Digital channels to drive a developing philanthropic culture in China

06 December 2018 Authored by Consultancy.asia

Digital avenues will open up a new frontier for individual donors in China’s growing philanthropy landscape says a new report from Bain & Company.

Despite a few bumps along the way, China’s philanthropy sector has grown significantly over the past decade, with RMB156 billion donated to charitable causes last year compared to the RMB31 billion in 2007. Yet, according to a new report from global management firm Bain & Company, the rise in whole terms has not kept pace with economic growth in the country over the period, representing just 0.2 percent of GDP.

This figure, which compares unfavourably to the 1.4 percent of GDP given in India and the US total of 2.1 percent, has only fractionally improved since it was previously brought to attention by Bain in a report from 2010. Meanwhile, the Chinese economy has continued to boom on all fronts, with China home to half of the world’s new billionaires last year and many of the globe’s leading e-commerce and online financial services companies.Charitable donation made in ChinaBroadly, these latter two points, together with the comparatively low overall donation tally and individual penetration rates in the country, suggest a sector ripe for substantial growth – which today is still dominated by corporate giving at roughly 60–70 percent of overall value. In the US for example, corporations account for just 5 percent of charitable donations (compared to around 20 percent in China), with individuals responsible for over 70 percent of the 2016 total donation value of ~RMB 2.6 trillion.

Further, it probably doesn’t need to be restated, China hosts a population of some 1.38 billion individuals. So that while the county is already one of the largest bases for individual donors worldwide (indeed, the fourth-largest at 91 million in 2016 behind India, Indonesia and the US), the number of donors still only amounts to 7 percent of the overall populous – indicating, again, plenty of room for growth as the local philanthropic culture develops.Sources of charitable donations in ChinaSupporting that development will be the continued rise of the digital era, contends Bain, with China home to more than three quarter of a billion internet users – a whopping 530-plus million of them engaged with online shopping and payments last year; fueled by platforms such as Tencent and Alibaba, the latter of which recently attracted sales worth US$30 billion over the just 24 hours of its annual signature Singles Day event.

While rapidly growing – jumping from a worth of RMB2 billion to 3.5 billion between 2016 and 2017 (via ~3 billion donations to 4.6 billion) – digital fund-raising still only accounts for just over 2.3 percent of China’s total donations. But, according to the Bain report, which was conducted in conjunction with non-profit coalition United Way, the online donation model comes with distinct advantages, and as such represents a significant opportunity as a driver for individual philanthropic growth.Percentage of charitable donations in China made onlineWhen quizzed, 62 percent of respondents in China stated that their preferred method of donation was online, with 64 citing more industry transparency as the biggest benefit of digital philanthropy, followed by 57 percent saying it was more easily accessible for individuals. For Chinese respondents under the age of 30, who are the most economically positive worldwide, nearly two thirds say they pay attention to philanthropy, with over half participating in charitable activities.

“This trend is poised to continue,” state the authors in respect to compound annual growth in local donations of greater than 60 percent from 2014 to 2016, “as rising disposable income boosts donor participation and donation amounts, and as rapid development of digital infrastructure (e.g., Internet/mobile penetration, digital payments) increases individuals’ access to charities… This shift presents meaningful opportunities for stakeholders with the resources and capabilities to take advantage of new digital channels.”

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