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Digital Philanthropy in China: Activating the Individual Donor Base
Digital is unlocking new avenues for individual participation in philanthropy,
promising significant development of the sector.
This report was authored by Yin Chen, Weiwen Han, Ming Wong and Jiakai Yuan. Yin Chen is a Bain & Company partner in Shanghai and leads the firm’s social impact efforts in Greater China. Also based in Shanghai, Weiwen Han leads Bain’s Greater China offices. They can be reached via email at [email protected] and at [email protected].
Ming Wong is a Hong Kong-based vice president with United Way World-wide and leads UWW’s Asia-Pacific practice. Jiakai Yuan is the chief China representative for United Way Worldwide and is based in Shanghai. They can be reached via email at [email protected] and at [email protected].
Bain Radar 360SM is a service mark of Bain & Company, Inc.
Copyright © 2018 Bain & Company, Inc. All rights reserved.
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Contents
Embracing the digital revolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg ..1
At a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg ..3
1. China’s philanthropy sector: Potential and challenges. . . . . . . . . . . . . . . . . . pg ..7
2. Digital philanthropy: Evolution and characteristics. . . . . . . . . . . . . . . . . . . pg ..15
3. Digital fund-raising: Vision and implications. . . . . . . . . . . . . . . . . . . . . . . pg ..25
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Embracing the digital revolution
Dear Colleague:
In life, we benefit when ability and opportunity meet. Having a skill is important, but more so if there is a productive way to use it. Similarly, if an opportunity presents itself but you don’t have the capability to take advantage, the moment goes unrewarded.
The potential for philanthropic growth in China is a tremendous opportunity for organizations with the ability to seize the moment. As this report describes, China, a nation of about 1.4 billion people, possesses an untapped philanthropic market in an early stage of development. We need a tool—a way of working—to help philanthropic organizations take advantage, increase their impact and strength-en more communities.
China’s potential philanthropic growth represents a tremendous opportunity for organizations with the ability to seize the moment.
Right now, in countries around the world, digital technology is reshaping society. To make a purchase, for instance, shoppers used to go to a store and choose from what was physically on the shelf. Today, with the Internet delivering knowledge right to our fingertips, data is plentiful. Shoppers can research any number of options at home, learn about brands and make a selection from the comfort of their sofa.
Digital technology is having a similar effect on philanthropy. Today, people don’t have to rely on tradi-tional charities to act on their behalf. Instead, when they identify an issue they care about, they can go online, donate, get involved and see the progress they’re making. That’s the growth opportunity for charities today.
The philanthropic opportunity in China aligns with our vision at United Way and the digital capabilities that we are developing. This report shows that while donor penetration in China is low, Internet pen-etration continues to rise—creating a pathway for philanthropies to connect with people more directly than ever.
Several years ago, I spoke with my board of directors about the importance of United Way embracing digital technology if we wanted to stay in business. That’s why we have shifted our strategy to build tools to support today’s empowered individuals. We are helping people find causes they care about, develop community partnerships and opportunities, and multiply their impact. We are helping them not only to volunteer, but also to engage their friends and family and to share stories and ideas that increase their reach.
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To be effective, philanthropic organizations in China must embrace this digital revolution. They must build connections, show people how they can make a difference and develop a culture of giving. That’s what United Way is working to accomplish, and it is how charities in China and around the world will build trust and support across our collective sector. In China, these efforts must be aided by the estab-lishment of a regulatory environment that keeps pace with today’s technological innovations.
I encourage you to thoroughly review the data and conclusions in this report. The opportunity provid-ed by digital technology to help build stronger communities at scale is right in front of us. In China, the opportunity is massive. Let’s seize it.
Brian A. Gallagher President and CEO, United Way Worldwide
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At a glance
. China’s.RMB.156.billion.philanthropy.sector.has.been.growing.at.a.brisk.pace,.but.donations.from.individuals.comprise.only.about.20%.of.the.total ..
. Digital.fund-raising.accounts.for.slightly.more.than.2%.of.China’s.total.donation.value,.but.it.is.growing.rapidly,.driven.by.younger.people.attracted.to.supporting.specific.projects.with.com-pelling.stories ..
. Government.regulations.and.self-reporting.will.also.support.continued.development.of.the.philanthropy.sector,.ensuring.transparency.and.nurturing.public.trust ..
. To.capture.the.opportunities,.stakeholders.across.the.sector.need.to.develop.integrated.digital.strategies,.including.identifying.potential.ecosystem.partners .
Philanthropy in China has grown rapidly over the past three decades, in tandem with the development of the economy as a whole. However, China’s overall culture of philanthropy is still emerging as indi-vidual awareness and participation increase.
Total charitable donations in China reached RMB 156 billion in 2017, having grown at a compound annual rate of 11% from 2011 to 2016. China’s philanthropic sector has developed primarily through corporate giving, which contributes approximately 60%–70% of total donation value, while donations from individuals make up about 20% of the total market. Although China has the fourth-largest num-ber of individual donors in the world (91 million in 2016), this represents only 7% of the Chinese population, suggesting significant room for growth.
Individual participation in philanthropy has fluctuated over the past several years. The sector has been affected by natural disasters, which spur short-term donations, as well as by scandals, which de-flate the public’s trust and willingness to donate. Total donations from individuals fell by 60% from 2011 to 2014 but have since recovered, growing at a compound annual rate of more than 60% from 2014 to 2016. This trend is poised to continue as rising disposable income boosts donor participation and donation amounts, and as rapid development of digital infrastructure (e.g., Internet/mobile pen-etration, digital payments) increases individuals’ access to charities.
Digital—and especially digital fund-raising—is set to transform China’s philanthropy sector, bring-ing both unparalleled access and transparency. This shift presents meaningful opportunities for stakeholders with the resources and capabilities to take advantage of new digital channels. At the same time, the sector continues to face traditional challenges, such as finding and attracting top tal-ent, which are only exacerbated in the new digital environment.
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Rise of digital philanthropy
Digital technology is rapidly changing how China’s philanthropy sector operates—from diversifying and engaging the sources of funds, to better promoting and enabling fund-raising, to driving improved fund utilization. This report focuses on the most developed of these areas: online fund-raising.
Over the past 15 years, online fund-raising has evolved through three distinct stages. During its period of emergence, from 2004 to 2013, the market saw the rise of new charities and online channels lever-aging commercial platforms like Taobao. From 2013 to 2016, innovations by Alibaba and Tencent (in-cluding the 99 Charity Day campaign) marked a period of rapid development, ushering in exponential growth in online fund-raising. And from 2016 to the present, it has seen regulated but fast growth, with China’s Charity Law—the first comprehensive legislation governing the sector—coming into ef-fect. Online fund-raising has soared over the past five years, both in terms of participation and total donation value.
By making philanthropy increasingly accessible, digital has activated giving by individuals, which represented more than 60% of online donations in the past three years, vs. about 20% of donations overall. Online donations come primarily from younger donors, who have a growing interest in philanthropy and ability to donate. Engaging this population is becoming a must-win battle for all stakeholders. Health, poverty alleviation and education are the most popular themes of online projects, driven both by platforms’ push and by donors’ pull.
Across the sector, online giants Tencent and Alibaba dominate the market today, but the competitive landscape will continue to evolve as more platforms are approved to engage in public fund-raising. The ability to generate and drive traffic is a key differentiator within the overall online fund-raising ecosystem. Departing from the traditional model, where public foundations are by far the largest players, these platforms empower NGOs and individuals to raise funds and enhance their profiles online. Thus far, however, funding distribution for online projects reflects the Pareto principle, with the top 20% of projects absorbing most of the donation value.
Digital fund-raising’s potential growth is significant, as online donations still account for less than 6% of donations from individuals. On the demand side, charitable organizations with public fund- raising qualifications (abbreviated as COPFQs in this report) and nongovernmental organizations (NGOs) also have a relatively limited online presence; only about 40% of COPFQs and 2% of NGOs were represented on Tencent’s charity platform in 2017.
Implications for industry stakeholders
The rapid rise of digital philanthropy in China creates significant opportunity for stakeholders to make a mark in the sector. At the same time, foundations and NGOs need to conquer some key challenges, including gaining and maintaining the public’s trust through more efficient operations and established, transparent reporting standards. The Chinese government is actively providing the philanthropy indus-try with guidelines and policies to manage fraud, as well as drafting clear guidance on charitable
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organization reporting. However, the overall regulatory environment is still in a nascent stage and must continue evolving to keep pace with innovation.
Digital can accelerate the development of China’s overall philanthropy culture, but this requires stake- holders to define their objectives and develop corresponding strategies. Common digital objectives include creating a positive and targeted impact, building a trusted brand and broadening the scope of influence. Still, individual stakeholders have different objectives and need to develop their own differ-entiated perspectives on how to participate in the market. Even digital philanthropy leaders like Tencent and Alibaba are improving their operations along these lines, developing clear and unique value propositions, and focusing their digital efforts on key areas in order to achieve their objectives.
There is no single path to success, but based on our study and the Bain Radar 360SM framework, philanthropy stakeholders should ask themselves a set of key questions as they begin to develop their digital strategies.
• Customer and channel engagement: How do we leverage digital infrastructure to maximize do-nor engagement?
• Products and services: What donation options and donor services can we develop for digital platforms?
• Operations: How do we improve our internal operations by leveraging new digital tools and ca-pabilities?
• Data and analytics: What analytics do we use to measure and track key activities, and how can we apply digital tools to manage them?
• Operating model and partnerships: How do we tailor our operating model to cater to digital needs? Do we need ecosystem partners?
• 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?
Not all of these challenges and opportunities can be met by individual stakeholders alone; the need for true partnerships in various forms will increase. However, given the trajectory of the market and the poten-tial to make a meaningful impact, philanthropic organizations must prioritize their digital strategies if they want to stay relevant and engaged with an increasingly active population of individual donors.
•. China’s.philanthropy.sector.has.emerged.over.the.past.30.years,.with.significant.fluctuation.between.2007.and.2011.as.a.result.of.major.natural.di-sasters.and.scandals ..Thanks.to.increasing.trans-parency.and.government.regulation,.the.sector.is.now.entering.a.phase.of.steady.growth .
•. Despite.its.rapid.rise,.philanthropy.in.China.has.not.kept.pace.with.the.overall.economy ..China’s.total.donation.value.currently.accounts.for.only.0 .2%.of.its.GDP .
•. Individual.donor.penetration.is.relatively.low.at.only.7%.of.the.total.population,.but.participation.continues.to.grow.rapidly.as.the.younger.gener-ation.slowly.embraces.the.concept.of.giving.back.through.charity ..
•. The.sector.is.ripe.for.continued.growth.as.dispos-able.income.increases,.digital.infrastructure.en-ables.easier.access.to.charities,.and.the.govern-ment.actively.participates.by.creating.guidelines.and.policies .
•. However,.the.industry.also.needs.to.tackle.a.set.of.challenges,.including.winning.and.maintaining.public.trust,.establishing.efficient.operations.and.transparent.reporting.standards,.and.recruiting.and.retaining.top.talent ..
1.China’s philanthropy sector: Potential and challenges
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0.0
0.5
1.0
1.5
2.0
2.5%
Total donation value as percentage of GDP, 2016
China
0.2
Japan
0.3
India
1.4
Australia
1.8
US
2.1
Notes: Exchange rate calculated at 1 USD=RMB 6.7; due to limited data availability, Japan’s giving data estimated as the sum of 2016 individual giving and 2015giving by corporations and foundations; Australia’s giving data is for 2015–16Sources: Giving Japan, Japan Fundraising Association, 2017; Federal Reserve Economic Data (FRED) database; Open Government Data Platform India; Philanthropy Australia; Euromonitor; World Bank; Annual Report on China’s Philanthropy Development, 2018; Philanthropy Roundtable; Bain analysis
Figure 2:.Charitable.donations.account.for.a.very.small.share.of.China’s.GDP,.indicating.future.growth.potential
0
100
200
1981 06 07
31
08
107
09
63
10
103
11
85
12
89
13
95
14
106
15
122
16
146
17
156
Total charitable donation value (RMB billions)
Emergence Fluctuation Adjustment and steady growth Regulated
CAGR
29%CAGR
11%CAGR
7%
(Sept 2016–present)
Notes: Incomplete record of data before 2007; China’s Charity Law took effect in September 2016Sources: China Philanthropic Donation Report, Ministry of Civil Affairs, 2012; Annual Report on China’s Philanthropy Development, 2018; Bain analysis
Figure 1:.After.periods.of.fluctuation.and.adjustment,.China’s.philanthropy.sector.is.steadily.becoming.a.powerful.force.for.good
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0
100
200
300265
Indonesia
146 144
China
91
39
Japan
36 34
20% 56% 45% 7% 47% 28% 52%
Total donors, 2016 (millions)
India US Germany UK
1 2 3 4 6 8 9Rank bynumber of
donors
Percentageof population
0
20
40
60
80
100
2014
66
2016
91
Total donors in China (millions)
17%
CAGR(14–16)
Notes: Number of donors estimated based on Charities Aid Foundation (CAF) research; donors defined as those who donated money during the one-month periodprior to the interview; Pakistan ranked fifth and Thailand ranked seventh in number of donors Sources: CAF World Giving Index, 2016–17; Giving USA 2017; World Bank; Bain analysis
Figure 4:.Chinese.donor.penetration.is.relatively.low.but.increasing.rapidly
0
20
40
60
80
100%
2011
32%
57%
11%
85
12
29%
65%
6%89
13
18%
70%
12%
95
14
11%
69%
20%
106
15
16%
71%
13%
122
16
21%
65%
14%
146
Total donation value and sources (RMB billions)
Notes: Other includes government, foundations, social organizations, etc.; 2016 data is through September 2016Sources: Annual Report on China’s Philanthropy Development, 2018; Bain analysis
CAGR(11–14)
CAGR(14–16)
–24%
15%
31%
8%
62%
14%
–2%
17%
3%
14%
17%17%
11%
Individuals
Corporations
Other
CAGR(11–16)
Figure 3:.Corporations.have.been.the.major.source.of.funding,.but.donations.from.individuals.are.on.the.rise
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0
20
40
60
80
100%
2000 2010 2017 2030E
Distribution of Chinese households bydisposable income (USD)
500–2,500
2,500–10K
10K–65K
65K–100KOver 100K
0
20
40
60
80
100%
2015
500–25K
25K–55K
55K–100K
Over 100K
Distribution of US households by disposable income (USD)
3,900
1,052
1,382
2,162
Average donationamount, 2015
(USD)
Percentage ofhouseholds thatdonated, 2015
63%
46%
30%
84%
Notes: Average donation amount is among households that donated; the Philanthropy Panel Study segmented income by 25K, 50K, 100K and over 100K; forconsistency with the US national household income data, we grouped the percentage of households that donated and the average donation amount for 25K‒50K into the 25K‒55K category, and data for 50K‒100K into the 55K‒100K categorySources: Philanthropy Panel Study, Indiana University Lilly Family School of Philanthropy, 2015; Euromonitor; Bain analysis
Figure 6:.Rising.income.levels.in.China.could.help.boost.charitable.donations.and.philanthropy.participation
0
20
40
60
80
100%
China
21%
65%
14%
146
US
72%
5%
23%
2,613
Total donation value and sources, 2016 (RMB billions)
Individuals
Corporations
Other
Notes: Other includes government, foundations, social organizations, etc.; exchange rate calculated at 1 USD=RMB 6.7 Sources: Giving USA 2017; Annual Report on China’s Philanthropy Development, 2018; Bain analysis
Figure 5:.Based.on.a.comparison.with.the.US.philanthropy.market,.donations.from.individuals.could.grow.significantly
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0
20
40
60
80%
6560 60
NewZealand
57
US
56
Australia
56
Canada
54
Ireland
53 51
TheNetherlands
51
China
14
Yemen
13
CAF World Giving Index score, 2017
Myanmar Indonesia Kenya UAE
12 3
4 5 6 7 8 9 10
138 139
CAF ranking
Notes: Scores calculated as a combined average of the percentage of people who reported one or more of the following in the month prior to the interview: helpinga stranger, donating money and volunteering time; China’s score based on 4,373 interviewsSources: CAF World Giving Index, 2017; Bain analysis
Figure 8:.Despite.its.spectacular.growth,.China’s.philanthropy.culture.is.still.in.a.very.early.stage
0
200
400
600
800
2010
458
11
513
12
564
13
618
14
649
15
689
16
731
17
772
34% 38% 42% 46% 48% 50% 53% 56%Internetpenetration
Internet users in China (millions)
0 200 400 600 800
Onlineshopping 533
Instantmessaging/
socialnetworking
720
Onlinepayments 531
Internet users by activity, 2017 (millions)
69%
93%
69%
Percentage of totalChinese Internet users
Note: Internet users defined as individuals over six years old who have used the Internet in the past six monthsSources: Statistical Report on Internet Development in China, CNNIC, January 2018; Bain analysis
Figure 7:.Tapping.China’s.huge.base.of.Internet.users.represents.a.major.opportunity.for.charities
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Low salary
50.5%
Problematicmanagement
11.8%
Lack ofsocial
recognition
8.0%
High workintensity
6.8%
Limitedspace for
careerdevelopment
6.6%
Familyreasons
6.2%
Governmentinterference
5.8%
Highpressure
1.6%
Problematicrelationship
with leadership
1.0%
Other
0.8%
Reasons for leaving a job with a charitable organization
Sources: China’s NGOs Salary Survey Report, China Development Brief, 2016 (n=489); Bain analysis
Figure 9:.Low.salary.is.the.biggest.talent-retention.challenge.that.China’s.charities.face
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2.Digital philanthropy: Evolution and characteristics
•. Digital.technology.is.rapidly.changing.how.China’s.philanthropy.sector.operates—creating.new.bridges.between.stakeholders,.and.closing.the.distance.between.donors.and.specific.projects ..
•. Overall.donation.value.and.participation.have.both.soared.over.the.past.five.years ..Still,.given.the.popularity.of.online.donations.and.increasing.confidence.among.individual.donors,.there.is.significant.room.for.growth .
•. Currently,.the.landscape.is.highly.concentrated;.20.online.platforms.are.licensed.to.link.individual.donors.to.projects,.but.90%.of.total.donation.value.goes.through.Alibaba.and.Tencent ..How-ever,.competition.may.intensify.as.other.players.apply.for.licenses.to.participate .
•. Overall,.digital.philanthropy.in.China.today.is.characterized.by.a.few.key.attributes ..Young.people.are.the.major.donor.group.online,.and.engaging.young.donors.will.be.an.important.battle.for.all.stakeholders ..We.also.find.that.plat-forms.are.encouraging.NGOs.and.individuals.to.fund-raise.online,.and.that.a.relatively.small.percentage.of.projects.are.capturing.the.bulk.of.the.donation.value ..In.addition,.health,.poverty.alleviation.and.education.are.the.most.popular.themes.of.online.projects ..
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Note: Only 11 of the 13 online fund-raising platforms approved in 2016 are operating today, for a total of 20Source: Bain analysis
February 2005 Two charity
institutions open“Commonweal
Shops” on Taobao
February 2012Sina establishescharity platform
August 2016 Ministry of CivilAffairs (MCA)approves 13
online fund-raisingplatforms
September 2016Charity Law
goes into effect
August 2017“One-yuan
painting”donation drive
goes viral
May 2018MCA approves
9 onlinefund-raising
platforms
December 2004YeePay sets uponline donation
channel forIndian Oceantsunami relief
June 2011Guo Meimei and
Red Cross Societyof China scandal
exposed
September 2015Tencent launches99 Charity Day
August 2016Alibaba launches
Ant Forest toencourage eco-friendly practices
November 2016Luo Er scandal
exposed
December 2017“Same-day birth-day” campaign
initiated on illegalplatform with prob-lematic operations
Emergence Rapid development Regulated and fast growth
Breakthroughs Regulations Scandals Key milestones
Figure 11:.Online.fund-raising.in.China.has.developed.in.three.stages
Sources of funds Fund-raising Fund utilization
Individuals E-commerceSocial media
Live streamingShort-form videos
EntertainmentLifestyleSports
Corporations
Offline:Private/public foundations
NGOs/government
Governmentand social
organizationsGovernment
Foundations/NGOs
Beneficiaries
20 online platforms withonline fund-raising qualifications
+ Charitable organizations with
public fund-raisingqualifications (COPFQs)
COPFQs’ own channels
Emerging influence of new digital tools
Digital-related areas Online flow of funds Offline flow of funds
Notes: Number of online platforms as of August 2018; some individuals and organizations that are not registered as foundations or NGOs can still initiate projectsSources: Expert interviews; Bain analysis
Digital marketing/promotion
touchpoints
New online platformsand channels
Figure 10:.Digital.is.changing.how.China’s.philanthropy.sector.operates
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0
20
40
60
80%
Donatingonline
62
Volunteering
53
Donatinggoods
43
Initiatingonline project
by oneself
19
Percentage of respondents, 2017
0
20
40
60
80%
Moretransparent
for the industry
64
Easilyaccessible for
individuals
57
Lower entrybarrier for
organizations
50
Percentage of respondents, 2017
“What is your preferred way to participate inphilanthropy?”
“What is the biggest benefit of digitalphilanthropy?”
Note: Survey conducted on People Think Tank’s WeChat accounts and website (n=11,484) Sources: “The Public’s View on Philanthropy in China,” People Think Tank, 2017; Bain analysis
Figure 13:.Donating.online.is.the.preferred.participation.method,.valued.for.its.transparency.and.convenience
0
1
2
3
4
2013
0.4
14
0.4
15
1.3
16
2.0
17
3.5
75%
119%
79%
36%
Online fundraising value (RMB billions)
Notes: No consolidated data before 2013; 2014–16 totals sourced from Online Fundraising in China: A Research Report on Third-party Platforms; 2017 total is thesum of each platform’s data; Tencent data includes individual donations, “steps walked” donations and corporate match donations on 99 Charity Day; Alibaba’sdata may be underestimated because Ant Financial does not disclose corporate donation data; due to limited data availability, 2013 includes Sina platform onlySources: Annual Report on China’s Philanthropy Development, 2017–18; Online Fundraising in China: A Research Report on Third-party Platforms, China Associationof Fundraising Professionals, 2014‒16; China Philanthropy Times; China Global Philanthropy Institute; Tencent and Qfund operational reports; Bain analysis
CAGR(13–16)
CAGR(16–17)
0.44 1.12 3.03 4.61 6.25
Driven by Tencentplatform’s strong
growth
Number of onlinedonations (billions)
Online fund-raisingas percentage of
total donations0.4% 0.4% 1.1% 1.4% 2.3%
Figure 12:.Online.fund-raising.value.and.participation.have.soared.over.the.past.five.years
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2015
1,345
Increase incorporate giving
835
Increase inindividual giving
1,361
2017
Corporate
Individual
3,540
38% 62%38% 62%
Total online fund-raising and sources (RMB millions)
0
1,000
2,000
3,000
4,000
Contribution to2017 gain
Notes: Corporate giving includes match donations for Tencent’s 99 Charity Day and Tencent “steps walked” donations; online corporate donations for 2017 may beunderestimated because Ant Financial does not disclose corporate donation data Sources: Annual Report on China’s Philanthropy Development, 2017–18; Online Fundraising in China: A Research Report on Third-party Platforms,China Association of Fundraising Professionals, 2014‒16; Tencent and Qfund operational reports; Shanghai United Foundation; China Philanthropy Times; China Global Philanthropy Institute; Bain analysis
Figure 15:.Digital.has.activated.donations.from.individuals
Donation value by channel and source, 2017 (RMB billions)
Individuals
Online 5%–6%
44
Corporations
Offline ~99%
95
Other
Offline 100%
17
Offline ~94%
Online ~1%
Notes: Other includes government, foundations, social organizations, etc.; due to limited data availability, 2017 totals estimated using 2014‒16 CAGRs for individuals, corporations and other; online corporate donations may be underestimated because Ant Financial does not disclose corporate donation dataSources: Annual Report on China’s Philanthropy Development, 2017–18; China Philanthropy Times; China Global Philanthropy Institute; Shanghai United Foundation; Tencent and Qfund operational reports; expert interviews; Bain analysis
Total donation value=RMB 156B
Figure 14:.Online.fund-raising.has.plenty.of.room.to.grow.across.donor.categories
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0
20
40
60
80
100%
Tencent
41%
59%
Taobao12%
88%
AntFinancial
16%
84%
Unitedfor
Charity
98%
Baidu
98%
Lianquan
99%
289 84 111 17 17 5
COPFQ penetration on online platforms, 2017
2% 2%
Number ofCOPFQs
on platform
0
20
40
60
80
100%
Tencent
~98%
Lianquan
~100%
Unitedfor Charity
~100%
8.22 0.40 0.12
NGO penetration on online platforms, 2017
2% 0.1% 0.03%
Numberof NGOs
on platform(thousands)
Already launched Not launched
Notes: COPFQs refers to charitable organizations with public fund-raising qualifications; NGOs refers to social service organizations (previously known as privatenonenterprise units); some individuals/organizations that are not registered as NGOs or foundations can still initiate projectsSources: Annual Report on China’s Philanthropy Development, 2018; Tencent, Taobao, Ant Financial, United for Charity, Baidu and Lianquan operational reports; Xinhuanet; Bain analysis
Total COPFQs: 697 Total NGOs: 422K
Figure 17:.NGOs.and.charities.with.public.fund-raising.qualifications.have.a.limited.presence.on.online.platforms
0
100
200
300
400
500
Average donation amount, 2017 (RMB)
China
0.4
China,excludingTaobao
China,excludingTaobao
8
Taobao
0.05
AntFinancial
AntFinancial
2
Tencent
26
Qfund
2248
362
442
Sina DonorsChoose
(USplatform)
Onlinecrowd-funding
(US)
0
2,000
4,000
6,000
8,000
China
6,250
270
Taobao
5,980
Top five platforms foronline donations
203
Tencent
63
Qfund
2
Sina
1
Number of online donations, 2017 (millions)
Notes: DonorsChoose selects and runs education fund-raising campaigns online; average donation amount for DonorsChoose reflects first-time donors onlySources: Annual Report on China’s Philanthropy Development, 2018; China Philanthropy Times; Nonprofitssource.com; DonorsChoose.org; Bain analysis
Figure 16:.Small.average.donation.amount.indicates.huge.potential.for.online.fund-raising.among.individuals
Digital Philanthropy in China: Activating the Individual Donor Base
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0
1,000
2,000
3,000
4,000
2013
367
14
436
15
1,345
16
1,978
17
Tencent
Alibaba
Other3,540
Online donation value by platform (RMB millions)
United forCharity
Qfund
Sina
LianquanGongyibao
186
XinhuaBaiduJD
ChinaFoundationCenter
Notes: 2014‒16 totals sourced from Online Fundraising in China: A Research Report on Third-party Platforms; 2017 total is the sum of each platform’s data; Alibaba dataincludes both Ant Financial and Taobao; Alibaba’s data may be underestimated because Ant Financial does not disclose “steps walked” donations; Tencent data includesindividual donations, “steps walked” donations and corporate match donations on 99 Charity Day; in 2013, Other includes Sina only, due to limited data availabilitySources: Annual Report on China’s Philanthropy Development, 2017–18; Online Fundraising in China: A Research Report on Third-party Platforms, China Association ofFundraising Professionals, 2014‒16; Tencent and Qfund operational reports; China Philanthropy Times; China Global Philanthropy Institute; Bain analysis
Figure 19:.Tencent.and.Alibaba.currently.dominate.among.online.fund-raising.platforms
0
20
40
60%
Post-'90s
19
Post-'80s
58 Among those under 30 years old:
Pay attention to philanthropy
Participate in charitable activities
35
Post-'70s
19
9
Other
58
1.0 2.4 4.3 1.8
Percentage of online donors by generation
48
Averagedonation size
(indexed)2013 2016
Note: Donation size indexed to the post-’90s periodSources: 2017 Youth Attitudes Toward Philanthropy Report, Ifeng; China Online Donation Report, 2013; Ant Financial; Bain analysis
63%
52%
Figure 18:.China’s.younger.generation.shows.a.strong.interest.in.philanthropy.
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United Way Worldwide | Bain & Company, Inc.
0
25
50
75
100
125
Toutiao
107 103
Kuaishou
9486
Pinduo-duo
54
41
Youku
40 39
JD
3730
Vip-shop
2619
Bilibili
17 16
Momo
16 15
Qutoutiao
13
Daily active users, Q2 2018 (millions)
TikTok
iQiyi ixigua Huoshan Meituan Kuwo NetEaseMusic
Didi
Sources: Jiguang; Bain analysis
Companies with online platform qualifications
Figure 21:.Other.Internet.players.can.harness.their.traffic.to.create.innovative.philanthropic.models
0
20
40
60
80
100%
Daily active users (millions)
Tencent (WeChat)
Alibaba (Taobao)
Alibaba (Ant Financial)
Sina (Weibo)
Baidu
1,155
Platform donation value (RMB millions)
Tencent (WeChat)
Alibaba (Taobao)
Alibaba (Ant Financial)
3,384
Online platform performance, 2017
Sina (Weibo)Baidu
Note: Daily active users refers to users of mobile appsSources: Jiguang; Tencent, Taobao, Ant Financial, Baidu and Sina operational reports; China Philanthropy Times; Bain analysis
Figure 20:.Tencent.and.Alibaba.outperform.other.platforms.by.better.leveraging.their.business.traffic
Digital Philanthropy in China: Activating the Individual Donor Base
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0
5
10
15
Distribution of funding across One Foundation projects on the Tencent platform,July 2018 (RMB millions)
178 One Foundation projects
In 2016, the top 20% ofprojects absorbed more than80% of total donation valuefor Tencent’s 99 Charity Day.
Tencent
More than 40% of projectshad few or no donations asof August 2017.
Taobao
The platform’s most popularproject (One Foundation’smonthly donation campaign)raised RMB 135 million andaccounted for about 16% oftotal donations as ofAugust 2017.
AntFinancial
Sources: China Development Brief; Tencent operational reports; expert interviews; Bain analysis
Figure 23:.Relatively.few.strong.projects.claim.an.outsize.share.of.online.donations
0
2,000
4,000
6,000
8,000
10,000
Number of fund-raising projects by initiator type, Tencent platform
Before 2012 12 13 14 15 16 17
COPFQs NGOs Individuals
Note: COPFQs refers to charitable organizations with public fund-raising qualificationsSources: Tencent reports; Bain analysis
Launch of 99Charity Day
Figure 22:.As.online.platforms.empower.NGOs.and.individuals,.public.foundations.are.no.longer.the.sole.major.player.
Digital Philanthropy in China: Activating the Individual Donor Base
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0
20
40
60
80%
Health
63
Poverty/disaster
relief
54
Most popularthemes online
46
Environ-mental
protection
3225
Other
9
Percentage of donors by topic, 2017
Edu-cation
Animalprotection
0
20
40
60
80
100%
Topics on Tencent platform, 2017
Donors are most interested in health, poverty/disaster relief and education
Online platforms focus on projects thatinspire public empathy or support government initiatives
Health
Education
Poverty/disaster reliefEnvironmental/animal protection
Other
Note: Health category does not include fund-raising requests initiated by friends and relativesSources: “The Public’s View on Philanthropy in China”, People Think Tank, 2017; Tencent reports; expert interviews; Bain analysis
Figure 25:.Health,.poverty.alleviation.and.education.are.the.most.popular.themes.of.online.projects
“The Long Tail” “The Survivor” “The Star” “The Influencer”
No cleardifferentiating points
Performance and key characteristics
Initiated/stronglypromoted byfoundations
One of the mostsuccessful projectson online platforms;strong reputationand media exposure
Highly empathy-provoking topic; widepublic awarenessthanks to strongplatform promotion
Relatively newHistorical track record Good track recordoffline
Award-winning orwidely reported
Award-winning orwidely reported
LimitedBranding and marketing capabilities
Dedicated team Dedicated team andPR professionals
Strong IT and onlinesupport fromplatforms
Very limitedResources(online/offline)
Strong source offunds
Strong source offunds; widecollaboration withmedia and onlineplayers
Strong source offunds; deepcollaboration withmedia and onlineplayers
Regular supportPlatformengagement/support
Regular support Positioned at keytraffic point for onlinecampaign
Full ownership; co-brandingcampaign
LowLevel of capability High
Source: Bain & Company
Figure 24:.Four.categories.of.online.fund-raising.projects.have.emerged
•. As.digital.reshapes.a.wide.range.of.industries,.China’s.philanthropy.sector.is.positioned.to.lead.the.world.in.innovation.given.its.unique.combi-nation.of.digitally.savvy.users.and.large.ecosys-tem.players ..
•. China’s.philanthropy.sector.can.harness.digital.to.accelerate.the.development.of.its.overall.culture ..To.do.so,.stakeholders.will.need.to.clearly.define.their.objectives.and.develop.corresponding.strategies ..
•. Digital.philanthropy.in.China.is.still.in.its.infancy,.and.there.will.be.no.single.path.to.success.in.the.market ..As.stakeholders.assess.the.opportunity,.it.is.important.for.them.to.ask.several.key.questions,.with.a.focus.on.how.they.will.engage.customers,.manage.operations,.leverage.data.and.analytics,.and.grow.their.internal.talent.pool ..
•. Even.for.the.most.mature.organizations,.these.are.not.easy.tasks,.and.they.can.be.even.more.challenging.for.nonprofits ..Finding.partners.to.supplement.capability.gaps.will.be.an.important.part.of.any.winning.strategy ..
3.Digital fund-raising: Vision and implications
Digital Philanthropy in China: Activating the Individual Donor Base
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United Way Worldwide | Bain & Company, Inc.
Current stage
Infrastructure (policy/technology advancement)
How digitalenables ...
Sources of funds
Fund-raising
Fund utilization
• Provides touchpoints to increase awareness and drive individual participation• Incentivizes corporations to utilize and enhance digital marketing capability in philanthropy activities
• Creates a new fund-raising channel with better transparency and diverse donation topics• Activates COPFQs with more sources of funds and enhanced marketing and operations capabilities
• Enables project initiators to better design, operate and market their projects• Provides additional sources of funds with higher transparency requirements
Note: COPFQs refers to charitable organizations with public fund-raising qualifications Source: Bain & Company
Stage 1:Engaging mass participation
Stage 2:Increasing frequencyand depth of engagement
Stage 3:Integrating philanthropyinto people’s everyday lives
Figure 27:.China’s.philanthropy.sector.can.leverage.digital.to.increase.its.impact.and.cultivate.a.donation.culture
Sciences Tech Healthcareand
pharmaceuticals
Publicsector
RetailFinancialservices
Industrialgoods
Consumerproducts
Energy
Professionalservices
Entertainmentand media
Telecom
Travel
Beginning to accelerate Changing fast Almost there• Digital impact primarily in operations and cost reduction
• Limited digital disruption in the industry
• Digital-enabled customer experience increasingly important
• Increasing personalization for customers using advanced data analytics
• Advanced technologies and data analytics constantly deployed to find competitive advantage
Note: Industry placement based on prevalence of data management platforms, use of predictive modeling, and adoption of multivariate and A/B testingin marketing campaignsSource: Bain Worldwide Marketing Leaders and Laggards Survey (n=487)
Figure 26:.Industries.further.along.the.digitalization.curve.can.shed.light.on.China’s.digital..philanthropy.journey
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United Way Worldwide | Bain & Company, Inc.
Source: Bain & Company
Bain Radar 360 helps an organization define itsdigital transformation journey
Philanthropy stakeholders can focus onrelevant elements to guide their efforts
Wave 1
Wave 2
Wave 3
Products and services
Operations
Economicmodel
Data andanalytics
Systems and technology
Talentand culture
Operating modeland partnerships
Digitaldeparture
Customerand channel engagement
Planning and continuous oversight
of the process to ensure results
Orchestration
Key activitiesEnablers
Stages of evolution Customer and channel engagementHow do we leverage digital infrastructure to maximize donorengagement?
Products and servicesWhat donation options and donor services can we develop fordigital platforms?
OperationsHow do we improve our internal operations by leveraging newdigital tools and capabilities?
Data and analyticsWhat analytics can help us measure and track key activities,and how can we apply digital tools to manage them?
Operating model and partnershipsHow do we tailor our operating model to cater to digital needs?Do we need ecosystem partners?
Talent and cultureDo we have the right talent/culture to make our digital planwork? If not, how can we practically close the gaps?
Figure 29:.Asking.a.set.of.key.questions.can.help.stakeholders.focus.their.efforts.and.develop..digital.strategies
Sources of funds Fund-raising Fund utilization
Corporations
Digitalphilanthropy
objectives
COPFQs Online platforms Foundations/NGOs
Digital enablers
• Create a positive and targeted impact on society• Build a trusted brand and broaden scope of influence
Strategiesrequired
for success
Seek more touchpointswith consumers andgain public attention
Generate sustainableand balanced sourcesof funds
Create traffic/pull;generate participationand diverse sourcesof funds
Develop a clear and unique value proposition Focus on key areas to improve with digital levers
Increase publicawareness; generatebalanced sourcesof funds
Note: COPFQs refers to charitable organizations with public fund-raising qualifications Source: Bain & Company
Figure 28:.Philanthropy.stakeholders.need.to.define.clear.digital.objectives.and.develop..corresponding.strategies
Digital Philanthropy in China: Activating the Individual Donor Base
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United Way Worldwide | Bain & Company, Inc.
Source: Bain & Company
Customer andchannelengagement
Products andservices
Operations
Data andanalytics
Operatingmodel andpartnerships
Talent andculture
How do we leverage digital infrastructure to maximize donor engagement?
What donation options and donorservices can we develop for digitalplatforms?
How do we improve our internaloperations by leveraging new digitaltools and capabilities?
What analytics can help us measureand track key activities, and how canwe apply digital tools to manage them?
How do we tailor our operating modelto cater to digital needs? Do we needecosystem partners?
Do we have the right talent and cultureto make our digital plan work? If not,how can we close the gaps?
Invest in a trusted brand with strong traffic baseCreate engaging digital marketing/storytelling campaigns Embed best-in-class customer relationship management processes
Integrate philanthropy with core business strategiesSource and manage high-quality projects within focus areaDevelop innovative models (e.g., gamification) and sustainable project design
Embed operational efficiency best practices, enabled by digital Standardize reporting and increase information disclosure
Leverage digital tools to conduct data analysis
Establish a digital-ready operating model Develop ability to partner with the right ecosystem stakeholders
Acquire and cultivate digital talent with a clear career story
Capabilities to developKey questionsObjectives
Figure 30:.To.pursue.their.digital.philanthropy.objectives,.stakeholders.should.identify.critical.areas.for.development
Digital Philanthropy in China: Activating the Individual Donor Base
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Digital Philanthropy in China: Activating the Individual Donor Base
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United Way Worldwide | Bain & Company, Inc.
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