Why does India's philanthropy sector need a fillip?

Inflation, pandemic woes and the state of the country’s economy are indicators that we need a more inclusive growth rate to realise our potential, states the India Philanthropy Report 2022

The last week of June this year saw some welcome news on the philanthropic front. The Adani group of companies declared a donation of ₹60,000 crore (around $7.7 billion) to various charities related to healthcare, education and skill development on the occasion of their chairperson Gautam Adani’s 60th birthday. Adani is currently ranked at number six on the Bloomberg Billionaires Index (BBI), the only Indian among the top ten at the moment. The statement added that the Adani Foundation currently works with 3.7 million people in 2,409 villages across 16 Indian states.

It’s a grand gesture that was welcomed by India’s most generous man and the founder chairperson of Wipro Limited, Azim Premji. “The challenges and possibilities of our country demand that we work together as one, cutting across all divides of wealth, region, religion, caste, and more. I wish Gautam Adani and his foundation the very best in this important national endeavour,” Premji was quoted in news reports.Th

Who is the most generous of them all?

Every December, we have several end-of-the-year lists out in the media. Which films have breached box office expectations? The top ten songs of the year? Famous people who passed away that year?. And the most bombastic of them all: who is the richest Indian? Of late, there’s been more robust tracking of the wealthy corporations and the people who lead them. The Bloomberg Billionaires Index (BBI) tracks the fortunes of the wealthy everyday. As of July 3, 2022, the richest Indian at the sixth position on the BBI is Adani, whose net worth currently stands at $98.8 billion, followed by Mukesh Ambani at the 11th position with a net worth of $86.3 billion. Until recently, up until he died on June 28, lower down at position 38 (or 40, depending on the day) was Pallonji Mistry, the reclusive billionaire who made Ireland his home, with a net worth of $28.9 billion. Premji is currently at number 47 with a net worth of $25.8 billion.

Premji also happens to be the most philanthropic man in India currently. In 2013, he signed the Giving Pledge, where he stated, “I became convinced that markets, public systems and philanthropic initiatives all had a significant role to play if the country was to have inclusive development, and that we needed to work purposefully towards establishing a more humane, equitable and ethical society for all our citizens.” According to the EdelGive Hurun India Philanthropy List, Premji and his family donated ₹9,713 crore, or ₹27 crore a day, in FY21, topping the list for the year.

Family ties

In the fight towards Independence from colonial rule, the support of industrialist groups was integral, playing a huge role in nation-building. Founder of the Tata Group, Jamsetji Nusserwanji Tata, topped the EdelGive Hurun Philanthropists of the Century list from 2021. The report pegs the current value of his donation–mainly towards education and healthcare–at $102.4 billion, with his key endowments starting from the year 1892.

And yet, the India Philanthropy Report (IPR) 2022, released earlier this year by Bain & Company and Dasra, states that the economic disparity among the top first percentile and bottom 50th percentile of people in India has widened, even as the COVID-19 pandemic has pushed more than 20 crore people in the country into poverty. Contributions by traditional family philanthropists [contributions/giving by ultra high net-worth individuals (UHNIs) and high net-worth individuals (HNIs)] overall contracted.

The report quotes Ingrid Srinath, Centre for Social Impact and Philanthropy, “Economic volatility and an increase in contributions to quasi-official funds coupled with lack of reliable information on where to give especially during Covid has affected the inflow of funds into the sector.”

The IPR states that the total supply of funds is at an average seven per cent of GDP in recent years (8.3 per cent in 2021), and according to Niti Aayog’s estimation of the total annual funds needed, that is, 13 per cent of the GDP to achieve its commitments to the United Nations Sustainable Development Goals by 2030. We have a whopping deficit of ₹8 lakh crore for FY 2021 and ₹10 lakh crore for FY 2026 if the same trajectory continues. The report states that India’s social sector expenditure as a percentage of GDP is less than our neighbouring countries and other BRICS countries, and some way behind Organisation for Economic Co-operation and Development countries.

Neera Nundy, co-founder of Dasra who also worked on the IPR 2018, said in a blogpost for Forbes India, “A gradual shift is emerging with a few family philanthropists setting an example by prioritising deep listening to the communities and investing in institutional building or operational processes. They are paving the way for many more funders to invest in building a listening ecosystem in order to move the needle in the development sector.”

One example of family and corporate philanthropists is the JSW Foundation established in 1989, which has an impressive record, working across 11 states and 15 districts in India, and reaching out to one million individuals in the villages located around the manufacturing locations used by JSW. “We are a needs-based organisation that has evolved over a period of time, making sure that our footprint is reflective of our expansion plans as a company,” says CEO Ashwini Saxena. The JSW Foundation focuses their attention: skill enhancement; sports; health and nutrition; agri-initiatives; water, sanitation and environment; education and learning; art, culture and heritage.

The road ahead

In April 2014, the Indian government made corporate social responsibility (CSR) mandatory for corporations. The rules under Section 135 of Companies Act, 2013 made it mandatory for companies with a certain net worth, turnover or profitability during the immediately preceding financial years, to spend two per cent of their average net profit for the past three years on CSR activities. As a result, CSR funds have grown at a faster pace than that of the economy. Robust future GDP growth accompanied by the two per cent mandate and Bombay Stock Exchange 200 companies contributing approximately 50 per cent to the total CSR spending point to strong future CSR contributions.

In eye-opening detail, the IPR indicates the deficit of social sector funding in India, stating that it is private philanthropy that will bridge some of this gap. The report also says that the philanthropic potential of UHNIs is now being given the push by a number of start-ups and young tech entrepreneurs. Tech companies constituted about eight per cent of total UHNI wealth of around ₹85 lakh crore and for FY21 the sector contributes 35 per cent of the total philanthropic donations of ₹4,500 crore. Tech entrepreneurs and NowGen philanthropists have the potential to play a crucial role in meeting the country’s social sector fund requirement. UHNIs from the tech sector have donated more generously than other sectors, constituting about eight per cent of the total UHNI wealth in 2021 but contributing to approximately 35 per cent of total donations. Initiatives like the Young India Philanthropic Pledge, started by the Kamath brothers of Zerodha (the youngest entrepreneurs to feature in the Hurun Rich List), back this optimistic trend.

Crowdfunding, too, has huge potential as a channel for retail donations in the future. Platforms like Ketto and ImpactGuru registered four-times and two-times growth, respectively, during the two earlier deadly waves of the COVID-19 pandemic.

Significant contributors to India’s philanthropy sector include:

Shiv Nadar: HCL Technologies founder-chairman Shiv Nadar and family are at the second spot on the EdelGive Hurun India Philanthropy List 2021, donating ₹1,263 crore.

Gautam Adani: Gautam Adani and family donated ₹130 crore in FY21, and was ranked eighth on the EdelGive Hurun India Philanthropy List 2021.

Mukesh Ambani: Reliance Industries Ltd’s Mukesh Ambani and family donated ₹557 crore in the last fiscal, and occupied the third spot on the EdelGive Hurun India Philanthropy List 2021.

Kumar Mangalam Birla: Kumar Mangalam Birla and family donated ₹377 crore and stood at the fourth spot on the Philanthropy List.

Nandan Nilekani: Infosys’ Nandan Nilekani donated ₹183 crore, and was ranked fifth on the list. Nandan Nilekani donated ₹138 crore for Societal Thinking in FY2021.

Hinduja family: The Hinduja family donated ₹166 crore in FY21 and stood at sixth position on the EdelGive Hurun India Philanthropy List.

Bajaj family: The Bajaj family stood at seventh rank as the group donated ₹136 crore in FY21.

Anil Agarwal: Anil Agarwal and family made a donation of ₹130 crore in the previous fiscal, and shared the eighth rank along with Gautam Adani on the EdelGive Hurun India Philanthropy List 2021.

Burman family: The Burman family donated ₹114 crore, and made it to the tenth spot on the EdelGive Hurun India Philanthropy List 2021.

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