His Excellency Mr. Chen Changzhi, Vice-Chairman of the 12th session of the Standing Committee of The National People’s Congress (NPC),His Excellency Mr. Li Liguo, Minister of Civil Affairs of PRC, Chairman of the China Charity Alliance,Distinguished Fellow Key Note Speakers and Panelists,Guests and colleagues, Ladies and gentlemen,
Firstly, allow me to thank the China Charity Alliance and the Lao Niu Foundation, as well as the various supporting partners, for hosting this important event at such a crucial time for China’s philanthropy sector. I am extremely glad to be invited to join you today to share UNDP’s perspectives on the role of philanthropy in development, both from China and the Globe. I sincerely hope this will contribute to the important discussion at this forum.
Over the next two days you will explore different issues and perspectives related to one common goal: unleashing the true potential of philanthropy in China. The United Nations Development Programme is here to support your efforts towards this goal, whether by strengthening the cooperation between China and other middle-income countries, sharing international experiences in the development of philanthropic sectors, or looking at ways to reform the governance of philanthropy to improve its ability to tackle poverty and inequality.
Philanthropy – literally the “love of humanity” – is an expression of human generosity that exists and is reflected in most of the world’s cultures and religions as private giving for the betterment of others. In the modern world, philanthropy can make a pivotal contribution to sustainable development, and can complement or make up for the failure of governments or the marketplace.
In fact, in the last 15 years the growth in global philanthropy has transformed the international development sector. Its resources have grown exponentially as a proportion of total Official Development Assistance. In 2013, official development aid from all OECD DAC nations reached US$134.8 billion. Private capital flows from North to South amounted to about $577 billion, over four times the official flows that year. Of that, philanthropic financial flows were around $59 billion. The UN recognizes that corporate and private philanthropy played an important role in supporting progress made towards the Millennium Development Goals (MDGs).
Development aid, and more broadly international public finance for sustainable development, will remain essential in the decades to come. However, we cannot ignore the shrinking proportion of ODA within total financial flows to the South. Today the largest proportion of financial flows comes from foreign direct investment; the second largest is remittances; and the third is private philanthropy. This represents an enormous opportunity, since a broader range of philanthropists is emerging and becoming engaged in international giving, as well as domestic giving within developing countries.
Countries like China, but also Brazil, India and South Africa, have become deeply involved in foreign assistance not only through government aid but also through private investment, philanthropy, and remittances. Philanthropic contributions from those four countries to the developing world already amounted to around $400 million in 2013, a 30% growth from a year before.
However, philanthropy should not be viewed simply as a “gap filler” for ODA. Instead, and most importantly, philanthropy brings a complementary and beneficial set of new actors, approaches, and types of funding to development. And this comes at a pivotal moment for global development cooperation.
Planning for the Post-2015 Development Agenda is well underway. Looking forward, it is clear that philanthropy will play an even bigger role in supporting the achievement of the new goals, which will be endorsed by the international community next year. In this context, UNDP has commissioned a review of Philanthropy’s contribution to development globally. Its results will be discussed in September at a side-event of the UN General Assembly week in New York.
Yet philanthropy as a sector still receives little attention in these processes and in turn does little to engage actively with them. Processes are led by UN member states and multilateral agencies. While other important stakeholders like civil society organizations and the private sector have gradually become more included as non-state actors, the philanthropic sector is still not engaged enough in these processes and discussions.
Joining the forces of official development cooperation and philanthropy in the service of the new international development goals will make a substantial difference. For this to happen, however, philanthropy needs to leverage the larger resources and expertise of official development cooperation actors. And the UN system and governments need to leverage the insights, innovations and more nimble approaches of the philanthropic sector.
As the world looks for additional sources of financing to fight against poverty, inequality and disease, a lot of hope is resting on the rise of philanthropy in countries like China. A strong and healthy philanthropic sector in China, confident in looking outside its borders, will benefit China as well as the rest of the world.
In many ways China today has the unprecedented opportunity to tap into its increasing economic development and its expanding non-profit sector. At the end of last year there were over 3,600 foundations in China, a 50% increase from just five years ago. According to some estimates, between January 2011 and March 2012 China’s top 100 philanthropists together contributed the equivalent of $1.6 billion to support charitable causes including healthcare, education, poverty alleviation, disaster relief as well as culture and sports.
Most importantly for the philanthropic sector, according to recent estimates, the levels of personal wealth in China are rising faster than ever before. At the end of last year more than 230 billionaires resided in China, surpassing the number residing in the USA. The total net worth of the 400 richest people in China was valued at around $570 billion USD, a 35% increase from the year before. Many of these wealthy individuals are starting to give back, by setting up private foundations or by supporting the work of other social organizations.
However, we all know that there are also challenges ahead. Despite the rapid growth in corporate and personal wealth, total charitable giving in China is just 4 per cent of the level in the US and Europe. In 2013 total charitable donations in China actually dropped (17 per cent) from a year before. In many respects, China is still a place where philanthropists are finding it hard to build, promote, and sustain effective charitable organizations. This is due to a combination of public distrust in the sector because of some recent scandals, an unclear legal and policy framework, and a governance system that needs more transparency. In particular, weak tax incentives for individuals to donate and difficult registration and operation procedures for foundations and civil society organizations continue to slow the growth of the sector.
UNDP has always incorporated the support for an enabling environment for civil society and philanthropy as a key component of effective development cooperation at the national and global levels. In China, UNDP is proud of its longstanding partnership of many years with the Ministry of Civil Affairs, focusing on improving the policy and legal environment for civil society organizations as well as their engagement in policy-making and public service delivery.
Over the years through this partnership we have supported important pilot initiatives regarding the administration and management of civil society organizations (CSOs). These pilots have led to some important breakthroughs. In 2009 in Shenzhen, we supported the local government in piloting a tax deduction policy for donations made to CSOs, as well as the simplification of registration procedures for CSOs and foundations. These policies were officially adopted and now allow the direct registration of 4 types of organizations. I commend the leadership of both the Ministry of Civil Affairs and Shenzhen Government on these achievements in reform.
UNDP will continue to work with the Ministry of Civil Affairs to promote the development of civil society and philanthropy in China. Our goal will continue to be a more enabling legal and policy environment for social organizations, including their registration and management procedures. However, the transparency and credibility of the sector needs to be enhanced. In particular, legal reforms that ensure transparency and better disclosure of spending by foundations and non-profits are needed to create a new culture of transparency across the non-profit sector and to regain the trust of the Chinese public.
Ladies and Gentlemen,
To promote philanthropy, we also need to look at social innovation and the growing role that social media and the Internet are playing in charitable giving. As non-profit organizations in China are becoming ever more innovative in the ways they publicize their work, tools such as mobile giving, fundraising pages and crowd-funding are becoming more common and have the potential to open incredible opportunities for the non-profit sector.
New technology is creating a world where effective philanthropy is no longer the exclusive domain of big foundations or organizations, but of anyone interested in giving back. This invigorates people to think that they can make a difference and then urge others to make a difference as well. All of this should be supported and encouraged.
Globally, since 2010, in an effort to support this type of innovation, UNDP has partnered with the Gates Foundation to organize the Social Good Summit. This has become a global event organized in New York during the UN General Assembly week but also concurrently in many countries. The Social Good Summit aims to unite people from around the world around one common theme: the power of social media, innovation and technology to solve our world’s greatest challenges.
The true question that lingers today is how we can better leverage these innovations as well as the growing work of philanthropic organizations and the private sector to achieve a lasting and sustainable impact globally and here in China.
Einstein once said: “it is every man’s obligation to put back in to the world at least the equivalent of what he takes out of it”. By supporting the development of philanthropy in China we can all contribute to a more equitable, prosperous, and stable world. I therefore wish this forum to be most successful.
Thank you for your attention!