India’s billionaire club slow to share riches
They may build skyscraper mansions, travel by private jet and throw sumptuous wedding parties, but it seems India’s super-rich are much slower at opening their wallets for charity.
India now has 55 dollar billionaires, the fifth-biggest number in the world, according to a Forbes ranking this month.
But like other emerging economies such as China, its charitable giving still lags markedly behind that in the West where the tradition of wealthy businessmen donating chunks of their fortunes is much more deeply ingrained.
High net worth Indians gave up an average 3.1 per cent of their income to charitable causes in 2011 – up from 2010 but far behind the 9.1 per cent average in the United States, according to global consultancy Bain & Company.
But analysts say the upturn in giving as more Indians get seriously rich is going at a snail’s pace.
“The pace for corporate India and especially the new rich giving up its wealth is excruciatingly slow,” said Manjeet Kripalani, executive director at Gateway House, a Mumbai-based think tank.
“Corporate philanthropy needs to look at a thoughtful way of scaling up giving,” she said.
While impressive growth in the past decade has created a swathe of Indian tycoons, the more recent economic slowdown has compounded the slow take-up of philanthropy, despite a pressing need to tackle widespread poverty.
“Giving is impacted by sentiment, which remains weak at the moment. It is likely to be flat or extremely moderate in terms of growth,” said Arpan Sheth, author of Bain’s annual Indian study.
The latest report released this month did not give fresh statistics, but said donors were “putting a higher bar on understanding the impact of their giving, before they commit to causes” in the tough business environment.
India’s richest man Mukesh Ambani, chief of Reliance Industries and owner of a billion-dollar, 27-storey family home, has criticised Western corporate charity as a “disempowering tool” that “increases dependency”.
India does not lack a culture of giving.
Reliance has followed the lead of large industrial groups such as Tata and Aditya Birla, which donate heavily to charity through their own trusts, with projects ranging from healthcare and education to rural infrastructure.
Azim Premji, chief of software giant Wipro, last month gave US$2.3 billion from his own pocket to the education charity he controls, and he is now considered “Asia’s most generous man” by Forbes.
He was the first Indian to join the “Giving Pledge” club, set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet to encourage the world’s wealthiest to donate at least half their fortunes to charity.
But the scale of Premji’s donation has renewed the debate on why the richest are not giving away more of their wealth.
“Many others haven’t demonstrated the same kind of generosity,” said business journalist Anand Mahadevan in an Economic Times column.
One explanation from businessmen, Mahadevan said, is that wealth creation is still a recent phenomenon in India compared with countries such as the United States, and philanthropy usually comes further down the road.
Also, Indian charity often takes a more informal form: people might donate to local schools or hospitals in kind, or “give money, hair, gold, to our temples as charity”, said Kripalani.
India currently ranks a lowly 133rd out of 146 countries in the latest World Giving Index – down from 91st position in 2011 – based on surveys of charitable behaviour around the globe.
Its far poorer neighbours Pakistan and Bangladesh came in respectively at 85 and 109 in the same survey.
Analysts say a major barrier to giving is not knowing whether donations will produce sustainable results, given the lack of accountability, transparency and impact assessments.
“When we met philanthropists, the message we got was: show us the impact, we will give more,” said Anant Bhagwati, co-author of the Bain report, at a conference in Mumbai this month to encourage a greater philanthropic culture.
The trends may be encouraging: last year’s Bain survey found more than 70 per cent of donors had less than three years of philanthropic experience and more than a third were 30 or younger.
Manas Ratha, director of the non-profit Dasra group, which helps to pair donors with charities, said willing philanthropists were there but needed more guidance.
“A lot of work needs to be done. There is good reason to be optimistic, but we are losing time and opportunity,” he said.