Discover more from Pekingnology
Internet-based Philanthropy in China
A Nobel laureate's speech and summary of an industry report.
Every September, Chinese tech majors kickstart a series of charity events, such as Alibaba’s Sept. 5 Charity Week and Tencent’s Sept. 9 Giving Day, as Caiwei Chen noted in TechNode last year: since this tradition of “charity month” in China was pioneered nine years ago by Tencent, these peer-to-peer fundraising campaigns have become the primary way that the general public in China gets involved in charitable donations to non-profit organizations.
It’s September again, and Pekingnology shares some content from the 中国互联网公益峰会 Internet Good Summit in May, where Sir Christopher Pissarides, a Nobel laureate in economics at the London School of Economics, gave a speech.
At the summit, the Internet Society of China, a Chinese government-supported industry group, and China Philanthropy Research Institute of Beijing Normal University also published the report《互联网公益慈善“中国样本”》 Internet Philanthropy in China: The “Chinese Model” for High-Quality Development of Philanthropy.
Below is the full speech and a summary of the report. [Pekingnology thanks Sir Christopher Pissarides for sharing the speech.]
I am Professor Sir Christopher Pissarides, a Nobel laureate in economics based at the London School of Economics.
I received the invitation to participate at the 2023 China Internet Public Welfare Summit with great pleasure, and I'm sorry I cannot be with you in person. I want to make some remarks about Internet philanthropy.
Since ancient times, societies have been helping their members overcome difficult times. This could be events like a natural disaster, or ongoing problems like poverty, lack of education, poor health, and others that do not enable individuals to enjoy life in full.
In modern times, the most important channel to which this help is transmitted is the government. Through its welfare, health, and education programs, it helps people raise their standards of living, come out of poverty and overcome obstacles to enjoy life.
But relying on government only is not enough. Society rewards people unequally. Some become rich, some are left behind. Once economic growth comes and creates a wealthy class, we see voluntary charitable donations from this class. These are usually large donations that are directed at particular causes that the donor cares about, for example, giving some natural disasters, like an earthquake.
In more recent times, however, we are discovering that less wealthy, ordinary members of society also want to help. In older days, they were not given the opportunity. One person could not make a difference with a small donation. But if many acted together, it could make a large difference. This is what modern technologies are enabling us to do and China is becoming a leader in it.
When we are children, we learn that we can achieve great things if we work together with others. When TV made it possible to reach many people together, enterprising pioneers in Britain launched Band Aid and Red Nose Day. Entertainment was offered mixed with invitations to donate small amounts to help others. These events were tremendously successful.
Now, we have the Internet which reaches even more people than TV did. We're here today and we hear that China has been a pioneer in making use of the Internet, to collect many small donations, and this has made a difference in the alleviation of poverty. China has hit a successful formula that can be replicated elsewhere for an excellent humanitarian cause, but it may not be as easy as it might sound to apply it elsewhere.
Why is China's success not easy to apply elsewhere? Making use of the internet for charitable donations involves some things taking place together. It involves a culture of using the Internet for small mobile payments, which the West is only just beginning to develop. China has been a pioneer in online payments. Western societies move from cash to checks to credit cards. China moved to online payments through platforms like WeChat and Alipay. Chinese people trust the large platforms that develop to handle payments because they have been using them for many years. Practically every Chinese citizen has the experience of mobile payments.
Once Internal charity platforms offer other features that small donors look for that guarantees their success, this is what charitable companies have succeeded in doing, especially the 99 Giving Day and the 95 Philanthropy Week in September.
What are the features that are attractive to small donors? Small donors want to know that if they donate very small amounts - known as micro philanthropy, through online payment means, it will not be taken up by transaction fees charged by those processing the payment. They want to know what happens to their money and have some control over it. On Chinese platforms, they can do that. There is both transparency in the facility to say which charity you want to support. We can use blockchain to guarantee the donation path and monitor progress. This is important in ensuring trust in the charitable mission.
What incentives have been given to young Chinese to donate? Young Chinese people spend an awful lot of time on their phones. I have seen it on my trips to China. They play games, they chat to their friends, they search through shopping platforms. Free charitable donations have been added to their activity, making it part of their games. There is similarity here with the Red Nose Day in the UK when young people sit in front of the TV to watch their favorite stars perform, and they're invited to text their number on their phones, which automatically gives a donation.
But with the Internet, it is much more far reached. Games, music, and other events can be engaged like sports activity. Engage in sports activities similar to the sponsorship of events in the west. For example, you pledge a charitable sponsorship, if you succeed to complete the marathon course. But running a marathon requires much more efforts outside your normal activities than the Chinese Internet public welfare activities where people might donate their daily steps through their phone.
Donation to Internet philanthropy becomes an activity that’s accompanied by something that people do to enjoy themselves anyway. On top of that, at Internet philanthropy events, such as the 99 Giving Day, participants are offered the incentive of mansion donations by companies taking part. In this period, Tencent Charity has created donating safflowers, during which participants contribute through charitable acts instead of cash. They can support their favorite public welfare projects by donating the safflowers, which they collect from charitable acts. And on Top, there is also a mansion donation from Tencent Charity. With such incentives, donations grow and the culture of philanthropy develops, which will persist in the future when the young donors of today become the big donors of the future.
This is what I wanted to share with you today, how the Internet is helping charity reach more people, develop a culture of philanthropy for the future. I wish the summit every success, but especially with a fruitful future development of philanthropy in China, making use of the latest technologies available to us.
Thank you very much again for the invitation and goodbye.
Internet Philanthropy in China: The “Chinese Model” for High-Quality Development of Philanthropy
[Summarized by Pekingnology]
The history of human civilization is a history of social welfare, and the practice of philanthropy has a rich history both in China and overseas. The origins of modern philanthropy can be attributed to Western nations in Europe and America. Various factors such as the economic and social advancements following the industrial revolution, the infiltration of religious culture, and the establishment of legal frameworks for philanthropic activities have all contributed to the ongoing global leadership and progress of Western philanthropy. China, on the other hand, has a longstanding cultural tradition of alleviating poverty and engaging in charitable endeavors since ancient times. However, the emergence of modern philanthropy in China occurred relatively late and underwent a slow development process. Following the establishment of the People’s Republic of China (PRC) [in 1949], private philanthropy faced numerous challenges and obstacles but eventually encountered new opportunities for growth with the implementation of the reform and opening-up policy.
Internet Philanthropy “Chinese Model”: Progress and Current Status
Compared to the centuries-long history of philanthropic development in Western countries, the foundation of modern philanthropy in China is relatively weak. After the establishment of the PRC, the government-led welfare relief system was gradually established, and state power replaced charitable organizations to undertake basic welfare and disaster relief work. After the reform and opening up policy, the space for the development of private philanthropy in China gradually expanded. In the 1990s, with economic development, technological advancements, social changes, and especially the iterative development of the internet industry, internet philanthropy in China grew from a small spark to a raging fire, gradually forming the "Chinese Model" of internet philanthropy.
Development Journey: From Inception to Thriving Growth and Progressive Maturity
Emerging Stage (1990s-2007)
Following the 1990s, China embarked on the mission of establishing a socialist market economic system and successfully joined the World Trade Organization in 2001. After the commercialization of the internet in 1995, the Chinese internet industry entered the era of PC internet. This period witnessed the emergence of email, portals, BBS forums, and other online platforms, resulting in the transformation of internet philanthropy in China from sporadic and occasional personal assistance to the establishment of public welfare portals and forums, marking the gradual transition towards a more organized phase.
Thriving Growth (2008-2016)
Following 2008, China experienced sustained high-speed economic growth, surpassing Japan in 2010 to become the world's second-largest economy. It gradually emerged as a prominent player on the global stage after the international financial crisis. Simultaneously, China's internet underwent a rapid transformation, entering a new phase of development with the rise of mobile internet, injecting fresh impetus into the growth of internet philanthropy in China. Events like the Wenchuan earthquake and the Beijing Olympics fostered a culture of volunteerism and philanthropy, raising public awareness and promoting internet philanthropy in China.
During this period, Western internet giants such as Google, Facebook, and Amazon actively engaged in internet philanthropy. However, due to differing developmental trajectories and regulatory systems, major U.S.-based internet companies did not establish dedicated philanthropic fundraising platforms similar to Tencent and Alibaba in China, which provide internet-based fundraising services for charitable organizations. Chinese philanthropic entities, on the other hand, leveraged internet crowdfunding platforms to interact with their audiences, enabling them to publish content, organize activities, and conduct fundraising campaigns, thereby encouraging user engagement in philanthropic initiatives. The convergence of internet innovation and philanthropic strategies led to the emergence of diverse internet philanthropy projects. Donation-based crowdfunding gained popularity, and platforms focused on personal medical assistance, such as "QFund (轻松筹）" and "Water Drop” (水滴筹), began to proliferate. Another difference lies in the fact that Western countries have developed a model of philanthropy based on social interactions with strangers, whereas China's philanthropy model is based on social interactions with acquaintances.
Gradual Formation (2017-Present)
As early as 2014, the State Council of China issued the first document aimed at guiding, standardizing, and promoting the healthy development of the charity sector since the establishment of the People's Republic of China. In 2016, the Charity Law of the People's Republic of China, the first comprehensive law regulating the charity sector in the country's history, was promulgated and implemented. This law provided a clear legal status for internet philanthropy platforms, facilitating their standardization, professionalization, and sustainable development. Moreover, internet philanthropy has expanded its reach into various industries and established closer ties with enterprises. The "business + philanthropy" model has not only attracted more companies to participate in philanthropic activities but has also moved beyond a mere donation-based approach. It starts by incorporating philanthropy into the companies' own business operations, seeking deeper integration between business and philanthropy, and continuously innovating philanthropic models. For instance, the Vanke Foundation's "garbage map" project utilizes the internet as a platform to digitally analyze data and assist cities and communities in implementing waste classification policies. This initiative promotes transparency and compliance in the waste industry by providing relevant information and enhancing public awareness of waste classification. Overall, since the implementation of the Charity Law in 2016, internet philanthropy in China has gradually evolved into a new model characterized by the collective efforts of multiple stakeholders, cross-sector collaborations, resource integration, and the leveraging of complementary advantages.
Development Status: Remarkable Advancements in Scale, Efficiency, Innovation, and Beyond
Ripple Effect: Rapid Growth of Donating Users, Chinese People Becoming One of the Largest Internet Philanthropy Donor Groups in the World
Through the widespread adoption of social networking and mobile payment technologies, the barriers to participating in philanthropy have significantly diminished. Anyone can now engage in philanthropic activities, sparking a surge of interest in public welfare among the general population. The impact of the "charitable friends circle" continues to expand, reaching a broader audience. Participating individuals not only fulfill their own sense of purpose but also contribute to addressing social issues, thereby aligning intrinsic and extrinsic values. As of September 2022, there are 29 designated internet fundraising platforms for charitable organizations authorized by the Ministry of Civil Affairs, collectively mobilizing over 51 billion instances of individual online participation.
Long Tail Effect: Continuous Increase in Donation Amounts, Rapid Growth in Proportion of Social Donations
Internet platforms have opened up new avenues for charitable organizations and projects to showcase their work to potential donors, providing the public with a wider range of options to participate in philanthropic activities. Some small and medium-sized charitable organizations have courageously explored innovative approaches, utilizing the power of web traffic to mobilize public engagement and expand fundraising channels. This, to a certain extent, challenges the dominance of established charities during the offline fundraising era and harnesses the benefits of the "long tail effect." According to statistics, from 2017 to 2021, the annual donation amount through the Chinese internet witnessed significant growth, increasing from approximately 2.59 billion yuan to around 10 billion yuan. The average growth rate far exceeded that of overall social donations in China.
Catfish Effect: Active and Diverse Innovation, Helping Solve the Development Challenges of Philanthropy in China
Under the leadership of Chinese philanthropy platforms, the characteristics of business model innovation, management innovation, and technological innovation in internet philanthropy are becoming increasingly prominent. Some innovative philanthropic models originating from the West have been introduced to China and continuously iterated, achieving greater effectiveness. Moreover, there is a continuous upgrade of domestic innovative models based on China's actual needs and development status.
Internet Philanthropy “Chinese Model”: Definition and Value
Fundamental Definition: China's Path of Internet Philanthropy Development
The "Chinese Model" of internet philanthropy is a unique approach to philanthropy in China, shaped by several key factors. Firstly, China's rapid economic growth and digital transformation have played a vital role in the development of internet philanthropy. China's position as the second-largest digital economy, coupled with widespread adoption of digital technology, improved infrastructure, and a growing internet user base, have laid a solid foundation for the emergence and advancement of the "Chinese Model" of internet philanthropy. Secondly, it involves a blend of learning from successful international experiences and integrating local characteristics and needs. Thirdly, it places a strong emphasis on grassroots development, supporting regional economic growth and revitalization of rural areas. By extending philanthropy to the grassroots level and aligning it with regional development goals, internet philanthropy in China is evolving towards sustainable and continuous collaboration for the betterment of society. Lastly, it is deeply rooted in China's rich traditional culture, aiming to foster a culture of compassion and kindness among the entire population. This cultural foundation creates a positive social atmosphere and favorable public opinion environment for the growth of internet philanthropy in China.
Key Values: Systematic Exploration in Addressing Challenges and Difficulties in Philanthropy
Alleviating the Pain Point of "Accessibility" in Traditional Philanthropy, Achieving Universal "Philanthropy for All"
In traditional philanthropy, donors typically need to visit banks, post offices, or make in-person contributions to fulfill their charitable intentions. This process lacks convenience and accessibility, which poses a significant challenge and impediment to the growth of traditional philanthropy. However, with the integration of the internet and philanthropy, especially the widespread adoption of social networks and mobile payments, the barriers to individual philanthropic donations have substantially decreased.
Resolving the Challenge of "Transparency" in Traditional Philanthropy, Promoting the Construction of "Transparent Philanthropy"
Transparency is a fundamental value and essential element in philanthropy. The lack of sufficient transparency in China's philanthropic sector has faced many public criticisms, resulting in diminished trust in philanthropy and impeding its sustainable development. The emergence of internet philanthropy not only facilitates the rapid dissemination of information regarding philanthropic projects but also enhances the efficiency of the traditional philanthropic process. Moreover, it enables philanthropic organizations and projects to operate online, leveraging data-driven approaches that promote transparency. This enables more timely feedback on fundraising information, fund allocation, and project implementation, contributing to a more transparent and accountable philanthropic ecosystem.
Mitigating the Bottleneck of "Effectiveness" in Traditional Philanthropy, Co-creating the "Digital Philanthropy Ecosystem"
Traditional philanthropy faces challenges such as decentralized and inefficient matching of charitable needs and resources, inadequate public awareness of philanthropy, and insufficient strategic focus on philanthropic services for national and regional development. The development of internet philanthropy reconstructs the traditional approach to philanthropy and effectively enhances its effectiveness. The formation and development of the "Chinese Model" of internet philanthropy systematically build a digital philanthropy ecosystem centered around philanthropy platforms. This ecosystem covers multiple levels, including funding, regional development, and talent cultivation, stimulating the vitality of the philanthropy ecosystem and expanding the breadth and depth of philanthropy.
Internet Philanthropy "Chinese Model": Pillars and Features
The formation and development of Internet Philanthropy "Chinese Model" is not a random outcome but is driven by profound internal development logic. Looking at the history of Internet philanthropy in China, the "Chinese Model" is a product of multiple driving forces, including economy, technology, governance, and culture, which together form the four pillars that support its continuous development.
Economic Pillar: Economic growth and wealth accumulation are important material foundations for the development of philanthropy, as evidenced by global development experiences. According to the "2022 Global Wealth Report" published by Credit Suisse, the global wealth of residents reached $463.6 trillion by the end of 2021, with China's wealth amounting to $85.1 trillion, second only to the United States. From 2000 to 2021, the median wealth of Chinese individuals increased from $3,133 to $26,800. At the same time, China has witnessed vigorous development in the digital economy, represented by the Internet, big data, cloud computing, and more. In 2021, China's digital economy reached 45.5 trillion yuan, more than double the size in the early stages of the 13th Five-Year Plan.
Technological Pillar: Continuous iteration and widespread application of digital technologies, as well as platforms driving technological innovation, provide inexhaustible creative energy for the development of technology-enabled philanthropy.
Governance Pillar: The Communist Party of China and government support for philanthropy, along with policies promoting co-construction, co-governance, and resource sharing, provide fundamental institutional guarantees. In recent years, China has gradually improved its system of philanthropic policies and regulations, centered around the "Charity Law," and established a policy framework that includes government purchasing services, tax incentives, and credit incentives.
Cultural Pillar: The integration of China's tradition of compassion, poverty alleviation, and mutual assistance with socialist culture creates a solid social foundation. The value goals of Internet philanthropy in China are completely aligned with the essence of socialism with Chinese characteristics and are highly compatible with Chinese socialist culture.
Embracing the Era: Leading a New Concept of Charitable Prosperity for All
Chinese internet philanthropy upholds the principle of allowing the public to autonomously participate while fulfilling its important role in supporting major national strategies like poverty alleviation and rural revitalization. As internet technology continues to evolve and the digital age progresses, the philanthropic industry must actively adapt to new challenges and emerging demands.
Open Innovation: Expanding Charitable Paths with Digital Technology
Philanthropy often begins by addressing societal challenges. Through the utilization of technologies like 5G, artificial intelligence, big data, and blockchain, charitable projects, management, and information disclosure are gradually being digitized and made more intelligent. This advancement enhances the efficiency and effectiveness of philanthropy. Open and shared data technologies play a pivotal role in constructing a new digital philanthropy ecosystem, demonstrating the philanthropic potential of technology. As a result, the internal governance and external service capabilities of charitable organizations are improved, enabling the philanthropic sector to undergo comprehensive digital transformation.
Mobile Inclusiveness: Building a New Charitable Landscape with Broad Participation
Compared to PC-based internet philanthropy, Chinese internet philanthropy facilitated by mobile payment platforms connects more donors (consumers) with social, consumption, and charitable scenes through digital platforms. This not only provides donors (consumers) with a convenient and efficient way to contribute but also enables internet philanthropy to break through physical barriers and practice "contactless" charity during emergencies such as the Wenchuan earthquake, public health crises, the "7.20 Zhengzhou Heavy Rain" incident.
Universal Participation: Building a New Charitable Landscape with Shared Contributions
Internet philanthropy has made philanthropic giving no longer the privilege of high-net-worth individuals but gradually "entered the ordinary households." From July 2016 to the end of 2022, a cumulative total of 430 million donors through platforms like Water Drop Crowdfunding have helped 2.77 million critically ill patients, raising approximately 56.9 billion yuan for medical funds. Among China's 1 billion internet users, one in every two people provides assistance to others through online channels, profoundly changing the way Chinese people engage in philanthropy and extending the "practice of daily kindness" rooted in Chinese culture.
Fairness and Transparency: Shaping a New Philanthropic Ecosystem with On-Chain Public Welfare
The application value of blockchain technology lies in its ability to provide information traceability, tamper resistance, and transparency. By integrating blockchain technology into philanthropy, it can address the issues of low transparency and inefficiency in traditional philanthropy.
Internet Philanthropy "Chinese Model": Opportunities and Challenges
Currently, charitable donations in China account for less than 0.2% of GDP, which is a significant gap compared to Western developed countries. Although the amount of internet donations is relatively large on a global scale, it accounts for less than 7% of total philanthropic donations in society, indicating that there is still ample room for the future development of internet philanthropy in China.
The Development of Internet Philanthropy "Chinese Model" Faces Various Challenges
Although the internet philanthropy "Chinese model" has become increasingly refined in recent years, its development quality still needs improvement compared to Western countries. Issues such as being "big but not strong" and "fast but not optimal" remain prominent.
Low level of digitization
Research conducted by Tencent Foundation and Tencent Research Institute in 2021 indicated that the development of digitalization in the philanthropic sector still has significant room for improvement and faces resource constraints such as limited investment, inadequate talent, and limited supply. Many non-profit organizations, particularly small and medium-sized ones, struggle with a significant "technological divide," characterized by low levels of digitization and a shortage of technological expertise.
Insufficient Social Trust
The lack of social trust presents an essential obstacle to the advancement of philanthropy in China. Despite the efforts made by internet crowdfunding platforms to promote transparency and utilize digital technology to enhance accountability, challenges such as fraudulent donations and misappropriation persist within the philanthropic sector.
Insufficient Social Philanthropic Culture
In recent years, China's internet philanthropy has made significant progress. However, objectively speaking, compared to Western countries such as Europe and the United States, China has not yet formed a widespread social philanthropic culture. This has resulted in a relatively low level of grassroots philanthropy in China, with many people not having developed a stable awareness and habit of engaging in philanthropy. Consequently, it affects the sustainable development space of Chinese internet philanthropy. Additionally, the rapid development of the internet has given rise to new cultural phenomena, with various subcultures, represented by "second-dimensional culture," becoming mainstream in online society. How to adapt to and integrate the characteristics of these new cultures and shape a new social philanthropic culture will be a challenge for the continued development of internet philanthropy "Chinese model."
Looking ahead, the future development of Internet philanthropy in China, represented by the "Chinese model," shows promising trends influenced by the "Five Forces," "Four Dimensions," "Three Driving Forces," and "Dual-wheel Drive." These trends are expected to contribute significantly to China's modernization efforts.
Increased Inclusivity: By harnessing the collective strength of the Party, government, enterprises, social organizations, and the public, the Internet philanthropy "Chinese model" aims to foster a culture of shared participation and benefits for all.
Expanded Influence: The Internet philanthropy "Chinese model" will have a wider reach in terms of geographical coverage, sectors, target populations, and sustainability, enabling it to have a more profound impact on society.
Enhanced Innovation: Guided by digital leadership, technological advancements, and enterprise innovation, the Internet philanthropy "Chinese model" will shift its focus from mere efficiency to fostering a culture of innovation and creative solutions.
Improved Quality: The dual-wheel drive of national policies and the rule of law will propel the Internet philanthropy "Chinese model" towards a path of higher quality development, ensuring adherence to standards and promoting excellence in philanthropic endeavors.