The Indian middle class steps up to charity
The last five years have seen a rise in middle class philanthropy, as individual donations to charities show an increase. Sharon Fernandes writes.delhi Updated: Oct 02, 2011 01:38 IST
For the world, the Indian middle class is the most attractive feature in the country, almost like the shiny gold Tata Nano that got rolled out recently. The country’s most inexpensive car was turned into a $4.6 million vehicle with 80 kg of gold, silver and precious stones.
The middle class is a huge viable market for private consumption; it has also been glorified with stories of motivation like that of a slumdog millionaire who clawed his way from being a slum dweller to be part of the shopping friendly, pizza-eating middle class that spends time every weekend at the mall. But that’s not the entire picture.
Many sociologists find the middle class guilty of spending lavishly only on themselves. Even a protest march by this section of society against corruption, was branded by cynics as an unintelligent protest. The view was that as this class’s concern “rarely extends beyond their own interest,” why should we take their stand on morality seriously? But the section does have an altruistic side.
Speaking to the Hindustan Times, top charities in India say the rise in the number of middle class individual donors has boosted their donations by an average of 20% in the last five years. “We’ve been pleasantly surprised when we tapped into the middle class donor since 2007. The ‘critical’ mass of the middle class has helped us gain almost R10 crore last year. These are from individual donations of Rs3,000 per year,” says Nisha Agarwal, CEO, Oxfam India. “We hope to double that figure,” she adds. The recession that hit the salary hikes and new jobs had no impact on the donations. “We saw a rise in individual donations since the recession in 2008. Charity was recession proof especially for families who earn Rs10,000– Rs30,000 per month. They did not shy away from the Rs2,500 per year donation,” says Yogita Verma, director, Research generation, CRY India, which saw a growth of Rs8 crores in donation last year.
To acknowledge this spurt in ‘giving,’ Care India, a 61-year-old charity organisation that depends on donations from the industrial and corporate sector started an individual donor scheme last year. “The boost in the economic growth over the last five years has been tremendous in the middle class segment, so we decided to tap this. We are present in 15 states. We have kick-started the scheme from 8 cities so far. The metros give us a lot of donors,” says Amelia Andrews, communication manager, Care India.
A year ago, consultancy firm, Bain & Company published the first edition of the India Philanthropy Report. Based on data from 2006, it found that though over the past two decades, a large number of Indians have rapidly accumulated wealth, there has been an increasing disparity between the wealthy and impoverished. Private donations was not filling the void at a rate necessary to close the gap. Things have changed though. “Our data then was from 2006. The total giving was 0.6% of GDP, of which only a third was private giving. Moreover, a mere 35% of the donations came from private sources, such as individuals and corporates. That picture has changed quite significantly over the last five years,” said the 2011 report. There is a clear spike in the number of private donors, and it says that individual giving will grow significantly in the years ahead. “Among developing nations, India’s high-net-worth population is the third largest behind China and Brazil. But the number of wealthy individuals is increasing faster here than in many other countries,” says the report.
However, India unlike developed nations such as the US and Europe where the state already does what charity organisations do, still has a long way to go. “They may be getting in more money but there is still a lack of a good model. The charities work in India because people think the government is not doing it right. In China, the state is active. Even in London, you will never see charity brochures asking for help for the British poor, because the government is supposed to take care of those in need,” says Himanshu, assistant professor, developmental economics, at Jawaharlal Nehru University (JNU).
The latest commotion about the Commission’s decision on how many people in India are really poor and who will be supplied free cheap grain, still needs adequate data to identify the poor better.
As reported, a National Council of Applied Economic Research (NCAER) income data shows that “the inequality levels in rural areas are disconcertingly close to those in urban areas and are rising at the same rates, and can be compared to several developed middle-income countries such as China, Hong Kong, Singapore and even the US.”
India’s lack of effective large-scale structural and institutional reforms in governance, especially with poverty eradication is well known. But with the rise in the number of salaried professionals who donate to charities, it shows this is a section that doesn’t want to continue with the “chalta hai, kuch nahin ho sakta” attitude. They want to deal with developmental issues themselves, rather than wait for the government.
The rise of this section — the NCAER says it would constitute 40% of the Indian population by 2025 — could help in nation building, though at a slow pace. “We never get big ticket donations. It is not the high net worth individuals who give to us. It is the middle class,” says K Vaidyanathan, General Manager, Make-a-Wish Foundation, that is present in 10 cities across the country and had its highest collection of more than R1 crore this year (2010-11).
Charity has been a constant in the god fearing populace pre and post-liberalisation, though the other drivers were tax benefits — or guilt. Direct charity too been a prime parameter; people giving a “bonus” to the house help or cheques are made out to religious organisations. Awareness and transparency of NGOs and charities has also helped donors come forward. “When you have visibility, and transparency, the donor can see where his or her money is going. They don’t mind giving to a charity. The sense of fulfillment that ‘my money is not going waste’ is a key factor for the middle class who help us,” says Vaidyanathan, of Make-a-Wish that gets most of its applications online.
Anonymity is another factor. “When you give to charity, the saying goes your left hand should not know what your right hand is doing, and when HNI individuals or corporates donate, it is done for the name to be propagated or the mention of the company. For the middle class, they just want anonymity, to help, and get good karma,” says Mathew Cherian, CEO, Helpage India, one of the oldest charities in India that was earlier supported by public sector companies, but over the five years has a healthy individual donor scheme.
Helpage touched Rs13 crore last year in collections from individuals online and via direct mail.
The mindset is changing, and most examples are set at home feel experts. Popular culture also reflects the change, with films that once celebrated the aspirational ‘havelis’ with huge chandeliers and a joint family that spent lavishly on weddings and bling, now showing real stories of middle-income folk. Television also celebrates the middle class in its serials and contests.
Even advertisements have a shade of activism and righteousness. The latest Nokia phone ad shows a college student who gets a copy of a leaked exam paper on his phone deciding to do “the right thing” and alert news channels instead of trying to join the herd that wants to cheat.
A socially upright middle class is the new role model for advertisers. A source at JWT, the agency behind the new Nokia ad, says the ad was a reflection of the middle class, especially the youth, which is increasingly becoming more socially aware. “If you saw the Anna Hazare movement, you realise people want to make a difference. They want to further the cause of development,” says Andrew of Care India. “The age group that gives the most is mostly between 25-45 years.”
But while these examples from the middle class seem to be motivated enough to see a better future, this kind of philanthropy may not be enough feel some experts.
“The middle class does have an important role to play. Giving is not enough. For 80% of the population is still struggling to find a sense of equality, which will not come unless the government makes some changes in policies itself, the poor on the whole are still searching for a right to live, with clean water, health and education,” says Susan Visvanathan, Chairperson and Professor of Sociology Centre for the Study of Social Systems at JNU.
While there is still a lot of hope pinned on the generosity of the middle class, Parth J Shah, President, Centre for Civil Society suggests that the government could encourage higher tax benefits to encourage charity, for as India gets richer, there will be more donations.