Philanthropy – Power of giving: Fund-starved sectors like science, health, education, rural development need generous HNIs

News: Recently, families of IT firm Mindtree’s co-founders Subroto Bagchi and NS Parthasarathy donated Rs 425 Crore to Indian Institute of Science. IISc.

It should be noted that last year, IISc broke into the top 100 band in Times Higher Education’s Reputation Ranking of global universities. The donated amount will utilized to set up medical facilities focussed on cutting-edge clinical research and innovation.

Philanthropy in India is growing, but the fund flows are too miniscule, despite the country boasting many high net-worth individuals (HNIs).

How do Indian foundations fare as compared to global foundations in terms of assets and spend rate?

A Harvard Kennedy School study of nearly 1.6 lakh foundations across 22 major countries revealed that

– 97% of foundation assets totalling $1.5 trillion are concentrated in the US and Europe.

– Not only are Indian foundations’ ranking abysmally low, their spend rate (expenditure versus assets) was a low 3% against 9% in the US and 37% in Spain.

What is the present situation wrt philanthropy in India?

The India Philanthropy Report 2021 by Bain and Dasra notes philanthropic funding in 2020 rose 23% to Rs 64,000 crore.

– Foreign contributions, CSR and retail donations have stagnated at 80% of inflows. Family philanthropy accounted for most of this increase.

An Edelweiss study predicts 4 lakh Indian HNI families by 2025 with assets totalling Rs 360 lakh Crore, against 1.5 lakh families with Rs 140 lakh crore assets in 2018. This reveals high growth potential for family philanthropy.

The tech sector accounted for 26% of family philanthropy, despite boasting only 9% of HNI families.

Why funding by domestic HNIs is essential?

Domestic HNIs funding local causes could help offset the pressure applied by FCRA restrictions to global non-profit contributions to India and the pandemic’s severe blow to those in lower income brackets.

India’s public spending in areas like science and technology, health and education is abysmally low in proportion to GDP compared to other countries. Hence, philanthropy can help bridge this gap.

Source: This post is based on the article “Power of giving: Fund-starved sectors like science, health, education, rural development need generous HNIs” published in Times of India on 15^th Feb 2022.