Tata Trusts: Outstanding Corporate Foundation

Image: Vikas Khot

Ratan Tata is expected to channel his energy and time solely into the Trusts after he retires from Tata Sons

Tata Trusts
Award: Outstanding corporate foundation
Why They Won: For running India’s largest, oldest corporate philanthropy; creating a model that others can replicate.
Their Trigger: Strong belief in sharing wealth.
Their Mission: Support academic institutions, social causes, programmes for under-privileged.  
Their Action Plan: Disburse money via NGOs who implement projects.  
Their Next Move: Initiatives in research, international collaborations.

Villages in the Chureddhar and Chham districts of Uttarakhand’s Tehri Garhwal region are linked to the state’s electricity grid. But, like other villages in the middle-Himalayas, their electricity supply is, at best, erratic. An initiative by the Sir Ratan Tata Trust (SRTT) is hoping to change that.

SRTT has teamed up with First Solar, an American major in renewable energy, to set up two solar photovoltaic (PV) plants in these districts to ensure a steady supply of power. “If successful,” the Trust said in a statement in September, “The pilot project could be replicated across hundreds of villages throughout India.” The project is symbolic of what is yet to come from India’s largest philanthropic organisation—the Tata Trusts (which includes SRTT)—as they prepare for their biggest transition. In December, Rata Tata, who chairs the Trusts, will retire from Tata Sons, the group holding company that he heads, and will be succeeded by Cyrus Mistry. He will, however, continue to chair the Trusts. This is the first time that the Trusts and the group will be headed by different persons.

With Tata, who turns 75 in December, expected to channel his energy and time solely into the Trusts, the move is being seen as catalytic. The Trusts’ projects will have renewed focus on issues close to his heart: Nutrition, water, and rural infrastructure. It also aims to broaden its horizon, and will be open to international collaborations. More fundamentally, the Trusts will look to have a more sustainable and wider impact by increasingly doing philanthropy based on a market model and not just charity.

The Tehri Garhwal venture has elements from all these objectives. “[These issues] are indeed high priority areas and can go a long way in improving the quality of life in rural India,” said Sir Dorabji Tata Trust, the largest of the Tata Trusts, in an emailed statement to Forbes India.

SRTT’s partner First Solar—among the 25 fastest growing technology companies in the US—is a $2.7 billion manufacturer of PV modules. The project aims to build a sustainable and scalable market-based model “that is low-maintenance and simple for the communities to install, maintain and use.” The project will use advanced PV cells and is in line with what MK Krishna Kumar, a director at Tata Sons and a close associate of Ratan Tata, says will be the future: “Focus [in the future] will be on technological disruptions.”

This approach to philanthropy is akin to what the Trusts’ international peers have been doing, and something that Tata himself believes is the right way to bring about long-lasting change. In 1991, when he took over as chairman of the Trusts from uncle JRD Tata, this was part of the reforms he introduced. In an interview to Synergos, a US-based non-profit organisation, Tata had noted: “Philanthropic institutions in India still believe they’re charitable and therefore must operate on a shoestring that creating an organisation is almost a luxury. This needs to change.”

The first of the Trusts was set up in 1919. Each of them was formed when a family member bequeathed his or her wealth, including shares in Tata companies, for the cause of social good. Since then, their money comes from the majority shareholding in Tata Sons. The stake now stands at 66 percent.

From 1991, as the group businesses grew, more money started flowing into the Trusts and Tata realised that the organisations, which now disburse about Rs 500 crore a year, needed to change their processes to handle this large sum of money, and also to have greater impact. Over the next 20 years, almost everything at the Trusts changed—the composition of their boards, their choice of partners (NGOs who implement projects on  their behalf), project reviews, and fund disbursal.

“Trustees started giving more emphasis on reviewing programmes and having impact assessments to understand if we were making any difference,” AN Singh, managing trustee of SDTT, had told Forbes India earlier this year. The impact of these changes can be seen in the projects the Trusts have implemented, and in the fact that the organisation has emerged as a role model for corporate philanthropy.

“The Trusts have been a path-breaker in inculcating the best practices,” says Anurag Behar of Azim Premji Foundation. Other philanthropists like Rohini Nilekani have adopted the Trusts’ model. “The Tatas [SDTT and SRTT] are looking at output indicators now for some time. The more scattered approach that the Tata Trusts have taken in the last many years has made it possible for all manners of ideas and institutions to find voice... It has also helped them in trying out different social experiments,” says Nilekani.

The Trusts are also preparing to tweak their model to include social enterprise. Many of their recent projects, including the drinking water initiative in Savda Ghevra, a resettlement colony outside Delhi, follow this principle. For families of Savda Ghevra, it was tough to buy a 20-litre bottle of drinking water for Rs 7 when they earn Rs 7,000 a month. Drinking free water from government tankers was easier. But, when Bhavari Devi, head of Shudh Jal Ghar Samiti, explained the medical costs of drinking unclean water, she acquired converts. “I now sell at least 1,000 litres of water every day,” she says.

SDTT officials said the Trusts would look to financially partner enterprises with collective ownership.

There is an increasing buzz in the world of philanthropy around the high profile collaborations Tata will initiate by using the Trusts’ platform. The biggest of them would be his partnership with Bill Gates, whose Bill & Melinda Gates Foundation, despite controversies, has championed issues that need immediate attention. Although some insiders from the sector have hinted that the two business leaders might “do something to encourage modern philanthropists in India”, details are closely guarded.

Another initiative that will draw a high level of interest is the Trusts’ collaboration with the prestigious Massachusetts Institute of Technology in starting a research centre in India that will focus on frugal engineering. An American campus will also be part of the joint venture. 

Ratan Tata is defining his legacy.