At a closed-door event of global leadership organisation YPO in Mumbai with Wipro’s first family late last year, the interviewer asked Azim Premji that how he would like to be remembered in the long run — as one of the most successful entrepreneurs of liberalised India or as a leading philanthropist?
At the Premji Foundation, chief executive Anurag Behar has his work cut out — increase fieldwork and double workforce to more than 3,000; set up a university (its second) in a Hindi-speaking state, most likely Madhya Pradesh; identify more NGOs to give grants; get “good people” to work in places such as Barmer (Rajasthan), Raigad (Chhattisgarh) or Uttarkashi (Uttarakhand).
Contrary to perception, money is the least of Behar’s worries after running the foundation for over a decade. “We have enough.” His challenge is execution. For instance, by good people, “I don’t mean just a good psychology teacher, but someone with an intention of serving in education,” he says.
His hands are full, with lots to spend. But India needs more innovative ideas to solve problems at scale, talent that is sensitive to needs of the underprivileged, a check on charities eyeing tax breaks rather than making a meaningful change, improved execution and support for less-talked-of causes.
Wipro’s chairman alone accounts for a big share of the $10 billion a year that India’s wealthy commit for social causes, and along with government’s commitment of $20 billion a year, it’s about $30 billion to help the needy.
Compared to the Rockefellers, Mellons and Gates, the well-heeled in India mostly look at philanthropy as a tax-planning initiative. The Birlas, Bajajs, Tatas, Wadias and Godrejs have always believed in giving back a part of their bottomline to the society at large, earmarking profits for philanthropy. Today, the flag-bearers of that pledge are the Nadars of HCL, Srinivasan of TVS or the Piramals, Mahindras and Mukesh Ambani.
Azim Premji, Shiv Nadar and Ratan Tata.Conscious individuals — Amit Chandra of Bain Capital, Shailesh Haribhakti, chairman of L&T Finance — or first generation entrepreneurs like GM Rao or Yusuff Ali MA are driving philanthropy equally.
The Agastya Foundation, the world’s largest science education NGO, started by former Citibank honcho Ramji Raghavan, would not have been possible without ace investor Rakesh Jhunjhunwala, its largest contributor.
Cumulative wealth of India’s population may reach $25 trillion by 2027. The number of ultra high networth individuals (UHNIs) —more than Rs 25 crore assets — is expected to scale from 60,000 in 2011 to 3,30,000 by 2022, says Kotak Wealth Management.
But the “glass is only half full,” says Anant Bhagwati, director, Dasra, which works in areas of urban sanitation, governance and improving lives of adolescents. A March 2019 India Philanthropy Report from consultancy Bain & Company highlighted that India needs $60 billion a year if it has to meet the UN’s 2030 Sustainable Development Goals (SDG). These ambitious targets include zero poverty, zero hunger, peace, justice, strong institutions and reduced inequalities.
Take out Premji’s charity, and the shortfall for philanthropic activities will be higher than $30 billion a year. Of course, innovation to build scale and managerial capacity in many philanthropic ventures are limited.
“We are seeing a big shift to giving, with new wealth of global scale being created in India,” feels Venu Srinivasan, chairman, TVS Motor. “The main challenge, though, is human resources. Money is always available for good ideas. No good cause went bust for lack of money. But many have yielded poor returns due to lack of leadership, strategy and implementation.”
WHERE ARE THE PREMJIS?
“Private funding is punching way below its full potential. Indian ultrarich and corporations need to step up further to meaningfully cover a part of the SDG shortfall,” adds Arpan Sheth, partner, Bain & Company.
Wealthy families in India —excepting the likes of Premji, Nandan Nilekani, Kiran Mazumdar-Shaw or Nadar — put aside less than 0.2% of their wealth for philanthropy, compared to at least 2% by their US counterparts. “I believe Rs 20,000 crore of private investment in social change is too small to matter. Even if this increases 100%, it will continue to be small, given the size and scale of problems,” says Vineet Nayar, HCL Tech honchoturned-philanthropist and chairman of Sampark Foundation.
Anne-Birgitte Albrectsen, chief executive, Plan International, says, “Growing generosity is welcome, but we must have more philanthropists.” This global charity doubled its India spend to Rs 1,000 crore in 2016. Most of its money comes from 500-odd firms including Nike, Ericsson, Accenture, Axis Bank and Coca-Cola India.
“Premji is transforming the landscape of philanthropy in India. While we don’t currently work together, we are looking closely now at potential areas of common interest,” she says in a reply ET queries from London.
But there’s good news. Amit Chandra, managing director, Bain Capital, points to an initiative, livingmypromise.org, where 21 ‘non-billionaires’ signed up to donate at least half of their wealth. “Every week, someone is joining. We hope this number will in due course swell to thousands of Indians, building a broad-based giving movement of the middle class.”
Anyone with net worth of Rs 1 crore and above can be part of this. Chandra and his wife, who support Agastya Foundation among other NGOs, have committed to give most of their wealth “to charity at the end of our lives.”
Billionaire entrepreneur Mazumdar-Shaw is helping form Indian Philan–thropy Initiative, an informal association of high networth individuals.
MISSING CAUSES & SCALE
However, while capital could increase, much of the effort remains concentrated in very few areas. Healthcare and education are the two most funded causes in India but several causes don’t get as much attention, such as access to justice, building sustainable cities or climate change.
Most start with sponsoring a school in their backyard, but are unable to scale even that. “Philanthropy is becoming more inclusive — more people are giving both time and wealth. Yet, the problem is bigger than I had ever imagined,” adds Nayar. “Just like the IT industry came up with scale models for developing software, we need to develop scale models to solve social problems that impact millions.”
Sampark is in pursuit of educational equality in rural areas. “We have reached 7 million children in 76,000 schools. Doing social good is not good enough. Solving problems at scale is what matters most,” adds Nayar.
Albrectsen argues that philanthropists have more sustainable impact as they take a long-term view of development, untroubled by (annual) CSR mandates or short-term grant cycles. But smaller causes still lack attention. For instance, philanthropy for gender equality is growing but the overall proportion remains small — less than 16% — and an even smaller part of these funds goes to empower girls.
Farhan Pettiwala, executive director, Akhand Jyoti Hospital, points out that there’s no handbook for aspiring philanthropists. “People have to evolve their own models.”
Mazumdar-Shaw, for one, has. She funds research and initiatives on themes such as manual scavenging, rural education or sanitation, saying, “The absorption capacity of NGOs is poor. They have no managerial capacity. We want to give to someone who is professional.”
On the other hand, the Piramal Foundation believes in the trusteeship approach in the areas of primary healthcare and nutrition, education and access to clean drinking water. “If we have to assist in tackling complex social issues, the ability to operate at scale is crucial. We need large investments in innovation, technology, data analytics to deliver better outcomes,” adds Ajay Piramal, group chairman.
Anand Mahindra, group chairman, explains how “the approach towards philanthropy is rapidly evolving from unidimensional giving to a holistic strategic approach in creating positive social change. If you want sustainable transformation, this approach is better than just writing a cheque.”
Pettiwala points out how not everybody is able to devote time. Besides, “some believed philanthropy was a golden parachute for the successful retiree of CEO jobs in India Inc. Thankfully, things are looking better now and there are people exploring full time careers in philanthropy.”
As things stand, a small minority genuinely empathises with the needs of the have-nots. Data shows that contribution of those few — both in money and time — falls woefully short of requirements. As Niraj Bajaj, director, Bajaj Group, says, “In India, ownership of shares and voting rights cannot be separated, which is why promoters have limitations in giving. Promoters get worried about losing control by becoming takeover targets.” He does, though, see improvement.
Most industrial houses, and now individuals, do charity as part of social consciousness. Yet one has to “distinguish between genuine cases and dubious purposes that masquerade as charity,” says Hitesh Gajaria, head of tax, KPMG India. Some may even channel money via charitable sources.
Also, a lot more needs to be done to make it easy to give. Genuine charitable institutions are burdened with lot of compliance — under the Income Tax Act, Foreign Contribution Regulation Act and so on.
In the UK and the US, there’s no annual audit. It’s usually once in three years. In India, philanthropists have to approach the charity commissioner for every little change. Samir Kanabar, tax partner, EY India, says, “Any change to the charter document has to be approved by the charity commissioner, which can take three to six months. There are compliance requirements but if you are a legitimate charity, it’s not challenging.”
There will always be exceptions, and perhaps the ecosystem of giving will improve as more people learn what’s right and what’s wrong. Dasra’s Bhagwati sums it up: “When the elephant moves, it moves well. That’s better than aspiring to be a cheetah.”