What's missing from India's joy of giving?

With Amazon founder Jeff Bezos having announced his wish to give away most of his money to charity, it looks as if the philanthropy bug has spread far and wide among the super-billionaire community. Bezos is worth a cool 124 billion dollars, a mind-boggling amount that no individual really needs for his personal needs. It is thus all to the good that he has followed the path charted by others in his league like Bill and Melinda Gates along with Warren Buffet. It also sends a signal to many for whom wealthy innovators like him are role models that philanthropy must play an integral role after one has amassed enormous profits.

Bezos had not signed the Giving Pledge, an initiative by Bill and Melinda Gates for the super rich to commit to giving away half of their wealth. But he has now clearly indicated that he is going on the same path. As for India, only a few of the top billionaires have so far signed the pledge. These include Azim Premji, Rohini and Nandan Nilekani, Kiran Mazumdar Shaw, PNC Menon and Anil Aggarwal. This does not mean that philanthropy is not on the agenda of the top wealth creators but it does mean that they are not prepared to make a leap of faith by committing to giving away 50 per cent of their riches.

At the same time, it must be conceded there has been a long tradition of philanthropy by top industrial houses in the country. In the western region, it was wealthy Parsis who turned giving into a fine art and set up many worthy institutions including schools, colleges and hospitals. Similarly, Marwari industrialists have set up chains of educational institutions in the northern and central regions that are well known for their excellence. The donations have extended to religious places and Birla temples have been sent up in many places. The Muslim community too has not been far behind in donating to setting up hospital and educational institutions both at the primary level as well as in higher education. Hospitals and engineering colleges have been set up by generous donations from this community in many parts of the country.

Having said that, it has to be accepted that charity is not a way of life in this country as in many others. It is precisely for this reason that the concept of mandatory corporate social responsibility (CSR) was made a legal responsibility here in 2014. Companies must utilise two per cent of their profits for expending in socially productive areas. Even so, the pace of private philanthropy has not been growing at the rate that it should for a country that requires huge investments in the social sector. A study by consulting agency, Bain earlier this year shows that overall private giving, both domestic and foreign, has stayed relatively flat over the past few years. Domestic private giving has, however, grown at a moderate pace of eight to ten per cent.

It finds that CSR, family philanthropy (ultra-high-net-worth individuals) and retail giving cumulatively contribute about 84 per cent of the total private philanthropic capital in India. CSR, driven by the two per cent mandate, has grown at 15 per cent annually in the past seven years, with its share in total private giving growing from approximately 12 per cent in fiscal year 2015 to 23 per cent in FY21. The study expects that riding on rapid economic growth, formalisation, and more companies coming under its umbrella, CSR contributions will grow at 19 per cent annually, with its share expected to reach about 32 per cent of total private giving by FY26.

Family philanthropy, in contrast, has contracted overall. UHNI giving has decreased from the peak of 2016, while HNI (high net worth individuals) giving has grown at a modest pace. Relative contributions (giving as a percentage of wealth) among Indian UHNIs range from 0.1 per cent to 0.15 per cent compared with 1.2 to 2.5 per cent in the United States, 0.5 to 1.8 per cent in the UK, and 0.5 to 1.4 per cent in China.

But as far as the new age industrialists are concerned, there is a great deal of consciousness about the need to give those who are at the bottom of the pyramid. Azim Premji's foundation has partnered with the Karnataka government to ensure that education infrastructure is improved significantly. The Shiv Nadar led HCL is well known for its Vidya Gyan chain of schools in UP for underprivileged children. Similarly, Infosys founder Nandan Nilekani and his wife Rohini have done sterling work in the area of environment.

At the same time, there is certainly a need to ensure that a culture of giving to the most deserving sections is inculcated in Indian society. One disturbing element is the traditional mode of donating to religious institutions. This has led to the accumulation of wealth by religious trusts in lakhs of crores. The Tirupati temple trust or the Shirdi Sai Baba Sansthan Trust have enormous funds accumulated with them. It is no doubt true that many of these have used the moneys for setting up educational institutions and hospitals. But the fact is, that such funding needs to be targeted to those agencies that can provide the greatest benefit to the needy rather than to religious trusts.

Bezos' declaration on giving away his billions thus comes as a timely reminder that both corporates and individuals need to target their charity in a more effective manner. In this country, the overall volume of donations also needs to be stepped up considerably especially since the pandemic has resulted in the poor becoming poorer and the rich becoming richer. This is not just charity but a bid to ensure that the rising rich-poor divide is eliminated as soon as possible.