A Growing Wave: The Startling Rise of Chinese-American Alumni Giving

Tomorrow's campus donors? photo:  Bo1982/shutterstock

Tomorrow's campus donors? photo:  Bo1982/shutterstock

A new study from the Global Chinese Philanthropy Initiative (GCPI) found that the number of Chinese-American foundations in the U.S. grew to approximately 1300 between 2000 and 2014—a 418 percent increase compared to 195 percent for the general population. The report doesn't say anything about donor-advised funds, but such accounts probably hold many more pots of money aside for charitable use by Chinese Americans.  

Giving by this group has been soaring in recent years. Major gifts by Chinese Americans increased almost five-fold between 2008 and 2014 to nearly $500 million.

The big winners? American universities and colleges. According to the study, approximately 66 percent of the gifts from Chinese-American philanthropists between 2008 and 2014 went to higher education. And as more Chinese-American alumni make their way through the U.S. university system, giving will continue to grow over time.

I'll delve into why Chinese-American giving is growing in the higher ed space momentarily. But first, let's get a larger lay of the land, starting with the fact that IP coverage over the past few years corroborates the study's findings. Consider this sampling of recent gifts, from either Chinese-American alumni or Chinese nationals who attended U.S. universities. 

  • Andrew and Peggy Cherng, who have amassed a net worth of $3.2 billion from their 2,000 or so Panda Express restaurants, gave $30 million to Caltech.
  • Caltech also netted $115 million from Tianqiao Chen and Chrissy Luo, a couple whose wealth comes from Shanda Interactive Entertainment Limited, to establish the Tianqiao and Chrissy Chen Institute for Neuroscience.
  • Harvard received the equivalent of a $21 million from the Lee Kum Kee family to fund research on the links between psychological well-being and physical health. The family currently owns Lee Kum Kee Sauce Group and LKK Health Products Group, two multinational companies headquartered in Hong Kong. 

Other funders include Zhang Lei of Hillhouse Capital Group, who's given big to Yale, SOHO China’s founders Zhang Xin and Pan Shiyi, who gave $15 million to Harvard, and Gerald Chan, who in 2014, gave $350 million to the School of Public Health at Harvard via his Hong Kong-based Morningside Foundation.

The Hong Kong connection is particularly noteworthy. According to the GCPI study, wealthy individuals from Hong Kong are by far the top Chinese donors to American universities, giving $181 million between 2007 and 2013.

It's impressive stuff, and it all begets a simple question: What explains this startling rise in philanthropy from Chinese-Americans?

A Profound Cultural Shift

For starters, many of these big donors are first-generation Americans choosing to buck cultural conventions. We take for granted philanthropy's role in civic life, but the culture of alumni giving is still relatively new in China and Hong Kong.

"Usually, the tradition in Chinese-American families is to take care of the family, and what we’re seeing now is the giving is to even a broader community family," said Stewart Kwoh, who heads the Asian Americans Advancing Justice LA and the GCPI initiative.

Similarly, according to Rupert Hoogewerf, author of the Hurun China Rich List, wealthy Chinese people who donate to American universities may be seen as unpatriotic. "People are asking, 'If you are going to help people, why don't you help the people at home?'"

These perceptions are rapidly changing as Chinese students navigate the American business world and university system. Ming Hsieh, a billionaire Chinese-born American entrepreneur and philanthropist, told the Los Angeles Times that he didn’t even know about philanthropy when he got to USC. It was only after seeing donors' names on USC buildings that he understood the concept. 

He earned a Bachelor of Science degree in electrical engineering in 1983. In 2006, he donated $35 million to the USC Viterbi School of Engineering; four years later, he donated an additional $50 million to establish the Ming Hsieh Institute for Engineering Medicine for Cancer.

It's worth adding that philanthropy within China itself has risen sharply. Earlier this year, the Guardian reported that between 2010 and 2016, "donations from the top 100 philanthropists in mainland China more than tripled" to $4.6 billion and that 46 of the wealthiest Chinese now have foundations. In 2014, the Chinese billionaire Jack Ma set aside $3 billion for a charitable trust. 

Familiar Motivations

Philanthropists, by definition, are a heterogenous bunch. No two are the same, and motivations for giving inevitably vary. So what drives Chinese-American giving? Turns out it's a laundry list of reasons that sound a lot like those of their American counterparts.

Take the example of John Long. A global real estate investor whose family foundation established the Long U.S.-China Institute, Long and his wife donated $2 million to UCLA to start a real estate research center in 2000 and more than $6 million to UC Irvine to launch the Long U.S.-China Institute in 2010.

The Longs were were inspired to share their wealth by their Christian faith and the example of other philanthropists such as Eli Broad. Echoing T. Denny Stanford's "die broke" credo, Long said, "They’re not going to stuff my casket with dollar bills."

And much like their American brethren, Chinese-American donors aren't immune from the siren song of enlightened self-interest. New donors understand the "benefits from having their names associated with the world’s top education brands, especially as they expand their business empires outside China," says the Wall Street Journal's Wei Gi. 

Similarly, Wenshan Jia, a communications professor at Chapman University, which recently netted a $7.5 million gift from Chinese immigrant and entrepreneur Steeve Kay, said increasing their charitable profile is a great way for Chinese Americans to establish the causes they care about and become a political voice.

This cultural shift is inextricably linked to the fact that Chinese philanthropists, and more specifically, Chinese-American alumni, have money to give. It's a familiar story: A growing number of Chinese alumni find success in the business, technology and real estate, and decide to give back. It's textbook "first generation" philanthropy.

"In the last 20 years, more Asians have become more well-to-do and they finally have the ability to give," said Walter Wang, President and CEO of Los Angeles-based JM Eagle Inc., the world's largest manufacturer of plastic pipe. A UCLA graduate, Walter's wife Shirley is the first Asian American to head the UCLA Foundation and donated $1 million to the campus for middle-class scholarships last year. 

A "Self-Perpetuating Cycle"

The rise of Chinese American alumni giving must also be viewed within the larger context of the U.S. university system. 

Administrators discovered long ago that an influx of international students can ease their schools' severe financial challenges. And with over 330,000 students, China contributes almost double the number of international students of any other country. What's more, a Foreign Policy magazine study found that a majority of respondents formed a more positive image of the U.S. during their time here, making them prime candidates for unsolicited fundraising calls somewhere down the line.

As such, universities have cultivated what Nian Hu of the Harvard Political Review calls a "self-perpetuating" international fundraising apparatus geared toward Chinese-American alumni over the past decade. It looks like this:

The more international students come to U.S. universities to receive their education, the more inclined they are to donate to the school. And the more international alumni donate to elite U.S. universities, the more those universities reach out to and engage with international alumni, encouraging them to continue giving or at least to continue sending their children abroad for their education.

The emergence of this cycle could not come at a better time for most university fundraisers. While "mega-gifts" are rising, giving at the middle of the "gift pyramid" has dropped off somewhat, suggesting fundraisers are having a difficult time engaging younger and less affluent alumni. Giving from Chinese American alumni can generate greater parity.

So while the long-term prognosis looks a bit murky—President Trump has threatened to stop issuing F-1 visas, which could lead to a huge decrease in Chinese students—the short-term forecast looks promising for American universities. Education, noted Josefina Castillo Baltodano of the UC Berkeley Center for Studies in Higher Education, is a "core value" for the Chinese community.

"They’ve always given money, but now they have more wherewithal."