Putting philanthropy to work in India
Indian donors must carefully consider the design and impact of their philanthropic activities, and the latter’s intersection with development activities
Last week, Amazon founder and chief executive officer Jeff Bezos tweeted a request for ideas on philanthropic strategy. He noted that much of his work—through Amazon and The Washington Post, for example—was designed for impact in the long term. But for his philanthropic activities, he was interested in working at the intersection of urgent need and lasting impact. His tweet has since received thousands of responses, many from social enterprises looking for funding, but also from economists and development professionals advising Bezos on how best to channel his resources. This is an important conversation—one Indian philanthropists would do well to follow.
Indian philanthropy, especially individual philanthropy, is at a critical point. According to Bain’s “India Philanthropy Report 2017”, India’s philanthropy market has “matured” considerably, particularly when it comes to contributions from individual philanthropists. Indeed, the report finds that the amount of funds coming from individual philanthropists has grown sixfold in the past five years, from Rs6,000 crore in 2011 to Rs36,000 crore in 2016. Contributions from individual philanthropists have also grown faster than those coming from any other source, such as foreign aid, or from corporate social responsibility (CSR) activities.
The Bain report estimates that India will be short by Rs533 trillion if it’s to achieve its UN-mandated Sustainable Development Goals by 2030. Individual philanthropists can play an important role in bridging the gap. Funding trends for the development sector are already moving in that direction. In 2016, private donations made up 32% of total contributions to the development sector compared to just 15% in 2011. The government, of course, is still the largest contributor—in 2016, it spent Rs1.5 trillion in the development sector—but its share in the funding pie is declining steadily and its profile is being renegotiated as philanthropic foundations take on a greater role in driving development initiatives.
For these initiatives to be effectively realized, the focus has to go beyond the quantum of philanthropy to asking how and where those rupees can be leveraged for maximum impact. From the government’s point of view, this means preparing the ground for greater collaboration with philanthropic foundations. This is already happening at the local level but there’s more scope for cooperation with the Centre. The government also has a role in ensuring transparency and accountability—a Dalberg study found that India has been unable to leverage the philanthropic potential of its diaspora because the latter perceives the development sector to be corrupt and inefficient, and is overwhelmed by regulatory constraints and unfavourable tax policies.
From the donor’s point of view, the crux of effective philanthropy needs to be designing for maximum impact. First, a potential donor needs to decide where he wants his money to be spent—education, healthcare, disaster relief, public policy, arts and culture, etc. In India, a 2013 study by McKinsey found, there are at least 50 sub-sectors that suffer from a funding gap but donor efforts are focused on just seven to 10 sub-sectors, such as disaster relief and primary health and education. In comparison, in the US, where the philanthropy sector is more developed, donor resources cover a wider range of sub-sectors such as public affairs and environment, even though education and healthcare still get the lion’s share of funding.
Let’s say a donor decides to put his money in education. He now has a range of options: subsidizing costs at an existing school; building a school from the ground up; setting up a training centre for teachers and school administrators; funding an agency that will help the government better deliver one of its education schemes; or working directly with the government to shape educational policy in the long run.
The McKinsey study puts these interventions into four categories ranging from the most direct to the most indirect, and notes that while direct interventions have deeper impact in the short term and can be easily measured, indirect interventions usually offer more scope to scale up and provide sustainable solutions for the long term. The entire breadth of interventions are needed, though donors almost always start with direct interventions and then move on to indirect interventions as they become familiar with the lay of the land.
It is important that Indian donors consider the design and impact of their philanthropic activities and the intersection with development activities carefully. In numerous surveys, India has ranked poorly on generosity indices—not simply because Indians give less but because the giving is often through informal channels. Similar patterns of philanthropy in Pakistan, detailed by Anatol Lieven in Pakistan: A Hard Country, hint at the subcontinental historical and cultural roots of this informal social safety net.
Indeed, as Pushpa Sundar points out in Revealing Indian Philanthropy, modern India owes much to its tradition of philanthropy, from Jagannath Shankarseth to Jamsetji Tata. But as the socioeconomic context has changed, so have the demands of effective philanthropy—something the inheritors of Shankarseth’s and Tata’s mantles should bear in mind.
How do you think Indian philanthropists can contribute to the country’s development goals? Tell us at firstname.lastname@example.org