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? The panel discusses what that means within the sector and whether there are lessons in compassionate capitalism here for India Inc. The other panellists include Kiran Mazumdar-Shaw, chairperson-MD BIOCON, and Anant Bhagwati, director Dasra.
This is an edited version of Rohini Nilekani’s comments on the India Development Debate, exploring the future of philanthropy and the challenges India faces.
Azim Premji and his family have really set targets and goals that we all must aspire towards. Even before Nandan and I came into our wealth, I’ve always believed that the wealthy should feel a great sense of responsibility towards society. It’s no use for some people to be wealthy, if the rest of our society doesn’t benefit in some way from that wealth. Wealth creation and philanthropy must go together, you cannot separate those two things. So it was an obvious step for us to embark on our philanthropic journey. We have publicly committed to giving away at least 50% of our wealth.
However while there are people like Azim, Kiran, and I who are willing to give away these large amounts, we also face certain challenges within the sector in India. A major factor is the absorptive capacity of current civil society organisations. At this stage, they simply aren’t able to absorb and use the large amounts of capital that people are ready to give away. So what we need to be doing now is encouraging new civil society actors, and investing in the philanthropy ecosystem of this country. We need to be involved in creating and strengthening the pipelines for giving, investing in the capacity for organisations to scale so that they can use the money effectively.
The Challenges of Giving
The Bain report of 2019 shows that individual philanthropists account for about 60% of the total private funding in the ’18 fiscal year in India. 80% of that amount is credited to Azim Premji. So while high net worth individuals have grown at a rate of 12% and are expected to double in terms of volume and wealth by 2022, many question whether philanthropy in India only consists of the same handful of individuals and foundations who give, year after year.
When we begin to explore the reasons why other wealthy Indians don’t give more, it comes down to a question of wealth creation versus wealth inheritance. As Anant notes, first generation entrepreneurs and wealth creators from the IT sector for example, are willing to part with large sums of money for social good. But there’s also a lot of wealth in India that is inherited, and passed down from generation to generation within families. So those individuals may feel a responsibility to leave a legacy and wealth for future generations as they are not necessarily the sole owners of that wealth. This kind of thinking could explain why the US gives almost 2% of their net worth while India is only at 0.2%.
However, I think we’ve reached a point where we have to challenge all the ultra-wealthy, even those who have inherited wealth, to give more. Today many families who come from old money have also realised that protectionism doesn’t serve them, and have opened up to global competition. There are a lot of people now who have not just come into their families’ wealth, but have actively added large amounts to it. So I think they can afford to be bold and publicly commit to giving some of it away. It’s time for Indian philanthropists to strike out and carve their own space within the sector.
As for the question of where and whom to give, and how to effectively impact society, who better to answer that than successful business entrepreneurs? If they can build huge, successful corporate empires, they can also build successful, scalable societal missions. Some of us are already engaged in this work, through what we call societal platform thinking, and we have developed a framework for scale. So at this point, the wealthy need to step up to this challenge and be creative about generating scale themselves, rather than waiting for NGOs to do the work. As philanthropists we can pool our skills together and work with other sectors to help organisations adapt and streamline. In the current economy, with the rich simply getting richer, the existence of inherited wealth should no longer be an excuse for people to not give.
Creating a Culture of Giving
It’s critical to impart the duty of giving, across economic classes in India, but especially among the wealthy. Between 2018 and 2022, India is estimated to produce 70 new dollar millionaires every day, i.e. people with a net worth of seven crore. So we need to think about how we can inculcate a sense of civic duty and philanthropy in our citizens. As Kiran points out, our country has philanthropy in its DNA. A lot of modern India was very impactfully built through the philanthropy of people like the Tatas or the Birlas, who invested in creating the educational ecosystem, and the healthcare ecosystem, among others. The current and future generations should be able to take this work forward. I agree with Kiran that people must be inspired to do philanthropy, they should believe in this culture of giving, in order to really make an impact.
Our media should keep the spotlight on the wealthy, and enable the public to ask what good the super-rich are doing for the rest of society. I actually think Indian society in general is a lot more giving than we imagine. While the Gates Foundation is coming out with specific data on everyday giving, we do know now that even middle income individuals are willing to step forward publicly and commit to giving their money steadily and visibly. With the convergence of public pressure and media attention on the super-rich to give a portion of their wealth, and the emergence of transparent data around who gives, and how much, I think the giving culture in this country is only set to grow. I’m hopeful about the potential of public participation in creating public goods as well – so that even if we ignore the ultra-high net worth individuals, those who are less wealthy but ready to give can have a serious impact on the ground.
We’re seeing a change with companies as well, where corporate social responsibility is playing a role in creating value for organisations. As Kiran mentions, the culture of corporates investing in solving issues and impacting society is almost becoming a part of good governance, and a way to evaluate their worth. Hopefully this will have a cascading effect, where we hold all companies to higher standards.
Moving the Needle
In a country like India, the size of the issues at hand makes combating them extremely tricky. Whether it’s education or healthcare, if the eventual aim is to reach 200 million people, it becomes clear that you have to work alongside the government, and philanthropic capital is catalytic capital. Anant correctly points out that, purely from a numbers perspective, if this capital works in unison with the government to tackle certain issues or to ensure the state’s scheme is more effective, that is when philanthropy actually starts to move the needle. When we talk about things like societal platform thinking and building out the philanthropic ecosystem, these projects need risk capital and they need duration. The giving must be strategic, for long durations, and focused on addressing a specific problem. Scalability is a key factor here, and as Anant also states, unless we tackling issues at a district level, if not state level, we’re not going to be able to create lasting change.
Philanthropic capital is risk capital, it’s innovation capital, and India’s wealthy needs to up their game and give generously and to new and difficult areas. We need to invest that capital into areas that ensure human rights for all our citizens. We need to expand our idea of philanthropy and address issues such as gender inequality, mental health, and other social justice areas. So in addition to working alongside the government in order to scale, we also need to open up new areas that may be slightly riskier, and put in that innovative capital where it is needed. The future of philanthropy needs individuals who are willing to offer up the risk capital, who accept the possibility of failure, and who build relationships based on trust – with more people like this, we will definitely see large-scale impact in India. I’m hopeful that this process is already taking place, and we’re all going to up our game.