According to a report, the richest 1% Indians possess 58% of all wealth in the country. With the country’s growing income gap, the silver lining seems to be the deepening philanthropic streak in India’s ultra rich; the Nilekanis being the latest addition to the list of Indian billionaires who have pledged a portion of their wealth for social betterment. On this episode of We The People, we ask: can the Indian rich help narrow down the widening inequality? Is philanthropy enough to push our development agenda without a streamlined structure and proper execution? Are CSR and inheritance tax feasible tools to help improve the way our resources are allocated?
India’s economic growth over the past two decades has led to the emergence of a new economic class of the super wealthy. In tandem with this, private philanthropy has tripled between 2011 and 2016, according to the Bain India Philanthropy Report, and is expected to increase significantly over the coming years. With this in mind, it’s worth considering what has led to this uptick in philanthropic giving, and what bearing it might have on the Indian non-profit sector.
The other panellists invited to We The People, to discuss this issue included Kiran Mazumdar-Shaw, CMD of Biocon India Limited; Medha Patkar, social activist; Pushpa Sundar, founder of the Sampradaan Indian Centre for Philanthropy; Amitabh Behar, Executive Director of the National Foundation of India; Lakshmi Nalapat, the 12th princess of Travancore; Shreyasi Singh, author, ‘The Wealth Wallahs;’ Gurcharan Das, author and former CEO of Procter & Gamble, India; and Jeffrey Alan Gettleman, the South Asia bureau chief of the New York Times.
This is an edited version of an episode of We The People, where Rohini Nilekani and others talk about whether the rich can help narrow the widening economic inequality, and if CSR and philanthropy are enough to push the development agenda in India.
In Order to Give, We Need to Scale
In terms of giving, Indians have actually matched or surpassed other countries when they were at the particular stage of the economy that we are at now. The reports from Bain & Company also show this trend, so the data does indicate that the country is doing well, in terms of philanthropy. Certainly, there is always the potential for people to give more, with the top 1% garnering more power and wealth than ever before. Our society today is undoubtedly unequal, so people do need to address that in a way that is effective. But at least the reports show that India is on the right track, in that we are as generous, if not more generous, than other economies at this stage.
However, philanthropy in this country is not a simple question of parting with one’s money. One of the major issues that this class of wealthy Indians find, is that the pipelines aren’t set up so they can pour in their investments and immediately have real social impact. Instead, what happens is that they must first build out those ecosystems and widen the pipeline into which they can give. The Indian non-profit sector is diverse and thriving, but not many institutions have the ability to absorb such large amounts of capital. So the starting point for many of us in the philanthropy sector, is to invest in building up the capacity of organisations to scale, so that they have the ability to receive the money that’s waiting. It’s a long process that involves learning and adjusting, to ensure that the organisation can expand and implement those donations in an effective way.
Two Kinds of Wealth
Within the socio-economic strata of Indians able to part with vast amounts for philanthropy, I think we’re beginning to see a change in the sources of that wealth, as well as a change in attitudes towards giving. Only in the last 25 years or so, have the wealthy felt secure enough about their financial positions to be willing to give. Guruchand Das points out that wealth accumulation in India only picked up after ’91, when India got its economic freedom. He further notes that the life of a business house in India is around 60 years. The first generation made the money, the second generation used that money to gain power, and the third generation which now has money and power, tries to build their reputation by giving money to philanthropy.
People who inherit their wealth do feel like they have to save it for future generations, as it has been saved or them, rather than to give it all away to philanthropy. So it makes sense that this new wave of first generation wealth creators are more willing to give their wealth away. In terms of individuals with inherited wealth, the question of whether it’s time to bring in an inheritance tax, if not other kinds of taxes on the wealthy, is certainly an appropriate one. Perhaps that could function as a motivator for philanthropic giving, depending on how it’s implemented. There might be a lot of resistance to this, but I do think this discussion should be opened up in India.
Shreyasi Singh also explains this difference between inheritors of wealth, who believe they are custodians of the family wealth, and the newly wealthy. The latter are in their 30s or 40s and the truncated time it takes for them to come into these large amounts of money leads to a greater sense of gratitude and responsibility to give back. She also points to the possibility of greater ambition among these first generation wealthy, who value innovation and risk-taking when it comes to philanthropy. The culture around philanthropy is also changing. Singh mentions an interesting perspective from someone she met while working on her book, who said that while in the past India idolised its freedom fighters, today we idolise wealth creators. The sociological filter for who we value and what the metrics for success is, has changed, and now this class of super wealthy must be seen giving back to society. We need to create a culture of giving, where people aren’t forced to give, but see it as something aspirational. When figures like Bill Gates started working in the philanthropy sector, we saw him as a role model and it encouraged others to also give. So even if some criticise this as a PR move, it’s important to celebrate these role models and to foster the culture of philanthropy.
Philanthropy, Charity and CSR
There is, as Pushpa Sundar mentions, a difference between philanthropy and charity. While charity is also a form of giving, philanthropy involves planning for social change. Indians do a lot of charity, especially when calamities like floods, earthquakes, etc strike. But we also need strategies to ensure social change on a larger scale. I think it’s important for us to now be tackling social justice issues and larger societal problems. Medha Patkar also points to this need for people to address the basic causes of inequality, and we need philanthropy in order to do this. Patkar makes a very cogent argument about the way we should go about doing so. CSR ensures that companies earning a certain amount of net profit a year should give back to society. However, they have made that profit through the labour of minimum wage workers who could never dream of making that much money. So the question becomes whether something that comes out of inequity can actually bring about equity or justice. It’s only when the people who we want to bring justice to are actually involved in the process of envisioning a solution, that any kind of real change can take place – and that is the role of philanthropy.
According to the Bain report, we know that private philanthropy is growing faster than CSR, and government spending on welfare. While some may be concerned by that, individual actors in the philanthropy sector may actually have more freedom to work in areas that business houses or companies would want to avoid. The kind of work that Kiran Mazumdar-Shaw has been doing, as well as what we have been doing, involves engaging people who have lost their rights, who require legal initiatives, etc. which corporate philanthropy might steer clear of, because of certain politics involved. CSR initiatives usually focus on safer areas like education and healthcare, but we need to invest and scale for other issues as well. Between CSR, charity, and philanthropy, I would agree with Amitabh Behar that what we really need today is strategic philanthropy for social justice.
I personally believe that philanthropy cannot be apolitical, and I mean this in the best sense of the term. I don’t mean that party politics are involved at all. The work I do is political because it is essentially about the redistribution of power. When power is not distributed equitably or sustainably, then you have to address it, in whichever sector you’re working in. When it’s a question of access, or where people don’t have the same rights or ability to enforce those rights, those issues are automatically political issues. A lot of my work has been within this space and addressing these questions, so I do think it’s very hard for philanthropists to be able to stay apolitical. I understand the danger of this, when powerful individuals have the ability to fund initiatives and impose their own views on others. However we do not live in a vacuum, and I don’t think there’s any such thing as safe philanthropy. All of us have our politics and they do play out in how and to whom we decide to give. At the end of the day, if we want to affect change and tackle issues of power, then we need to be ready to take risks.
The act of taking risks is integral to the sector. Patkar points out that if we reduce the role of philanthropy to simply be about reducing wealth inequality, then we are undervaluing all the other roles it plays in our society. We need philanthropic initiatives to back experimentation, innovation, and talent, which can result in creatively rethinking solutions for certain issues. By taking risks ourselves, and learning from our failures, we can map out entirely new blueprints for societal change, which the government can then use. Patkar says that a society needs much more than bread, and philanthropy can provide the platform for those possibilities to bear fruit.