Many philanthropic ventures have a limited impact: Narayanan Vaghul8 min read . Updated: 03 Oct 2014, 12:30 AM IST
Former ICICI Bank chairman Vaghul says philanthropy must involve everybody and should not be organized by any one organization
Mumbai: Philanthropy is gaining ground in India and there is greater awareness among the youth on the need to give. Yet, many philanthropic ventures have a limited impact when it comes to creating real change, says Narayanan Vaghul, former chairman of ICICI Bank Ltd. Vaghul, a career banker, is now associated with a number of philanthropic ventures including the Joy of Giving Week. While more funds are flowing into philanthropic ventures, the country, its companies and charities will need to work together to make a difference at a time when inequalities in the economy remain wide. Edited excerpts from an interview:
How have you seen philanthropy change in the time that you have been associated with it? Is there greater awareness towards it now than a few years ago?
Certainly. I never expected things to start accelerating at this pace. I used to say that this is a movement that has been started and it will go very slowly. I never expected things to move so rapidly. Credit for this goes to two types of people. I never expected to mobilize so many young men and women for this cause. It’s no longer a question of corporate philanthropy. It’s becoming highly individual.
What has contributed to this increased awareness?
We made one very good decision. When we started this Joy of Giving Week, we decided that it must ultimately be a festival like Diwali or Navaratri. It should involve everybody and should not be organized by any one organization. That means, it is a people’s movement. That has caught the fancy of the people. Nobody wants for any one person to give direction. There is no leadership for this movement. Leadership has passed on to the people.
So the involvement is widening? People are realising that it’s more than just giving money?
It is widening. Philanthropy is not about money. It’s not about writing a cheque. There are quite a lot of people who believe that they have written a cheque and fulfilled their duty to the society. I would compare it to my generation, when we went to the temple and we gave some money to the beggars sitting outside the temple, and felt that we had done our punya (good deed) for the day. But that doesn’t add up to anything.
There is a basic misunderstanding in the fact that philanthropy is about money. It is more an individual’s movement. Money does come in, but it’s also about attitude. For instance, one of my colleagues in Chennai, during the Joy of Giving Week, goes around autorickshaw stands and teaches the autorickshaw drivers spoken English. This is very helpful for these autorickshaw drivers, but there is no money involved in it. But that is also joy of giving. You are giving vidya or education to these people.
It is not merely giving money. Money is being given to worthy causes. There is a set of corporate groups, wealthy individuals and high networth individuals who make a lot of difference. But more than that, in the last four years, I have seen our heritage of compassion and love and humility is coming forth in this moment. That is more important to me.
Is the increased awareness coming from the obvious inequalities all around us? What is the galvanising factor?
Different categories of people look at it from different perspectives. The people who are high net worth individuals believe that we have earned so much from the society, we want to give it back. That is the prime motivation for them. Then there could be a person who is earning much lesser also feels the need to give. His feeling emerges from compassion and a feeling that I don’t just exist for myself but for others, too. So, the motivation is different. I don’t want to evaluate whether this is better, or that is better because both serve the same purpose.
I think most importantly, and this is an unproven belief I hold, that this has been latent in our society for a very long time. So, it’s not like Warren Buffett and Bill Gates have played a very big role. I am sure they have been a source of inspiration, but this has been latent in our society for generations and it is now coming to the fore.
I am amazed at the speed at which the movement is gaining ground, from Assam to Haryana, people are getting caught up in this.
How does one channelize this movement in the right direction in order to reduce inequalities?
I must admit a certain sense of confusion on that. Despite all the philanthropy that is going on in our country, the country remains very poor. For the last six decades, I have seen millions of NGOs working for alleviation of poverty, but I haven’t seen a visible alleviation of poverty. Take the example of education. Millions of NGOs are engaged in education, but I don’t see any improvement in educational standards. Why is it not happening?
Somewhere, I believe that we are all not working together and we are all working disparately. We are working with a sense of ego—focused on the fact that I am doing this. Till that sense of ego persists, the collective efforts of millions of people are not going to yield anything. If so many people are coming together, there has to be a synergistic effect of coming together and pooling their efforts. We have not been able to do that so far. We need to have a strategy.
So, the fact that the movement of philanthropy is gaining ground gives us some satisfaction but the fact that it is not making much of an impact on the society also causes some disappointment in me. I don’t have a strategy right now, but I have been articulating this and I find that there are takers for this idea. The evolving of a strategy would mean that we need to kill our egos. In the corporate world, we talk about mergers and acquisitions which leads to synergies. Two plus two becomes eight and not four, because the additional four comes out of synergies. So, if the 200 well-run NGOs in education combine their energies, the impact will be much larger.
What are your impressions on corporate philanthropy and the mandatory corporate social responsibility (CSR) spending of 2% of average net profit of the past three years? There is a lot of scepticism about how that money will be used and whether we have the institutional structures to use that money in the best possible way.
My own personal feeling is that it will have a limited impact. There will some companies who will fulfil it in a ritualistic way and look at it as something that is mandatory. It will be passed on to the HR (human resources) person, and eventually, it will be done so it can be put in the annual report.
There will be other corporate groups who are serious about it and they will create foundations, like the Tata Foundation, for the purpose of doing this. But the foundations themselves have to have a proper strategy in order to make a difference. I haven’t seen that many organizations have that clear strategy. Even the companies where I am on the board, they look at the permissible activities because the ministry of corporate affairs lists out what is permissible. They don’t go beyond that to discuss the impact of that 2% spending. Again, here also, collaboration may work and companies may need to come together to work in a focused way if they want to make an impact.
Is there potential for misuse of this provision?
There is significant potential for misuse. For instance, there is a general class under which you can donate to the prime minister’s relief fund or the chief minister’s relief fund—that is a permissible cause for CSR. People can take the easy way out, and then there will be no impact because we know how these funds can be used. I remember in one state, and I don’t want to mention the state, there was a flood. Deepak Parekh (chairman, HDFC Ltd) and me, we decided that instead of giving money, we will build houses for the affected people. But the government did not want us to do it and they wanted us to just give them money. So, we could never succeed in our efforts.
Finally, where does philanthropy fit into today’s economic context in India? We are striving for higher growth which may eventually help reduce inequalities but in the short term, there is a lot of pressure on keeping spending in check as well.
This is going to be the biggest challenge for the government. Inequality is certainly increasing. The new government is focusing on growth which will eventually help but there will be an interim period when inequality may increase. How exactly the government is going to minimize the impact of this on poorer sections is important. The challenge before any political leader is very simple—if they continue with subsidies, they can get votes, but it won’t improve the conditions for these people.
People don’t want to live on doles. But at the same time, discontinuing subsidies is not politically popular. If you use the growth model for poverty alleviation via the trickle-down effect, that will take 5-10 years. The political system does not have the patience for that. This dilemma has to be worked out somehow.
I am watching to see if the new government has a strategy. If they don’t, then things will remain the same. What frightens me is also the fact that they go before the WTO (World Trade organization) and say that subsidies will have to continue beyond 2017 and that we cannot contain it at a certain level. So, we are losing sight of the larger macro picture for the purpose of ensuring that we don’t have to make a change in the systems. We know that this approach has failed over the last 10 years and I don’t think there is a visible improvement in this. So, I am worried about this and worried about what strategies would work in poverty alleviation.