Jack Ma on CSR and Philanthropy

In an Charlie Rose interview, Jack Ma is asked – and speaks extensively – on CSR  and philanthropy in China.  Interviewed before the now famous Gates and Buffet dinner, the interview couldn’t have come at a better time.

Founder of Alibaba and Taobao (two of China’s most trafficked e-commerce platforms), Jack Ma holds a god like status in China.  His voice on the matters of CSR and philanthropy in China are listened to as he has been one of the most vocal about the responsibility that he (and others) have to society. And while he has a foundation of his own, one of his first comments on the subject of giving I thought best summed up the argument for NOT giving his money away:

“Today what China needs is 200 million jobs [..] So, today China philanthropy and charity I understand, but people like us should use resources better.  I think we can run the resources better than the government […] I will regret when I am 80 years old giving the money away. I should spend the money now to create jobs”

Perhaps this is a statement that goes against the grain of most Western theories on social welfare, but a few things to consider.   first, it is important to note that china’s wealth is still largely new wealth.  new wealth held by entrepreneurs who are some 20 years younger than their peers in western countries.  this is particularly important for several reasons, but the most important being that this group is still focused on wealth creation, and self preservation.  they are the baby boomers of china who vividly remember hardships ( economic and otherwise) and they are going to look to first secure the future needs of their inner circle.  and giving this money away would essentially ask them to sacrifice the capital they need to fuel their investment in businesses, real estate, education, and healthcare.

Second to that, the other big hurdle is that the system simply is not ready for the amount of money that potentially could be donated.  a quick look at the history of the gates foundation will highlight the difficulties of finding organizations that can be trusted with large sums, and in china this is even more complex as the selection of partners who could put money to work in scale is limited to the GONGOs (government organized nongovernment organizations).  sure, there is a ‘burgeoning’ NGO sector developing, but there are less than 5 fully independent NGOs that could handle more that 1 million USD at once, and to use that in more than 5 markets would be difficult for even the most well known groups.

Which leaves potential philanthrocapitalists in China little option in their mind.  Sure, they can establish a foundation under one of the GONGOs, but for what purpose if that GONGO is dogged by issues of efficiency and transparency, issues that are rumored to be driving Jet Li out of China.

It’s a complex issues, but one (that if you take jack at his word) offers a third way.  the way of large scale social enterprises.  enterprises that bring economic models together with social needs, to deliver the promises of both.  it is a model that allows for these entrepreneurs to leverage their skills, while putting their money in play, for the common good.  Without the need for opaque partnerships, and questionable results. As he says earlier in the interview:

“The last century, if you wanna grow, I believe you should find a good opportunity.  [..] but today if you want to be a great company think about what social problem you could solve.

For me, I believe this is where many of China’s rich are headed. Already in our recent research on the issue of how wealthy Chinese are investing their money into communities, we are seeing where investments in socially responsible businesses have a growing place. Organic foods, elderly care services, cancer clinics, etc. are all becoming industries that are seeing more and more money from these entrepreneurs. They are industries that for China have huge potential, solve a social need, and can be controlled by the investor

Stay tuned for more in this space.

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