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Wanted: Strategic do-gooders

India needs philanthropy that extends beyond charity to make a sustainable difference at a sizeable geographical level, in core development areas, writes Rohini Nilekani.

india Updated: Apr 02, 2006 02:38 IST

One of the most touted outcomes of India’s growth rate, at least in the economic press, is the rise of a new ‘super-rich’ class of individuals, mostly in the corporate sector. A recent NCAER survey put the figure of households with income between Rs 50 lakh and Rs 1 crore at 1,03,000, and growing at a rate of 26 per cent annually. A similar growth rate was expected for the next rung of 4,54,000 households with incomes between Rs 20 lakh and Rs 50 lakh. And we all know about the rise of Indians in Fortune’s Billionaire lists.

One of the most desired outcomes of this outcome would be a corresponding rise in the rate of ‘giving back’ by the new rich.

It is already happening, of course. And not just at the top of the wealth ladder. Middle level professionals in the new economy, who have suddenly found their vested stocks or their investments go through the roof, who have quickly reached an unimagined quality of life early in their careers are eager, if not downright anxious to give back.

But up there in the stratosphere of dollar billionaires and even in the atmosphere of rupee billionaires, new private foundations and public trusts are being set up every other day in India, by people who are now comfortable enough in their wealth to want to invest it in philanthropic activity. To cite a few recent examples, Sunil Mittal’s Bharti Foundation, set up last month and the Nand and Jeet Khemka Foundation set up last year.

And yet, Indian philanthropy comes nowhere near the $250 billion that US citizens give annually towards non-profit/development activity. When people/foundations do give, the old paradigm of giving is still largely prevalent. That vision is more rooted in charity — giving help to the poor through cash or kind, giving student scholarships, medical assistance, funding hospitals and the like.

There is nothing wrong with that. Charity will and must remain the cornerstone of an individual’s desire to connect with his own humanity. Yet, there is a grand new opportunity for our new high net worth individuals to make a genuine difference to the country’s equity issues.

It is in the arena of strategic philanthropy. By this is meant philanthropy that extends beyond charity to make a sustainable difference at a sizeable geographical level, in a core development area such as education, health, access to credit etc or even across a metasphere such as conservation of biodiversity or climate change. Strategic philanthropy can lead to higher efficiencies in government spending, can lead to new policy directives and can sometimes create whole new platforms for problem solving at a global scale.

In the US, in the past century, such strategic philanthropy has been led by organisations such as the Carnegie, Ford and Rockefeller Foundations, and more recently, at a never before scale, by the Hewlett Foundation, the Michael and Susan Dell Foundation and then of course, the giant Foundation of all time, the Bill and Melinda Gates Foundation, with an annual outlay of $4 billion, more than the GNP of many small countries

In India, the Tatas have been silently doing such strategic interventions for the past one hundred years, and some NRIs have also made some attempts to go beyond charity. But it is only recently that genuine new efforts in this direction have begun to take off.

Why is it so important that Indian philanthropy move into a different paradigm?

India’s biggest problems seem to be: a) the lack of good governance, and b) the inability to scale effectively. The lack of good governance (and governance includes the effective, equitable and sustainable management of resources) prevents much money and help reaching the intended beneficiaries, as we all know, partly through corruption and partly through gross inefficiency. The inability to scale keeps all our wonderful local successes just that — local. This is true across both the government and the voluntary sector.

If our new corporate success stories have shown anything, they have proved that the private sector knows how to quickly and profitable ‘scale up’. Whether in IT or in telecom or in consumer products, what has worked in Bangalore or in Ludhiana will soon make it across Cochin and Bhubaneshwar as well.

Similarly, the corporate sector is ramping up its governance practices. Partly because good governance is related to higher profitability and partly because good governance practices are becoming mandatory both in the legal sense and in terms of access to western markets, India’s corporate sector is becoming more transparent and more accountable than it is so far been.

So the new corporate sector has more to give India than just money. It can share technological and management capabilities, scaling up skills, effective resource management, and much more. And of course, if a return must be expected, it gets back in return quite as much as it can give — in terms of greater sensitisation, a better understanding of complexity and diversity, a 101 in human values and sometimes a greater trust from potential customers.

And what better time than now, when government is opening up quite dramatically to the idea of participation — not just from the private sector but from the voluntary sector as well. In fact, a unique model of public private partnership has been developing in this country that has caught the interest of international donors and agencies.

In the West, the concept of PPP is largely about using public capital and private know how to generate better public infrastructure. But in India, a model has evolved where private capital and know how together with civil society’s grassroots experience and delivery mechanism has come to the aid of government, to enhance public service delivery.

There are many examples of this, especially in education. The Pratham network, for the past ten years has successfully engaged India’s largest corporate entities to support its grassroots work in government primary schools individual foundations have now blazed their own new trail.

Similar examples abound in other core sectors, including health, microcredit, governance, the arts, etc. Eventually, such philanthropy, which goes beyond charity to a more long term sustainable social intervention and institution building yields more bang for the buck, as corporate people like to say.

And it’s a win-win for all — government, in terms of enhanced efficiency, taxpayers, because their tax rupee reaches further, citizens, especially those who are under stress and of course the philanthropists themselves who can expect a great sense of satisfaction, sometimes recognition and fame and who knows, their reward in heaven?

(The writer is Chairperson, Arghyam Trust)