INTEGRATION OF BUSINESS AND

COMMONWEAL AND CHALLENGES

IN THE ERA OF CHARITABLE

ECONOMY

Wang Zhenyao

China Philanthropy Institute of

Beijing Normal University Nov. 03, 2014

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Convergence of Charity and Business

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I, Mankind has entered the era of charitable economy.

Turning Point of World Economic Development

• According to World Bank data, in 2001, world GDP was $32.3467 trillion;

• In 2011, it was $70.0204 trillion;

• In 2012, it reached $72.4404 trillion.

• In 2001, world GDP per capita was $5,301;

• In 2011, it was $10,040;

• In 2012, it amounted to $10,281;

• Starting in 2011, the entire human race entered the era when GDP per capita reached ten thousand US dollars.

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Human Civilization Entered a Major Transition Period

• In 2011, world GDP reached $70.0204 trillion;

• Meanwhile, GDP per capita reached $10,040;

• This is the first time in human history to achieve such a high social level;

• Significant changes have taken place in the world situation.

• Companies in Chinese mainland have also entered into a transition period;

• Society there is in transition as well: it is entering a stage of ten thousand US dollars

per capita.

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• In respect of economic composition, the tertiary industry becomes increasingly developed. Generally, it accounts for more than 70% in the United States, France, Britain, Germany, Japan and other developed countries.

• In respect of industrial form, pension, health, tourism, children education, etc. have become the pillar industry. In 2013, Chinese tourist arrivals reached 3.262 billion, and total tourism spending was 2.6276 trillion yuan.

• In respect of development speed: in those countries whose GDP per capita is more than ten thousand US dollars, especially more than forty thousand US dollars, its economic growth rate will tend to be less than 5%. In recent years, development speed of the United States, Japan and other countries is usually less than 3%; in 2013 it was even lower than 1% in Germany, France and Italy.

Economic Characteristics of Charitable Economic Times: Affluence with No Growth

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The growth of wealth makes the entire wealth of human race transfer from quantity to quality, and closely integrates economic and social responsibility. Social Services with social values have become the leading industry, and the world has entered into the era of charitable economy objectively.

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The World's Wealth Shifts from Quantity to Quality

The Inherent Logic of Charitable Economy

Social value determines economic value

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Economic value

determines social value

Social value

determines economic

value

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social services

economic development

modern charity

coincidence

New pattern: coincidence of economic development, social services and modern charity; convergence of business and charity!

The unprecedented growth of modern charity

function

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II. New Development Pattern of China’s Philanthropy

• Stimulate the vitality of social organization. Correctly handle the relationship between government and society, and accelerate the separation of the government agency from social organizations to promote the latter play its role with clear responsibilities and self-governance in accordance with the law.

• - The decision of The Third Plenary Session of the 18th Central Committee of the Communist Party (48)

Repositioning of Government and Social Policy

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China's new policy landscape: Facilitate the generation of

a large community

• In 2012 and 2013, the government launched a major reform to promote religious charities, abolish authorities, and determine to purchase social services from community organizations;

• Annual expenditure of private foundation is over 100 million yuan! Laoniu Foundation spent more than 140 million yuan in 2012; philanthropists begin to promise more than ten billions of donations!

• The rise of philanthropic entrepreneurship and influential investment!

New Stage: positive interaction between officials and the people, and a comprehensive reform is coming.

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Economy Society Politics

Society

Social Structure Transformation of the Charitable Economic Times

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The total value of China’s all kinds of donations was over 136.3 billion yuan

in 2013 “Total social donations in 2013 will exceed 110 billion yuan. This is the third time to exceed 100 billion after 107 billion yuan in 2008 and 103.2 billion yuan in 2010, and there is a substantial increase over 2012."Yang Tuan, editor of Charity Blue Book and researcher at the social policy research center of Chinese Academy of Social Sciences said: donations at all levels of charity society and civil systems have substantial growth than in 2012. With the funds to buy services of social organizations and the national volunteer service hours conversion value, in 2013, the total value of all types of donations is expected to more than 136.3 billion yuan. According to the reports, in 2013, the purchase of social organization services by the government has become an important policy, both to promote the transformation of government functions, and to open up important sources of funds for social organization. Generally, the nature of government funds to buy social organization services can be divided into three categories: special funds, budgetary and extra-budgetary funds. Funding sources consist mainly of financial funds and lottery. According to incomplete statistics and estimates of the Blue Book , the total amount of government funding in 2013 to purchase social organization services is about 15 billion yuan.

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The age of large donations (more than ten billions) is coming.

• According to “China’s Top 100 donator List“, from 2011 to

2013, a total of 20 donations were over two hundred million

dollars; a total of 54 were over 100 million yuan.

• In May 2012, Mr. Lu Dezhi has promised to donate 10 billion yuan

to Huamin Charitable Foundation in the next five years;

• In June 2012, Mr. Wang Wenbiao declared in "Rio + 20" meeting

to invest 10 billion yuan to Elion Foundation;

• In 2013, Hainan Airlines decided to donate shares of more than 8

billion yuan to Hainan Liberation Commonweal Foundation.

The Advent of the Era with Ten Billions of Donations

Development Situation for China Foundation: One More Foundation Every Day

• In October 18, 2014, the total number of foundations was up to 4041, of

which 1,477 are public foundations, 2564 are private foundations;

• In December 2012, the total number of China Foundation officially broke

3000; In September 2014, there were more than 4000 foundations.

891 1056

1280

1533

1826

2213

2608

3009 3109

0

500

1000

1500

2000

2500

3000

3500

2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年3月

2006年3月，第1000家基金会成立

2010年下半年，第2000家基金会成立

2012年12月，第3000家基金会成立

Changes in the overall number of foundations

In March 2006, the 1000th foundation was

established.

In March 2006, the 1000th foundation was

established.

In the second half of 2010, the 2000th

foundation was established.

In December 2012, the 3000th foundation

was established.

2013, the First Year of Pension Service

• • Social services, social benefits, home environment, etc. have been added into the Old Age Security Act and begin to implement;

• • The State Council issued the Opinions on Accelerating the Development of Pension Services to make a comprehensive plan for the pension service system.

• Combine elderly welfare, government investment and enterprise development;

• Charitable business with social values begin to develop in a start-round way;

• Respect for the elderly has become intrinsic pursue of pension services businesses.

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The Basic Mission of Chinese Modern Charity

• European and American historical experience shows that after the Industrial Revolution, a wide range of social charity campaign is often needed.

• Britain began earlier, while American philanthropists profoundly shaped the whole human civilization.

• Promote the transition of economic system;

• Promote social reform to become more benign;

• Establish a sound link between the public and the rich;

• Enhance social morality, and promote the spirit of volunteerism.

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How to fully reflect the social value of business?

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III. Strategic Choice in the Intersection of Business and Charity

Can business leaders be involved in charity to lead the trend of Chinese social reform and reshape China's

commercial civilization?

• Learn the century-long experience from the United States;

• Establish universities, hospitals, libraries, parks and the like;

• Support social services, volunteer services, and social work.

• Corporate social responsibility;

• Cooperation in global charity;

• Organize pension and children's causes;

• Develop social enterprises;

• Make influential investing.

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CHINA IS LOOKING FORWARD TO THE CHOICE OF BUSINESS LEADERS! BUSINESS LEADERS ALSO EXPECT FURTHER TRANSFORMATION OF THE CHARITY SECTOR!

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