The Covid-19 pandemic took a huge toll on businesses in India, but despite that, the private sector didn’t shy away from its philanthropic commitments. According to the Bain & Company and Dasra Indian Philanthropy Report 2021, in fiscal year 2020, private-sector funding was in the region of ₹64,000 crore, close to 23% more than in fiscal year 2019 (₹52,000 crore). However, unlike most years when almost a quarter of the philanthropic donations come from foreign contributions and the remaining from domestic corporations in the form of social corporate responsibility funding (which account for 28%) and retail investors (with donations to the tune of ₹5 crore account for another 28%), in FY 2020, family philanthropy accounted for almost two-thirds of the increase in funding since FY19. While other sources remained stagnant, family philanthropy, according to the report, tripled its corpus and grew to ₹12,000 crore in FY20.
The wealth of billionaires in India grew by 35% between April and July 2020, according to the Billionaires Insights 2020 report published by UBS and PwC and this has been reflected in their philanthropic activities. Families are also giving back to society sooner, says the Bain & Company and Dasra Indian Philanthropy Report 2021. The Insights into UHNW Family Philanthropy in India report by UBS suggests that the time needed for such families to create their first foundation for philanthropic giving dropped from 30 to 50 years in the 1950s to 15 to 20 years in the 2010s.
Billionaire families' interest in philanthropic activities is also deepening. According to an Edelweiss report, 95% of family business owners have philanthropic interests and commitments. PwC suggests that these interests and activities are not limited to capital but indicate a significantly deeper commitment. Approximately 90% of such families in India are engaged in activity in addition to giving money— a significantly higher portion than the global average of 68%.
Family philanthropy, according to the report, has fewer constraints than other sources, enabling a broader impact on the social sector. These donors have a greater ability to innovate, influence public policy, build institutional capacity, and experiment with new forms of funding.
Family Biases
The family foundations however, have biases towards certain causes such as education and healthcare, and often other pressing issues such as gender equality get neglected. Even in FY20, education and healthcare received a higher share of family giving (47% and 27% respectively).
Not only do family foundations have a bias towards supporting education and healthcare causes, since bulk of them live in Mumbai, Delhi and Bangalore, these geographies get undue advantage of their wealth. The report says that these areas account for 77% of ultra-high-net-worth individual (UHNI) wealth and 85% of total actual donations, leaving a greater need in “aspirational districts.” For example, Odisha (a relatively underperforming state) has SDG India Index composite scores of 61 and 40 for health and education, respectively, whereas Maharashtra (a better-performing state) scores 76 and 65, respectively. This divergence of outcomes mirrors an unequal distribution of resources
The Bain & Company-Dasra report also points out that a majority (60%) of family philanthropists engage with non-profits through grant-making. “Not all NGOs can absorb scale funding of the sort offered by these families, given that only a handful of NGOs in India have an annual operating budget of more than ₹5 crore, according to a study by Ashoka University’s Centre of Social Impact and Philanthropy (CSIP) (the average annual budget of NGOs in India is less than 60 lakh crore). Such grant-making behaviour is better suited when the non-profit ecosystem is more sophisticated and has a larger scale,” says the report.
Though philanthropic spending in India is on the rise, the Bain & Company-Dasra report says that the social sector remains underserved. “Compared with other BRICS countries, India under-spends on the social sector—reflected in its relatively poor ranking (117th) on the Sustainable Development Report. Central government spending on the top 10 social programmes accounted for the vast majority of overall public funding for the social sector, with a contribution of ₹3.2 lakh crore for FY20,” says the report.
