Using Online Donations to Strengthen Philanthropy in China

(Art by iStock/metamorworks)

Lost among the oft-reported story of how Tencent and Alibaba dominate more than 90 percent of China’s online fundraising by value is news that China’s two largest banks, Bank of China and ICBC, obtained approval to operate online donation platforms in mid-2018.

These companies and many others are increasingly turning to the creation of online donation tools like Tencent's and Alibaba's in a bid to increase customer loyalty. Nonprofits stand to benefit because their funding sources will become more diverse and accessible. And donors will get the satisfaction of seeing their money going toward the specific causes they choose.

This shift presents opportunities for stakeholders with the resources and capabilities to take advantage of new digital channels, particularly online fundraising, which offers significant room for growth, given that it accounts for less than 6 percent of all donations from individuals in China. Another indication of a notable opportunity for expansion can be seen in broader patterns of Chinese giving: Though the country has the fourth-largest number of individual donors in the world—91 million in 2016—they represent only 7 percent of the population. And total charitable donations in China reached 156 billion RMB ($23 billion) in 2017 (compared to $410 billion for the United States), reflecting a compound annual growth rate of 11 percent from 2011 to 2016.

Questions to Guide Digital Philanthropy in China

There is no single path to digital fundraising success in China, but based on our study, Digital Philanthropy in China: Activating the Individual Donor Base, stakeholders should ask themselves six questions as they begin to develop their strategies:

• Customer and channel engagement: How do we leverage digital infrastructure to maximize donor engagement? Unilever in China, for example, uses their strong digital marketing capabilities to create multiple opportunities for participation. The firm supported sustainability and environmental efforts through the social media website Sina Weibo and Unilever's online store within Alibaba’s Tmall; the project led to 400,000 RMB ($59,000) in donations.
• Products and services: What donation options and donor services can we develop for digital platforms? The game Ant Forest from Alibaba has accumulated roughly 230 million users and supported the planting of more than 10 million trees in only five months. At the same time, it has boosted Alibaba’s mobile payment platform Alipay by connecting its usage to a player's generation of points, which is needed to get a real tree planted.
• Operations: How do we improve our internal operations by leveraging new digital tools and capabilities? The SEE Foundation uses Lingxi, the largest CRM solution provider in China, to manage its donations and donor retention.
• Data and analytics: What analytics do we use to measure and track key activities, and how can we apply digital tools to manage them? The China Foundation for Poverty Alleviation (CFPA) uses monthly digital promotions to activate the donor base and gather data on interests, resulting in a donor retention rate of greater than 80 percent.
• Operating model and partnerships: How do we tailor our operating model to cater to digital needs? Do we need ecosystem partners? The nonprofit World of Art Brut Culture designed a one-yuan donation drive involving art made by people with autism, Aiyou Future Foundation, and Tencent. It achieved explosive donation and traffic among young people.
• Talent and culture: Do we have the right talent and culture to make our digital plan work? If not, how can we practically close the gaps? Alibaba established its Poverty Relief Fund at the end 0f 2017, with the goal of investing 10 billion RMB ($1.5 billion) over five years to alleviate poverty through ecommerce, education, female empowerment, ecology, and healthcare. Alibaba's most senior executives, including Jack Ma and Joseph Tsai, sponsored the effort, and all of the company's major business units are involved.

Remaining Relevant in a Digital World

By making philanthropy easy and accessible, digital tools such has online fundraising platforms have encouraged a tremendous surge in giving by individuals.

Online donations come primarily from younger donors, who have a growing interest in philanthropy and ability to give. Engaging this population is becoming a must-win battle. Health, poverty alleviation, and education are the most popular themes of online projects, driven both by platforms' outreach and donors' preferences.

No single organization can meet all of these challenges alone, increasing the need for partnerships. Yet philanthropic organizations should not wait to pursue digital opportunities. If they hesitate, they may miss the chance to make a meaningful impact and remain relevant to the increasing number of donors who give online.

Read more stories by Ming Wong & Yin Chen.