80 per cent of Chinese philanthropists donations last year went to institutions outside mainland China, says survey

Survey shows 80 per cent of funds went to institutions outside mainland

About 80 per cent of the charity donations made by Chinese philanthropists last year benefited institutions outside mainland China, a survey shows.

China Philanthropy Research Institute, at Beijing Normal University, has recently compiled a list of the top 100 mainland philanthropists that made the most donations during 2014.

The 100 philanthropists, including individuals and families, donated a total of 30.4 billion yuan (HK$38 billion).

More than 24.2 billion yuan – about 80 per cent of all donations – went to Hong Kong, Macau, and foreign institutions, the institute found.

Last year was the first time donations to non-mainland institutions had exceeded those made to mainland ones since 2011, when the survey began.

Jack Ma Yun, chairman of mainland’s e-commerce giant Alibaba Group, topped the list by donating to a foreign charity group shares valued up to the end of last year at 16.9 billion yuan.

Pan Shiyi and Zhang Xin, the Soho China real estate tycoon couple, also ranked high for US$15 million in donations to Harvard University in the US, which is a part of their US$100 million fund to help the university’s Chinese students.

Mainland charities received about 15 per cent of all donations, with charities affiliated to higher education institutes most popular with the donors.

Former premier Zhu Rongji was 82nd in the list after donating 15.22 million yuan in royalties from his book, Zhu Rongji Meets the Press, to a charity that helps students in poverty.

Only 1.18 per cent of all donations went to organisations owned or administrated by the mainland authorities.

Mainland tycoons have shown more interest in donating to foreign institutions over the past few years, especially given the lack of favourable tax policies for mainland charities, Zhang Gaorong, research director of the project, said .

“If foreign charities cash shares [of a company] donated by the owner, the charity need not pay as much income and added-value tax as mainland counterparts,” Gao said.

“That makes a huge difference in the work a charity could do with the donations.”

While charity donations are popular among mainland tycoons, they are not yet as common as in countries like the US.

Individual mainland donors must still pay income tax on the part of donations that surpass 30 per cent of his or her annual income.

Companies, likewise, must pay income tax on the part of donations that surpass 12 per cent of their annual net profits.

Until 2009, mainland companies and individuals were not allowed to donate shares.

But mainland tycoons were still unable to have a charity asset trust endowment registered if all of the capital was in shares, rather than cash – something that was common in many foreign nations, Gao said.

A lack of transparency in the administration of mainland charities also led some mainland donations to go abroad, Gao said.

Chinese Red Cross was criticised in 2011 when Guo Meimei, claiming to be general manager of “Red Cross Commerce”, flaunted her lavish lifestyle on social media.

“However, the transparency concern is not as great as before because many tycoons now run their own charities,” Gao said.