IT Leads the Way in Philanthropic Activities

India is home to some of the poorest people in the world. According to the World Bank, almost 42% Indians live on less than $1.25 a day which calls for urgent attention. But what is ironic is that, at the same time, India is the second fastest growing economy in the world. There are a host of experts who believe that India must work on reducing this disparity at the earliest. Relying on government is one way but isnt the only solution. The private sector or individuals holding most of the nations wealth have to show magnanimity, and contribute to healthcare and educational programs aimed at poor. Recently many people, particularly from IT industry, have garnered headlines for their charity endeavors. Most of the IT companies have their charity foundations that offer help to the marginalized. Ajim Premji Foundation, Infosys Foundation, Bharti Foundation, Shiv Nadar Foundations are some of the examples.

The burgeoning billionaire club in India seemingly has understood the importance of including the downtrodden in the mainstream. Many of the foundations run by these groups have started outreach measures in rural areas which are close to the parent firms office. We work on educational and healthcare programs for poor children in areas where Infosys has physical presence, says Sudha Murthy, chairman, Infosys Foundation.

Though a new tribe of philanthropic billionaires have risen to the occasion, of late their efforts are still in a nascent stage.

IT Industry Leading the Charity Brigade

If experts are to be believed, the concept of philanthropy is faring low in India. It further needs to get nurtured among the Indian billionaires, who are slowly loosening their purses for the underprivileged class and are trying to show their support to social upliftment causes. Like Warren Buffet, the third richest man in the world who recently visited India, says, Indian billionaires have to show inclination towards charity works and understand the ways of giving back to society. A group of Indian businessmen, mainly from IT industry, has put their charitable traits on display leading the charity brigade in India. Azim Premji of Wipro, Shiv Nadar of HCL, Narayan Murthy of Infosys, and Sunil Bharti Mittal of Bharti Enterprises, among others have formed foundations with the purpose of extending education and healthcare facilities to the marginalized sections of the society. A part of their income annually goes into charity works of various kind. In Forbes Asias list of philanthropists in India, 3 persons namely Rohini Nilekani, wife of Infosys Technologies co-founder Nandan Nilekani; Sunil Mittal, chairman and group chief executive of Bharti Enterprises; and Shiv Nadar, chairman and chief strategy officer, HCL Technologies, were included from IT and telecom sectors.

It is difficult to talk about billionaires in India and call upon them to do charity works. But I personally believe that our country needs great help. Poor people lack basic amenities like education and healthcare facilities which deter them from entering the mainstream, says Murthy.

According to Bain & Cos Indian Philosophy Report 2010in 2006, Indias giving totalled close to $5 bn, which is expected to rise steadily to 0.6% of GDP.

India Well-positioned Among Emerging Economies

India is well-positioned in Asia and among the developing countries as far as philanthropic activities are concerned, but lags at international levels. When India is shown way ahead in Bain report with 0.6% as compared to 0.3% in Brazil and 0.1% in China, it runs far behind developed countries like US that make donations totaling slightly more than $300 bn or about 2% of the US gross domestic product.

Admittedly, the US is a far more developed economy and the comparison between its figures and Indias has its limits. But the figure is impressive by any standards.This comparison makes us realize that we still have a long way to go, especially as a growing number of Indians accumulate wealth. So we must ask ourselves this urgent question: What will it take for our giving to reach the levels of the US or UK, where philanthropy tops 1% of GDP annually? writes Arpan Sheth, author of Indian Philanthropy Report, Bain & Co.

There is a large chunk of population struggling in the absence of basic things in India. We need to catch up with developed counterparts as far as giving is concerned. And given the very significant role that business organizations can play in society today, they must also engage with and contribute to the social issues, says Anurag Behar, CEO, Azim Premji Foundation and chief sustainability officer, Wipro.

Encouraging Philanthropy in India

In order to encourage charity in India, there is a need for special impetus either through making regulations flexible or removing their unnecessary paperwork. Also Indias growing class of wealthy individuals need to develop a mindset for giving. A close look at Indias growing class of wealthy people leaves no doubt that they have the capacity to be more active givers. Bain research further shows that nearly 40% of the nations wealth is controlled by the top 5% of Indias households. Theres more to itthe wealthiest 1% controls about 16% of the national wealth. The report further reveals that there are over 115,000 high net-worth individuals in India today. Realizing this, recently Bill Gates and Warren Buffet courted Indias rich in a discussion which saw the likes of tech tycoons Azim Premji and Shiv Nadar, among other participants.

India has a remarkable tradition of giving. Its clear that theres some great thinking going on about philanthropy, said Gates in a statement after the discussion. Both Bill Gates and Warren Buffet who have donated for various charitable and humanitarian causes, spoke on the ways of improving philanthropy in India and put forth their experiences.

While old business families such as the Tatas and the Birlas have a long established tradition of charity, the more recent wealth creators have yet to open their purses in a big way. Wipros chairman Premji recently donated shares worth $2 bn (`8,846 crore) to his charitable foundation, joining the league of Asias top philanthropists. Similarly Shiv Nadar Foundation is aggressively building up schools and educational institutions for the underprivileged class. Many people are aware of what the Shiv Nadar Foundation is doing. My vision is to empower individuals with transformational education to mould leadership. The key initiatives of the Shiv Nadar Foundationthe SSN Institutions and VidyaGyanhave today become Indias top private engineering college and school, respectively.

Their core focus is to provide access to world-class education to extremely challenged but meritorious sections of the country, shares Shiv Nadar to a query on CIOL.com.

Infosys Technologies contribute `15-20 crore annually to charitable works in India. The money is spent on educational and healthcare activities, shares Murthy.

According to Indian CSR, the top givers in India include Azim Premji, chairman of Wipro, who transferred about 8.6% stake of his personal shares for education initiatives; GM Rao, chairman of GMR Group, who has pledged his personal stake in GMR holdings to create a `1,540 crore endowment that will fund activities of the charitable foundation run by his firm; Anand Mahindra, VC and MD of M&M, who has given `44 crore to Harvards Humanities Center; and Ajay Piramal, chairman, Piramal Healthcare, who will spend `200 crore for socio-economic development.

Developing Charitable Hearts and Removing Constraints

Giving does not necessarily rise with income and education. It becomes clear when you look at charitable donations across 3 classes in urban Indiamiddle, high, and upperas defined by income and education. According to Bain, donations by the wealthy actually go down. In fact, the wealthiest or upper class have the lowest level of giving at 1.6% of household income. The high class, which is ranked 1 level below the upper class on the income and education scale, donates 2.1% to charity. Even the middle class gives 1.9% of the household income to philanthropy.

In case, an individual do not want to give away his/her earned fortunes, he/she can do charity by following their certain passions. Passion for art, music, etc, is something shared by almost every individual, which can be the pursuit of their charity, says Karandeep Singh, managing director, Sapient India.

Today in India, many of those new wealth-gainers are not willing to part with even a small amount of their money. And the reason may be a belief that charitable donations do not necessarily win social recognition. According to a study, 30 high net-worth individuals in India showed that they contribute, on an average, just around one-fourth of 1% of their networth to social and charitable causes. But when you draw comparisons between Indian and global billionaires, it is important to note that even the great philanthropistsJohn D Rockefeller, Andrew Carnegie, and JP Morgandid not give away their riches until towards the end of their lives.

Another factor which also impedes contributions, according to Sheth, is a belief by donors that support networks are not professionally managed, and as a result, their contributions wont be put to good use or are at a risk of being misappropriated.

This Road Leads to Charity

There can be a rise in donations if certain hurdles are removed. Government has to reform certain laws that bar donors from giving. Donors who provide material goods receive no tax benefits. The current tax deduction structure does not encourage donations which needs to be reformed. In addition, there is a need to minimize the cumbersome bureaucratic process required to obtain tax exemptions.

In short, charity demands willingness and a sense of giving back to society. The likes of Gates and Buffet can only advise. Indian billionaires can perhaps learn from Indian tycoons in the IT industry who have opened ways for charity and set some sort of benchmark.