Giving it away in China

How philanthropic are China's new billionaires and millionaires? Experts in the world of giving say the potential is there, but the motivation and mechanisms for giving may not be, reports Jack Freifelder from New York.

The number of millionaires in China grew to 2.4 million last year, second only to the United States, which totaled 7.1 million, according to the Boston Consulting Group (BCG).

The number of billionaires is upward of 300, according to the 2013 China Rich List put out by the Hurun Report, a leading authority on China's high net-worth individuals. And the most recent compilation of Forbes World's Billionaires List includes more than 130 Chinese individuals with net worth that exceeds nine digits.

How giving are these rich?

China ranked 133 among 135 countries for donating money and last for volunteering, according to the World Giving Index 2013, an annual survey by the Charities Aid Foundation, a non-governmental organization (NGO).

And where does the world's second-biggest economy stand on charitable donations versus the world's biggest economy, the US?

Total charitable giving in China was just 4 percent of the US level in 2013, according to Shanghai-based Hurun.

In 2013, China's top 100 philanthropists gave away a total of $890 million - about $100 million less than the $992.2 million that Facebook CEO and co-founder Mark Zuckerberg and his wife donated that year.

In the US in 2013, individuals gave roughly $240.6 billion, or 72 percent, of the total amount given to charitable organizations, $335.17 billion. That was about 2 percent of GDP and a 4.2 percent increase over 2012.

According to the Giving USA Federation's most recent data, foundations gave $48.96 billion (up 5.7 percent), and corporate giving accounted for just 5 percent of the total, or $17.88 billion (down 1.9 percent), down primarily because of the slow growth in corporate pre-tax profits.

Unlike China where individual wealth has occurred in the last decade or so, the accumulation of wealth in the US by individuals has a much longer history, going back to such entrepreneurs as John D. Rockefeller Sr and Andrew Carnegie in the early 1900s. Today's most notable US philanthropists are Microsoft Corp founder Bill Gates and business magnate and investor Warren Buffett.

The long history of philanthropy by Americans is also because the US offers its citizens - and corporations - who give to charities some of the world's most generous tax incentives. If the extremely wealthy do not give away some portion of their income or put it in some type of tax shelter, it goes to the tax collector.

"The potential is there in China as a result of the growth in the country's number of millionaires and billionaires," said Yanzhong Huang, a senior fellow for global health at the New York-based Council on Foreign Relations (CFR). "But we have to keep in mind that just having the capability to donate does not mean there's an incentive. Motivation could be provided by the government or in the form of taxation benefits, but there's not much there."