Tapping the promise of Philanthropy

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India has had a centuries old tradition of philanthropy , which was dominated by a few business houses in few decades before and post-independence who has the desire to contribute to nation-building.

What is the current scenario in Philanthropy sector in India?

The scenario has changed now. Economic growth has led to more people becoming wealthier at younger ages and consequently having the desire to give back to the society.

Also, Regulations around corporate social responsibility have provided a nudge to corporations to support social causes. There is also a host of platform that now facilitate smaller retail donations.

There has been greater professionalism within philanthropy and a shift from ideas of it being a source of development rather charity.

What are the challenges that still remain?

Indian philanthropists still donate a much smaller portion of their wealth relative to countries like the US.

Significant sectoral and regional concentration- Education and healthcare receive 75 per cent of family-based giving in India. Many critical sectors like environment, rural development and citizen empowerment remain underrepresented.

More concentrated in Metro cities-Around 85 per cent of donations by ultra-high net-worth individuals are spent in three cities alone — Mumbai, Delhi and Bengaluru.

This unequal distribution of resources needs to be addressed.

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How has the Pandemic affected the Philanthropic efforts across sectors?

Many non-profits find themselves struggling to survive which makes Philanthropy much more relevant in current times. These organisations will require not just infusion of capital, but significant handholding to become stable again

What is the way forward?

Risk taking-Philanthropic capital enjoys much greater independence than governments and corporations and are better-placed to support complex and under-invested areas by experimenting with novel approaches. This should motivate philanthropists to experiment with innovative methods and plans for development .

For example- For example, REVIVE Alliance, a coalition of philanthropic funders and multilateral organisations, is experimenting with the concept of “returnable grants” with only a “moral obligation” to repay if specific financial milestones are achieved.

Patience– Philanthropic capital must be patient and seek to support longer-term, systemic change as Social change is a long and complex process; success is often not immediately visible.

The areas which require long term investment but also provide long term gains are research, developing sector-level institutions and infrastructure, and also .developing the capacity of NGOs themselves

Trust and collaboration– Multi-year funding commitments based on trust can allow NGOs to focus on impact rather than worrying about fundraising. Also, collaboration will help in  shared learnings which will have a multiplier effect.

Being adaptive-Funders should acknowledge that things may not always go as planned and that that require them to re-evaluate their approach or priorities. Having robust feedback loops is will help in this.

Source– This post is based on the article “Tapping the promise of Philanthropy” published in Business standard on 17^th Feb 2022.