An Analysis of Online Fundraising in China

 

Online fundraising: the figures 

The growth of online fundraising has been one of the most important developments of the last few years for the Chinese charity sector. The ubiquity of the mobile internet and the almost universal use of social media platforms like WeChat and shopping sites like Taobao have created an online environment in which fundraising for charitable causes has flourished at a rate unprecedented worldwide. However, just like most aspects of social life in China, online fundraising has also come under regulatory pressure in recent years.

China’s Charity Law, which went into effect in September 2016, can be seen as the first comprehensive attempt to regulate the country’s charity sector. Among other things, the law addresses the phenomenon of online fundraising. It stipulates that all charitable organisations must release fundraising information only on official platforms recognised by the Civil Affairs Department of the State Council. Following this, 12 organizations were officially designated by the Ministry of Civil Affairs (MCA) as online public fundraising platforms, later reduced to 11. The 11 platforms currently designated for online fundraising are Tencent Charity, Taobao Charity, Weibo Charity, Jingdong Charity, Baidu Charity, Xinhua Charity, Gongyibao, United for Charity, Qingsongchou, China Foundation Center, and Ant Financial.

This month, the 11 designated platforms went through a statistical assessment. The assessment, conducted by the MCA, measured the amount of money the platforms raised, the number of individual donations that were made, and different charities’ levels of activity on these platforms during the first half of 2018. According to the report that the MCA released, from January to June 992 charity organizations participated in the 11 platforms’ online fundraising, posting 11,000 calls for donations for 10,103 projects3.57 billion individual donations raised a total of 980 million RMB for these projects, providing almost 100,000 RMB on average for each project1.

The distribution of the donations between the different platforms is by no means even. Three of the platforms, Tencent Charity, Taobao Charity and Ant Financial, overshadow all of the others, accounting collectively for 92% of total donations. Tencent Charity raised the largest amount, 415 million, followed by Ant Financial with 320 million and Taobao Charity with 167 million. The other eight platforms only raised 78 million between them. While Tencent operates the first platform, Taobao and Ant Financial are both operated by Alibaba, meaning that China’s two tech giants Tencent and Alibaba run all three of the platforms that account for the great majority of online fundraising within the country.

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While Tencent Charity raised the most money, Taobao Charity comes first for the number of individual donations, with over 3.2 billion donations, or 92% of the national total. This enormous number is due to the fact that a portion of the money from purchases with certain sellers on the online shopping platform automatically goes to charity. This policy has engaged 340 million customers and 1.42 million online businesses. Since the size of the individual donations tends to be quite small, Taobao comes first for the total number of donations, but not for the total amount of money donated.

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It is clear from the statistics that the same charities tend to raise the most funds across the different platforms. For instance, the China Charities Aid Foundation for Children and the China Social Welfare Foundation rank in the top five for money raised on all three of the top platforms. The One Foundation ranks in the top five on Taobao, and comes first on the Ant Financial platform.

What is also clear is that a small group of organizations are the ones that raise the majority of the funds in general. Taking the Tencent Charity Platform as an example, the five top ranked organizations are the China Charities Aid Foundation for Children, the China Social Welfare Foundation, the Amity Foundation, the Shenzhen Charity Federation and the China Children and Teenagers’ Fund. All together, these five organizations raised donations for over 200 million Yuan during the first half of the year, or almost half of the 415 million raised in total through the platform. It is notable that at least three out of these five organizations could be classified as GONGOs (“government-organized non-governmental organization”), a type of NGO created by the government that maintains strong ties with the state.

It is also instructive to compare the figures for the first half of this year with the figures for the first half of 2017. The comparison would suggest that the future trend for online fundraising in China is still a positive one. Aggregate online donations for the first half of 2017 amounted to 750 million Yuan2, while for the first half of 2018 the figure was 980 million Yuan, making for an impressive 31% increase. The growth is also spread pretty evenly across the three major platforms. Tencent Charity raised 330 million in the first half of 2017 and 415 million in the first half of 2018, a 26% increase. Ant Financial saw the biggest growth, with 210 million raised in the first half of 2017 and 320 million in the first half of this year, a 52% increase. Taobao Charity saw a 37% increase, from 122 million to 167 million.

On the other hand, the figures for the whole of 2017 present a very different picture from the half-year figures. Aggregate donations for the entire year amounted to 2.58 billion3, over three times the figure for the first six months. Tencent’s platform also completely overshadows all the other platforms if the whole year is taken into account, raising 1.625 billion Yuan, more than all of the other platforms combined. What explains the stark difference between the half-year and end-of-the-year figures is mainly the effect of Tencent’s 9/9 Philanthropy Day, actually a three-day fundraising event held annually around the 9th of September. The event raised a total of 1.3 billion Yuan in 20174, almost half of all donations for the entire year, accounting both for the gap between the first and second half of the year, and for Tencent’s overall dominance.

It should also be pointed out that the money raised by Tencent’s annual event has increased dramatically over the three years it has been held. The debut in 2015 raised 127.9 million Yuan, the second edition in 2016 raised 300 million, and the third edition last year raised 1.3 billion, as already noted. If this upward trend continues, online donations in 2018 may overtake donations in 2017 by an even larger margin than figures for the first six months would suggest. Of course it may be that the 9/9 Philanthropy Day’s popularity has already peaked, and donations will not rise much further. A sharp decline would seem unlikely however, since its status as China’s prime online fundraising event remains unchallenged.

 

Contributing factors and challenges

There are various factors behind the continuing success of online fundraising in China. Over the last decade the existence of a consumer class with a high level of disposable income and a growing awareness of charitable causes has combined with the emergence of an ecosystem of apps and websites that have become central to social and even work life in urban China. Thanks to the spread of the mobile internet and of mobile payments, donating to charity has become much easier and more convenient, and can be done without too much effort.

Due in part to the fact that many important international websites are inaccessible, China’s most popular online services are mostly operated by the country’s two domestic tech giants, Tencent and Alibaba. In particular, WeChat (owned by Tencent) has become China’s most popular multi-purpose app, with over 900 million daily users5, while Taobao (owned by Alibaba) is the most popular online shopping website with over 600 million monthly users6, and Alipay (also owned by Alibaba) is the most popular mobile payments platform alongside WeChat.

As already noted, the three most successful platforms for online donations, which together accounted for 92% of all donations in the first half of 2018, belong to Tencent (Tencent Charity) and Alibaba (Ant Financial Charity, which is linked to Alipay, and Taobao Charity). There is an obvious connection between the ubiquitous popularity of the apps and websites run by the two corporations, and the popularity of their fundraising platforms, since the platforms are in an advantageous position in terms of publicizing fundraising campaigns through the online services that belong to the same company. Interestingly, the use of big data analytics may also be a factor. For example, Tencent Charity’s 2016 CSR report claimed that Tencent had started to explore the use of big data from WeChat and its messaging app QQ to target fundraising campaigns at specific users in accordance with their interests and hobbies7.

The recent advent of innovative new ways to donate has certainly contributed to the continued growth of online donations. A good example is Ant Financial’s popular initiative Ant Forest, a game that allows users to plant and fertilize an animated tree with “green energy” collected through mobile payments with the Alipay app. Once the planted tree reaches a certain level of energy, a real tree will then be planted in Inner Mongolia by the SEE Foundation and the China Green Foundation, slowing down the region’s desertification.

Other examples abound. A WeChat initiative allows users to donate their daily “steps walked”, counted by a health app, through a matching program supported by charitable corporate contributors. Taobao, as mentioned above, allows sellers to choose to donate a portion of the revenue made every time someone buys their products on its online shopping platform. Jingdong Charity (another platform linked to the online shopping website Jingdong) accepts used clothes, books, and other life supplies along with cash in their fundraising.

Measures taken to enhance transparency may be another reason why online fundraising remains popular. Public trust in charities has been low for years in China, due to scandals like the Guo Meimei case in 2011, which involved the Red Cross. Over the last couple of years a number of public controversies over fraudulent fundraising campaigns have broken out, also affecting public trust.

The Luo Er case at the end of 2016 is probably the most high-profile example. A man named Luo Er, living in Shenzhen, attempted to fundraise online to cover the treatment of his young daughter, who was ill with leukaemia. The post soon went viral on WeChat, and 2 million RMB were raised within a day, but very soon doubts started to be raised about the situation: people accused the man of misrepresenting his financial situation, while the company that was behind the initiative also fell under suspicion. After a meeting with the Shenzhen Civil Affairs Bureau and Tencent, Luo Er agreed to return the money to the donors. The case attracted much attention from the media and public.

Perhaps in the face of this and other controversies, various platforms have taken steps to increase transparency. Tencent Charity has introduced a function called “calm down”, requiring the donor to scroll down and read information about the project’s timeline, prospective effect, and financial situation before they decide to donate. Ant Financial and Qingsongchou, meanwhile, have begun to make use of blockchain technology as a way of ensuring that information isn’t tampered with and transactions remains visible.

For example, the China Poverty Alleviation Foundation’s recent project to provide health insurance for breadwinners in rural areas was posted on Ant Financial’s platform using blockchain, ensuring that the information on the donations, the insurance and the compensation claims cannot be tampered with, and the whole process is transparent. More traditional measures were taken by the Gongyibao platform when it recently hosted a healthcare support project by a philanthropic foundation from Hubei. Gongyibao established a system connecting the platform, the foundation and the hospitals, allowing the hospitals to verify the information of those requesting help, ensuring the information’s authenticity at the source.

While the continued strength of online fundraising in China is something to celebrate, there are obviously still points of concern. First of all, transparency and accountability remain problematic. Even Tencent’s 9/9 Philanthropy Day has not been free from controversy: last October the platform revealed statistics on the 2017 edition that appeared to confirm suspicions of machine-generated fundraising, with thousands of accounts making donations faster than humanly possible8. Given that every donation by the public generated a matching one by Tencent, it is easy to see how the system was being fraudulently abused.

It is still unclear however who was responsible, and an investigation promised by the platform has not yet yielded appreciable results. With more scandals over misuse of funds in the charity sector coming to light (for example the recent controversy over Qin Yuefei’s Serve for China), it remains to be seen whether the potential for further growth in donations may not be dented by lack of public trust.

Another issue is that, as already elaborated upon, a large proportion of the funds raised go to a limited number of charitable organizations. What’s more, many of those tend to have a government background. Due to their possession of superior resources and connections, as well as their recognizable names, such organizations find it much easier to carry out large-scale fundraising campaigns. For grassroots charities it is still harder to raise funds from the public.

Furthermore, the extremely high share of all online fundraising that passes through platforms operated by Tencent and Alibaba, and particularly Tencent, raises questions regarding the ability of such companies to influence and direct the focus and agenda of online fundraising campaigns.

 

Notes

1 成绩单: 11 家互联网公募平台半年募款超9.8亿元,强者愈强待改变, the Charity Times, 08/08/2018

2 上半年慈善组织互联网募捐平台在线筹款超7.5亿元, Sohu, 18/08/2018

An overview of the 2017 annual reports of China’s online fundraising platforms, China Development Brief, 14/03/2018

4 Third “9/9 Philanthropy Day” raises 1.3 billion, China Development Brief, 11/09/2017

5 日活跃用户9亿! 2017年微信数据报告 (完整版), Sohu, 09/11/2017

6 Alibaba Group Announces March Quarter 2018 Results and Full Fiscal Year 2018 Results, Alibaba Group, 04/05/2018

7 2015/16 Tencent Corporate Social Responsibility Report, Tencent

8 Tencent confirms suspicions of machine-generated fundraising on the “9/9 Philanthropy Day”, China Development Brief, 12/10/2017

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