Miserly rich need lesson in how to give

South China Morning Post  |  Mar 11, 2002

By Sin-ming Shaw

Byline: The willingness of US citizens to provide generous funding for universities puts their wealthy SAR counterparts to shame, writes Sin-ming Shaw

HONG KONG'S WEALTHY are giving very little back to the society that has enriched them beyond imagination. The University Grants Committee estimates total private individual contributions amounted to $540 million last year, a small sum to the mega-rich and far short of what higher education needs.

Without significant alternative sources of income from the private sector, universities will remain dependent on public funds, boding ill for those trying to become first-rate.

Government funds will be limited as Hong Kong's fiscal health suffers from structural deficits. Total dependence on public funds, even if they were forthcoming, reinforces the "iron rice bowl" culture among universities not subject to competition, a necessary condition for excellence.

Every Oxford needs a Cambridge. One important reason why public US universities, such as Berkeley and Michigan, are so good is because they have to compete against private ones for the same pool of student talent and, more importantly, for funds from corporations, foundations, donors and government.

The generosity with which the American rich and the not-so-rich give to education goes far beyond what tax deductibility can explain.

It puts to shame Asians whose dedication to educating their young is supposedly legendary.

Gordon Moore, the inventor of the computer chip, has given $4.7 billion to the California Institute of Technology. The Hewlett Foundation, of Hewlett Packard fame, has donated $3.2 billion to Stanford University.

In January 2002, Sanford Weill, chairman of Citigroup, gave $780 million to the Cornell Medical School. Maurice Greenberg, of the American International Group, an adviser to the SAR Government, chipped in another $490 million. The Greenberg family has now given more than $3 billion to the hospitals of Cornell and Columbia Universities.

Mr Greenberg ranks number 103 on the Forbes list of the world's richest. Mr Weill does not rank at all, unlike a number of Hong Kong's billionaires.

The nouveaux riches here have given a pittance to education. Li Ka-shing, ranked 23 on the Forbes list this year, is a notable exception, as is the unranked Gordon Wu Ying-sheung, who has pledged $780 million to Princeton University.

But Sir Gordon tellingly shunned Hong Kong's universities on the grounds that their mediocrity would waste his money. Mr Li gives huge sums principally to mainland campuses.

In Hong Kong, wealth accumulation has become an end in itself. The rich reject the argument that Americans care more than they do about charity, and, in particular, education.

They insist that America's higher marginal tax rates provide an incentive that Hong Kong's scant 15 per cent flat tax lacks. To address the issue head on, the SAR Government ought to provide the needed incentive by allowing deductions at 30 per cent for every dollar given. That would closely match the American allowances.

Christopher Cheng, chairman of the Hong Kong General Chamber of Commerce, has used the same argument in the context of supporting the arts. A 30 per cent tax deduction should, indeed, apply to all charitable donations. Once that supposed obstacle is removed, Hong Kong's creative and intellectual communities can more forcibly call on the rich to give more.

Hong Kong has to develop a culture of giving if its people want to be proud of their institutions of higher learning.

There is a strong argument for "privatising" at least two universities. Not only would they provide an alternative model, they would reduce the drain on the SAR's budget.

Take the Chinese University. It spends roughly $3 billion a year. The Government should transfer $50 billion to "endow" the university, using a six per cent return as a benchmark. The university will then have to fend for itself.

Its scholars can, like their US counterparts, compete openly for public funds for projects. But they must win on merit. Government bureaucrats may object to "depleting" official reserves by such a transfer. But their reasoning is invalid, because the money stays within the community. Once it has been transferred, an item of recurrent expenditure will forever be eliminated from the Budget. This would immediately reduce the size of the SAR's fiscal deficit.

Certain facts are straightforward. Not all universities, departments and professors are equal. They should not be funded as if they were. Universities should not all remain public, and private funds should be encouraged.

Universities have been overly generous in handing out honorary doctorates to the rich while getting very little in return. Such wantonness actually cheapens the honours and the institutions that give them.

Sin-ming Shaw teaches at the American University of Paris

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