Social Sector Funding Grew 11% Over Past 5 Years Between 2014 & 2018; Funding By Individual Philanthropist Grew By 21% In The Same Period
Rs 26 lakh crore ($370 billion) per year is the current projected funding required by India to achieve even 5 of the 17 Sustainable Development Goals by 2030
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India has maintained a strong philanthropic momentum with the social sector funding growing steadily at 11% in the last 5 years, between 2014 and 2018. Private funding grew at a rate of 15% per year during the same period while public funding increased at a pace of about 10% per year, according to Bain & Company’s “India Philanthropy Report 2019 — Embracing the field approach to achieve India’s Sustainable Development Goals”, released today.
The ninth annual report, developed in collaboration with Dasra, uncovers a continuous increase in social sector funding in India with contributions across the board. While the government continues to remain the largest contributor, private funding, led by individual philanthropists expanded its base, outpacing public funding. Funding by individual philanthropists grew by 21% between 2014 and 2018. This overall trend is expected to continue in the future as well, given India’s strong economic growth and a rising middle class, fast becoming the donor base.
The report says, what has got the nation this far, will not be enough to help achieve UN’s Sustainable Development Goals (SDGs), 2030. India’s social sector requires a significant funding ramp-up if it is to achieve the SDGs. Even if India sustains its current funding growth rate and channels all philanthropic capital into these five SDGs it will face an annual shortfall of Rs 4.2 lakh crore ($60 billion) if it is to achieve even five of the 17 SDGs by 2030.
However, this is not yet a match for a funding requirement of Rs 26 lakh crore per year to achieve even five of the 17 SDGs by 2030. Increased investment from the government along with active participation from private individuals and organisations enabled encouraging results in five development indicators under the SDGs, including sanitation cover, infant mortality rate and access to housing in rural India. These numbers in health and cleanliness and housing schemes indicate that outcome-oriented and collaborative efforts trigger waves of social impact.
“A large part of the funding gap is expected to be bridged by public funds; however, private funding is also punching way below its full potential. Indian ultra-rich and corporations need to step up further if it has to meaningfully cover a part of the SDG shortfall.” Arpan Sheth, partner Bain & Company said.
A breakdown of individual contributions reveals that while large donations (Rs 10 crore or more) by ultra-high net worth individuals (UHNIs) account for 55% of individual philanthropist funding, about 80% of this figure results from Azim Premji’s donations to his philanthropic organisation - APPI. Take out that contribution across the years, and the segment has seen a 4% decrease since 2014. This is a key improvement area, given that UHNI households have grown at a rate of 12% over the past five years and are expected to double in both volume and wealth from 1,60,600 households with Rs 1,53,000 crore ($21.4 billion) combined net worth in 2017 to 3,30,400 households with Rs 3,52,000 crore ($49.3 billion) combined net worth in 2022.
Deval Sanghavi, co-founder, Dasra said, "Philanthropists can provide risk capital, knowledge and expertise to encourage innovations in India’s social sector through field approach which governments may not be able to create. As we approach 2030, we also need all stakeholders to come together in a collaborative manner and channelize all our finite resources to achieve SDGs so that millions of underprivileged can thrive.”
A benchmarking exercise of weighted average participation (the percentage of net worth contributed per year) compared with the US suggests an additional strategic giving potential of Rs 40,000 to 60,000 crore (~$5.4 billion - ~$9 billion) from large UHNI donors alone. This increase, when compared with their current contribution of an estimated Rs 23,000 crore ($3.2 billion), indicates a potential increase of 2.5 to 3.5 times the current level of giving. Besides, 15% of the CSR budget remained unspent in FY18 so there is a potential to improve the fund utilization as well.
“The current status of the social sector need and funding should resonate as a mission call with all development stakeholders, not just private philanthropists. There is a critical need to aggregate development efforts and impact, to ensure India’s leap to its next stage of development which is ambitious, sustainable and leaves no one behind.” Anant Bhagwati, partner Bain & Company said.
The report finds that increasing the quantum of giving alone will not help. It has therefore pushed Indian philanthropy to adopt a field approach to maximize the social impact of every rupee spent through intentional collaborative action with the largest funder and scale partner – the government. While private philanthropic capital is growing and room exists for further acceleration, it might remain limited when compared with India’s overall funding needed to attain the SDGs. Thus, to maximise the impact of each rupee, private philanthropy should collaborate with the largest funder and scale partner in the landscape: the government.
In India Philanthropy Report 2019, four case studies highlight the ‘Field Approach’ through which multiple corporates, government, and philanthropists have successfully improved outcomes relating to social causes like urban sanitation and adolescent health, well-being and education, eradicating malaria and controlling tobacco consumption. The analysis of four case studies points out a few critical elements of this approach:
Field outcomes: A shared vision and a robust outcome-led model Data-driven policy advocacy: Data-backed models to demonstrate effectiveness of the interventions Collaborative action: Coordinated effort by the government, implementing partners, intermediaries, funders and technical experts Government allies: Engaging with the government for creating scalable change Design for scale: Designing programs and models which are easily scalable across geographies
Achieving SGDs by 2030 needs not only a radical increase in the funding but also rethinking the approach towards challenges in the development sector. Though the government will remain the most dominant player in funding for the development sector, individual philanthropists have an important role to play to push collaborative action through the field approach, IPR 2019 notes. The ‘Field Approach’ keeps the challenges at the centre of the action and provides amplified returns on the philanthropic capital by aligning funders with world’s development targets.