India: Waiting for take-off

Aaron Dorfman

The face of philanthropy in India has altered greatly since 1985, but some of the same features remain. As in the US, it is failing to fulfil its real potential. Support organizations are still largely absent, patterns of giving remain generally unresearched, and the general approach to giving is one that considers the relief of symptoms rather than tackling underlying causes.

Yet a very different future could be imagined, as outlined below. While many of the factors that could produce a massive upsurge in philanthropy are either in place or being developed, particularly related to use of the internet, obstacles remain. What are they and what would it take to overcome them?

Looking back 20 years

Twenty years ago, indigenous grantmaking foundations were only just beginning to emerge in India. The general picture was of small, local, poorly resourced NGOs dependent on either state funding or grants from overseas agencies for their survival. Means of giving which have since begun to emerge – payroll giving, internet giving, sponsorships, etc – did not exist. Instead, the main channels for philanthropy were religious institutions, family trusts and corporate foundations, which focused mainly on programmes for employees or the local community. There were no bridging organizations and no support organizations and only a handful of national-level charities. In fact, there was little understanding that philanthropy could be an organized and systematic activity, or that it might need professional expertise (both in philanthropy itself and in the subjects/issues supported). Marketing and lobbying by NGOs was virtually non-existent. Accountability and transparency were not issues.

Looking forward to 2025

Looking forward to 2025, organized giving has become a way of life in India. We see greater accountability to beneficiaries, with reporting models such as Keystone’s used widely with stakeholders. Direct donor-beneficiary conversations are common, with beneficiaries reporting progress from village kiosks and communities posting their needs on the internet and starting to raise funds. With the use of new technology, the cost of fundraising has dropped by up to 50 per cent, a trend accentuated by donors using low-cost, well-publicized umbrella events like the Mumbai Marathon.

Individuals are now key donors: a large proportion of the current ‘largest middle class in the world’ have evolved into social investors rather than charitable donors practising chequebook charity. In general, philanthropy has moved to an investment mentality, with a greater focus on building strong, professional, self-sustaining organizations and less on piecemeal project support. In fact, the information-based social investment decisions of many individuals are as important as the grantmaking decisions of large foundations. Technology has empowered these individual donors to exercise choice in the fullest sense, with individuals setting up ‘filters’ based on criteria they think are important to help them decide which NGOs or projects to support. The state, too, sees stimulating social investment as as important as stimulating economic investment, and has a well-articulated policy to promote the philanthropic sector and create conditions in which it will thrive.

This new generation of informed donors will focus on equity issues rather than the ‘soft’ giving currently practised. Individual giving has been largely redirected from sectarian giving (to religion, caste, community) or simply traditional giving (to the home village/region to build a hospital or school) to secular, change-oriented giving. There are adequate tax incentives and a more liberal regulatory environment as well as more trained philanthropy practitioners who can help define a strategic approach to maximize the effects of giving.

The philanthropic sector has become influential enough to advocate and bring about change, but sees itself as belonging within a larger field with common interests.The business and voluntary sector have become closer. Not only do corporations engage with NGOs more actively, but business management schools offer courses on NGO management. Business managers move to careers in NGOs and NGOs invite business leaders to be on their boards.

Philanthropy in India today

The charitable impulse is well established in India, but there is a long way to go before the vision of philanthropy outlined above can be achieved. Many individuals, families and corporations are engaged in providing assistance and relief to those in need. There are also examples of philanthropists who seek to go beyond charity and use philanthropy to address the underlying causes that make charity necessary. The wealth generated in the 1990s is resulting in a rapid growth of corporate and independent foundations. Individual giving has grown too, the advent of the affluent NRI (non-resident Indian) group being significant here. National-level charities such as HelpAge India, CAF India and Give Foundation began to make their appearance in the late 1980s and 1990s. India now has a huge and varied non-profit sector, with over 2 million NGOs.

As in every other aspect of life, the rapid spread of information and communications technology (ICT) is an important development, though its real significance still lies in the future. However, the spread of ICTs is beginning to bring greater efficiency in fundraising, and NGOs are beginning to share learning and come together for ‘umbrella’ events such as the Standard Chartered Mumbai Marathon and the Hutch Delhi Half Marathon involving over 100 charities. This year’s Mumbai Marathon in January raised over Rs 4 crores (around US$900,000).[2]

The sector is well placed to tap both the wealthy diaspora, an increasingly important element in individual giving, and what is often called the largest middle class in the world, in India itself. The potential to promote more – and more strategic – philanthropy and social investment in India is tremendous. Perhaps more than most other countries, India is ripe for the infusion of private funds into development initiatives. The Government of India, more than ever before, is ready for partnership, and has in fact opened up key social sectors to third sector investment. However, if these developments offer opportunities, they also present serious challenges.

Barriers to the growth and professionalization of philanthropy in India

The knowledge gap
The single largest deterrent to promoting philanthropy is the existence of a knowledge gap. Data on the sources, amounts, recipients and impact of philanthropy simply does not exist. By way of example, there is no study on the numbers, activities and contribution of the many family foundations in India. Without such knowledge, it is difficult to make an effective case for the potential role of private investing in the social space, or to know precisely what the needs of organizations involved in philanthropy are.

The lack of philanthropy professionals
Another key issue is the fact that there are too few (only a handful) of philanthropy professionals in India. While ‘Moving Away From Aid’ is the new mantra of the government and of several INGOs and NGOs, there are few ideas or resources to strengthen local resource mobilization, skills and knowledge. For effective and sustainable social investment, investment in building human resources and educating philanthropy professionals is critical.

Business could be a valuable ally for the non-profit sector, and many NGOs would benefit from business management skills. Business management schools offering specialized courses in NGO management would be of great value to NGOs, as would the infusion of business expertise into an NGO by means, for instance, of having a business person on their board or staff with a corporate background.

The lack of support structures
Twenty years ago, there were no community foundations, no bridging organizations (connecting donors to causes or one sector in society to another), no support organizations (research, advocacy, networking, training). There is greater diversity today, but too few organizations of the type that are needed in a mature philanthropic environment. With the exception of the Ford Foundation in India, CAF India, the Sir Ratan Tata Trust, the Sir Dorabji Tata Trust, the Centre for Advancement of Philanthropy and Sampradaan, few organizations or funding agencies have invested in the promotion of philanthropy in India. Establishing new institutions or developing the capacity of existing organizations to support philanthropy is critical.

Inadequate legal structure
Indian NGOs, including philanthropic organizations, suffer from archaic laws and excessive government control, and concerted efforts are needed to advocate for a more enabling and encouraging legal environment. Laws such as the Societies Registration Act and the Public Trusts Act date from 1860 and do not adequately cover organizations working in the field of development. Even the federal Income Tax Act grants tax exemptions only to organizations having a ‘charitable purpose’. There is a real need for separate legislation under which development organizations can register.

Bureaucratic requirements, too, are overly complex. NGOs must register with and report to a number of government authorities. At the state level, the organization has to register with one of three authorities.[3] At the federal level, they must register with the income tax authorities; if they receive foreign contributions, then they must also register with the Ministry of Home Affairs. Separate returns must be filed annually with all three authorities.

Developing a philanthropy marketplace

Internet giving
Giving portals such as GiveIndia have allowed direct communication between donors and recipients. Potentially, at least, such portals have removed one of the age-old obstacles to giving – that givers could not see where their money was going or what was being done with it. Donors will thus become more engaged and informed and will support those organizations which use their money well. From the point of view of NGOs, the internet gives them access to a vastly increased ‘market’ quickly and relatively cheaply, while greatly reducing their fundraising costs.

The founders of GuideStar began development of an Indian equivalent in October this year. Such a comprehensive database on NGOs will give a further major thrust to increased and well-directed giving, especially given the greater choice of giving options and the convenience of payment mechanisms such as credit cards, mobile phones and payroll deduction.

It is easy to exaggerate the effect of changes in ICT, however. Whatever the impact of the internet on giving in the future, it currently accounts for only a small proportion. The majority of givers do not use the internet, nor do the majority of NGOs, relying instead on the more traditional direct mail. CRY, the largest online fundraiser based in India, presently derives only 6 per cent of its total revenues from online sources, 60 per cent of which come from the overseas diaspora. Similarly, the bulk of funds raised by GiveIndia comes through offline channels or originates offline, with transactions only completed online. Employee engagement through payroll giving is likewise still in its infancy.

Greater accountability
Market forces unleashed by these developments may well produce greater accountability. Donors will see directly into the operations of the non-profits they support. Those that allow them to do so will attract greater funds and other NGOs will follow suit and adopt similar standards of reporting when they see the benefits it brings. More self-regulation of the sector by organizations such as the Credibility Alliance (www.credall.org.in) will develop, and NGO rating agencies and other certification services will emerge.

Presenting it in this way makes it sound as though these things are inevitable. They are not. For one thing, well-endowed NGOs may resist making public disclosures. It will require investment in infrastructure and in developing the capabilities of smaller NGOs, particularly to enable them to participate in such a ‘philanthropy marketplace’. As already emphasized, the impact of ICT is so far very limited, and many NGOs will not have the ICT or human resources to carry out the kind of direct reporting donors demand. Then again, the multitude of languages in India will slow down the rolling out of ICT-driven services. Many will also lack the business experience and expertise to take advantage of the new fundraising opportunities. Attracting business people on to the boards of NGOs or offering business management courses tailored to NGOs could help here.

Barriers to achieving a greater focus on equity

One significant barrier to achieving a more equity-focused philanthropy sector is the role of the non-profit sector vis-à-vis the state. A growing tendency, in India as in many other parts of the world, is the withdrawal of the state from many elements of social provision. The non-profit sector is taking on the role of ‘compensating’ for the state, and this is taking two forms: NGOs working as agents or contractors for government, and private philanthropic investments in social infrastructure – a model akin to the one prevalent in the USA.

The growing influence of the corporate sector (indigenous and transnational) is another factor that militates against the emergence of a strong, vibrant, diverse, social justice-oriented philanthropic sector in India, which could support a more bottom-up, community-led, less donor-driven sector. With a few exceptions, corporate philanthropy is still largely limited to tokenism in the form of PR-driven initiatives. Even the larger corporate foundations tend to be biased towards programmes that can show quick, tangible results and are easily scalable, and this in turn tends to militate against community-centred approaches and participative decision-making.

On the other hand, corporate influence on state policy is considerable, and there is a significant corporate lobby for privatization of social services. Combined with the push to privatization by the bilateral agencies, this represents a formidable coalition of interests that favours efficiency over justice.

Other barriers include diminishing public faith in and patience with state institutions, the global push towards privatization, and low levels of institutional sustainability and collaboration among indigenous non-profits. Greater linkages with global campaigns for social justice would help here.

Givers’ beliefs are another barrier to change. Changing habits of giving require change in the values and beliefs of the giver. Unfortunately, narrow sectarian politics continues to grow and gain strength. Changes in values and beliefs are therefore difficult to imagine in the medium term. And if caste-based or religion-based politics deepen, the ruling parties will be more motivated to do right by the communities from which they derive their power than to stimulate the growth of a secular third sector.

Finally, largely owing to the lack of support organizations and philanthropy professionals, the notion of strategic philanthropy has been slow to take root in India. Although, as noted, there are examples of philanthropists who pursue a social justice rather than an ameliorative approach to giving, such efforts are limited. The concept and practice of strategic philanthropy aimed at equitable, social change is still new.

A mixed forecast

While philanthropy in India has come a long way in the past 20 years and offers rich prospects for development, it still awaits its quantum leap. It may be that the internet, with its potential to vastly expand the numbers of givers and the amount of giving, will be the catalyst and other elements – a more systematic approach to generating resources and a more strategic approach to deploying them – will then fall into place.

It’s certain that if Indian philanthropy is to reach its true potential and help bring significant changes to the lives of millions of Indians, then its own underpinning – its support networks and its knowledge base – will need to be developed. So will the capacity of its recipients to reach out to and profit from a new generation of informed donors.

1 The views expressed here are those of the authors and not necessarily those of their respective organizations.

2 Though this is a fraction of the total funds raised in a year in India, it is the largest amount of money raised in a single day through a regular event. But what is more exciting is that the cost of this event was an extraordinarily low 5.01 per cent, making it arguably one of the lowest-cost fundraising events in the country.

3 The office of the Charity Commissioner, the Registrar of Societies, or the Registrar of Companies

Pushpa Aman Singh is Vice President, Programmes at the GIVE Foundation. She can be contacted at pushpa@givefoundation.org
Ingrid Srinath is Executive Director of CRY India. She can be contacted at ingrid.srinath@crymail.org
Anmol Vellani is Executive Director of India Foundation for the Arts. He can be contacted at anmolvellani@indiaifa.org
Priya Viswanath is Executive Director of CAF India. She can be contacted at cafindia@eth.net


Comments (0)

Leave a Reply

Your email address will not be published.



 
Next Special feature to read

Is aid the answer?

Demba Moussa Dembele