India's Golden Age of Philanthropy is Within Reach
I returned to India after business school in the late 1990s. While it is no small feat that our gross domestic product (GDP) has grown from about $420 billion to $3 trillion, and the poverty rate has dropped to around 10%, we are still far from becoming a developed country. Considering our rapid growth since 1991, India will reach a per-capita income of some $15,000 by India@100 in 2047. What role can philanthropy play in accelerating economic growth that is both inclusive and sustainable?
India’s rich giving history: Philanthropy has long been embedded in the fabric of Indian society and contributed heavily to the creation of modern-day India. Pre-industrial India saw business families giving away a proportion of their income to local charities. Industrialization and the freedom struggle in the 19th and 20th centuries morphed giving into what we consider modern-day philanthropy. Industrialization enabled rapid wealth creation; business leaders like Sir Jamsetji Tata voiced their opinions on using wealth for social good, donating vast amounts to create exemplary institutions.
As India’s Independence movement began, Mahatma Gandhi encouraged businessmen to contribute their wealth for the betterment of society. Industrialists like Jamnalal Bajaj and G.D. Birla supported Mahatma Gandhi’s initiatives during the freedom movement while pursuing their own philanthropic interests.
With prominent leaders at the forefront, Indian philanthropy was thriving; simultaneously, America was witnessing the Carnegie-Rockefeller era of philanthropy. Andrew Carnegie built impressive institutions (like Carnegie Library and Carnegie Mellon University), but also inspired (and instigated) the rich; the last line of his book reads: “The man who dies rich, dies disgraced." John D. Rockefeller, a hard-nosed monopolist, eventually donated large amounts of money to systemic reforms, especially to improve the education system. The Rockefeller Foundation also developed the vaccine to eradicate yellow fever. Both Carnegie and Rockefeller became role models, inspiring generations (including myself) to give away their wealth to improve society. They also established a norm that was propagated through society, much like Jamsetji Tata’s belief that if you’re rich, you must donate money and do good (remember the clamour around Jeff Bezos to announce his philanthropic initiatives?)
Why aren’t we giving more?
Despite India’s history of giving and rapid wealth creation in the last few decades, there are three major challenges that have inhibited Indian philanthropy: a) A trust deficit: budding philanthropists haven’t yet come to fully appreciate the good work being done in the impact sector; b) The parochial nature of giving, which risks some of the poorest parts of the country being ignored; c) Programmatic giving which doesn’t add up (example: a number of foundations and NGOs work on school education, yet learning outcomes have not improved).
Modern-day philanthropy—India’s takeoff moment
I believe Indian philanthropy is now poised to take off, despite the challenges. We’ve witnessed an uptick in domestic philanthropy recently, with Azim and Yasmin Premji, and Nandan and Rohini Nilekani leading the way. Beyond committing to part with a majority of their wealth, they’re showing the world a new model of selfless public service and philanthropy. Mukesh Ambani, Gautam Adani and Ajay Piramal have made big commitments, along with the startup gang inspired by people like Sridhar Vembu and the Kamath brothers. Another decade on, I hope that wealthier people will give more, give sooner and give better.
The way forward for philanthropy
There are four strategic ways that emerging philanthropists can create outsized impact:
1) Build institutions: India needs collective philanthropy to build new universities. IIT and IIM alumni could fund research centres to help improve their rankings. Donors can fund think-tanks and build area-specific (say, on energy transition) or geography-specific (such as eastern Uttar Pradesh) institutions. The Tata family continued Jamsetji Tata’s tradition of philanthropy and has been a pioneer in building institutions like the Indian Institute of Science in Bengaluru, The Energy and Resources Institute (TERI), Tata Memorial Hospital, etc. These institutions have transcended generations and made a deep impact on Indian society.
2) Fund risky R&D for the government: Governments are the principal actors in the social sector and spend crores on education, health, etc. However, the government is a behemoth and can’t experiment or innovate on a continuous basis; state capacity is also limited. Philanthropists can fund innovative models and test new ideas through non-profits by building evidence, advocating for policy change and supporting government implementation. For example, Nandan Nilekani built an innovation ecosystem which supports the government in developing a best-in-class digital architecture for India (think of Aadhaar, UPI and eKYC).
3) Support governments to improve delivery: Partnering with the government as a philanthropic entity is the most effective way to make a scalable and sustainable impact. For this, philanthropists need to change their orientation from funding programme delivery through NGOs (like funding mid-day meals in schools) to initiatives which improve the government’s system of delivery. The Piramal Foundation is supporting the Aspirational Districts collective; Veddis Foundation is funding initiatives to improve the evidence base and outcome orientation of governments.
4) Enable economic growth: We all want India to be a $30 trillion inclusive and sustainable economy by India@100. This will create resources for the government to fund development programmes and social security for those who might be left behind. Traditionally, philanthropy has focused on the social sector and left economic growth to markets and government. But I would challenge our wealth creators to use their wealth and experience to advocate policies, support the improvement of enabling conditions for investment, exports and job creation, and help transform our economy.
The old model of charity was to create immediate change in one’s backyard. Modern-day philanthropy, beginning in the 19th century, has shown the power of strategic transformative giving. India’s golden era of philanthropy is emerging. Turning our sights to India@100, can we accelerate philanthropic giving and challenge it to help us unlock our economic potential and enable us to be a developed nation in the next 25 years?
This article was originally published in the Mint