How India’s New Philanthropists Are Working to Bring About Systemic Change

When steel baron Lakshmi Niwas Mittal, then the fifth richest man in the world and the richest Indian, was asked at a media interaction in Mumbai about his views on philanthropy, he had a simple answer. “I am too young for charity,” he said. That was in 2006 and Mittal was 55. One year later, it was the turn of his son Aditya, a Wharton alumnus and chief financial officer in his father’s empire, to be asked the same question by The Sunday Times of London. Aditya Mittal, then 33, had a slightly different take on the issue. “At some point I may want to do something completely different, like dedicate my life to philanthropy,” he said. His plan is to establish a string of health centers in India to reduce infant mortality. Father and son may be based in London now, but when Mittal Jr. gets into giving, it won’t be long distance.

If you run a health check on the state of philanthropy in India today, you will find that it is getting younger, more energetic and more involved. The silver citizens — tired trustees nodding over coffee in somnolent boardrooms — are on their way out. Young blood is coming in. They are still traditional in the sense that they don’t go about shouting from the rooftops about their philanthropic credentials and achievements. But their numbers are growing. People are making money and they are prepared to distribute it, too.

While India may not boast as many super rich as some other nations, it does have a fairly healthy kitty. Economic daily Business Standard’s rupee billionaires club lists 106 new members in 2010, taking the total tally to 657. The net worth of these 657 billionaires is around US$357 billion; that’s 20% of the total market capitalization of India’s listed companies. India’s dollar billionaires, though a smaller number, increased from 33 to 45 last year.

The Quiet Givers

S. (Kris) Gopalakrishnan, co-founder and co-chairman of Infosys Technologies and one of India’s rich brigade, points out that everybody has their own philosophy about giving.”Each individual has to decide for himself or herself. I believe that if every individual can help at least one other individual at their time of need, that’s sufficient,” he says. Reticent at the best of times, Kris, who is believed to be a generous donor, is even more restrained when it comes to talking about his own philanthropic activities. As indeed is his longtime colleague and mentor at Infosys, N.R. Narayana Murthy.

Murthy, who co-founded the Indian IT bellwether 30 years ago, ushered in a new era of wealth creation among its middle-class employees. Infosys was one of the first companies in India to offer its employees ESOPs (employee stock ownership plans) and made millionaires of them. Murthy and his wife Sudha are known to be big givers in their personal capacity. But while neither of them misses an opportunity to showcase Infosys’ achievements or that of the Infosys Foundation (headed by Sudha), they are usually tightlipped when it comes to their personal giving. Says Murthy, “I don’t like to talk about it. I personally believe that philanthropy should not be talked about much.”

Katherina M. Rosqueta, executive director at the Center for High Impact Philanthropy at the University of Pennsylvania, points out that given the differences in history and culture, philanthropy in India is very different from that in the U.S. Philanthropists in India, she notes, typically have some personal relationships with the beneficiaries of their generosity. “If I had to sum it up in one word, I would say that right now, Indian philanthropy is more ‘intimate’ than American philanthropy,” says Rosqueta. (See interview with Rosqueta.) 

Some of that is changing, although slowly. While they may still be largely reticent about going to town with their philanthropy — IT czar and Wipro chairman Azim Premji, who tops the list of philanthropists in India, is also amongst the most tightlipped — the new philanthropists in the country are moving beyond charity and doling out handouts to individuals. Instead, they are looking at ways to bring about deep-rooted, systemic changes in society. They are spending a lot of money getting the best people, putting processes and accountability measures in place and, equally importantly, giving of their time.

Arpan Sheth, partner at Bain & Co, who last year presented a study titled An Overview of Philanthropy in India, says: “I’ve spoken to many of the newer philanthropists, and I feel that they are very passionate. Each of them is taking a very cause-based approach. They have specific causes they want to impact and change.”

Premji is right on top of this list, too. In December last year, in the biggest single act of philanthropy by any Indian, Premji made an endowment of US$2 billion towards his decade-old foundation called the Azim Premji Foundation (APF), which works in the area of primary education. At the time of the US$2 billion funding, Premji said: “I’m completely committed to supporting the larger ambition of creating the required social change.”

Building Institutions

Dileep Ranjekar, a Wipro veteran who joined the APF as CEO when it was first set up in 2000, recounts that in the early days of the APF, Premji went to slums in Mumbai and to the interiors of Andhra Pradesh to see for himself what some others were doing in this space and how his Foundation could contribute most effectively. “Our aim is to address the problem at the deepest level and work at bringing about systemic changes on a large scale,” says Ranjekar. Adds Anurag Behar, co-CEO of the APF: “For the past 10 years we worked in the ‘program’ mode. Now that we have understood this space well we are working towards building an institution.” Like Ranjekar, Behar is one of Premji’s trusted and senior lieutenants and was with Wipro from 2000 onwards before moving to the APF in July last year.

A key pillar of the new approach at the APF is the setting up of the Azim Premji University in Bangalore. Expected to be operational in July, this is India’s first private university to focus on postgraduate programs in education and development. Other activities of the AFP include an Institute of Assessment and Accreditation to develop standards of excellence in the education sector; and the establishment of state and district level institutes to work with the local communities and government to offer on the ground support in education and allied development domains.

The newest big ticket philanthropist on the block is G.M. Rao, chairman of the infrastructure major, the GMR Group. In March this year, Rao committed to give US$340 million to the GMR Varalakshmi Foundation (GMRVF), the group’s corporate social responsibility arm. The endowment amount is equivalent to his entire share in the business. “Three months back, we completed a 10-year strategic plan for the Foundation and we made ambitious plans. So that this plan is not affected by fund shortage I decided to pledge the entire portion of my personal part of our wealth,” says Rao. (See interview with Rao.)

The GMRVF is active in 22 locations in India and Nepal and works in the areas of education, health, hygiene and sanitation, empowerment and livelihoods, and community development. “As an infrastructure company, our footprints are local. Hence, the Foundation typically works with the under-served communities in the proximity of our projects. Since these communities are affected by us and affect us, we feel we owe our primary responsibility to them,” says Rao. “We have put in place MIS, reporting and review systems for the Foundation activities just as we have for our businesses.”

Focusing on Education

In September last year, another IT czar, Shiv Nadar, chairman of HCL Technologies, committed to donating 10% of his wealth. His personal wealth is pegged at about US$3 billion, and he has already given US$130 million to his Shiv Nadar Foundation. Nadar was followed by his CEO Vineet Nayar, who sold one million shares of his personal holding in the company to fund Sampark, a non-profit organization that he founded a few years ago. Like Premji (and Rao), these two are also focusing on the education sector.

While there is no hard data to support this, going by the information available, the education sector gets the most of the philanthropic donations in India. This is not surprising. For one, it is well accepted that education plays a vital role in the upliftment of a society. Two, India’s scorecard in this sector is dismal. According to various estimates, the literacy rate in the country is only 65%, only 39% children reach 10th grade and of these, only 40% move to the next level, one out of three children in grade five cannot read and write, 75% of the schools are multi-grade and teachers are not trained adequately.

Of philanthropists focusing on other sectors, one name that stands out clearly is that of Rohini Nilekani. One of India’s most visible philanthropists in recent years, Nilekani has zeroed in on water as her core focus area. The vision statement of her foundation Arghyam (which means “offering” in Sanskrit) is to provide “safe, sustainable water for all.”

In 2005, Nilekani set up Arghyam with an endowment of around US$22 million. (Rohini is the wife of Nandan Nilekani, co-founder of Infosys. She currently holds 1.41% in the company). Since 2005, she has given around another US$10 million to Arghyam and US$10 million to some other causes. Commenting on the choice of water as her area of key focus, she says, “There are so many challenges and so many causes to choose from. The trigger has to come from both your brain and your heart.”

In order to achieve scale and maximum impact, Nilekani has chosen to work primarily through partnerships with the government, NGOs and various types of institutions. “We believe in collaboration,” she says. “If you want to address systemic issues, one needs to build an entire ecosystem around the giving.” Nilekani adds that “there is plenty of skill and plenty of commitment in India. One needs to tap into it.”

The Importance of New Platforms

Manish Chokhani, director at financial services firm Enam Securities, has chosen GiveIndia, a donation platform that has a portfolio of 200 NGOs, as his vehicle for giving. Chokhani and his wife have identified building teacher capacity as their area of focus and have decided to give away half of their wealth towards this during their lifetime. Most of this will be routed through organizations that have been scrutinized for transparency and credibility by GiveIndia. He explains why: “It would be hard to imagine someone like a Bill Gates or Azim Premji, who have built vast business enterprises of their own, giving away large amounts of money to someone else to do something that they can do better. Similarly, people like me, who come from a financial services background and have not built organizations from ground up, would typically look at organizations like GiveIndia which offer a ready, credible and effective platform.”

The Chokhanis are also members of GiveIndia’s First Givers Club, a platform that seeks to foster an active giving culture and help build a community of donors. They have committed to a minimum of 40 hours a year. “That’s in theory. I am sure we spend a lot more time than that. But it’s not always about being there. Sometimes it’s about networking, building connections. It could be just a five minute call or an hour of strategizing,” he says. Chokhani sees organizations like GIveIndia as a critical part of the new ecosystem of philanthropy because they offer new options for individuals to give in a more effective manner — whatever the size of their contribution.

For JP Morgan CEO Kalpana Morparia — who, after being involved in various charitable activities like supporting the SOS Children’s Village and other causes, was looking for some way to make a more lasting impact — the answer came by way of the Bharti Foundation. Set up by India’s telecom king Sunil Mittal, the Bharti Foundation works in the area of education and currently covers more than 30,000 students. It plans to increase this number to 200,000 in due course. In a recent interview with an economic daily, Morparia, who has donated around US$330,000 to this foundation, noted that “the scale and the rural reach [of the Bharti Foundation] impressed me. And Sunil Mittal’s approach to scaling is known and proven.”

Like the GMRVF, which is an intrinsic part of the GMR Group, the Bharti Foundation, set up in 2000, is the philanthropic arm of the Bharti Group. This model — that of a family-run business organization creating a separate foundation or Trust which is largely funded by the business — is probably the most common model of philanthropy in India.

A Long Way to Go

Jason Wingard, vice-dean, executive education at Wharton School, points out that it is ironic that “even as the country’s recent economic boom has created a new class of millionaires — much as the Industrial Revolution did in America at the end of the 19th century — these individuals and successful Indian corporations have been slow to increase their levels of charitable giving.” Wingard believes this is due in part to lack of well-established philanthropic institutions.

Rueben Abraham, professor and executive director at the centre for emerging market solutions at ISB, adds that there are more basic forces at work. “Philanthropy is something that happens when you are secure in your own wealth. That is not something that most Indians are used to. We have only seen a generation and a half of wealth, and one really can’t still take it for granted. The security about wealth has not yet seeped into the consciousness of the Indian wealthy. And of course there is no policy incentive for people to give.”

At the same time, however, there is no mistaking the new energy towards philanthropy in the country. With India on a liberalized and sound economic footing, Indians are creating wealth in diverse and non-traditional manners. More importantly, many of the new rich have their roots in middle-class values and work ethic. They are also creating wealth at a much younger age. All of this is leading to new attitudes towards giving.

Nilekani encapsulates the new thinking: “Earlier, because of the way the economy was structured, the family capital had to be passed on to the next generation to run the business. Wealth was a legacy that you received, and you had to carry it forward. All that has gone for a toss. People like us who have made money from new sectors have no obligation to give all of it to our children. They, too, don’t want to be dependent on us. Our children are well educated and are excited about creating their own futures and their fortunes.”

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