The evolving role of non-profits in philanthropy
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Mathew Cherian, chief executive officer, HelpAge India and author of A Million Missions
“What politics is to Europe, religion is to India.” When Swami Vivekananda said this, he had already seen the whole of India and most of the West. He knew that dharma in India referred to that essential, universal spirit behind sects—not sectarian beliefs. He believed that only those programmes for social change will have any lasting effect which take into account the fact that dharma is the central theme of our national existence. In India, dharma and daanam are tied together.
In the Upanishads, daanam—giving/sharing, the equivalent of philanthropy (philan-thropos, love of humanity) as in European literature—has been set with certain cardinal rules. The rules have been that whenever one donates, he or she looks at desh, kaal and patra—the three cardinal principles. This daanam tradition is now ingrained and set in the minds of many Indians. Desh is the principle of region of need, where a particular state or province may be affected by a natural disaster or extreme food shortage. Kaal is the principle of the time of need. Every person goes through the cycle of good times and bad times. The Upanishads indicate that one has to practice daanam when people are going through bad times. The third principle of patra indicates that daan is given whether the recipient is deserving or not deserving. This is in consonance with the principle of accountability, whether the recipient charity is accountable to the daan it receives.
The Upanishads also indicate the gradation of daanam: shramdaan (volunteering), anna-daan, (food), vastra-daan (clothes) and gyan-daan (knowledge). Islam has rules on giving which is zakat. Zakat has its own governing rules; Christianity has its rules of Tyeth, that is one-tenth of the income to be set aside for charity. This is very similar to the Sikh religion, which also has its dasvandh that translates to one-tenth for the poor and disabled. Philanthropic traditions are universal in a country like India across religions. The bulk of the giving is by individuals, not companies or foundations or government sources. However, the environment for giving is not encouraged very much.
The giving potential was estimated at Rs.1,600 crore—90% goes to religious charities. The current steps by the ministry of finance in giving 50% tax exemption under section 80G (limited to Rs.60,000) and 100% tax exemption under section 35AC has not given any great fillip to individual philanthropy. One of the measures that needs to be looked into is a uniform 100% exemption to all charities found credible by the income-tax (I-T) department, which should be approved without time limits. The current incessant scrutiny of charities with income above Rs.1 crore by the I-T department needs to end.
Unlike religious giving, the many non-governmental organizations (NGOs) who work in India on very relevant areas do not get enough resources to be sustainable. How can giving become more tax effective and also easy is the key question. The government now holds the key to this question.
The amendment in the definition of “charitable purpose” under section 2(15) of the I-T Act in 2008 had sweeping repercussions for business income of such organizations. Voluntary organizations under the sixth limb were not allowed to engage in any incidental business activity. However, Finance Act 2010 and in 2011 relaxed it up to Rs.10 lakh and Rs.25 lakh, respectively. The government has amended section 2(15) of the I-T Act adversely in 2008 and has promised removal of exemptions under the proposed Direct Taxes Code in 2012. Among the other measures to promote philanthropy, we also need to look into:
1. Government allocation for social welfare has increased over the years, although the utilization of funds has remained low due to procedural difficulties and delays in accessing the resources, corruption and political interference, among other things. Also, while working with a voluntary sector organization, most public sector units under the current CSR (corporate social responsibility) provisions also see it as giving out a service contract that is in contravention of provisions under sections 12(A) and 2(15) of the I-T Act. The voluntary sector organizations are also supposed to pay service tax on the services availed by them, which is a drain on their meagre resources. In spite of these resources, many NGOs have to rely on individual funding.
2. The recent trend of issuing notices and raising demands on various income-generating activities of non-profit organizations (NPOs) has been undermining the limited efforts of these organizations aimed at making themselves financially more self-reliant. Putting a restriction of Rs.25 lakh on the income of an NPO is a very restrictive clause in the development of a meaningful strategy for the financial sustainability of an organization. A recent announcement carrying with it the possibility of applicability of service tax even on NPO services is a further dampener.
3. With an increasing number of professionals joining the sector, it is essential to improve its efficiency and service standards. It being difficult for voluntary sector organizations to give adequate monetary compensation, retaining talent remains an unviable proposition. In view of the increased pressure from the donors and government to limit administrative expenses, hiring and retaining high quality human resources is proving to be a major hurdle for the sector.
Deval Sanghvi, co-founder, Dasra
Giving begins with a deep sense of compassion. Many give regularly through religious institutions, community gatherings and even support individuals around them such as sponsoring the education expenses of their domestic workers’ children. These gestures are noteworthy in ensuring we help those around us. Yet, these initiatives are limited to the individuals who we know and see. It does not trickle down to the 800 million Indians that live under $2 a day.
Our thoughtful contributions do not change the situation for 53% of the households that don’t have access to toilets. It does not delay the age of marriage for one out of every five girls who gets married before she turns 15. It does not stop the 1,600 Indian children who die every single day due to the lack of sanitation and clean drinking water.
In addition to helping those around us, we need to actively participate in providing equality and dignity to 800 million Indians. This new ask of going beyond our community and taking up a more ambitious challenge is critical to India’s growth and sustainability. It requires a different approach to giving. It moves away from the idea of “I did all that I can” to “We transformed lives like never before”.
Similar to for-profit investments, when selecting an NGO for funding, we need to understand the impact of their product or services, assess growth plans and invest in their management teams to succeed. Unfortunately, the selection process is complete for many givers when they are assured a tax deduction. Yet, to create lasting change, we need to invest significant time in selecting the right NGO and, post-funding, provide on-going support enabling the organization to scale.
In 2011, a group of philanthropists came together with a similar thought process and decided to fund Muktangan, an NGO operating seven English-medium schools within the Municipal Corporation of Greater Mumbai system, to launch a teacher education programme. The goal was to increase the number of capable English-medium teachers in the system. In the past four years, Muktangan’s budget has grown by 500% and they have enabled 240 women to become teachers. This transformational growth occurred by investing in management costs, mentoring senior leadership and enabling the organization to create over 5,000 pages of teacher education curriculum. Assuming that each teacher continues to teach 30 children per year for 15 years, this group of 240 teachers will educate 108,000 students. That is effective grant-making.
Research is also critical to understanding how philanthropic funding can generate greater impact. In Dasra’s recently published report titled No Private Matter: Confronting Domestic Violence in India, we consulted over 100 NGOs, foundations and government officials. This allowed us to identify scalable interventions, vet leadership teams and provide managerial support to high impact NGOs. Within a six-month period of launching this report, it has been used by private equity professionals, established family businesses and even Azim Premji’s philanthropic initiatives to collectively commit over Rs.12 crore of grant funding to organizations highlighted in the report.
For the first time in India’s history, we have the knowledge, technology and resources to end poverty. But we need a shift in mindset to be more effective with our giving. Philanthropy needs to move from individual contributions to the power of collective action. Formidable partnerships are required and necessary to provide 800 million Indians with equal opportunity.
For example, the Kiawah Trust (a UK-based family foundation), USAID (US government’s development arm) and the Piramal Foundation (corporate foundation) have joined forces to empower 113 million adolescent girls in India. While each group has distinct programmes and perspectives, they have realized that combining efforts will create transformational impact.
This alliance has not only led to a greater amount of funding, but has also enabled collaboration from a variety of stakeholders. Within the past 12 months, they have been able to partner with BSE to influence corporates, Hindustan Times and Mint to cover path-breaking interventions, engage in conversation with Warren Buffett and Bill Gates on maternal and child health, enlist DSP BlackRock to strengthen and support key initiatives, and partner with Vodafone Foundation to provide pro bono support through their corporate volunteering programme.
This coordinated effort is quite different from traditional charity, but given the magnitude of issues faced by adolescent girls in our country, it is essential.
While giving is good, the ability to provide 800 million Indians with equal opportunity is exhilarating. We need to be driven by uncompromising competence and be strategic with our philanthropy. As Gandhiji said, “The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problem.”
Shaheen Mistry, founder, the Akanksha Foundation and founder and chief executive officer of Teach For India
Walk into the Gandhi Ashram in Ahmedabad and, like me, you may stop and read a quote, once scribbled in Gandhiji’s distinctive handwriting.
“I am mostly busy making sandals these days. I have already made about 15 pairs.
When you need new ones now, please send me the measurements. And when you do so, mark the places where the strap is to be fixed—that is on the outer side of the big toe and the little one.”
It amazes me that a man in the midst of planning perhaps the world’s greatest independence movement put the same level of thought, care and planning into the littlest things. Stopping to read Gandhiji’s quote made me think that perhaps if I, and you, made a commitment to the little things and if enough of us did enough little things, then these would grow into a force so powerful that it would change the world.
I think about the little things that we can do to unleash the potential of children; for if we gift each child the opportunities that they need to be their greatest, then India will change. It will become stronger and gentler, peaceful and more understanding, kinder and happier.
Pradyna was a little girl in one of our classrooms. A few weeks ago, she wrote a suicide note, doused herself with kerosene, set herself on fire and died two days later. There was too much abuse in her life for her to bear. She had just turned 12.
A week later, in a different city, I met another Pradyna, about half the age of our child who had passed away. She ran into my classroom, sat down on my lap, and we watched a music video together. For three minutes we chatted about what we saw in the video—someone feeding a homeless person, someone stroking a cow’s head, someone smiling as she pulls a dog out of the water. Three minutes later, little Pradyna ran out, only to return a few minutes later. She put her little fist in mine, dropped something onto my palm, and then ran off, smiling. When I looked down, I saw two delicate gold anklets.
Rushing after her to return them, I thought of the magic of that moment—of how pure, and kind, and unconditional our children are.
I thought of how ironic it was that in the span of two weeks, I had come to know of two Pradynas—one who reminded me of the truth of how far we are from giving our children what they need, and the other who showed me the hope of what is possible.
My 24 years in the education sector have been a string of stories. Stories of children being the first in their community to go to college, starting their own NGOs, pushing back their age of marriage to stand on their own feet, working to change deep-rooted mindsets within their families. All of these stories have reiterated that thought that little Pradyna’s gesture of kindness sparked again—that change is possible, that the values inculcated today can change the world tomorrow, that all children can have the opportunity to be their greatest selves.
Today we have the ideas, the resources and the technology to give all of our children an excellent education. The question remaining is just one: Do we have the will? Do we believe not just that this can happen, but understand the role each one of us has to play? Do we know that in maximizing our country’s human potential, India will be fundamentally different? An India that is stronger and gentler, clearer and more understanding, kinder and happier?
When we think about the staggering magnitude of our vision, we know that building a critical mass of driven, committed leaders is the strongest catalyst in advancing social change.
These leaders will demonstrate that change in education can happen, while simultaneously creating platforms and building networks of collective action so that systemic change is possible. They will be politicians, lawyers and business people. They will lead NGOs, run schools and stay in classrooms as teachers. Wherever they are, they will ask themselves this question: how do we ensure every child attains an excellent education?
At Teach For India, we believe that this India is not just possible, but inevitable. We believe that at the heart of making this possible is the right kind of education—for every single one of our children. This education blends academics, values, and access and exposure. It is the kind of education that feels like magic in a classroom. It is the kind of education where our children care—not just about becoming a doctor or engineer, but about the kind of human being they want to be remembered for. It is the kind of education that will make India reach her greatest potential. We’ve taken a first small step and, today, approximately 900 Teach For India fellows and 700 alumni work for equity in education, directly impacting over 50,000 children and others working directly with the children. They take little steps on the long path to educational equity.
Today, on Gandhiji’s birthday, my mind wanders back to the ashram, and the image of his care for how a pair of chappals is made, and I know that big change starts with caring about little things.
Today, perhaps, we can stop and smile at a child at the traffic signal and understand a little about his life, or read a favourite story, or introduce music into a classroom, or share a little of what made Gandhiji special with children who may not know him well. Perhaps, these little things, today and always, will warm a child’s heart, spark curiosity, spread hope, challenge thought, and spread love.
Perhaps, these little things will nudge children along the path of finding their light. And, perhaps, in nudging them along, we will find a new dimension of our own light, too.