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Indian philanthropy: gaining new momentum

Indian philanthropy: gaining new momentum
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First Published: Thu, Mar 10 2011. 11 58 PM IST

Updated: Thu, Mar 10 2011. 11 58 PM IST
Sharing prosperity, I believe, is a very natural human instinct. The apparent variance in the way it surfaces in different societies has more to do with the different socio-economic and cultural environments that people live in. India’s current economic momentum is steadily helping reveal its philanthropic leanings despite the typical cultural barriers of an extremely family-oriented social setting.
Bequeathing personal wealth to offspring has historically been a powerful urge with Indians. But this is clearly changing as the traditional joint family system is steadily giving way to nuclear families leading to a weakening of the familial bonds. Though we may still be a long way from American type of individualism where teenagers move away from parents to settle on their own, we are soon going to see the changing attitude towards “giving” among the older generation. Though it may initially be limited to the rich and well-to-do, I clearly see it spreading across the middle class in the years to come. It will be a natural consequence of the rapid economic growth that we have entered. Economic prosperity has traditionally been the biggest driver of change in this area.
Increased individual wealth is a recent phenomenon in India and any society takes time to get comfortable with “new” wealth before moving into sharing it with the less fortunate.
Developed societies have, for obvious historic reasons, reached this stage long before the emerging and developing world. So it did not really come as a surprise when a 2010 study totalled Indian philanthropic contributions at $7.5 billion in 2009 as compared with $300 billion in the US. The deviation, however, does not appear too staggering when one actually takes into consideration the respective sizes of the economies.
Contributions in India amount to 0.6% of GDP (gross domestic product) as compared with 2% in the US. This is an acceptable variation keeping in view the stage of the wealth creation cycle both are currently in and the significant tax breaks accorded to philanthropic gestures in the US. For an apples-to-apples comparison, it would, however, be appropriate to compare India with Bric countries such as Brazil and China given the comparable socio-economic environments where contributions account for 0.3 and 0.1% of GDP, respectively.
Corporates have been a powerful driver of philanthropy, given the wider “wealth creation and management” role they are entrusted with in any society. India is no exception.
Corporate houses such as the Tatas and Birlas had been quite active with regard to their philanthropic activities during both the pre- and post-independence period. Instances of contribution from other rich people to various charitable organizations were substantial too. If corporate philanthropy took somewhat of a back seat in the late 1960s, 1970s and even the early 1980s, it was not without reason.
The era of licensing and control did take a heavy toll on entrepreneurs by creating an atmosphere of uncertainty and arbitrariness. Low economic growth and lack of faith in the sustainability of growth became the silent killers of corporate philanthropy during the period. Entrepreneurs were more worried about their own survival, trying to figure out the ways and means to work their way through the restrictive policy regime. All their energies had to perforce be oriented towards their business. Looking around to indulge in social welfare was a luxury that few could afford.
The environment changed for the better with the onset of economic liberalization in the 1990s. It allowed entrepreneurs to think and act freely. They were no longer constrained by opaqueness of the system. Systemic changes coupled with new bursts of entrepreneurial energy brought into force a new momentum. But it took some time to convince the entrepreneurial class that the change was for real and in fact sustainable.
This partly explains the rather subdued growth of corporate philanthropy in the 1990s, despite the onset of liberalization.
Every passing day in the last decade has brought new confidence. We have seen its reflection in a conspicuous surge in philanthropic contributions, both at the individual and corporate level, particularly during the last couple of years.
It will be very simplistic to look at corporate contributions merely in terms of the financial commitments. Instead, it will be more appropriate to take a holistic view of their role in social welfare, working towards a triple P (people, planet and profit) bottom line.
To me, philanthropy is less about financial numbers and more about intent, execution and outcome. An individual donation may not always come in the shape of a financial contribution. It can be devotion of personal time and effort. Similarly, for an entrepreneur, developing a low-cost product or service and distributing it efficiently across remote areas to deliver life-transforming possibilities, despite running on thin bottom lines could mean as much commitment to social welfare as a big direct contribution. The concept of “social business” is quite relevant in this context wherein some entrepreneurs do not generate a profit but a “contentment dividend” for its shareholders.
As critical as raising philanthropic contributions is the creation of “specialist” infrastructure to channel them to the desired objectives. This is precisely the reason why the US is able to handle donations worth $300 billion in a year and address issues on a global scale. There is an urgent need to professionalize the infrastructure in the country to execute large-scale social initiatives.
Not every donor needs to reach the remote villages to contribute to their well-being.
Collaboration is clearly a wise option, much like the way Warren Buffett partners with the Bill and Melinda Gates Foundation to channel his contributions. My own organization, the Bharti Foundation, which specializes in delivering quality education, is already running 237 schools reaching out to over 30,000 underprivileged children in rural India. It recently collaborated with Google to channel a part of the latter’s social investment ($5 million) in the country.
Thanks to the current economic momentum, Indian philanthropy has a new lease of life.
The best part of this revival lies as much in the size of contributions as in the widening of the donor base. I clearly see a massive movement emerging, where millions participate—in their own little or big way—to change lives of their unfortunate brethren not just in the country but across the world.
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First Published: Thu, Mar 10 2011. 11 58 PM IST