Society

Rich more willing to set up family foundations

By He Dan and Yu Ran (China Daily)
Updated: 2011-05-16 07:57

Entrepreneurs to use bonuses, stocks for charitable giving

BEIJING - Mainland billionaires are showing an ever greater eagerness to establish family foundations for charitable purposes and to fall in line with what experts think is the most decent way for the rich to spend their money.

Earlier this month, Cao Dewang, chairman of the glass giant Fuyao Group in Fuzhou, Fujian province, used stocks with a market value of 3.55 billion yuan ($546 million) to establish a family foundation.

The Heren Foundation, named after Cao's father, is the mainland's first family foundation. Its mission is to provide support for education, healthcare and various projects aimed at eradicating poverty.

Successful entrepreneurs in China are now wont to give money to charities but seldom go so far as to establish a family foundation.

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Zong Qinghou, the founder of the Hangzhou Wahaha Group, a leading beverage company in China, is an exception.

Speaking at a Beijing conference, Zong said he is willing to set up a family foundation.

"Our chairman, Zong Qinghou, has considered setting up his family foundation for a long time," Shan Qining, a spokesman for Wahaha, told China Daily. "But this was the first time he announced that to the public."

Explaining his goals, Zong said he would like to establish an internationally recognized prize, similar to the Nobel Prize, to encourage more successful Chinese scientists to work toward making innovations in technology.

Zong also said he will take part of the annual bonuses he receives from the 150 companies he holds shares in and use the money to "provide continuing capital" to defray the costs of running the foundation, Beijing News reported.

Zong, who owns about $5.9 billion in assets, ranked third on the 2011 "Global Chinese Billionaire List" released by Forbes China.

Rupert Hoogewerf, chairman of Hurun Report, said those who do charity work in China will benefit from the fact that so influential a person as Zong has decided to start a family foundation.

His opinion was echoed by Wang Zhenyao, director of the One Foundation Philanthropy Research Institute at Beijing Normal University.

Wang praised Cao and Zong for choosing to give stocks and bonuses to their foundations instead of making single donations. Those funding methods should help to prevent the capital shortages that most public foundations face in the long run.

Meanwhile, not all who want to do good must give to charity, said Deng Guosheng, deputy director of the Non-Governmental Organization Research Center at Tsinghua University.

He said the rich can also benefit society by using their money to improve the equipment used by their companies and to hire more workers.

"A good entrepreneur will not necessarily become a good philanthropist," Deng said.

He said the rich should learn more about policies regulating charitable giving and hire professionals to manage their foundations.