Tuesday, January 18, 2011

Premji shows the way, will others follow?

Philanthropy by captains of industry is picking up but a lot remains to be done for the downtrodden

Amitabh Shukla / New Delhi

Corporate philanthropy in India has taken a giant leap with the decision of Wipro chief Azim Premji to donate a whopping Rs 8,846 crore for charity. Never before in the country has any industrial house or an industrialist shown such a gesture of profound magnitude for the have nots of the society.

What makes Premji's gesture all the more important is that the donation has been made from personal wealth and not as part of the much-hyped corporate social responsibility (CSR) of the industrial houses. He could have used the money to buy a cricket team or a private jet but he did not.

Moreover, there is a clear vision and direction on what is to be done with the funds to the tune of Rs 8846 crore unlike many examples in which the industrialists merely donate for a specific work like calamity relief, get a photo shoot done for publicity and then forget their responsibility towards the more unfortunate brethren of their country.

Even though India has a tradition of charity - all religions preach this, big time corporate charity is picking up only now. For most personal aggrandizement, stashing money in foreign banks, living a luxurious lifestyle, building a magnificent house, acquiring jets, yachts and limited edition automobiles is the order of the day. Though wealthy people in the past - the Sheths, some industrialists – had been contributing to religious institutions, very few had a vision of what needs to be done with the funds beyond the short term and how to create a lasting impact on society.

If a hungry person is given fish to eat, it will solve a temporary problem of hunger. But if you teach him how to fish, it will be a permanent solution to the woes, goes the saying. Teach him and empower him. This is what Premji has done.

Premji in his statement said, "We believe that good education is crucial to building a just, equitable, humane and sustainable society. We want to contribute significantly towards improvement of education in India, and through that towards building a better society." The philanthropist said, "All our efforts, including the University that we are setting up, are focused on the underprivileged and disadvantaged sections of our society. Our experience of the past 10 years has motivated us to significantly scale up our initiatives, across multiple relevant dimensions." The IT czar said that the Foundation's significant increase in scale and its clear focus on social purposes will require a substantial long term financial commitment, which is the purpose this endowment will serve."

Premji's initiative was followed by Ajay Piramal's Piramal Healthcare which announced spending of up to Rs 200 crore in charity, primarily on healthcare and education. The money will be given to different organisations in phases to optimize the benefits. The company also clarified that such contributions will not directly relate to the business of the company or the welfare of its employees and forms a part of its CSR.

Interestingly, it is the Indian IT industry, their founders, leaders, IT entrepreneurs and spouses, most of whom who have made their fortunes themselves instead of inheriting it, who are spearheading corporate philanthropy in India in true sense of the term. The traditional captains of industry still lag behind in the initiative.

Not surprising, IT majors Infosys, MindTree, TCS and HCL have been launching and supporting ventures that create social equity, better lives for the have nots and creation of opportunities for the downtrodden for whom there is nothing to look forward to except government support and to God. The top professionals and entrepreneurs in the IT sector have already set aside chunks of their wealth for charity, most of which are already functioning and changing lives at the grassroots.

While Infosys cofounder Naryana Murthy's family recently gave $5.2 million to Harvard University and its press for a series on Indian literary heritage, Tata Group also gave $50 million to Harvard Business School.

Murthy and his wife Sudha Murthy are also understood to have set up a venture capital fund to give credit to the poor. Sudha also leads the Infosys Foundation that works in villages in education, healthcare and other projects.

Coming back to Infosys, CEO and President Kris Gopalakrishnan donates around Rs 4 crore a year. Infosys co-founder Nandan Nilekani, now with the government on the National Identification Number project and wife Rohini have gifted $5 million for the Yale India Initiative.

Shiv Nadar, the founder of HCL, too has not lagged behind and pledged a tenth of his $4 billion wealth for charity.Sunil Mittal, the telecom czar, is not behind as Bharti Foundation primarily runs on his donations and is doing an excellent work in education in several parts of the country and bridging the gap between government effort and the needs of the community.

The Tatas and the Birlas, the traditional industrialists, are in philanthropy in a big way, often without any publicity, doing it silently and effectively. The Tata Sons, holding company of the group, uses the money earned on charity. Likewise, the Birlas run hundreds of institutions catering to education, medical help, grants to religious institutions amongst others. The Godrej family too has contributed in its own way from the beginning and so have the Sarabhais from Ahmedabad.

But is it enough? Indian billionaires can do much more for charity than they are doing. Thousands of cooperatives, NGOs at the grassroots and institutions doing brilliant work are perpetually starved for funds. Their impact could have multiplied many fold had they got the funds which they deserved due to the sheer volume of work they undertake. The outreach and impact of these organisations would only grow and create the desired social impact at the grassroots if they get more funds.

Reports had it that by western standards Indian charity amounts to peanuts and a lot needs to be done by industrialists here. A recent report suggested that in India individual and corporate donations make up only a tenth of charitable giving. While 65 per cent comes from the government through various schemes to the NGOs, the remaining comes from abroad.

Clearly, government, both at the centre and the states, remains one of the biggest donors to the projects in the voluntary sector. It has perhaps realized that the NGOs, cooperatives, civil groups and communities have played a major role in rural development, through catalysing people's initiatives for change, as well as through direct implementation of interventions around specific issues and therefore addressing the needs accordingly.

Formal recognition of the role ofvoluntary organizations came in the Seventh Plan document. This led to the formation of the Council for Advancement of People's Action and Rural Technology (CAPART) in 1986, as a nodal agency for catalysing and coordinating the emerging partnership between voluntary organizations and the Government for sustainable development of rural areas.

An autonomous body registered under the Societies Registration Act 1860, CAPART is functioning under the aegis of the Ministry of Rural Development, Government of India.
Even though there have been charges of irregularities and corruption, today, this agency is a major promoter of development activities in India with focus on grass-root. It assists over 12,000 voluntary organizations across the country in implementing a wide range of development initiatives.

The country is presently going through a change in its institutional structure in the developmental field where the move is to decentralize down to the lowest levels of panchayat. The panchayats at the village level are gradually becoming more important in all decision making and development at the grassroots. They are deciding the developmental agenda and governments at the Centre and the states are also giving them control over financial resources to meet the objectives.

It is here that the NGOs have the big task of facilitation and also build capacities within the panchayat institutions to enable them to discharge their responsibilities in a better and
inclusive manner.

The involvement of voluntary organisations in implementing development programs in partnership with the government has become key to this agenda. Such a role for the panchayats in the government scheme of things of decentralization will only likely to increase in the future due to its sheer impact.

But government contribution is not enough and the corporate houses need to chip in a big way to have a social transformation by involvement of the panchayats and the voluntary
organisations working at the lowest pyramid of society. There is still an amount of indifference to this crucial issue as several e-mails sent by Sopan-Step to some prominent industrial houses on their social contribution and endowment for charity evoked little response. Most of them remained unanswered.

Not surprising that fund-raisers for social causes continue to complain about their problems and how the industrialists and the industrial houses keep rejecting their proposal on one pretext or the other. These fund raisers say that a lot of effort and paper work is required here in the country even to raise a small fund for social causes.

Moreover, the corporate funding agencies look for short term deliverables which cannot be the exact measurement of the success of a scheme run by an NGO or a cooperative.

The huge middle class too is largely tight-fisted despite the prosperity brought by economic boom and is hardly known to contribute towards any non-religious charity. The bar has to be raised.

However, after the global efforts of Warren Buffet and Bill Gates, urging the captains of industry to donate at least half their wealth to charity (see box) and the largest endowment in Indian history made by Azim Premji, the debate has been stirred in a way which had never been done in the past. The arrow has hit the target- the Bull’s eye. It has raised the consciousness on the issue and underlined the point that industrialists do have a role on solving the ills plaguing the society, the same society from where they have made their fortunes. They are gradually realizing the importance of leaving a lasting contribution and a legacy to the society.

But, the Corporate Social Responsibility of the organizations has to be seen with a pinch of a salt. For many it is simply propaganda and public relations exercise with a watchful eye on the stock market. If these industrial houses are seen to be doing something for the society through CSR, they believe that it would increase the acceptability of their products. Many simply consider it as an excellent brand promotion and marketing strategy thinking that such acts would also raise the value of their stocks.

Corporate houses and the captains of industry have to see development from the prism of creating empowerment, long term capacity building, and creating awareness in the larger
community - all of which take time, effort and gradual realization. The short term mechanism of calamity relief - flagging trucks carrying relief material, though necessary, is not the solution to the larger issues plaguing the society.

The involvement of local community, local activists, those who are well entrenched in the society is a must for any positive outcome. The flow of CSR funds has to be through these organisations and cooperatives at the grassroots and individuals to have any meaningful and lasting impact and not necessarily through the corporate foundations which by and large function for short term results rather than the long but fruitful and lasting long term route.

In March, 2010, the Indian dollar billionaires numbered 69, compared to 52 last year, second only to USA, which has 403. The recent economic fortunes of India have brought untold wealth to some individuals. According to Forbes, the combined net worth of India’s 100 richest people rose to $300 billion this year from $276 billion last year, driven by the country’s booming economy and a rally in the stock market.

The Indian economy is galloping towards the double digit figures of economic growth. Rate of growth at 8 to 9 per cent has become the order of the day in the country in the era of booming economy and rising stock prices.

While several business leaders are gradually waking up to the importance of philanthropy, time has come to build a greater momentum in order to make terms like hunger, illiteracy, malnutrition, ignorance redundant words in this century.


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