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Book Extract: The Art Of Giving
In India and all over the world, people are beginning to alter their ‘giving’ behavior, from one oriented around charity to one oriented around philanthropy. Whereas charity tries to address an immediate need of a person or a group of persons, philanthropy seeks to affect long-term change through giving.
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In India and all over the world, people are beginning to alter their ‘giving’ behavior, from one oriented around charity to one oriented around philanthropy. Whereas charity tries to address an immediate need of a person or a group of persons, philanthropy seeks to affect long-term change through giving. Philanthropy thus requires an understanding of the complexity surrounding the social issues people want to resolve. Researchers have long been grappling with an understanding of ‘giving’ as a way to address immediate needs, and ‘giving’ as a way to bring about social change. Korten (1987) grappled with the same problem when he created a typology of NGO activities. Whereas the first activity met an urgent required need, the second level of giving was more sophisticated in that it involved increasing the capacities of individuals so that they learn to function independently and meet their own needs in the long run. The last three levels of activities help bring about structural long-term change and are therefore deemed as the most strategic and meaningful. The authors of the aptly named article ‘Family and Corporate Philanthropy: Emerging Trends in India’ (Ramachandran and Schmidheiny 2010) seem to be making the same distinction as Korten (1987) as they note the evolution from charity to philanthropy as an emerging trend. They use the same adage that Handy et al. (2006) employ to exemplify the difference between charity and philanthropy inherent in Korten’s typology: “Give a man a fish, you feed him for a day, teach a man to fish, you feed him for a lifetime.”
They draw attention to the increasing shift in recent years from charity to philanthropy in many new activities such as preservation of art, history, as well as safeguarding the environment. This trend was noted when family businesses slowly transformed their charitable impulses into sustainable organized philanthropic initiatives, and companies started setting up CSR wings (Ramachandran 2009).
This chapter looks at various emerging trends in Indian philanthropy—in which Indians are focusing on more secular giving to achieve sustainable, longer term change. Following a brief review of seven key trends, we examine Indian philanthropy in the context of global philanthropy as well as across the BRICS, to contextualize philanthropic trends in India with what is happening in other countries. While it would be impossible, in this research, to cover each emerging trend in Indian philanthropy, some of the most important and indicative trends are explored in this chapter and illustrated by three case studies: Dasra, GiveIndia, and Kiran Mazumdar-Shaw.
Trends in Indian Philanthropy
The Growth of Philanthropic Capital: Major philanthropic players are giving more. According to consulting group Bain & Company, India’s pool of philanthropic capital is growing, thanks to an increase in wealthy individuals’ contributions to philanthropy from 2–3 percent of household income in 2010 to 3.1 percent in 2011 (Seth and Singhal 2011). Numerous philanthropists are giving or are pledging to give at record high levels. For example, Biocon CEO Kiran Mazumdar-Shaw has pledged to give away 75 percent of her wealth when she dies (Forbes 2010), and Grandhi Rao, the founder of infrastructure conglomerate GMR Group, has pledged $340 million—his 12.5 percent personal stake in the business and one-eighth of his family’s share—through an irrevocable endowment to the GMR Varalakshmi Foundation (Forbes 2011). Others are P.N.C. Menon, the chairman of Sobha Developers, who plans to give away half of his estimated $435 million fortune (Koppisch 2013), and Rohini Nilekani, who sold $27 million worth of her shares in Infosys in 2013 to give to select social ventures (Koppisch 2014).
Azim Premji, one of the leading philanthropists in the country, was the first Indian to sign the Giving Pledge in 2013, when he committed to donating more than 12 percent of his stake in Wipro Limited to the Azim Premji Foundation. Also, Azim Premji has already given 25 percent of his personal wealth to charity (Dhamija 2013). More recently Billionaire Anil Agarwal who founded and chairs Vedanta Resources has public reaffirmed his pledge to donate 75 percent of his wealth. However, he has not yet signed the Giving Pledge. So far only four Indians have signed the Giving Pledge and Azim Premji is the only one based in India. The others are Indian Americans Vinod Khosla, Manoj Bhargava and Romesh Wadhwani (Karmali 2014).
Not only are individual philanthropists giving more, but the nation as a whole is also projected to give more as private companies channel their capital into corporate social responsibility (CSR). The new Companies Act 2013 formalizes the role of CSR, set at 2 percent of post-tax profit for big companies. This regulatory change is estimated to unlock $3.7 billion in CSR total spending in 2014. Though this seems like a large availability of funds, there are many causes that are in dire need of funding such as education and the environment (Seth et al. 2014).
Interest in Impact: There is an increased effort and interest on part of philanthropists to ensure their contributions make the intended impact. Some have even started their own foundations in order to control the foundations’ direction and efforts to achieve some desired result. Ashish Dhawan, a Harvard MBA and former Goldman Sachs banker, founded his own private equity firm after returning to India from the US, but gave it all up to start his Central Square Foundation. To advance the quality of primary to secondary education for the masses, his foundation focuses on training teachers, tracking the quality of teacher training institutions, and improving the education of principals. Not only that, Dhawan works with the government and a network of NGOs to create a chain of affordable schools, thereby rounding off his efforts to improve education. Other philanthropists who are taking a more hands-on approach to their philanthropic efforts include Vineet Nayar, vice-chairman of HCL Technologies, and Rohini Nilekani, founder of Arghyam. Nayar supports Sampark, a charity that works with governments to improve schools and expand water supplies. Nayar first got involved because his wife started Sampark; however, Nayar is now dedicated to the charity’s efforts full-time (Koppisch 2013). Rohini Nilekani who founded Arghyam and Pratham Books—which promote sanitation and literacy, respectively—gives philanthropic grants to organizations that she believes will make a measurable difference in the areas that are important to her. In general, donors are thinking more about their potential impact before they fund a cause (Rai 2013). Many philanthropists also prefer to support projects that have a good track record of ameliorating the social issues that matter to them. Thus, there is more talk of scoping out the right organizations to support (Mangaleswaran and Venkataraman 2013).
Philanthropists Are Starting Early: Not only are philanthropists giving more and in a manner that is impact driven, they are starting to give at an earlier age. Bain’s 2013 Philanthropy Report suggests that a young league of philanthropists—under the age of 40 and with less than three years of experience in philanthropy—are now entering the realm and their influence cannot be ignored. These younger stalwarts are influencing philanthropic giving in their own families. It is encouraging to see that in prominently philanthropic families such as the Agas, the Nadars, the Kotharis, and the Jindals, the values of philanthropy have been successfully passed onto the next generations. In such families, older and younger generations are working together for good causes, with the younger generations contributing enthusiasm and bright ideas that are then tempered and rendered practical by older generations that provide the experience, guidance, and funds (Ghosh 2011).
Foundations Are Preferred Channels: Foundations are increasingly seen as the most favored channel for giving because of their transparency and their focus on bringing about sustainable change in specific problematic areas. Bain’s 2013 survey suggests that transparency and accountability of NGOs affect philanthropists’ willingness to donate to them, so much so that more than 25 percent of donors said they would give more if impact communication improved: “This is likely to create an uplift of about 20% in donations from impact-motivated HNWIs” (Seth and Bhagwat 2013: 12). Although there is “broad consensus among donors and recipient NGOs that the work they fund or do is meaningful and leads to change” (Bain’s 2013 survey shows a solid 80 percent of donors are satisfied with the effect of their contributions, and 90 percent of the NGOs are satisfied with what they are accomplishing), there is a discrepancy in how donors and NGOs connote ‘success’ ... For one, donors measure the ‘success’ of their donations by statistical outcomes—such as the percentage increase of children enrolled in school, or an increase in numbers of patients benefiting from surgeries and other treatments, and so forth. While NGOs realize donors’ demands for statistical impact statements, they are bound by more qualitative constraints and are unable to communicate the complexity of gauging success in terms of numbers. Systemic change is difficult to measure, as it addresses deeper behavioral changes that are difficult to quantify (Seth and Bhagwat 2013). Fortunately, strategic philanthropy is on the rise with foundations such as Dasra that promote collaboration between philanthropists, researchers, and NGOs to take on complex social issues such as the empowerment of adolescent girls in India. Together, they are better positioned to bring about long-term social change and communicate the outcomes in a way that satisfies philanthropists (for further information, see case study on Dasra).
Trend: Increasing Use of Technology
Indian NGOs increasingly use technology to stimulate fund-raising and address donors’ needs. Some Indian NGOs such as iCharity, Karmic Foundation, Ketto, GuideStar, and GiveIndia are taking advantage of technology to reach out and campaign for donations from international and domestic donors, often to great effect.
....Online donors in India tend to be urban, middle class, moderately religious, educated, and employed, and the heaviest Internet users are men under 35 and women between 35 and 44 (Special Correspondent 2013). While there is potential, this new group of potential donors is skeptical and prefers to give directly to selected causes rather than through flashy websites, according to a study conducted by Give-India of its users...
Cyber givers are usually those who take the initiative in giving rather than wait to be asked. As a sizeable portion of the population still prefers a more private and anonymous form of giving that will not harvest public acclaim, cyber NGOs are not sure how to extend their reach to all levels of the public (corporations as well as the public at large). According to a study by Bain & Company of high-net-worth philanthropists in some of India’s largest urban areas, lack of transparency and accountability is the top hurdle for increasing charitable contributions online, followed by lack of awareness of channels for routing money, and unfriendly tax laws for donations... GiveIndia is one of the NGOs that successfully took on the challenge to ensure donors that their gifts were indeed going to the targeted recipients rather than to some nefarious NGO officials...
Venture Philanthropy: Venture philanthropy is another growing trend in Indian philanthropy. Unlike traditional philanthropy, “venture philanthropy focuses on developing a deeper ongoing interaction between donor and recipient, with an emphasis on measurable results. The concept revolves around making social, ethical, and other do-good objectives part of investment decision-making” (Spevacek 2010). Venture philanthropy firms differ from other firms in that their business models measure returns for investment in terms of social benefits and not just monetary rewards.
With permission from Sage Publishing