THE CONTEXT: With the rapid change in economy and society in this age, there is an influx of wealth in the philanthropy world with changing needs of society which is leading to change in the face of Philanthropy. It is said that we are entering the golden age of Philanthropy. In this context, there is a need to analyze, the role of Philanthropy in accelerating economic growth that is both inclusive and sustainable.
INTRODUCTION: PHILANTHROPY
Jamsetji Tata stated, “In a free enterprise, the community is not just another stakeholder in business but is in fact, the very purpose of its existence.” Here, the role of Philanthropy is seen both as an obligation and a sign of privilege and status. It tends to play a key role in advancing social justice and equality. It can even lead to shaping public policies by insisting on measurable results of their investments and advancing market-based solutions to contain social ills. One of the examples is the 2010 Giving Pledge, created by Warren Buffett and Bill and Melinda Gates, where signatory billionaires promise to give away at least half of their wealth during their lifetime or at their death.
CORPORATE SOCIAL RESPONSIBILITY
With the growth of the economy and its unintended negative consequences, there is a heightened sense of social responsibility, as a further consequence, more and more Indian corporate houses have come forward, resulting in increased spending in social responsibility in the last two decades.
What is Corporate social responsibility (CSR)?
- It is a self-regulating business model that helps a company to be socially accountable to itself, its stakeholders, and the public. By practising corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.
- CSRs are often broken into four categories: environmental impacts, ethical responsibility, philanthropic endeavours, and financial responsibilities.
- Philanthropic responsibility: It refers to how a company spends its resources to make the world a better place. This includes Whether a company donates the profit to charities or causes it believes in. Whether a company only enters into transactions with suppliers or vendors that align with the company philanthropically. Whether a company supports employee philanthropic endeavors through time off or matching contributions. Whether a company sponsors fundraising events or has a presence in the community for related events.
- Example: Starbucks has been known for its keen sense of corporate social responsibility and commitment to sustainability and community welfare. According to its 2020 Global Social Impact Report, these milestones include reaching 100% of ethically sourced coffee, creating a global network of farmers and providing them with 100 million trees by 2025, pioneering green building throughout its stores, contributing millions of hours of community service, and creating a groundbreaking college program for its employees.
CSR initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operates. In addition, a company may experience internal benefits through the initiatives.
GOVERNMENT VS PHILANTHROPY
The government and the philanthropic community have long worked together to solve public problems.
Philanthropy relates to the concept of nationalism or welfarism. However, Philanthropy is not interchangeable for government spending. Here, there is a need to look into the role of both government and Philanthropy.
GOVERNMENT WELFARE
- Not regulated by an external force: The government is in itself responsible for public welfare and not regulated or controlled by any external force for its welfare activities and is free to choose its own methods.
- Compulsory: Welfare is a compulsory obligation and an entitlement for the government.
- Allowed for legislation: Governments can fulfill their social welfare obligation by exercising their legislative powers by enacting laws and bringing policies.
- Can’t experiment much: Governments are the principal actors in the social sector and spend crores on education, health, etc. However, the government is a behemoth and can’t experiment or innovate on a continuous basis;
state capacity is also limited. - For maximum people: The welfare state has to work for maximum good for the maximum people for an inclusive society so that benefits reach to every section.
- Accountable: It is obligatory for the government to perform social welfare and if not performed well they can be held accountable for this.
PHILANTHROPY
- Regulated by the government: Though Philanthropy may be as old as human civilization, it is regulated by political institutions in a welfare state. Donations, charity, and funds spent as Philanthropy are encouraged with tax subsidies.
- Voluntary: Philanthropy is voluntary and depends on the organization whether to take it or not.
- Not allowed for legislation: organizations are not allowed to be “action organizations” that seek to influence legislation or participate in political campaigns.
- Innovative: Philanthropy solves problems differently than government. It tends to be more inventive and experimental, quicker, nimbler, more efficient, more varied, more personalized, and more interested in transformation than treatment, and more efficient.
- Discriminatory: Philanthropy activity can be discriminatory, and target based for organization’s own purpose.
- No accountability: There is no such accountability on the part of philanthropists and even if they don’t perform their obligations, they cant be held accountable.
LIMITATION OF PHILANTHROPY
- Rise of Corruption: The rise of rich organizations lead to vast sums of wealth and can use Philanthropy as a way to protect their wealth accumulation or diverting black money to the cause of Philanthropy avoiding penalties.
- Diversion of Resources: Philanthropy can lead to diversion of already scarce resources from a more effective solution to some less needy from a more deserving recipient as philanthropists are not experts in the social sector, they are not able to identify the needy properly.
- Lack of Transparency: It can involve secrecy that sometimes hides real connections or reasons behind philanthropic acts because of non-disclosure of acts.
- Lack of measurable impact: As there are no such parameters or tools to measure the efficiency of strategy and implementation of the acts done by philanthropists, it generally becomes not possible to measure the impact of these acts.
- Paternalism and Cultural Insensitivity: Another criticism of philanthropic interventions is the tendency of having cultural insensitivity and a sense of paternalism in the lives of vulnerable people rather than being empathic.
- Using it for their own agenda: As it can be noticed that the rich are not only becoming richer, but they have learned how to turn their giving into an instrument of shaping public agendas and policies at global and national levels for their own benefits.
- Undermined democracy: Privatization of public wealth effectively undermines democracy by handing control of essential public services to the ultra-rich, which can lead to monopoly of essential services.
WHY THERE IS NEED FOR PHILANTHROPY
- Create a culture of giving: It helps establish a culture of giving for generations and passes on positive attitudes towards money and helping others.
- Fueling innovation: Philanthropy is super important in terms of fueling innovation and ensuring that local organizations have the resources to implement the same.
- Quickly fill the fund gaps: Philanthropists can immediately support a cause or organization upon learning about it. Government policies may take time to implement but philanthropists help to quickly fill in gaps in funding that may emerge.
- Strengthen community: Philanthropy fuels a person or organization’s involvement in their community. It brings people together to support a cause which leads to much stronger unity and a sense of belonging.
- Supports underfunded causes: Philanthropy is important to society because governments can’t address the needs of all causes. Frequently, certain government budgets get slashed because of politics or a need to shift the money elsewhere. This can leave gaps in areas where support is needed. Philanthropic individuals and businesses help fill in the gaps by supporting causes and organizations that don’t use government funding.
- Benefits the philanthropist corporation as well: The benefits of Philanthropy are not limited to individuals. Corporations that support charitable giving receive a wealth of offerings from building a better public image, creating more vital brand awareness, and attracting new partners and talent who may be attracted to a company that contributes to charities.
INDIA: CURRENT SITUATION OF PHILANTHROPY
INDIA’S RICH HISTORY OF PHILANTHROPY
- Philanthropy has long been embedded in the fabric of Indian society and contributed heavily to the creation of modern-day India. Pre-industrial India saw business families giving away a proportion of their income to local charities.
- Industrialization in the 19th and 20th centuries has enabled rapid wealth creation for social causes. For example, business leaders like Sir Jamsetji Tata voiced their opinions on using wealth for social good, donating vast amounts to create exemplary institutions.
- As India’s Independence movement began, Mahatma Gandhi encouraged businessmen to contribute their wealth for the betterment of society. Industrialists like Jamnalal Bajaj and G.D. Birla supported Mahatma Gandhi’s initiatives during the freedom movement while pursuing their own philanthropic interests.
CURRENT SITUATION OF PHILANTHROPY IN INDIA
- India has no shortage of billionaires as 17 new ones added in 2017 alone, taking the count up to 101 and during the same year, the wealth of this elite group increased by ₹20,91,300 crore an amount equal to the total budget of the central government in 2017-18 but when it came to Philanthropy, though, only 38 men and one woman made it to the annual Hurun Indian Philanthropy List 2018.
- Relative contributions (giving as a percentage of wealth) among Indian UHNIs range from 0.1% to 0.15% compared with 1.2% to 2.5% in the United States, 0.5% to 1.8% in the UK, and 0.5% to 1.4% in China.
- Currently, this is a threshold moment for India’s philanthropy sector as despite economic uncertainty and the continuing impact of Covid-19, Indian Philanthropy is growing steadily as evidenced but there is a need to pace up the philanthropist activities.
ISSUES RELATED TO PHILANTHROPY IN INDIA
Despite India’s history of giving and rapid wealth creation in the last few decades, there are three major challenges that have inhibited Indian Philanthropy:
- A trust deficit: Budding philanthropists haven’t yet come to fully appreciate the good work being done in the impact sector.
- The parochial nature of giving: It risks some of the poorest parts of the country being ignored.
- Programmatic giving: The philanthropist acts are not giving intended outcomes, for example, a number of organizations are working on education yet learning outcomes have not improved.
MODERN-DAY PHILANTHROPY—INDIA’S TAKEOFF MOMENT
Indian Philanthropy is now poised to take off, despite the challenges. Few examples in this regard:
- There has been an uptick in domestic Philanthropy recently, with Azim and Yasmin Premji, and Nandan and Rohini Nilekani leading the way. Beyond committing to part with a majority of their wealth, they’re showing the world a new model of selfless public service and Philanthropy.
- Mukesh Ambani, Gautam Adani and Ajay Piramal have made big commitments, along with the startup gang inspired by people like Sridhar Vembu and the Kamath brothers.
- Tatas had a rich legacy of profit for purpose and they were not unique because, around the turn of Independence, we had other prominent Indian groups, such as the Godrej, Bajaj and the Birlas, who had a similar ethos.
- Adani family pledged Rs 60,000 crore towards charity to mark the 60th birthday of Gautam Adani. It’s one of the biggest philanthropic commitments made in India so far. According to the Bloomberg Billionaires Index, it is about 9% of Adani’s net worth.
But there’s scope to do more as the wealth of India’s ultra-high-net-worth individuals and families has continued to grow dramatically, but giving has not kept pace.Indeed, if they gave the same share of their wealth as their peers in the US, total giving could reach US$58 billion by 2026 which can contribute in growth of economy as well as social sector.
THE WAY FORWARD
Philanthropy has been part of our culture from the ancient times and is deeply embedded as a way of life, here we need to be proud of our culture and follow few strategies that are mentioned below for major impacts and to build a better world:
- Collaboration with stakeholders: Philanthropists need to collaborate with other stakeholders like NGOs or government agencies through collaborative vehicles and by making alliances of social sector actors with multilateral donor agencies for taking on some of India’s most chronic social challenges.
- Being more flexible: As Indian Philanthropy is short-term and restricted, there is a need for flexibility in the organization to strengthen the capacity of the social sector by building knowledge, and networks and engaging in these efforts.
- To realize the potential of the social sector: The response to the Covid-19 pandemic has shown a spotlight on Philanthropy and signaled the potential of India’s social sector. In this regard, if the wealthiest Indians continue on this path to take their place alongside the world’s notable philanthropists, the nation will have a chance at achieving its potential.
- Investment in prominent social areas: There is a need for identification of the social sector and investing in areas such as literacy, health infrastructure and gender equity for a better outcome.
- Meaningful dialogue with government: Policymakers can encourage Philanthropy meaningfully by engaging with wealth creators in a dialogue on issues such as tax disincentives or identifying critical areas which can lead to improvement in service delivery.
- Enable economic growth: To achieve India to be a $30 trillion inclusive and sustainable economy, there is a need to create resources for the government to fund development programmes and social security. Here, philanthropists can use their wealth and experience to advocate policies, support the improvement of enabling conditions for investment, exports and job creation, and help transform our economy.
THE CONCLUSION: The old model of Philanthropy was to create change in society by the generosity and this modern-day Philanthropy beginning in the 19th century, has shown the power of strategic transformative change. Society and Organization need to adjust in this changing world, and there is a need to balance government and Philanthropy as we enter the Golden Age of Philanthropy.
Mains questions
1. With the rich becoming richer and the poor becoming poor, there is a need to balance the growth of wealth in society. In this context, analyze the role of Philanthropy in balancing economy and welfare and its limitations.
2. Both Government and Philanthropy are contributing to the welfare of the social sector. In this regard, compare how both are different from each other and what can be the way forward for the sustainable growth of the social sector.
