Forbes India 15th Anniversary Special

People give for a selfish reason—to feel good: Luis Miranda, Nimisha Pathak

Billionaires and professionals turn to philanthropy to get that warm glow in their lives. And there are other motivations too—from currying favours with God and getting awards to converting profits to purpose, Miranda, chairman and cofounder of Indian School of Public Policy, and Pathak, a project associate, write

Published: Mar 10, 2023 12:28:43 PM IST
Updated: Mar 10, 2023 12:37:15 PM IST

People give for a selfish reason—to feel good: Luis Miranda, Nimisha PathakSome philanthropists have given less in recent years, but many have joined the list. Their focus areas are very diverse Illustration: Chaitanya Dinesh Surpur
 
Why do people give? Is it to make this a better world? Is it to give back to society in gratitude? Is it to see a name on a building? Is it a response to peer pressure? In this article, I want to focus on one reason which is not talked about much: People give because it makes them feel good.

Let’s start off with the personal journey of my wife, Fiona, and I. We have been lucky to have built up a small nest egg thanks to the ESOPs and carried interest I picked up over the years. We don’t have a huge amount of money, but enough to know that we have enough. Many years ago, I read an interview where a philanthropist commented that he doesn’t like the term ‘give back’ because it implies that he ‘took too much’. Since then, I have avoided the term ‘give back’ because I also do not believe that I took too much. When we looked at why we gave, we realised that it made us feel good to do so. Having studied at the University of Chicago, I know the importance of self-interest and incentives, and this feel-good feeling was as strong an incentive as anything else.

I got to know John List a few years ago when he was chairman of the department of economics at the University of Chicago. He had done a lot of research on why people give. His conclusion was that people give because it makes them feel good. Finally, I had come across some research that validated what was driving us. List’s research has shown that giving is influenced by incentives that discount the role of altruism. I then learnt about the work of an economist, James Andreoni, who came up with the ‘warm glow’ theory. In his view, people did not give money only to save the whales; they were also giving money to feel the warm glow that comes from being the kind of person who is helping to save the whales. Giving is not a zero-sum game; the giver also benefits by feeling good. UBS’s Revealing Indian Philanthropy also says something similar, but says it differently: “The vast majority of empirical research to date has found that private benefits are the primary motive for giving.”

Philanthropy has always been a part of our culture in India. We see it all over—religious buildings, educational institutions, hospitals, etc. Giving is deeply ingrained in our social fabric. It has been used also to help bring down the walls that divide us—religion, caste, colour and community. For example, one of the organisations we support is Sunbird Trust, set up by a classmate from school, Col Chris Rego. Sunbird is working on bringing peace in the Northeast through education. Sunbird has been supported by people across the country to sponsor over 6,400 children in 63 partner institutions, and has facilitated the building of 10 schools in states like Manipur, Arunachal Pradesh and Assam. These donors together with the various state governments and the armed forces have helped Sunbird grow and help bring peace through education.

Another organisation we are excited to be associated with is CORO India. This 30-year-old organisation started off by doing adult literacy in the poorer communities of Chembur in Mumbai. Our most well-known intervention is our Grassroots Leadership Development Programme, where we have helped over 400 grassroots organisations build their leadership talent through our fellowship programme. Our community-based approach has helped train around 1,500 grassroots leaders, with 70 percent coming from backward communities, 70 percent being women and 40 percent not having studied past secondary school. We work in Maharashtra and Rajasthan and here again, we have been blessed to be supported by some of the biggest philanthropists in India and overseas.

Also read: Marathons: How long-distance running became an avenue for philanthropy for Indian corporates

The Tata group has been a pioneer in institutional philanthropy and Tata Trusts started in 1892. Many leading institutions in India were started by them, including the Tata Institute of Fundamental Research, Tata Institute of Social Sciences and the Indian Institute of Science. Some of the organisations we are connected with—CORO and SNEHA—were supported by the Tata Trusts in their growth stage. The Birla Group also played a large philanthropic role in building educational institutions and temples. More recently, Azim Premji has been phenomenal with his philanthropy and I fondly recall his sessions at the CORO office where we would listen to the stories of change that his philanthropic initiatives have facilitated.

The opening up of the economy in 1991 led to a huge amount of wealth creation and that created a new set of philanthropists who brought their entrepreneurial zeal to their philanthropy. The Indian School of Public Policy, which I co-founded with Parth Shah, was seed-funded by two fabulous people—Nandan Nilekani and Vallabh Bhansali. They represent the new face of philanthropy in India. They made their wealth through capitalism and want to use their wealth to make this a better world. Rohini and Nandan Nilekani have referred to the words of Mahatma Gandhi when they said, “Wealth doesn’t fully belong to us, we are only trustees. Our children know that. Power to give away is the most important value of money.” They said this when they signed the Giving Pledge. More recently a group of people started #LivingMyPromise for lesser mortals who do not have billions of dollars to give. Signatories pledge to give away at least 50 percent of their wealth either during their life or in their will. Fiona and I signed up as promisors to learn from other philanthropists and to help get more people to give more. There are other collectives we are a part of—Social Venture Partners and GivingPi—that also help promote philanthropy in India.

Another big impetus to giving was the Companies Act of 2013 where Corporate Social Responsibility (CSR) was made mandatory. This forced companies to set aside 2 percent of their profits for CSR. I look at CSR with mixed emotions. On one hand, it highlighted the social responsibility of businesses. But on the other, it has made the work of NGOs more difficult thanks to the bureaucracy and reporting requirements that govern CSR giving. Of course, organisations like EdelGive, Rohini Nilekani Philanthropies and ATE Chandra continue to reflect the humane side of giving, as they balance the regulatory requirements with their passion to help society. A part of their funding comes with very few strings attached to help their NGO partners build capacity.

Many of us are focussed on reducing poverty and making India a more prosperous country. I am also influenced by Milton Friedman (this is like waving a red flag to many readers of this article!) and believe that economic growth is the best way to take people out of poverty. Tata Steel’s building of Jamshedpur is a classic example of corporate good and impact investing. But these words were not used at that time; Tata Steel was set up to make money from manufacturing steel and make India self-reliant.

The EdelGive Hurun India Philanthropy list of 2022 has some interesting data. Some philanthropists have given less in recent years, but many have joined the list. Their focus areas are very diverse, though education and health care remain the main focus.

Also read: How family philanthropy can shape a new social contract in India

Of course, there are other motivations like nation-building, currying favours with God and government, converting profits to purpose, whitewashing, boosting images and getting awards. Fiona and I agonised a lot when Fiona’s alma mater, St Xavier’s College, wanted to put our names on their renovated microbiology lab. We finally agreed because we felt it may catalyse others to also give to the college. And it worked. Similarly, we debated about the need to go public about #LivingMyPromise because we had grown up believing we should be quiet about our giving. Here again we went ahead because we believed it would help get others to also pledge. And they did. And we felt a warm glow. In fact, the glow was warmer because when we first checked with our kids before signing the pledge, their immediate response was that it wasn’t their money, and we should do whatever we want with it. They both are in the non-profit world and are just starting off their independent lives. We realised at that moment that we had done something right with them. It felt good.

Coming back to List and Andreoni, let’s get comfortable with the fact that people give for a selfish reason—to feel good… to get that warm glow. And there is nothing wrong with that. I see many young people jumping into the social sector and donating to causes in their own small ways. This must be giving them a warm glow also. Non-profits could also benefit from keeping this in mind when developing their fundraising strategies.

So go ahead and give. It will make you feel good.

(This story appears in the 10 March, 2023 issue of Forbes India. To visit our Archives, click here.)