Philanthropy could help unlock India’s vast economic potential

Source: The post is based on the article “Philanthropy could help unlock India’s vast economic potential” published in the Livemint on 22^nd August 2022.

Syllabus:  GS 4 – Corporate Governance.

Relevance: Philanthropy and its relevance.

News: India will reach a per-capita income of some $15,000 by India@100 in 2047. In that, philanthropy can play a crucial role in accelerating economic growth that is both inclusive and sustainable.

About philanthropy in India

Philanthropy has long been embedded in Indian society and contributed heavily to the creation of modern-day India.

Pre-industrial India: 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.

After Industrialization: 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.

During the independence movement, 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.

Philanthropy at present: India has witnessed an increase in domestic philanthropy. Few famous philanthropists are the Tata family which continued Jamsetji Tata’s tradition of philanthropy, Azim and Yasmin Premji, and Nandan and Rohini Nilekani, etc.

About the Philanthropical role models in the USA

While India was undergoing independence movements, America was witnessing the Carnegie-Rockefeller era of philanthropy.

Andrew Carnegie built impressive institutions like Carnegie Library and Carnegie Mellon University and also inspired the rich to contribute to philanthropy. The last line of his book reads: “The man who dies rich, dies disgraced.”

John D. Rockefeller 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.

What are the challenges that hampered philanthropy in India?

There are three major challenges that have hampered Indian philanthropy. These are, a) A trust deficit: Philanthropists haven’t fully appreciated for 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 doesn’t yield desired results. For example, a number of foundations and NGOs work on school education, yet learning outcomes have not improved.

How philanthropy and philanthropists can create a meaningful impact on Indian society?

There are four strategic ways that emerging philanthropists can create outsized impacts. These are,

Build institutions: India needs collective philanthropy to build new universities. Donors can fund think-tanks and build area-specific (say, on energy transition) or geography-specific (such as eastern Uttar Pradesh) institutions.

Fund risky R&D for the government: Philanthropists can fund innovative models and test new ideas through non-profits by building evidence, advocating for policy change and supporting government implementation.

Support governments to improve delivery: Philanthropists need to change their orientation from funding programme delivery through NGOs to initiatives which improve the government’s system of delivery. For example, the Piramal Foundation is supporting the Aspirational Districts.

Enable economic growth: Philanthropists can use their wealth and experience to advocate policies, support the improvement of enabling conditions for investment, exports and job creation, and help transform India’s economy.