Everyone In September, Chinese tech majors launch a series of charity events, such as Alibaba’s charity week on September 5 and Tencent’s fundraising day on September 9. Since Tencent began this tradition of “Charity Month” in China eight years ago, these peer-to-peer fundraising campaigns have become the primary way in which the general public in China contributes to charitable donations to nonprofit organizations.
Similar to Alibaba’s famous Singles Day shopping festival, these mega-campaigns are led and hosted by internet companies and their respective platforms. Platforms often offer generous fund-matching policies and incentives to encourage donations.
However, the past year has not been known as easy for most Chinese tech companies. Internet giants like Tencent and Alibaba reported slowing year-over-year revenue growth, while ByteDance reportedly shed a large number of employees across all departments, including sectors like edtech and gaming, which were growing strongly before being hit by regulatory changes.
Amid an economic slowdown, weak spending and regulatory pressures, what’s the draw for Chinese tech companies spending on charity events?
Why are Chinese tech majors organizing fundraising events?
Although the charity craze usually wears off after the promotional period, it still creates significant short-term traffic for the platforms at a time when attracting and retaining users is becoming increasingly difficult. According to Tencent’s released data, more than 58.16 million donors attended this year’s Giving Day on September 9, and the total public donations reached 3.3 billion RMB (476 million USD). “Charity festivals look good to the public in times of need and are a highly visible way of showing corporate social responsibility,” said Rui Ma, a China tech analyst and investor.
It is also an important time for NGOs. “Every September has become an unofficial carnival for nonprofit workers,” said Jenny Yue, a volunteer at a Beijing-based charity, “marking the most active time for Chinese nonprofit professionals and an unofficial team-building experience. ”
Yue explained that the pandemic has hit NGOs hard, as many initiatives have died out and funding for those that remain has shrunk significantly. Efforts during Charity Month are therefore paramount to building a strong donor base and, for some, surviving. “September. 9 has become almost a ‘must’ for nonprofits, not an option,” Yue said. Pervasive advertising from platforms, including Tencent’s super app WeChat, is helping to garner more attention than these organizations could otherwise ever get. NGO workers therefore tend to use all available resources to get the most out of the festival. They recruit volunteers who care about their cause and train them specifically on how to use the platforms and navigate their charity month campaigns to maximize their impact during the festival.
While the platform rules strengthen the fundraising process for charities, they also create barriers to fundraising, especially for grassroots organizations. Some small non-profit organizations that lack organizational capacity or digital know-how easily fall behind during this time. ByteDance’s DOU Love Charity Day has reportedly sparked debate over its mechanism for distributing donations – fundraisers can only receive promotional codes and bonuses based on the number of new users attracted to the platform.
But as internet companies rise to become major players in the field of philanthropy, more thoughtful engagements are expected to transform decades-old charitable practices in China.
The State of Philanthropy in China
Unlike the US, where 80% of charitable giving comes from individuals, 80% of charitable giving in China comes from the corporate sector, according to charitable research platform Global Giving. This data reflects the challenge of fundraising in China: the country’s modern philanthropy ecosystem only began to form after the market reforms of the 1980s and has taken blows ranging from board scandals and corruption to complicated bureaucracy and digital revolutions, before it really had a chance to blossom.
Peer-to-peer social fundraising thus became fertile ground for Chinese social media giants to establish their dominance and differentiate themselves. In 2018, China’s Ministry of Civil Affairs announced a list of 10 companies eligible to raise funds, making mega internet companies the only players allowed to conduct online charity fundraisers alongside some state-backed organizations. “Social media serves as the perfect traffic pool that leads to the fundraiser,” said Jonathan Yi, a Chinese internet analyst. “The WeChat-based Giving Day on September 9th is uniquely beneficial when it comes to raising funds by mobilizing individual volunteers and their communities. ”
This year, Tencent updated its Little Safflower social token game to encourage broader participation in the annual campaign. Contributors could collect “Little Safflower” not only by donating money, but also by participating in charity activities, such as collecting running kilometers and other good deeds on Tencent platforms, all of which contribute to the final number of “Little Safflower” and the corresponding matching donation . “The share-donate-share chain continues in a network of acquaintances, forming a virtuous cycle,” said Yi.
The same goes for Douyin, another social app built on human-to-human interaction, an existing user habit that charitable donations could build upon. Finally, in 2020, ByteDance was approved by the Ministry of Civil Affairs as an authorized online fundraising platform. However, unlike WeChat, which maintains regular social interactions, Douyin leans heavily towards a creator-consumer relationship. The platform therefore adjusted its Matching Fund policy to attract new users: donations from newly registered users are multiplied by 20 and doubled by the platform.
This isn’t the first time ByteDance has attempted to use its apps’ social feature for charity. In the global version of TikTok, developers can select a charity of their choice to display on their profile, providing not only a call to action but also a sense of identity.
differentiation through giving
Tencent, which boasts the longest-running and most widespread charity festival, is moving beyond just giving and starting to expand its all-encompassing ecosystem into business-to-business spaces. Digital Toolbox, a suite of Tencent services including Tencent Cloud, Tencent Doc, and Tencent Meeting, was an initiative by Tencent to help NGOs go digital. The Chinese tech giant has also launched an accessible version of a full range of products including WeChat, QQ Mailbox, QQ Music and Tencent News to support people with disabilities.
On the other hand, as an e-commerce platform, Alibaba has made empowering small merchants its priority. Starting in 2019, Taobao allowed merchants to mark some of their items as “charity products,” meaning a portion of the proceeds goes to a charity of the shopkeeper’s choice. In 2022, 2.2 million Taobao merchants participated in this campaign, while 500 million consumers supported the initiative.
Though its education division is undergoing a major reorganization, ByteDance is still actively working to build an education empire from its influence. In its 2021 ESG report, the company lists “educational capital” as a “very important” top value, ahead of “technological innovation” and “protection of originality”. This year, ByteDance launched several education-related initiatives, including one aimed at helping Fujian primary schools in rural areas access digital education.
Despite economic stagnation, China’s tech majors are highly unlikely to stop hosting charity festivals. In fact, they could rely more heavily on peer-to-peer donations and extend their impact further into users’ everyday lives. At a time when big internet companies are trying to cut costs and increase efficiency, regular fundraisers could become another form of marketing for them.