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Tuesday 9 August 2016

Panda power

Scepticism about charity starts to give way to generosity



THE feeding frenzy for the pandas comes at nightfall. People furtively approach them, pouring bags of old clothes down their gullets. By day, the trucks arrive to clean the bears out, leaving them empty for the next big meal. The pandas are plastic. They are large, bear-shaped receptacles, designed to entice people to donate their unwanted garments to those in need. First deployed in 2012, there are now hundreds around Shanghai, often placed by entrances to apartment buildings. They swallowed about a million items of clothing last year.

The procession of donors feeding trousers to pandas is impressive. But they usually do so under cover of darkness. Charitable giving is not yet a middle-class habit. Many people still feel awkward about it, despite their growing prosperity. China’s GDP per person is about one-seventh of America’s. But in 2014 Chinese gave 104 billion yuan ($16 billion) to charity, about one-hundredth of what Americans donated per person (see chart).
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This is partly a legacy of attitudes formed during Mao’s rule, when the party liked to present itself as the source of all succour for the poor (to suggest otherwise was deemed counter-revolutionary). Even until more recent years the party was reluctant to encourage charities, worried that they might show up its failings.

The middle classes have worries too—that giving large amounts to charity may draw unwanted attention to their wealth. They do not want to fuel the envy of the have-nots or encourage tax collectors to pay them closer attention. The top 100 philanthropists in China gave $3.2 billion last year, according to Hurun Report, a wealth-research firm based in Shanghai. That was less than the amount given by the top three in America.

In 2008 when a powerful earthquake hit the south-western province of Sichuan—the deadliest in China in more than 30 years—it seemed that one positive outcome would be a boom in charitable giving. Volunteers poured into the devastated region and donations filled the coffers of aid organisations. Problems soon arose, however. Embarrassed that private relief efforts were proving more effective than official ones, the government reined in citizen-led organisations.

A subsequent succession of scandals about mismanaged funds has not helped the growth of charities either. Even though most of them are well run, caution is sometimes warranted. Swindlers have even spied opportunity in the panda receptacles. Yuan Yuan, the organisation behind the pandas, noticed copycat ones popping up in Shanghai over the past year. Someone devised a scheme for using these as a way of conning people into donating clothes, and into investing in a business which would supposedly make money by reselling them. Returns of more than 10% were promised—much higher than on deposits in banks. Dozens of people fell for the scam, handing over a total of at least 3m yuan to the crook. They got nothing back.

For Yang Yinghong, general manager of Yuan Yuan, this con was just the latest in a series of challenges. Lest people be tempted to put their refuse in the donation boxes, he came up with the panda design and made the animals translucent so that passers-by could see that clothes were piling up inside them. The pandas’ eye-catching visibility has had an unfortunate side-effect, however. Mr Yang says people prefer to drop off their donations at night because others may think badly of them for giving away perfectly wearable clothes.

Despite such middle-class diffidence, the proliferation of the pandas on Shanghai’s streets may reflect a growing acceptance of public displays of charity. The pandas are migrating around the country, popping up in cities along the coast and deep in the interior.

Big-ticket donations by rich businesspeople are also becoming more common. When Bill Gates and Warren Buffett hosted a dinner in Beijing for China’s richest people in 2010, hoping to encourage them to give to charity, many billionaires chose to stay away (Zong Qinghou, a drinks magnate, said that philanthropy was just a way to dodge taxes). Some of them now seem less inhibited. In 2014 Jack Ma, co-founder of Alibaba, an e-commerce company, created a philanthropic trust (the firm’s diverse interests expanded further this week with the purchase of Hong Kong’s leading English-language newspaper, the South China Morning Post—see article). Zhang Xin and Pan Shiyi, who are property developers, launched a fund to help poor Chinese students go to universities abroad.

The China Philanthropy Research Institute estimates that fully 80% of donations by the wealthiest Chinese go to overseas charities. Many may well prefer to give to local causes, but regulations have hindered the development of philanthropy at home. To function as a not-for-profit organisation, charities must have a government partner, which entails the loss of their autonomy. It is also difficult for them to obtain tax breaks for their donors.

But this will soon change. The government published a draft law on charities in late October. Under discussion for a decade, it defines charities broadly, and acknowledges that they can help improve everyone’s quality of life. The law promises to allow charities to register directly, rather than work through an official partner. They may also enjoy tax exemptions. Zhu Jiangang of Sun Yat-sen University in Guangzhou says the law should help reduce the influence of government, and thus encourage charities to flourish. It is expected to be approved soon.

How far the government is really willing to go remains in doubt, though. At the same time as giving charities more space to operate, it is cracking down on non-governmental organisations, wary of foreign influence. Until charities are allowed to develop independently, the wealthy who aspire to be more generous will have few options. Some quip that it is easier to make money in China than to give it away.

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