Friday, September 17, 2010

What China Reveals about Nonprofit Law and the Infrastructure of Philanthropy

The Washington Post has published an interesting story on the response of China’s aristocrats to the coming visit of Bill Gates and Warren Buffet, now widely known for their challenge to wealthy Americans to give their fortunes to charity.  According to the Post, although Chinese magnates were initially excited by the prospect of meeting Gates and Buffet, they began discretely to try to discover if they, too, would be pressured to pledge their fortunes to philanthropy.  A few even reportedly declared that they could not attend the event that will feature the donating duo because of schedule conflicts.  China reportedly now boasts many billionaires, second in number only to the United States.   But most have not yet embraced the role of philanthropy.  While part of the reason may stem from personal preferences by some (but certainly not all) to hold on to wealth, the Post identifies another reason:

While the Chinese government has been eager to compete with the United States and the rest of the world in other fields, philanthropy is one sector in which it remains hesitant.  China's leaders have not fully embraced the idea of handing over to individuals or groups the power to help the nation's people - a role traditionally reserved for the Communist Party.  "One thing holding back philanthropy may be the reluctance among the rich. But the other is the worry of the government," said Li Huafang, a researcher for the Shanghai Institute of Finance and Law. "They don't want other entities competing with them for the people's hearts.”

Enter the need for changes in governmental regulation that dramatically alter the nature of nonprofit law in China.  Says the Post:

Even if philanthropy becomes popular among China's rich, most experts believe a change in government regulation is necessary.  China has no inheritance tax.  Individuals can donate only cash, not stocks or securities.  And private foundations are required to partner and register with a government ministry, which has hindered their creation.

This article should impress upon its readers the important role that nonprofit law serves in philanthropy.  Or, perhaps better phrased, the article should remind us that a major purpose of nonprofit law is precisely to serve philanthropy – to facilitate, and even encourage, the efforts of those with privately-owned resources to meet the vast needs of others – even in the face of a government that may be somewhat jealous of its resources and successes.


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