Rohini Nilekani’s comments on a panel discussing Mr Azim Premji’s new commitment to philanthropy totalling $21 billion. The panel discusses whether there are lessons in compassionate capitalism here for India Inc? What is the future of philanthropy in India? What are the challenges? How can India increase the effectiveness of charity?
00:11 Supriya Shrinate: Thank you very much for joining us on this very special addition of the India Development Debate. So this is a personal favorite. Wipro promoter Azim Premji is famously frugal in his personal life but when it comes to philanthropy he perhaps shows India Inc the way. His total commitment to philanthropy now amounts about $21 billion making him one of the biggest philanthropists globally. While more entrepreneurs have been joined by giving pledge in recent years most of them are first generation entrepreneurs and almost all of them are from Bengaluru, the gap between the super-rich and the poor continues to widen in India. Are there lessons in compassionate capitalism here for Indian industry? What is the future of philanthropy? What are the big challenges for those who want to do it and how can India increase the effectiveness of charity? That’s exactly what we are discussing right here in the India Development Debate and I couldn’t have asked for a better panel. I’m Supriya Shrinate and joining us right here on this show this evening are Kiran Mazumdar-Shaw, chairperson-MD BIOCON, Rohini Nilekani, author and social activist and of course Anant Bhagwati, director Dasra and thank you very much all of you for being with us.
01:14 SS: Kiran if I may start with you. Like I said Azim Premji lives a frugal life but as far as philanthropy is concerned he cuts no corners. His generosity has won him much praise. The question that I think a lot of people would want to know and perhaps be inspired from is, what makes someone give away so much of his wealth and does this set an example for Indian industry to follow?
01:43 Kiran Mazumdar Shah: Azim Premji is an exemplary philanthropist. He truly believes in giving back because he believes that wealth creators are very fortunate and they must give back so that society benefits in terms of the wealth that has been created. And I would like to say that these sentiments are something that we all echo because as first-generation entrepreneurs, we certainly shared these sentiments and of course, each one of us. I speak for Rohini and myself, for sure. Believe in giving back and we believe that philanthropy is a very, very essential part of wealth creation. So I just believe that whatever you refer to it, whether it’s called Compassionate Capitalism or whether it is about philanthropy, I think this is something which we owe to ourselves as wealth creators.
02:44 SS: Fair point. Of course we owe that to ourselves and I think I have a shining example of people on the show who’ve done that and Rohini Nilekani, you have all donated a large part of your wealth for philanthropy. Almost, in some instances this is almost half of it. What has really been your motivation and what are some of the challenges in philanthropy as far as India is concerned? And I think one of the questions that a lot of people who want to do it dissuade themselves is, have you ever felt demotivated in your journey because of the challenges that come up.
03:17 Rohini Nilekani: First of all thank you, namaste. Thank you Supriya. It’s a pleasure to be on the show. I’m so proud that Azim and the family who stands so strongly behind him have been so warm and generous and they’ve really set targets for us and goals for us to aspire to. I’ve always believed, even long before we became wealthy, that wealth has a great responsibility toward society. It’s no use some people being wealthy if all of society is not benefiting. So, as Kiran said, wealth creation and philanthropy, how you use it for the better of society to me it just goes together. You cannot separate those two things. So obviously for us it is quite easy to embark on the philanthropy journey. We have publicly committed to give away at least 50% of our wealth and since you asked about challenges, the real fact is that while all of us; Azim, Kiran, Azim’s family, Kiran’s family and us, we’re so committed to doing this, there are many challenges to giving it away well. One is, as we keep saying the absorptive capacity in the field also we need to encourage new civil society actors. So, along with our desire to give away wealth, we have to face these challenges and we have to also invest in the philanthropy ecosystem, so that more people can join and give away better and better. That’s what I feel about where we are at this stage of Indian philanthropy.
04:45 SS: Oh yes, absolutely. There is a report that I’m going to generously quote from and that report is the Bain report of 2019, and Anant Bhagwati to you then. Individual philanthropist account for about 60% of total private funding in fiscal year ’18 in India. You see the break down and it reveals that about 80% of this figure comes from Azim Premji. Take out that contribution across the year and the segment has actually seen a decrease. Is it worrying that we are seeing a lot more addition of rich people to the country? The ultra HNIs have grown at a rate of 12%, expected to double in terms of volume and wealth by 2022. And you know, many people wonder is philanthropy really growing in India or is it dependent on the same few individuals and foundations who give generously? Some of those people are right here on my show this evening.
05:40 Anant Bhagwati: Yeah, and thank you so much for having me and hi to Kiran and Rohini. It’s an inspiration to hear from you. So, I guess here’s the little bit of nuance here, which is as is all situations, India is a story of many realities. So I think the first reality is it’s a young country, wealth creation in India is actually decades old. It’s not very, very old, and the realities, there are sub-segments which are giving more, especially first generation entrepreneurs, the IT sector. So I think that’s very, very positive, and I think the second positive is the conversation level has been extremely high. So, the intent and the conversations is high, it’s never been higher. Now, if I swing to the other side of looking at…
06:34 AB: Why the reality is not as strong as the intent? I think there are two parts. I think Rohini mentioned this. There is both a supply-side issue and there’s a demand-side issue. So on the supply-side issue, I think the reality is a lot of wealth in India still is what I’d call legacy wealth. So this is wealth coming from the great grandfather to the grandfather and down, so the question is, is it incumbent on the people having the wealth today to actually pass it on or is it the incumbent for them to actually share? And I think that’s, that if you start building into the why, I think that’s one big thing. And it’s quite a big difference between, if you look at how the US gives, where it’s almost 2% of the net worth, whereas in India it’s 0.2%. So there’s a stark 10X difference. But at the same side, there’s a demand-side problem which is who do you give to? The largest nonprofit in India is small so that’s also has to be solved.
07:34 SS: So Anant, yeah okay. So Anant give me a minute because that’s exactly the question that I have for both Kiran Mazumdar-Shaw and Rohini Nilekani. And Kiran there’s a gap in terms of… If you actually just go by what the law says, CSR and I’m not just talking about individual philanthropist, I’ll come to that in just a bit. If you actually just look at the law, the new Companies Act and all of this and people are supposed to give 2% of their annual three-year net profit, but unspent budgets remain a big, big, big bother of concern. Yes, utilization rates have gone up, but 15% of those budgets are left unutilized. Is it a challenge for someone like you that you want to do so much for charity, but are the avenues of where you do very restricted?
08:28 KS: Yeah, I think we need to broaden the scope of CSR at least at the corporate level because I think we are getting too fixated on very small areas and like Rohini very correctly said that the absorptive power of all that we can do to make an impact on society are small and not scalable. In many cases we find that we want to do a lot more, but scaling is a big challenge for all of us. So I think what you tend to see is that even Azim, myself, Rohini, all of us are trying to build and invest in creating large institutions. For instance, all of us have contributed in some way to building educational institutes, the Azim Premji University. I have basically contributed to creating the Krea University and of course I’ve also actually invested a part of my philanthropy for creating a cancer hospital. So I think this is for us an easy opportunity to invest in something that is real and of scale. But when you try to really make the real impact on society in other ways, I think we really need to find models and we need to find NGOs or institutions that can actually utilize these philanthropic contributions in a much more meaningful and impactful way. So I think that really is the challenge, but a country like India has so much to do for society that I think we need to broaden the scope of what is permissible even under the CSR norms that the government has laid out for corporate India. Public infrastructure for instance is something that we should also allow.
10:31 SS: Oh, yeah absolutely. You make a very important point about having the institutions of the network. And Rohini Nilekani if I may ask you, you’ve got foundations like Omidyar or Bill and Melinda Gates or USAID, they have invested in intermediary organizations to build what is really called the strategic philanthropic market. Do you believe that is where the focus needs to be? I mean other than pledging and of course the money comes from generous souls like some of yourselves, but the building up of institutions and foundations, we don’t have a very strength in domestic philanthropy markets, so to say because we don’t have these intermediaries. People are inspired, yes, but where are the avenues to do so has not been done. How can that be done?
11:20 RN: Yeah. So I’ve three quick points to make Supriya. One is, yes you’re right, as I said earlier we must invest in the philanthropy ecosystem, in the intermediaries. I think that’s part of my portfolio, what must I do to encourage the philanthropy ecosystem itself, that’s why Azim, Kiran, myself, we are part of the India Philanthropy Initiative. I support organizations like Dasra and many others that are intermediaries. I think that’s very important. But I did want to bring up something that for years we have all been saying whenever there are shows on philanthropy, we have been saying what Anand pointed out, that a lot of the money is hereditary and so it’s very hard for the ultra wealthy to give forward, but now I want to challenge that because a lot of the old wealthy have also become the new wealthy. Especially those of them who understood that protectionism didn’t serve them, that opening up to global competition in fact made them stronger. And so they themselves in this generation have added a lot to the family wealth.
12:17 RN: So I think they can afford to be bold and not say we have to keep it all for our children and really come out and very transparently give more. And to the question of where will you give and how will you make impact, I think it’s time for Indian philanthropist to strike out boldly. If some of them can build such huge successful corporate empires, why can’t they also build huge successful scaled up societal mission kind of thinking and actually create that scale? Some of us have been doing that work, we call it societal platform thinking and we’ve developed a kind of framework for scale which I’m happy to share with anyone who wants to listen. But I think the time has come to challenge the old wealthy because they are also the new wealthy now, to give more and also to challenge them to be creative about generating scale themselves and not necessarily wait for Indian NGOs to step up because they are doing as much as they can, but they need much more from our side as smart givers.
13:18 SS: No, absolutely, but before I go across to Anant, I will take a quick round two of questions with both you and Kiran and then go to him. Kiran for a country that is estimated to produce 70 new dollar millionaires, which is people with a net worth of seven crore every single day between 2018 and 2022, according to some reports. The question to ask is, what can we do to encourage them to become philanthropists? And, one of the suggestions that has been put on the table is that there is just too much emphasis on UHNIs, the HNIs, the traditionally rich. Why are we not looking to scratch the surface of mass market of everyday givers? And, do you believe tracking the small ticket individual, the retail giving is going to expand the pie, so to say?
14:10 KS: I think unless you make philanthropy as something to be really proud of, something that inspires people to do, you are not going to be able to really create that philanthropic ecosystem. So, I really believe that people should want to give, people should really believe that the giving culture is a very important culture. And I don’t see why this can’t be a very strong culture in a country like India with its plethora of challenges because I think that’s what it’s about. We’ve got so many things to solve and so many such… So many societal challenges to overcome that it must be a natural kind of giving culture that we have. And, let’s face it, India has had a very philanthropic DNA about it because if you look at modern India, I think a lot of modern India was very impactfully built by, through philanthropy. The Tatas, the Birlas, they have actually invested in a very philanthropic way to create the educational ecosystem, the healthcare ecosystem and many other aspects of societal needs. And I think today’s generation has to basically take that forward in a much bigger way.
15:40 SS: No, absolutely. And, I agree with you that let’s not wait for that to happen, let’s build the ecosystem. But to build that ecosystem, and let’s get drawn really to the brass tacks and Rohini Nilekani, the current funding growth rate will lead to an annual shortfall of about 4.2 lac crore rupees, according to some reports, the social development goals have to be met by 2030. All of that said and done, but none of this will happen till more and more people come forward and give more. How should India ensure that the culture of giving gets appreciated, gains momentum? How do we promote that culture? Does it need to be done at a societal level, the interventions at school? What must be done?
16:26 RN: Thank you. I think a lot needs to be done and you are playing one important part of it. I think the media spotlight on this question and the public pressure especially on the wealthy has to be kept up. What is your money doing for all of society? I think that’s very important and you all are doing it. So, thank you for that. The second thing is to your earlier question, I think there are a lot of givers in this country, we don’t really have enough data, and some of us are coming together to put out that data. I hope in a few… It will take some time, but that’s being done. A report on everyday giving that we have done with the Gates Foundation is coming out very shorty about how many people are willing to give, how much? So, I think the culture exists, we have to understand it better and then increase it even more. Recently, I heard something very heartening. I won’t give away the source because they are going to create their own announcements around it, but even middle income people are willing to step forward publicly and say that they are going to give some more of their money steadily and visibly.
17:33 RN: So, I think many things are converging. We put up, keep on the public pressure, we keep the spotlight, we have some transparent data, real data emerging. And I think, we’ll feel much better about the giving culture in this country. I feel quite hopeful. So, public participation in creating public goods, never has there been a better time for someone to do so much with so little. If we all can contribute to creating digital public goods for instance, the knock-on effects of doing that are so large that I think even if you forget the ultra-high net worth individuals, even those with a much better developed giving muscle who may be less wealthy can have really serious knock-on effects and impacts when when so many things are converging. At least, that’s what I believe.
18:24 SS: Absolutely. I think Kiran Mazumdar-Shaw wants to come in to make a point there. Go ahead, Kiran.
18:32 KS: No, I just wanted to say that corporate social responsibility is also playing a very important role in basically creating a value for organizations. We know that many of these areas where we are being evaluated in terms of best employers, the judgment call when it comes to the quality of companies, I think CSR is also being one of the factors that has been considered when they evaluate companies in these kind of ways. So I think it’s about… It’s almost becoming a part of good governance, to see companies really investing in society and impacting society in a positive way. So, I think you’re gonna see that it will have a cascading effect on companies to do good for society. Because today you can see that the world over, I think companies, people and societies are extremely angry about companies who don’t care about society. I know that in my own pharmaceutical sector, you can see that the corporate greed that the pharmaceutical industry has shown worldwide is not going down well with patients and societies and people at large and governments for that matter.
19:57 SS: Oh, yes.
19:58 KS: And so, I think as a humanitarian industry, I really believe patients should be at the center of what you’re achieving, trying to do.
20:07 SS: Absolutely. No, you’re right. I think there is a demand for this to be done at a company level as well, but Anant I’m sorry, I kept you holding. But let me come to you, you know India is committed to 17 of those sustainable development goals, the national institute of transforming India created an SDG India index, and of course, there are nodal ministries that are attached. A, is that the best going forward? And B, are we going to see philanthropy follow where the government’s focus is going to be? So for instance, the Swachh Bharat Abhiyan saw a lot of philanthropy follow there. Previously education saw some more follow there. Is it a given that philanthropy will follow where the focus of policy making is going to be. That’s where private philanthropy is going to follow, and that’s how the ecosystem will build?
20:57 AB: Right. And I think if I just build on that point, I think three points there. So I think the reality is you look at the size of the addressable problem, coming from a background of the for-profit sector. The for-profit sector always talks of the addressable market. If you apply the same language here, it’s the addressable problem. That means there are 200 million adolescents who potentially let’s say have a problem. So, moment you start saying, “What percentage of my addressable problem, India’s problem am I addressing?” It becomes quite clear that you have to work with the government, and philanthropic capital is a catalytic capital. The reality is if you just do the numbers, you’ll see that if this capital works in unison with the government to either solve certain missing pieces, or make it more effective, that’s where it actually moves the needle.
21:48 AB: And I think that brings me to the second point, saying what I think Rohini mentioned, the societal challenges, and the societal solutions, eco-system solutions. They will need money, they will need big giving, they will need duration. You cannot say, “I will only give you x for one year, and then I’ll monitor 100 inputs, and then next year I’ll not support you. It has to become much more strategic, longer-duration, and laser focused on swinging the needle on certain addressable problems of India. And the reality is unless we start thinking at minimum the size of a district, if not many districts, if not a state, look, it will not move the needle. And I think that’s the real worry. Lot of action, lot of talk, but unless this approach changes, and we up the game, we will not move the needle over the next 10 years. So I think lot of optimism, but also the need for actually doubling down, and going all in now.
22:42 SS: No, absolutely, one last question. And I can’t borrow enough time from the next show, but Rohini Nilekani quickly a last word to you. Is it time like Anant is saying to shift the focus? Is it time to move the needle, and focus on outcome-based philanthropy? Yes, the intention has been very good that you’ve intended to give 50% of your wealth away. But the focus, perhaps the life cycle of philanthropy now needs to focus on output base. What sort of effect and impact is it going to create? And that should be measurable.
23:18 RN: Well, my philanthropy is not about that, but I want to say something to Anant’s report they are absolutely right. It’s time to up the game. So I would say to you, “Of course, we care about impact, but it’s very hard for us to give attribution and causational. It’s mostly co-relation. So it’s very hard to say “I did this and therefore impact happened”. But what I think we should not forget is that we have been saying this that philanthropic capital is risk capital, it’s innovation capital. Let’s up the game on the Indian wealthy and Indian giving hard to think about going to new areas, difficult areas. We used to call it human rights. If you want, we can call it justice. There are many, many things we need to do so that the remaining 300, 400 million people who need urgent help can be brought to the level of the others, and we have to look at issues of justice, of mental health, of gender, of so many other things that we have under-invested in through philanthropy.
24:15 RN: So I think one thing is working with government, and that’s marvelous. But I think opening up new areas, slightly riskier areas, and putting risk capital, and innovative capital where it is needed, we need to up the game on that so much. Outcomes will come if you do it right, but focus on risk, focus on accepting failure just like the corporate sector just accepts failure there, learn to accept failure, build relationships of trust, and that’s when you’ll find the impact down the road. The process has to be right. It’s time to up the game.
24:51 SS: Right. I usually do a sign out of a show all of you leave me very humbled. And I will only say may your tribe increase. Thank you very, very much. It’s an honor to do the show with all of you. Thank you very much Kiran Mazumdar-Shaw, Rohini Nilekani, and of course Anant. Thanks very much for being with us in this edition of the India Development.