Business Ethics

Global Philanthropy: Why Western Models May Not Work Everywhere

Warren Buffett and William Gates are targeting billionaires: They want the world's wealthy to contribute at least 50% of their fortunes to charity by joining a global initiative called the Giving Pledge. By the end of April, the 69 donors who had signed up so far included Larry Ellison, David Rockefeller, Ted Turner and Mark Zuckerberg. In India, there are none. When Buffett and Gates were visiting the country in March this year to push their cause, G.M. Rao, infrastructure tycoon and head of the GMR Group, announced that he was donating US$340 million -- his personal share in the business -- to charity. But he clarified it had nothing to do with the visiting duo. In China, which Buffett and Gates had visited in September 2010, billionaire philanthropist Chen Guangbiao said he would donate not half but all of his personal wealth to charity. According to a Reuters report, he had convinced 100 other Chinese businessmen to do the same. Still, seven months later, none of their names are on the Pledge. "[Buffett and Gates] don't understand China," says Feng Gang, professor of sociology at the Zhejiang University in Hangzhou. Adds Harsh Goenka, chairman of the Mumbai-based RPG Enterprises: "[In India,] our charity is not about writing fat checks."

Following their trips to the two fastest-growing economies in the world -- India and China -- the two billionaire philanthropists seem to have realized that in charitable giving, one size does not fit all. "A number of people have shown interest in knowing more about what we are doing in the U.S., but it doesn't mean that it should be done the same way in India," Buffett told India Knowledge@Wharton in Bangalore. "You have your own culture, your own history. All we are here to do is talk about what we have been doing. When we were in China, we met around 50 to 60 billionaires, and I was astounded, frankly, that one after the other stood up and talked about the same things that people talk about in the U.S. -- their families, their business, their hopes, their fears, everything. When people talk to each other, they learn. We can all learn from each other." Added Gates, who spoke to the media in New Delhi: "Each country should decide what model of philanthropy makes sense to them."

A Difference in Culture

Their circumspection was understandable. The Giving Pledge has been promoted heavily by the media, but some of the country's wealthiest businessmen ignored the meetings in India. Mukesh Ambani, who is currently the richest Indian, went to watch cricket instead of attending. Others were openly critical. "Philanthropy in the first world and in the third world are two different things," Yusuf Hamied, chairman and managing director of pharmaceutical company Cipla, told The Economic Times. Industrialist Ajay Piramal, who sold Piramal Healthcare to U.S.-based Abbott in a deal worth US$3.72 billion, wrote in the morning newspaper DNA: "In India, a lot of people don't want to talk about the good (philanthropic) work they are doing. In a way that is the dilemma we ourselves are facing: whether to talk about it or not. But then, we were told [by Buffett and Gates] that we should talk about it. People are looking for role models. So, now I've started talking about the work we do, which I haven't really done earlier."

In China, Feng feels that Gates and Buffett came without doing their homework. "China has two issues in terms of philanthropy," he says. "First, all of China's philanthropy organizations are managed by a few government-related agencies. No institutions can receive any donation without certain approvals. And private organizations in philanthropy are not allowed to operate. Second, with several corruption scandals, many entrepreneurs have serious concerns about the credibility of these agencies; they would rather donate on a one-to-one basis. The foremost challenge for China's philanthropy is to open it to private organizations, with the government playing a management role, and to build up trust among different parties."

But this new, very public style of philanthropy represented by Gates and Buffett has attracted some criticism in the West, too. Businessweek points out that Buffett, who "is one of America's greatest misers in life, will probably become one of its greatest philanthropists in death." However, that may not be so unusual, some observers note. Says Arpan Sheth, partner at Bain & Company: "Even the great philanthropists -- John D. Rockefeller, Andrew Carnegie and J.P. Morgan -- did not give away their riches until toward the end of their lives." Wipro chairman Azim Premji, who made India's largest philanthropic donation of US$2 billion in December 2010, is well known for his parsimony. He supposedly keeps tabs on the consumption of tissue paper in the office. And China's Chen Guangbiao, reports the BBC, does not give money to his siblings. His sister earns US$270 a month washing dishes in a hotel and his brother earns slightly more as a security guard.

"As conspicuous consumption approached its height in 2006, those spending big had created the perfect offset: conspicuous charity," says the World Wealth Report 2011, authored by Citi and Knight Frank Worldwide. "Today, high-visibility charity auctions are viewed as pre-credit-crunch relics, their ostentatiousness exposed. But this was the showiest, not the smartest, way of giving."

Unnecessary Hard Sell

"While I commend [Buffett and Gates's] philanthropy, what remains amazingly inexplicable is their reason to 'sell' this idea to others," says Devdutt Pattanaik, chief belief officer of the Future Group, India's largest retail chain. "I guess it stems from their fear of mortality. To 'convert' is not an Indian thing. Those who are charitable are charitable, and those who don't want to be are not."

Pattanaik notes that all the publicity surrounding the Pledge may well be changing Indian thinking. "In India, the idea is that anyone can be generous. In the epics, there are references to the poorest of the poor and even animals displaying acts of generosity. With the Western discourse coming in, the idea is increasingly becoming that the 'rich have to be generous.' This notion that charity and generosity are functions of wealth, and not personal evolution, is the trend that is increasingly evident. There is a move to coerce people into being charitable. The focus is tragically behavioral, not belief-driven."

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