Maya Prabhu heads the philanthropy business of RBS Wealth globally. In an interview with Somasroy Chakraborty, she discusses the recent trends in philanthropic investments in India. Edited Excerpts:
Is the size of charitable investments increasing in India?
In India, as mentioned in a recently released report, the top 10 philanthropic commitments added up to a whopping $2.5 billion in 2010. It is heartening that charitable giving has continued to rise over the last 12 months, with HNIs (high networth individuals) donating an increasing proportion of their wealth to charitable causes. Their average contribution was 3.1 per cent of the total income in 2011, up from 2.3 per cent during the previous year in India. These were in the form of grants to foundations and trusts to be utilised over the next several years.
What factors are driving philanthropic investments in India?
There has always been a tradition of charitable giving in India, closely linked to the diverse religious traditions in the country and corporate support for their communities. The more recent surge in philanthropy follows the tremendous private wealth creation in India. This trend is particularly visible amongst the young -- those in their 20s, 30s or 40s -- who have either accumulated substantial wealth at a relatively young age through their own business ventures or who are benefiting from the substantial wealth of their parents. The recent regulatory announcements about corporate social responsibility are also likely to enhance a growth in corporate philanthropy.
One of the main drivers for these investments in India has been the urge to create a family name. Is this trend changing?
There are many drivers for individuals and families to engage in philanthropy and in our view they are all legitimate. They include: their values, a passion for a particular cause often due to a personal experience, religious beliefs, preparing the next generation for the opportunities and responsibilities of wealth, creating a family legacy which is about business success, and using their private wealth for the public good. In business families, a family foundation provides a forum to discuss the family's values and offers another opportunity to foster family unity and build stronger connections between family members with the business.
Which are the areas where these investments are gaining popularity?
Earlier, most of the charitable aspirations of the families were associated with their religious beliefs. But now, in addition, there is a strong interest in education, housing and healthcare. There is a strong belief among HNIs that education is a powerful tool to empower this country and to eliminate poverty. The other emerging causes are water and sanitation, the environment and supporting children as a group -- from addressing child trafficking to working with street kids to focusing on the girl child.
Is 'charity' restricted only among rich individuals in metro cities?
There is a growing awareness about philanthropic activities in tier-2 and 3 cities. Much of it focuses around businesses supporting the communities where their factories are located.
Are wealthy individuals now becoming more conscious about the end use of their funds in charitable causes?
Definitely. We advise clients to focus on two aspects. Firstly, it is used effectively, efficiently and not wasted -- this is about management and governance. The second and equally important is to understand the results of funding. In other words, they must understand the impact of funding through the activities undertaken by the NGO on the cause that the philanthropist supports. It is important that sometimes the impact cannot be measured in numbers, but through qualitative means. In many cases, it can take time to demonstrable change. In our experience, wealthy individuals and families are now setting milestones for deliverables in the projects they are supporting and are closely involved in monitoring performance. The major change we see is that Indian philanthropists are gradually moving from reactive 'charity' to a more strategic approach to philanthropy. They are keen to understand the root causes and in supporting work to 'move the needle' and make a measurable difference. They are interested in understanding the results of their philanthropy.