The soft power of charity

Philanthropy, charity, giving—call it what you may—has more to it than social development and the self-satisfaction that philanthropists say they receive from giving.

It has emerged as an important strategic tool too. Experts suggest some do it for tax benefits, some as part of a business strategy and some to leave behind a legacy they can call their own.

According to management consulting firm Bain and Co.’s “India Philanthropy Report, 2015”, a survey found that the chief motivator for 55% of the respondents was the need to give back or a feeling of guilt. And 45% of the respondents indicated that they would give more in the next five years.

According to Santosh Desai, managing director and chief executive officer of marketing consulting firm Futurebrands India Ltd, there are obvious benefits that philanthropists derive—whether or not they seek them out at the outset.

“Philanthropy gives power of visibility, of being heard, and even access,” says Desai.

When an individual or institution is associated with a cause like sanitation or poor state of healthcare, they spend time in understanding the problem and working out solutions, so they become known for their expertise in the field, according to Desai.

For instance, Wipro Ltd chairman Azim Premji and his foundation, Azim Premji Foundation, whose philanthropy centres around education, has become the voice of this cause, a place to access funds or reach out to policymakers in education.

This may not have been the main motivation behind such a philanthropic endeavour but it is a definite by-product. “Personal philanthropy may not be guided by commercial motivation but company or institutional philanthropy is and that is why it tends to be more strategic in nature,” Desai says.

It is this school of thought that is guiding the approach of companies in corporate social responsibility (CSR)—the largest structured philanthropic undertaking in India.

Industry efforts at philanthropy are designed to address social ills but also stay focused on tying in the initiative with the company core, whether it be the need for innovation in agriculture or saving water.

From ITC Ltd’s sustainable agricultural initiatives to PepsiCo Holdings India Pvt. Ltd’s water conservation drive, most CSR initiatives have a direct link to the business of the companies.

“Strategic alignment of philanthropy is the best way to make the initiative sustainable in the long term,” says Namita Vikas, senior president and country head of responsible banking and chief sustainability officer at Yes Bank Ltd. 

The prevailing trend of strategic giving is becoming a part of wanting to make the maximum impact.

“The rigour applied to business projects is also being applied to social projects. People are planning giving in a similar manner to how business and investment are planned,” says Vishal Kapoor, head of wealth management at Standard Chartered Bank.

Giving comes with an annual plan, set targets and expected results; in certain instances, these results also include brand building.

Take, for instance, Procter & Gamble Co.’s Whisper School Girl Program, which tells consumers to buy its brand of sanitary napkins and help educate schoolgirls; it is a strategic approach to philanthropy. The company is doing good while also promoting its brand. The company’s 2014 annual report said this initiative had helped four million girls across the country.

“The company is playing on your guilt to purchase a product in the name of doing good,” says Mahesh Murthy, managing partner of Seedfund, an early-stage venture capital fund. Murthy, who has spent almost 30 years in helping brands with marketing, says giving should be selfless.

“Brand-directed philanthropy in conjunction with the CSR rules brought into force last year have created an oxymoronic situation, where we have selfish selflessness, a self-defeating exercise,” he says.

However, commercial benefits or public accolades are not the terms in which companies or individuals explain their philanthropic undertakings.

For them it is all about “self-fulfilment or giving back to society”.

“Philanthropy or giving is the process for any organization or institution to work towards improving the environment and community around it,” says Abhay Gupte, senior director at Deloitte India for enterprise risk services.

There are also other nuances to giving. It ties in with the traditional belief that what goes around comes around—a motivation for many to engage in social good. “Philanthropy is a part and parcel of conversation with any client setting up a succession estate plan,” says Sonali Pradhan, managing director and head of wealth planning at Royal Bank of Scotland Plc. (RBS).

She has divided her clients into two categories—the large wealthy families and “the rest”—with different approaches to philanthropy. Family businesses approach philanthropy from the point of view of making their future generations aware of how privileged they are and making them conscious of the wealth they will inherit and to showcase the values of their families.

Estate succession, in their case, is often largely tied in with the need to leave behind a legacy, much like the name built by the Tata or Birla households from years of philanthropy. Today, these brands have repute and respect in the market and this has as much to do with their philanthropic initiatives as it does with their main businesses.

Under the “rest” category, Pradhan says, “Philanthropic actions are much more emotional and geared towards personal satisfaction.” This kind of giving is more impulsive, with little recognition sought for it.