had a significant impact on the foundation’s overseas donations. For each additional full-time foundation employee, there was a 3% increase in foundation donation probability. The reason for this result is that China’s current laws and regulations are still not perfect, and some policies are not conducive to allowing foundations to participate in overseas charitable activities. For example, exchange controls in China can complicate the process of making overseas donations when foreign currency exchange and remittances issues are involved. Moreover, if foundations donate supplies overseas, the foundations are required to submit a special application to customs and arrange a series of customs-clearing procedures due to the charitable nature of the donations. Thus, foundations that do not have enough human resources to address such processes and procedures are less likely to make overseas donations. After all, Chinese foundations not only donate funds and supplies but also implement overseas charity projects; therefore, the demand for human resources is even higher.

Although previous research and the author’s case studies show that funding is one of the primary factors that impact foundations’ overseas donations, the results from Model 1 show no significant correlation between founding fund size and foundations’ overseas donations. On the contrary, for every unit increase in founding fund size, overseas donation probability decreased by 4%.Footnote 9 Some foundations were intentionally started with a relatively small fund size to avoid certain government regulations,Footnote 10 and the founders planned to make needed donations annually or as required. Therefore, Model 2 used the foundations’ annual income instead of founding fund size as the independent variable. However, the results indicate that there is no significant correlation between a foundation’s annual income and its overseas donations. Clearly, whether foundations engage in overseas donations has no direct correlation with the founding fund size of the foundations, implying that any impact is a result of other factors. According to the China Foundation Center, the founding fund size of some foundations that engage in overseas donations is not very large. For example, after the March 19 earthquake in Japan, the Chongqing Municipality Disaster Relief Fund made a donation of RMB 30,000, the Shanghai Kindness and Wisdom Public Foundation donated RMB 46,000, and the Leshan Education Foundation donated RMB 11,000 to the Red Cross. These foundations are all local foundations with small fund sizes. On the contrary, some large foundations, such as the Henan Soong Ching Ling Foundation and the Peking University Education Foundation, which both have hundreds of millions of Yuan in annual revenue, did not make any overseas donations.

Model 3 was used to examine the impact of the secretary general’s demographic characteristics on overseas donations. Therefore, age, gender, and the secretary general’s years of education were included as independent variables in the model. The results show that the age and gender of the secretary general had no significant impact on overseas donations. However, the number of years of education of the secretary general shows a significant correlation with whether foundations engaged in overseas donations. When the other variables were controlled, for each 1-year increase in secretary general education, foundation overseas donation probabilities increased by 27.7%. This result could indicate that the higher the secretary general’s educational level, the broader his or her international viewpoint, and, hence, the greater possibility of engaging in overseas charitable activities.

In addition to using age, gender, and the number of years of education of the secretary general as independent variables, Model 4 also included all of the independent variables used in Model 1. The results indicate that both the exchange frequency between foundations and overseas NGOs and the number of years of education of the secretary general still showed significant correlations with foundations’ overseas donations. However, independent variables such as the number of full-time employees in foundations, the founding fund size, and the age and gender of the secretary general did not show significant impacts on the dependent variable.

Table 4 Analysis of whether factors impact foundations’ overseas donations (logistic model)

Analysis of Factors that Impact Foundations’ Scale of Overseas Donations

The above analysis analyzed the factors that impact foundations in making overseas donations. This section analyzes how these factors impact the scale of overseas donations. The dependent variable in this study is the amount of overseas donations made by foundations; it is a continuous variable. Therefore, a multiple regression analysis model was used. Table 5 shows the results of the multiple regression analysis using different models.

Table 5 Analysis of factors that impact the scale of foundations’ overseas donations

The independent variables in Model 1 included the foundations’ founding fund size, the number of full-time employees, and the exchange frequency between the foundations and overseas NGOs. The results indicate that number of full-time employees in foundations and the exchange frequency with overseas NGOs had a very significant impact on the size of the foundations’ overseas donations, while founding fund size showed no significant impact. When the other variables are controlled, for every increase in one full-time employee, the foundations’ overseas donations increased by RMB 0.446. In addition, for every one-unit increase in exchange frequency between foundations and overseas NGOs, overseas donations increased by RMB 0.393.

Model 2 replaced founding fund size with the foundations’ annual income. The results are the same as for Model 1. A foundation’s annual income had no significant impact on the scale of overseas donations made by the foundation. As can be observed from the model’s diagnostics, the coefficients of determination (R Square) for Model 1 and Model 2 were approximately 44%, meaning that the independent variable in the regression equation could explain approximately 44% of the variation in the dependent variable. The test value or DW of the autocorrelation was approximately 2, meaning that the multi-collinearity in the regression equation was not serious, and there was no significant autocorrelation among the independent variables.

Model 3 was used to examine whether the demographic characteristics of the secretary general had any impact on the scale of foundations’ overseas donations. The results show that age, gender, and the number of years of education of the secretary general had no significant impact on the scale of the foundations’ overseas donations. To test the robustness of the regression results, in addition to including the three independent variables used in Model 1, the three independent variables concerning the secretary general’s demographic characteristics were also added in Model 4. The results of this analysis are consistent with Model 1 and Model 2, indicating that the number of full-time employees and the frequency of exchanges between the foundations and overseas NGOs had very significant impacts on the scale of the foundations’ overseas donations. However, the foundations’ founding fund size and the secretary general’s demographic characteristics showed no significant impact.

Conclusions and Recommendations

This paper is the first to describe the current overall status of the overseas charitable activities of Chinese foundations, particularly the overseas donations of such foundations. The results indicate that in the past, Chinese foundations merely received overseas donations. However, in recent years, one-third of the 500 most active foundations in China had donated overseas. In addition, the amount of overseas donations made by the Chinese foundations is growing geometrically, far exceeding the growth in GDP, and Chinese foundations have officially become a new force in the international donor market. This fact also means that Chinese foundations are starting to become active members of global civil society and to play a new role in global governance. In addition, Chinese foundations have expanded their target recipient countries from developing countries to a global scale that includes developed countries. Chinese foundations have also outgrown the previous approach from simple disaster relief donations to more routine charity projects such as education, sanitation, poverty alleviation, and capacity building.

Another contribution of this study is its finding through quantitative analysis that there is no significant correlation between foundations’ overseas donations and the founding fund size, which contradicts the results of previous case studies. Previous qualitative analyses indicate that funding is one of the primary factors that impact foundations’ overseas donations. However, this study suggests that the previous research findings are not supported. Some foundations with large founding fund sizes do not necessarily actively participate in overseas charitable activities, while some smaller foundations do. The frequency of exchanges between foundations and overseas NGOs, the number of full-time employees in the foundations, and the number of years of education of the secretary general are the most important factors that impact whether foundations make overseas donations and the scale of such donations.

Therefore, to establish more international NGOs based in China, the government should encourage foundations to look for opportunities abroad while making improvements to the country’s policies and regulations in the external environment and enhancing the understanding and support of overseas charitable activities among the public. In addition, the foundations should strengthen their own capabilities. Above all, however, the most crucial factor is to further promote exchanges between Chinese foundations and overseas NGOs. Friendship and mutual trust can be achieved through frequent exchanges, thus providing a solid basis for Chinese foundations to develop overseas charitable activities. For those foundations that are interested in such endeavors, efforts need to be made to strengthen their professional teams. There are significant differences between establishing charitable activities overseas and governmental relief aid. Relatively speaking, the government is primarily engaged in hardware establishment, whereas the foundations are primarily involved with software development, that is, in providing human services. Therefore, resolving human resource issues is a top priority for foundations. However, there are many restrictions to expanding a foundation’s number of full-time employees under current policies and regulations in China. For example, according to the Regulations for the Management of Foundations, the total administrative expenses of a foundation, including salaries, cannot exceed 10% of the total annual expenses, which leads to a situation in which foundations do not have an administrative budget that is large enough to recruit more employees. In addition, some donors in the general public want 100% of their donations to be devoted to the intended recipients and might even think that foundation employees should selflessly dedicate their time and effort and be paid low salaries or even work for no pay. Because of this belief, the average salary in foundations is capped at less than twice the average local salary in certain departments or tax reductions and/or tax-free privileges will be repealed. Because of these factors, the average employee salary in Chinese foundations is persistently low, making it difficult to attract or retain talent. Therefore, the government should amend and improve its related policies, loosen or eliminate restrictions on foundations’ administrative expense ratios, and increase publicity to raise public awareness of modern charitable activities. By doing so, Chinese foundations can accelerate their pace of internationalization such that Chinese NGOs can better fulfill their international responsibilities and play a greater role in the global governance process.

According to statistics from the China Foundation Center (2016) and Hudson Institute (2016), in 2014, overseas donations from Chinese Foundations were only 0.036% of private overseas donations from the USA, 0.323% of those from the UK, and 6.39% of those from even India. However, the growth rate of overseas donations from Chinese foundations is very high. In 2015, overseas donations from Chinese foundations were 3.66 times those in 2014 and 1209 times those in 2008. It is expected that with the rapid development of Chinese NGOs and the government’s One Belt One Road initiative, increasingly more Chinese NGOs will be crossing the country’s borders and participating in global charitable activities and the civil society movement. However, questions such as how much impact Chinese NGOs’ overseas activities will have on global governance, how they will deal with Western NGOs and local NGOs overseas, whether they will be integrated into the current establishment led by the dominant values and codes of conduct of Western NGOs or bring in a new model in the process of participating in overseas activities, thus enriching the diversity of global civil society, etc. remain to be further observed and studied. Since this paper surveyed the 500 most-active Chinese foundations and only received 82 valid questionnaires in return, the sample was insufficient to characterize the overall situation of Chinese foundations’ overseas donations and charity activities, not to mention the overseas donation and charity activities of Chinese NGOs. Therefore, a need remains for in-depth research on a wider scale on Chinese foundations or NGOs.

Notes

  1. 1.

    Social organizations in China are based on membership. Examples include trade organizations and academic societies. Private non-enterprise units are not based on membership and include organizations such as non-profit schools, non-profit hospitals, and non-profit social welfare organizations. See Wang and Liu (2009).

  2. 2.

    These include 73.1% of donations from enterprises and other corporate institutions, 13.75% of donations from individuals, and 13.15% from other sources (Chinese Foundation Development Report Task Force 2016).

  3. 3.

    According to the Ministry of Civil Affairs, the Ministry received RMB 18 million in domestic and overseas donations in 1995. This figure did not include donations received by other governmental departments and local governments.

  4. 4.

    The One Belt One Road Initiative is a collective term for the Silk Road Economic Zone and the twenty-first-century Maritime Silk Road. It borrowed from the idea of the ancient Silk Road in China and aims to strengthen the economic and trade cooperation and development of China and countries along the land and maritime Silk Roads. In line with the One Belt One Road Initiative, the Chinese government promotes the establishment of the Asian Infrastructure Investment Bank and also actively encourages Chinese enterprises and NGOs to go abroad. In this context, the government began to support Chinese Foundations in participating in the implementation of foreign aid projects, providing funding and other forms of aid along the way.

  5. 5.

    Prior to performing this survey, the author made a preliminary estimate of overseas donations by Chinese foundations. Based on media reports and communication with several of the foundations, the author feels that overseas donation by Chinese foundations is not active, particularly in the case of grave natural disasters abroad, in response to which the total amount of societal donation is not substantial. Therefore, the author estimates that the proportion of overseas donations by Chinese foundations is approximately 10%, while that of the 500 most-active foundations is approximately 20%.

  6. 6.

    In China, the majority of foundation councils or boards of directors serve no real decision-making function. Therefore, the secretary-general often plays a critical role in foundation decision-making.

  7. 7.

    “Project HOPE” is a brand name project of the CYDF, which primarily assists in the construction of HOPE elementary schools and provides “one-to-one” education funding. The World Eminence Chinese Business Association cosponsored “Into Africa Project HOPE” with the CYDF in December 2010, with the World Eminence Chinese Business Association in charge of fund-raising and the CYDF in charge of donation management and the construction of HOPE elementary schools in Africa. As of August 17, 2011, the CYDF has already received a designated donation of RMB 31.023 million from members of the World Eminence Chinese Business Association for “Into Africa Project HOPE.” In addition, pledged donations from members of the World Eminence Chinese Business Association have reached RMB 300 million. In August 2011, however, some netizens and media questioned the project in two areas. First, some expressed criticism that there were still many poor regions in China, and its basic educational system were still very backward. According to these critics, domestic problems should be the top priority for China before providing aid to Africa. Second, some people questioned whether the World Eminence Chinese Business Association was using the charity brand name of the CYDF to gain unfair commercial advantages. Xingyu Lu, who is the daughter of the person in charge of the World Eminence Chinese Business Association, took over “Into Africa Project HOPE” in a high-profile role, and she became one of the protagonists in this incident. Therefore, the incident is referred to as the “Lu Meimei incident” (Wang 2012).

  8. 8.

    Another dependent variable this paper initially planned to select was whether the foundation has overseas projects. However, in the 82 collected questionnaires, only a few foundations had overseas projects, and the number was too small to be analyzed. Thus, this dependent variable was omitted.

  9. 9.

    Due to large differences among the various foundations, the logarithm of founding fund size was used in the logistic regression analysis.

  10. 10.

    According to the Regulations for the Management of Foundations, the annual charitable expenses of public foundations cannot be less than 70% of the previous year’s total annual income, and the annual charitable expenses of non-public foundations cannot be less than 8% of the previous year’s fund balance.

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Correspondence to Guosheng Deng.

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Appendix: List of Interviews

Appendix: List of Interviews

Name Positions of NGO representative Date of interview
Liu, Y. Secretary General, Chengmei Charity Foundation, September 19, 2014
Wu, P. Director of International Department, CFPA, August 10, 2013
Yang, P. Director of Overseas Cooperation Center, CYDF March 22, 2013
Yan, Sh. Vice Minister of Africa Department, CYDF March 22, 2013

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Deng, G. Trends in Overseas Philanthropy by Chinese Foundations. Voluntas 30, 678–691 (2019). https://doi.org/10.1007/s11266-017-9868-7

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Keywords

  • Foundations
  • Overseas donations
  • Charity
  • Impact factors