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//India’s Billionaires are Embracing Philanthropy. But Will They Address its Deepest Problems?

India’s Billionaires are Embracing Philanthropy. But Will They Address its Deepest Problems?

The mumbai skyline. Catalin Lazar/shutterstock

The mumbai skyline. Catalin Lazar/shutterstock

“The colonized is elevated above his jungle status in proportion to his adoption of the mother country’s cultural standards,” wrote Frantz Fanon, the French West Indian psychiatrist and revolutionary.  If one of the defining features of British class hierarchy is the aristocracy’s charitable behavior towards the poor—exemplified by memorable characters in British fiction such as Emma Woodhouse and Mr. Brownlow—then it should come as no surprise, if one accepts Fanon’s proposition, that eventually the post-colonial elite in the jewel of the British empire—India—embraced this cultural signifier of power.

In fact, between 2014 and 2018, private philanthropy has increased at a higher rate than public funding, according to Bain’s new report on Indian philanthropy. While private funding to address India’s social development goals increased by 15 percent, public funding only increased by 10 percent. The government remains the largest source of funding for social development, but these trends suggest philanthropy is catching up.

The Drivers

All of India’s major religious traditions mandate some sort of philanthropy or charity towards the needy, according to a 2017 report on Indian philanthropy by Caroline Hartnell. The concepts of dana (giving) and dakshina (alms) in Hinduism, bhiksha in Buddhism, and zaakaat (prescribed offerings) and sadaqaat (voluntary offerings) in Islam, have been a part of Indian culture for centuries.

But as with other rising powers, it is economics—not culture—that is driving the increase in Indian philanthropy. India’s robust economic growth, also accompanied by rising inequality, has enabled the emergence of a new class of billionaires. Since the beginning of deregulation policies in the 1980s, the top 0.1 percent of earners have captured more growth than all of those in the bottom 50 percent combined, according to new research by French economist Thomas Piketty and his colleagues. This trend is in contrast to the 30 years that followed independence in 1947, when income inequality was greatly reduced, and the incomes of the bottom 50 percent grew faster than the national average. India is now home to 106 billionaires, according to the Forbes 2019 list.

The 2013 Companies Act also mandated the payment of 2 percent of profits to CSR initiatives for companies with a net worth of at least $78 million. However, Hartnell notes that corporate philanthropy actually fell from 30 percent in 2011 to 15 percent in 2016. A survey by accountancy firm KPMG in 2016 found that 52 of the India’s largest companies failed to give that amount. Bain’s report says that between 2014 and 2018, corporate philanthropy grew at a rate of 12 percent.

Another factor that may drive domestic philanthropy is the gradual declension of foreign funding to address India’s development challenges. According to Hartnell, foreign donors have gradually reduced their commitments to India, as other more urgent issues and countries have emerged. In addition, the Foreign Contributions Regulation Act, passed in 2010, has also been used to restrict the activities of foreign-funded Indian NGOs.

The Types

Hartnell distinguishes between several different types of philanthropy in India. Some of the main types, categorized by type of donor, are:

  • High Net Worth Individual Giving: HNWI giving is more technocratic, western-oriented, with a focus on scale, efficiency, and maximum impact.
  • Corporate: Corporate philanthropy includes the CSR programs mandated by the Companies Act. The law says CSR programs must be spent on projects that can be monitored for impact. The majority goes into government-run social programs, according to Hartnell. One leading example is Tata Trusts, which supports government initiatives such as the India Health Fund.
  • Community Philanthropy: Although the theory of community philanthropy is beginning to gain traction, Hartnell concluded that it was not yet a visible trend, but had enormous potential. Community philanthropy does not just take money from others and re-grant, but instead mobilizes resources for community needs to bring about changes the community desires.
  • Ordinary Middle-Class Giving: This is “retail” philanthropy or giving by middle-class Indians. It includes both formal giving to social sector and informal giving through religious or spiritual organizations. The creation of crowdfunding platforms has facilitated the growth in this type of giving. The most visible manifestation of this trend is DaanUtsav—the Joy of Giving Week—initiated in 2009.
  • Self-Funded Movements: Although not traditionally viewed as philanthropy, Hartnell emphasizes the importance of giving by members of marginalized groups, using their own resources to support their struggles. One example is the Right to Food Campaign, which has been mobilizing and advocating on hunger and malnutrition issues since 2001. When funds are needed, such as to cover travel costs, they are sourced from within the community and through crowd-funding platforms.

Impact investing is a nascent but growing field in India, expected to increase from about $1 billion in 2015 to $8 billion annually in 2025. According to Hartnell, financial inclusion accounts for the largest share of impact investing deals, as the sector has demonstrated its ability to scale, replicate, and generate returns to investors. The Bangladeshi entrepreneur Muhammad Yunus’ winning of the Nobel Peace Prize in 2006 generated enormous visibility for the sector in South Asia, and it has grown ever since.

The HNWI Givers and Causes

It is difficult to track and measure all of the different types of philanthropy in India, but the only one which is reported on publicly is the giving by HNWIs. According to the Hurun Research Institute, here were India’s leading individual philanthropists in 2018:

India givers table.PNG

In April 2019, Azim Premji became India’s top philanthropist, after pledging another 34 percent of his Wipro shares to his foundation. In 2013, he was the first Indian billionaire to sign the Giving Pledge.

As the above table demonstrates, education programs receive the majority of philanthropic funding. Some analysts, such as Lauren Bradford at the Foundation Center, have suggested that too much philanthropic funding may be going to the education sector, to the exclusion of other important social issues. For instance, about one in four Indian women have experienced physical and sexual violence by their intimate partners, according to UN Women, but violence against women does not attract much attention from private donors.

Another limitation of Indian philanthropy in its current form is that it fails to embrace what Hartnell describes as a structural “social justice” perspective, which focuses on the underlying political roots of a problem and demands accountability from the state to protect basic human rights. “The new forms of philanthropy favored by the newly wealthy likewise tend to avoid the complex, political aspects of change,” Hartnell says. “New funders have tended to concentrate on service provision, partly because this is seen as politically safe.”

Hartnell concludes that in the near future, the most likely sources of social justice funding will come from community philanthropy as it evolves, “retail,” middle-class giving, and the country’s robust self-funded social movements, like the Right to Food campaign. However, many of the experts interviewed for Hartnell’s report also called for educating wealthy donors about the need for systemic change. In the words of one expert, “The philanthropy orientation has to change from giving back to solving social problems.”

The Institutions

Over the past few years, a philanthropic infrastructure has emerged to help donors become more structured, strategic, and collaborative in their giving.

Dasra, which means “enlightened giving” in Sanskrit, was created in 1999 as a venture philanthropy fund to invest in early stage non-profit organizations in India. Now it works to strengthen leading NGOs and “magnify” philanthropists’ impact in order to ensure that India meets the Sustainable Development Goals by 2030.

In 2016, the Gates Foundation and Citibank, together with a group of Indian philanthropists, established  The Center for Social Impact and Philanthropy at Ashoka University. The center is India’s first academic center focused on “enabling strategic and robust philanthropy for social impact.” Another platform—The India Philanthropy Initiative—was created in 2012 to promote philanthropy among the wealthy through discussions, peer learning, and mentoring, and is currently housed in the Azim Premji Foundation.

What is still missing is more information and transparency about NGOs and the non-profit sector. As in other rising powers, it’s especially hard to get reliable and timely information on the extent of philanthropic giving in India and which donors are giving to which NGOs. However, this is starting to change. After a decade of effort, GuideStar India now has at least 8,000 NGOs voluntarily reporting on its portal.

2019-04-09T11:15:23-07:00April 9th, 2019|Categories: Nonprofit News|