Individuals lead the way in philanthropy, even as firms' contribution falls

Contribution from foreign sources, domestic corporations has slowed

Private funds raised for philanthropy and the social sector in India hit a record high of Rs 70,000 crore in 2017-18 (FY18), growing at a compound annual growth rate (CAGR) of 14-18 per cent over the last eight years. While both the share and the amount from foreign contributions fell dramatically owing to the government crackdown on foreign NGOs, it was more than made up for by individuals, whose philanthropic contributions in FY18 accounted for a sizeable Rs 43,000 crore. However, the contribution of domestic corporations to the social sector is slowing.

According to exclusive extracts from the latest “India Philanthropy Report 2020”, to be released by Bain & Co, funds from foreign sources in FY18 contributed to only 21 per cent of the funding, down from 50 per cent in FY10. In FY15, their share was 33 per cent. The reason: The government launched a massive crackdown on NGOs for violating Foreign Contribution Regulation Act (FCRA) norms.

The good news is that individuals’ share in the funds raised for the social sector shot up from a mere 26 per cent in FY10 to over 61 per cent in FY18. The report says that landmark commitments by 11 Indian-origin families, including that of Kiran Majumdar-Shaw, Dr Romesh and Kathleen Wadhwani, Azim and Yasmeen Premji, and Nandan and Rohini Nilekani, contributed to the huge spike in private funding.

These families joined Giving Pledge, a commitment made by billionaires globally to donate a major part of their wealth to philanthropic causes. Individual giving has also become participative, through the Daan Utsav or the Joy of Giving Week, held in October every year, which engages 7 million Indians in philanthropy, the report states. 

Dinkar Ayilavarapu, partner Bain & Company, says, “There has been a quantum growth in domestic philanthropic funding, with private giving leading the way. Yet there is a wide spectrum of vulnerabilities left unaddressed, driven in good measure by the systematic inequities and aggregation of problems that keep India’s most vulnerable outside the mainstream development.”  

The report highlights certain areas of concern. One, the geographical concentration of philanthropic funding is not linked to poverty incidence or other indicators of vulnerability. For instance, Maharashtra has grabbed 34 per cent of the state-wise share of philanthropic investment even though its poverty rate is 17.35 per cent. In striking contrast, Jharkhand gets less than 1 per cent share of philanthropic investment though its poverty rate is 36.96 per cent.

Two, there seems to be no correlation between the use of funds and high-need investment areas. For instance, health and education account for 55 per cent of domestic Corporate Social Responsibility (CSR) funding. Yet gender equality gets a mere 1 per cent of the total funds — despite the fact that the country scores very low on gender equality. Similarly, education gets one-third of the resources despite the country’s strong score in quality education in the sustainable development goal. The report also points out that an immediate investment of Rs 11,000 crore is needed to enable India’s 120 million adolescent girls to complete their secondary education.

Three, the philanthropic contribution from companies has seen a substantial slowdown. In 2018, for instance, they contributed only Rs 12,000 crore, growing at a CAGR of 12 per cent from 2010, which is much lower than the overall growth of philanthropic funding (15 per cent) and individual contribution, which has grown by 21 per cent.

Deval Sanghavi, co-founder of Dasra, a strategic philanthropic organisation which worked on the report with Bain, says: "While the media has put a greater focus on CSR, one must recognise that this will remain at only 2 per cent of profits, whereas individual giving can be up to 99 per cent of someone's net worth. For example, Azim Premji has committed $21 billion to philanthropy, which will be far greater than what Wipro can donate to the sector."