Finance Meets Philanthropy: Wealth Growth and Altruism Converge
Following the insurance industry's push into the charity sector with the launch of "charitable insurance" products (for details, see the report "Charity Scenarios Keep Expanding, What Kind of Spark Can 'Insurance + Charity' Create?"), the financial industry has also taken the initiative to integrate into charity, leveraging its financial attributes and advantages to introduce charity-themed financial products. This not only preserves and increases wealth but also channels finance towards good deeds, providing more participation channels and options for public welfare, and promoting the diverse and healthy development of charitable causes.
On August 7th, the "Warm Childhood" brand public charity financial management series products launched by CITIC Bank's wholly-owned asset management institution, CITIC Wealth Management Co., Ltd. (referred to as "CITIC Wealth Management"), namely "An Ying Xiang Fixed Income Stable Profit Warm Childhood One-Year Closed 1" and "An Ying Xiang Fixed Income Stable Profit Warm Childhood One-Year Closed 2," matured, achieving an annualized return (after donation) of over 3.6%. The proceeds of 2 million yuan will be donated in the form of charity to the China Birth Defect Intervention and Rescue Foundation and the China Organ Transplant Development Foundation for related public welfare projects.
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In recent years, an increasing number of financial management companies have launched charity-themed financial products targeting customers. Statistics indicate that several products have raised over 2 billion yuan. Charity financial management is becoming a new way for financial institutions to innovate product models and enrich product categories. Donating "excess returns" to charitable organizations not only advances wealth towards good but also explores sustainable fundraising paths for charitable organizations.
The operational model of the "Warm Childhood" charity financial management product:
Financial management returns donation becomes a new charity scenario.
In June 2023, CITIC Wealth Management's public charity financial management series product "An Ying Xiang Fixed Income Stable Profit Warm Childhood One-Year Closed" (fund) was listed and issued, with a product fundraising period from June 30 to July 10.
The fund's operational model, based on compliance with financial regulatory requirements, involves CITIC Wealth Management signing cooperation agreements with charitable organizations to design and issue charity financial products, attracting investors to invest. Through agreed donations on behalf of investors, charitable organizations provide donors with certificates, forming a specialized closed-loop cycle that achieves the goal of rational philanthropy. It is reported that under this model, CITIC Wealth Management's "Warm Childhood" has designed three donation models: fixed ratio, partial excess returns, and a combination of fixed and partial excess returns.
As of the end of July 2024, CITIC Wealth Management has issued a total of 17 charity financial management series products, including "Warm Childhood," raising over 12 billion yuan in social funds and expecting to pool over 10 million yuan in public welfare funds. It has established charitable cooperation strategic partnerships with nine charitable foundations, with public welfare projects covering Shanghai, Yunnan, Xinjiang, Zhejiang, Sichuan, Fujian, and other places. As the "Warm Childhood" charity financial management products mature one after another, the proceeds will be fully executed through cooperative charitable organizations.
A person in charge of CITIC Wealth Management told the reporter of the "Public Welfare Times" that financial management companies have the functions of comprehensive financing and wealth management, and their operational mechanisms are naturally in line with the path to common prosperity. With a wide range of investments and a rich customer base, through the bond of charity financial products, they meet the dual needs of "preserving and increasing residents' wealth" and "expanding the sources of charitable fund donations."
"The launch of charity financial products has continuously increased research and practice in the field of charity finance, achieving the third distribution of wealth and promoting the path to common prosperity. While providing strong support for economic development, social stability, and the continuous development of public welfare undertakings, it also offers local governments valuable insights into exploring finance to promote common prosperity," said the person in charge.As the recipient of the incremental proceeds from the "Warm Childhood Journey" financial product, Wang Zixi, Deputy Secretary-General of the China Birth Defect Intervention and Rescue Foundation, believes that the donation of financial products is one of the channels for the foundation to raise funds, and it is exploring a path for sustainable donation.
The "Two-Way Approach" of Wealth and Philanthropy
Well before the launch of "charitable financial" products, CITIC Bank Wealth Management had already been in communication with the government and charitable organizations to establish a link between financial products and public welfare donations and needs. It has successively discussed with the Shanghai Charity Foundation, the former Shanghai Banking and Insurance Regulatory Bureau, and other departments to improve the innovative model of charitable financial management. At present, the "charitable financial" model has been included in the proposal of the 16th Shanghai Municipal People's Congress, and has been recognized by the municipal and district governments.
Puyi Standard is a domestic research and development institution for asset management and wealth management markets, relying on the basic research support of the Trust and Wealth Management Research Institute of Southwest University of Finance and Economics, a strategic partner.
"The financial sector's involvement in the field of philanthropy, broadening the channels for public participation in public welfare, and adding new paths for the fundraising sources of charitable organizations, is a 'finance + charity' new model worth exploring," said Dong Cuihua, a researcher at the institution. Compared with ordinary financial products, charitable-themed financial products are mostly concentrated in a few institutions, and the number of charitable-themed financial products in previous years was relatively small. However, with the advancement of the common prosperity goal, this year, there has been a significant increase in the number of charitable-themed financial products in terms of issuing institutions and quantity.
According to incomplete statistics from Puyi Standard, before 2023, there were only 6 charitable-themed financial products in existence, but this year, 21 different share products have been issued, forming a series of charitable financial products, with issuers covering wealth management companies, urban and rural commercial banks.
Charitable financial products donate all or a proportion of the excess returns to charitable organizations. In the face of unstable economic expectations and significant fluctuations in the net value of financial products, how to ensure the realization of the charitable goals of charitable financial products? The combination of commercial behavior and public welfare purposes tests the operational capabilities of financial institutions.
The person in charge of CITIC Bank Wealth Management said that they are confident in the preservation and appreciation of charitable financial products. First, the company has equipped the most professional and experienced investment team for management and investment operations. Second, as a project to implement the central government's major strategy, it will match the most high-quality and stable assets to better meet the investment returns and charitable donation expectations of charitable financial products.
Dong Cuihua believes that it is necessary to balance the investment needs of investors for wealth preservation and appreciation with the charitable intentions of wealth for good, which sets higher requirements for the quality of the asset targets of financial products and the value of charitable projects. With the continuous increase in charitable-themed financial products, to truly gain the recognition of investors, financial institutions still need to increase investment research and development efforts and asset allocation capabilities.
Donor Selection and Information Disclosure ImplementationAccording to the "Warm Childhood Journey" series of financial products, the fund will fulfill its obligation to disclose product information to investors during the fundraising process, clearly stating that the company will donate a portion or all of the investment returns on behalf of the investors to the cooperating charitable organizations, and inform the recipients and purposes of the donations.
The person in charge of CITIC Wealth Management stated that the cooperating charitable organizations need to be identified by the civil affairs departments at the provincial and municipal levels or above, and must be charitable organizations with tax-deductible qualifications and a social organization recognition rating of 3A or above. They have formulated management methods for cooperating charitable organizations in accordance with the principles of openness, transparency, voluntariness, gratuitousness, and honesty and trustworthiness, managing the entire process through three stages: pre- cooperation access, in-process supervision and evaluation, and post-investment management, to ensure that the management of charitable organizations cooperating in charity financial products is more rigorous and standardized, and the donation expenditures are more powerful and effective.
"Knowing the donation information feedback of the excess part of the charity financial products is the right of investors. The company will strictly implement the whole process protection for financial consumers, safeguard the legal rights and interests of financial investors, mobilize the enthusiasm of investors to participate in charitable causes, and gather more charity funds to invest in public welfare undertakings. At the same time, the company will continue to help charitable causes, strengthen self-regulation, accept supervision from the public, strictly guard the original intention of public welfare, and prevent legal and moral risks in public welfare charity activities." The person in charge said.
Wang Ziwei said that the donation funds of CITIC Wealth Management will be specially used in the field of child care and rescue for healthy growth. For charitable organizations, it has expanded the methods of charitable donations, innovated the integration of charity and finance, increased the social publicity and donations of charity, and provided a new path for participating in public welfare and charity, which has good social value and significance. "CITIC Wealth Management's innovative move in public welfare donations not only expands new types of charitable donation methods but also is a financial institution's practice of the concept of financial support for the development of charitable causes, gathering the power of goodness, the spirit of goodness, and the behavior of goodness."
So far, CITIC Wealth Management has established cooperative relations with nine charitable organizations, including four national charitable organizations such as the China Birth Defect Intervention and Rescue Foundation, the China Organ Transplant Development Foundation, and the China Rural Development Foundation, as well as five provincial and municipal charitable organizations such as the Zhejiang Charity Federation, the Sichuan Charity Federation, the Fujian Charity Federation, the Shanghai Charity Foundation, and the Shanghai Huangpu District Education Foundation.
Charity financial products are developing in a diversified manner.
It is understood that in 2021, CITIC Wealth Management launched the "Lighthouse Plan" and formulated the "Top Ten Strategic Projects", with common prosperity and inclusive finance as key business development directions. In the same year, CITIC Wealth Management joined hands with the Zhejiang Charity Federation to launch the "Golden Clear Elephant (Tongfu) Series" charity financial products, with a fundraising scale of 1.17 billion yuan and a good cause of 1.55 million yuan. The public welfare funds were specially used for the care project for left-behind children, benefiting 217 schools and helping 5,312 children realize their "micro wishes".
In August this year, the Hangzhou branch of CITIC Bank and CITIC Wealth Management launched the first phase of the "Common Prosperity and Co-creation" charity financial products for the Zhejiang market, with 80% of the excess returns of charity financial products being donated to the Zhejiang Charity Federation in the name of investors. So far, the national cumulative fundraising has exceeded 500 million yuan, creating a new model of "finance + charity".
As of the end of June 2024, the "Common Prosperity and Co-creation" series of financial products have been issued for 14 periods, with a national cumulative sales volume of 23.857 billion yuan. Most of the financial products focus on supporting the first-line of Zhejiang's "common prosperity" and extend to 26 counties in the mountainous areas, deeply serving the economic and livelihood development of Zhejiang.
Industry insiders said that at present, the number of charity-themed financial products is increasing, and it is encouraging and worth exploring to implant the concept of charity in financial services. At the same time, financial institutions should improve their asset management level and asset allocation capabilities, develop differentiated financial products, and meet the diverse needs of investors for asset preservation and appreciation and public welfare behavior. At the same time, as a relatively new form of charity, charity financial products should not be limited to financial products, and the development direction should be broader. They should also establish long-term contact with charitable organizations, understand their needs, bridge the cognitive differences between the financial and charitable sectors, and better promote the development of finance towards goodness.