A MacArthur-Intellecap report on what needs to be done to aid India's transition to a more robust andequal society
New Delhi: According to Central Statistics Office data released last month, the per capita income in real terms (at 2011-2012 prices) in 2015-2016 is set to reach ₹ 77,431 as compared to ₹ 72,889 in 2014-2015.
Surely that is good news, but when you take a step back and look at the Human Development Index (HDI) rankings, India stands at 130 out of 180 countries.
The United Nations defines HDI as an average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living.
A rank of 130 means that even today India cannot claim that a vast majority of its citizens have access to healthcare, education, food, and a decent living.
In the last year or so, we have had politicians, surveys and now even a student tell us that our society has vast inequality, and if things are to change, then all of us—the very-rich, the middle- class, the corporate sector, and Indians living abroad—alongside the government, have to participate to bring about this change.
While acknowledging the government as the lead protagonist in development, the MacArthur Foundation-Intellecap report Strengthening Philanthropic Giving and Impact Investing for Development in India, which is due for release on Saturday at the Dasra Philanthropy Week 2016, looks at the scope of private actors in philanthropic giving and impact investing and what needs to be done to help these people in eventually aiding India’s transition to a more robust and equal society.
“Given India’s development context, we believe that private actors will need to provide more focus to both philanthropic giving and impact investing. We believe that these two are very different tools, and the range of needs that exist require different kinds of solutions," said Moutushi Sengupta, director, India Office, at John D. and Catherine T. MacArthur Foundation.
The report, which defines philanthropic giving as a “desire to promote welfare by generous contributions of money", and impact investing as “investment made in a for-profit enterprise to serve underserved beneficiaries willing to carry third-party assessment, and following regulatory norms", is based on reviews of existing literature and surveys.
Also, more than 40 stakeholders, including high net-worth individuals (HNIs), ultra HNIs, corporate social responsibility (CSR) teams, not-for-profits, and intermediary organizations like foundations and grant-making agencies in India, were interviewed by Intellecap, an organization that provides business solutions to scale profitable and sustainable enterprises dedicated to social change.
The report focuses attention on four groups, namely, UHNIs and HNIs, corporates, Indian diaspora and retail givers, and looks at how they are engaging with giving and impact investment.
The report, while acknowledging the absence of homogeneity even within the groups, comes up with some suggestions to improve giving and impact investing.
According to Abhishek Humbad, co-founder at NextGen, a CSR management firm, “The decision on which CSR project to invest in has to be taken considering all stakeholders. However, individual giving is as per the choices and interests of the individual. Hence, it is good to separate individual giving and corporate giving... However, there need to be synergies and partnership between all development programmes—either through individual giving or through CSR or any other medium, including government projects."
“Most issues in terms of drivers for participation cut across funder groups as they broadly segment into individuals (HNIs/UHNIs, retail and diaspora) and institutional (corporate CSR). Apart from regulation, many of the other drivers are common from our research and interactions," explained Prashant Chandrasekaran, associate vice-president, business consulting services, at Intellecap. He is also one of the authors of the report.
Chandrasekaran believes that Indian philanthropists, by and large have a limited understanding or awareness of impact investing. “This is one of the challenges highlighted in the study. For most philanthropists, there is a clear distinction between giving (for doing social good) and investing (to generate profits and returns)," he said.
To boost the current “private actor" funding potential from $8 billion per annum, as estimated by the Intellecap analysis, to $22.4 billion per annum, the report suggests some interventions across philanthropic giving and impact investing. “The $22.4 billion estimate is the potential giving opportunity in India if we benchmarked giving to US standards. There are, unfortunately, no interventions which can produce quick results in the short term. We believe results will emerge from a combination of multiple interventions," added Chandrasekaran.
Across the two forms of giving, the report suggests four methodologies—inspire, educate, catalyse and advocate—to accelerate the process of funding. In both philanthropic giving and impact investing, media is an important component to promote inspiration. The report urges supporting journalism fellowships, using television and Internet to raise awareness, and promoting role models in the sector.
As far as educating is concerned, expansion of research and developing open data platforms, as well as supporting existing platforms, to reach domestic investors is key. In the catalyse section, interventions that enable knowledge sharing, developing advisory channels for new funders, support for impact measurement and reporting and standardizing impact measurement frameworks are the need of the hour.
The last section on advocacy, as far as philanthropic giving is concerned, should focus on institutionalizing NGO accreditation, working on tax reform and on the policy front while for impact investing, it looks for increased CSR-related support to social entrepreneurs, which again can happen only if there is policy-driven change.
According to Sengupta, one of the key gaps they perceived in the engagement between the four identified groups of funders was the lack of collaboration among them. “We believe that there are significant opportunities to be leveraged if these groups start collaborating," she said.
Sengupta highlighted the second gap as that of poor availability of information across the four funder groups, something even Chandrasekaran was concerned about.
Trust is a another key gap in the social sector in India. Rohit Menezes, a partner at Bridgespan, an advisory and resource for strategy consulting on philanthropy and leadership, said that Indian diaspora donors and others are concerned about the credibility and trustworthiness of the NGOs they choose to support. “A list of certified/verified NGOs would be an important step to addressing the trust deficit," he said.
Indicating that the analysis and interventions presented in the report draw from the secondary and primary research that Intellecap undertook, Sengupta specifies that all the views do not necessarily reflect the views of the MacArthur Foundation. “Just as we hope other stakeholders will be doing, the Foundation too looks forward to studying the opportunities identified by the report as it reflects on its future plans," said Sengupta.