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India has seen unprecedented economic development over the past two decades. As the economy has grown, so has personal wealth and the desire by many successful individuals to give something back to a society where millions remain in poverty. At the same time, the new companies law of 2013 obliges companies above a certain size to spend 2% of their three-year average annual profit towards corporate social responsibility (CSR) activities. This is a pioneering move and makes India one of the first countries to have social welfare spending as part of company statute mandatory by law.

The considerable growth of private wealth and compulsory social spending by companies, taken together, could potentially revolutionize the amount of funds available for good causes. It could even offer an unprecedented opportunity for individuals, families and companies to contribute to the development of India. But to make a real difference calls for a change in attitude from a focus on charity to strategic philanthropy—or perhaps going even further, to integrating social goals into a company’s business model, like the Tata family and how they have successfully managed to do it.

Philanthropy is the giving of money, assets, time or expertise for social or environmental purposes. It differs from charity in that it tends to be less reactive, and more thought out, strategic and significant. It is often shaped by people’s values and experiences, and can bring as much joy and satisfaction to a philanthropist as it does to beneficiaries. In a family business, for example, corporate philanthropy can be a way to articulate the family’s values, and an activity in which to involve family members who may not be working in the business.

Developing a strategy

There are as many approaches to develop a strategy for philanthropy as there are motivations for giving, with no one right way. However, there are some worthwhile questions to consider when starting the process. What are your values, passions, interests or concerns? This will help in forming that geographical or demographic community, cause or sector you might want to focus on. What is your understanding of the challenges or opportunities that relate to your cause?

Learn more by meeting other funders, visiting charitable organizations, reading reports and consulting a philanthropy adviser. And consider exactly the type and quantum of resources you would like to contribute—money is the obvious one, but expertise, time and networks can be invaluable too.

Many philanthropists choose to channel their resources to existing organizations, while some prefer to invest significant time and resources in setting up their own operating organization or social enterprise. If you choose to set up one of your own, it is worth ensuring that you are not duplicating the efforts of others.

Tracking the results of philanthropy is important—to learn and evolve the strategy as much as to ensure accountability. In doing so, both quantitative and qualitative aspects need to be considered. This is particularly true when you may be trying to change social perceptions and ways of working, and involves asking the right questions about the impact of efforts.

Looking for results

One of the biggest obstacles to giving, historically, has been the low level of transparency and accountability in many of India’s non-governmental organizations (NGOs). While some are effective, accountable and well-managed, others are not—with no single reliable source of information on their activities.

However, here again, there are signs of progress as NGOs have stepped up efforts to hire professionals and improve transparency and accountability. Initiatives such as the Credibility Alliance and GuideStar are leading the way towards greater integrity, while organizations such as CAF India, Dasra and the Centre for the Advancement of Philanthropy are striving to provide more reliable information and advice. There are other areas of encouragement. These include philanthropists increasingly speaking publicly about their causes (and thus inspiring others) as well as greater collaboration and learning among funders of all types, such as through Dasra’s Indian Philanthropy Forum; a growing awareness of more strategic approaches, including the growth of social entrepreneurship and impact investing; and a greater use of more formal structures, such as trusts and societies.

It is also encouraging to see a growing number of our conversations with clients involving references to make a social contribution. It is inspiring to see the passion that drives individuals to make a real difference to the causes and communities they care about.

Charity has existed in some form or the other for centuries, often embedded within the tenets of religion. But our economic progress, combined with a more strategic approach, provides the opportunity to do so much more.

Shiv Gupta is MD, RBS Private Banking India.

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