India could soon be the world’s second most philanthropic nation, after America,” Bill Gates told me when I last interviewed him.
Coming from the world’s leading philanthropist, who has already given around $30 billion to the Bill and Melinda Gates Foundation and is, with Warren Buffett, trying to persuade the world’s billionaires each to promise to give away at least half of their fortunes by signing the Giving Pledge, that is a prediction worth taking seriously.
There are several reasons why India is ripe to soar up the philanthropic league table (where second place is currently held by Britain). First, as Michael Green and I show in our book, Philanthrocapitalism: How Giving Can Save the World, throughout history, periods of rapid entrepreneurial wealth creation tend to be followed, after a one or two decade lag, by a golden age of philanthropy.
This was true in Europe during the first wave of successful capitalism in the 16th, 18th and 19th centuries, and true in the US in the early 20th century. The current global surge in wealth creation began in the US in the 1970s and 1980s, spreading gradually to other countries including, starting in the 1990s, India. The current surge in American philanthropy, of which Gates is the poster child, really took off in the late 1990s. Now, the commitment to large-scale giving is starting to accelerate in countries that were later to the wealth creation explosion.
India is also better placed to see an increase in philanthropy than, say, China, because it has always had a culture of giving, both out of religious commitment and as a sense of corporate social responsibility that in some cases—most notably the Tata group—stretches back over a century. India’s new wealthy will be influenced by those cultural traditions, in contrast to China where the Communist regime is only slowly ending its long suppression of civil society, including the Confucian giving tradition.
The big question is not whether philanthropy will increase in India, but whether wealthy Indians will embrace the business-like social-problem-solving sort of giving that I have christened “philanthrocapitalism”. Gates wants to be as disruptive, in a good way, to society through his philanthropy as he was by driving the personal computing revolution at Microsoft. He wants to help end poverty and eradicate diseases such as malaria. He is bringing the same ambitions and entrepreneurial mindset to solving society’s problems as he did to building Microsoft into one of the world’s greatest companies.
Historically, many philanthropists have engaged in giving primarily to win public approval or to appease consciences guilty about how they made their money. These givers often put their money into alleviating the symptoms rather than thinking about how to tackle the underlying causes.
Philanthrocapitalists such as Gates are different because they combine their head and their heart when they give. They don’t feel guilty about how they made their money but realize that those same entrepreneurial skills that helped them thrive as capitalists can play a crucial role in helping to solve societies’ problems. They don’t leave it to the government to sort things out, they challenge the government to do better and offer to show it the way. They don’t do charity, they drive social change. Hopefully, India’s new wealthy will become not mere philanthropists but philanthrocapitalists determined to find solutions to India’s deepest problems.
What exactly does it mean to be one of those philanthrocapitalists applying a business brain to giving? Well, having a clear idea of what success looks like, for a start, plus a strategy to achieve it.
Judging by the most successful philanthrocapitalists in the US and elsewhere, a successful strategy requires a clear understanding of what philanthropic money can and cannot do. For instance, even the $4 billion a year that the Bill and Melinda Gates Foundation distributes is dwarfed by the sums of money spent by government and businesses in the global public health area that the foundation is trying to change. (“We are a tiny, tiny organization,” Gates told me, describing the world’s biggest philanthropic foundation.) So to make a difference, the foundation has to figure out how to leverage its money by using it to change what government, business and non-profit organizations do.
The entrepreneurial way to think of philanthropic capital is not as an alternative to government or corporate spending, but as a catalyst to change that spending. Philanthropists also have much greater freedom in what they do with their money than governments which have to focus on short-term achievements to get re-elected, or companies that have to meet the short-term profit needs of their shareholders. Philanthropists can take bigger risks, pursue longer-term change, challenge the conventional wisdom, dare to fail: their money can be the risk capital driving social innovation.
I have met a growing number of successful Indian entrepreneurs who get this. India is also blessed more than any other country, including the US, with a multitude of social entrepreneurs, people with innovative ideas for solving society’s problems, who philanthrocapitalists can invest in. Yet another reason why India can become the second most philanthropic nation on earth, but might even teach the US a thing or two about effective philanthrocapitalism.