W Power 2024

The rich continue to give less than 1 percent of their wealth to philanthropy: Report

Women are taking the lead in steering family philanthropy, while climate and environmental sustainability demands a higher share of the donor pie, says the India Philanthropy Report 2024 by Bain & Company and Dasra, which released today

Divya J Shekhar
Published: Feb 29, 2024 10:41:09 AM IST
Updated: Feb 29, 2024 12:01:52 PM IST

The rich continue to give less than 1 percent of their wealth to philanthropy: ReportGiving as a percentage of wealth has remained stagnant below 1 percent for years now, irrespective of the donor base of wealth-creators and philanthropists increasing year-on-year. Image: Shutterstock

Giving as a percentage of wealth is 0.08 percent in FY23 across categories of philanthropists, says the India Philanthropy Report 2024 by Bain & Company and Dasra, which released on Thursday. First-generation of wealth creators (called now-gen givers in the report) ranked highest among their peers, giving 0.19 percent of their wealth. They were followed by women philanthropists at 0.14 percent, professionals at 0.13 percent.

Philanthropic contributions vary significantly between individuals and families in each income or wealth cohort, and the differences are a function of commitment to specific causes, who in the family is managing the giving, and also about clarity on which causes and partner organisations to give to, says Radhika Sridharan, partner, Bain & Company, and co-author of the report.

Giving as a percentage of wealth has remained stagnant below 1 percent for years now, irrespective of the donor base of wealth-creators and philanthropists increasing year-on-year. This is also a factor of the ecosystem to enable formalised giving still being nascent in India, says Neera Nundy, co-founder and partner at Dasra. That said, she adds that this data point may not track the different ways in which Indians choose to give. “As a society, we are giving to our communities, to our religious institutions. Giving to NGOs is perhaps a smaller part. So I do believe that we are a culturally strong giving society, and it doesn’t get captured in this number.”

Overall social sector expenditure in India, reaching approximately Rs23 lakh crore, or 8.3 percent of the gross domestic product (GDP), falls 4.7 percent short of Niti Aayog’s annual social funding target. As per the report, demand-supply gap in social sector funding could increase by Rs15 lakh crore. About 95 percent of social sector funding is from the public sector, while the rest is private sources.

The report categorises private donors as ultra-high-net-worth individuals or UHNIs (net-worth over Rs1,000 crore), high net-worth individuals or HNIs (net-worth between Rs200 crore and Rs1,000 crore), affluent (net-worth of Rs7,200 crore). Under family philanthropy (the term includes charitable giving by UHNIs, HNIs and affluent individuals), more than 60 percent growth in UHNI giving was driven by existing donors. Other private donors include companies falling under the corporate social responsibility (CSR) ambit, retail givers, and foreign private funding.

HNI and affluent giving grew at a modest 7 percent. Data indicates that HNIs have a higher propensity to give (at 0.7 percent of net-worth, compared to 0.1 percent for UHNIs). “Hence, there is potential to unlock a significant upside [up to 12 to 25 percent] in donations from this segment with the surge in the Indian economy and capital markets,” the report says.

Also read: Now-Gen givers are steering philanthropy into a new era marked by innovation: Neera Nundy

Other emerging trends highlighted by the report, which stand to influence the nature of giving in India, includes women increasingly becoming important decision-makers in family philanthropy. About 65 percent women, as compared to 43 percent men, prefer to “own and operate” initiatives to directly impact outcomes. About 44 percent of women, compared to 33 percent men, adopt a GEDI (gender, equity, diversity and inclusion) lens to their philanthropic giving. “The emphasis on GEDI could be correlated to women’s lived experiences in the Indian landscape,” the report says. “It may contribute toward shifting power dynamics by addressing complex issues (social justice, caste discrimination, intersectional mental health).”

Environment, climate and sustainability is also emerging as a cause that is demanding a higher share of philanthropic outlay. “Half of now-gen young givers (first-generation wealth creators who are less than 40 years of age) are committed to climate action,” Sridharan tells Forbes India, over email. CSR allocation towards environment and sustainability has also increased, from Rs1,800 crore in FY18 to estimated Rs3,400 crore in FY23.

Another encouraging trend is that about 39 percent philanthropists list strengthening of the ecosystem over support to traditional causes (21 percent). Ecosystem strengthening typically involves keeping aside more funds towards areas like research and capacity building, the lack of resources towards which has been a pain point in the social sector, says Nundy.

The report also shows that the number of philanthropic collaboratives established per year has increased from 27 in two decades between 1999 and 2019 to 30 between 2020 and 2023. Nundy explains that philanthropic alliances and collaboratives (like Dasra’s Giving Pi and the ACT Grants) bring together multiple stakeholders and can enable an intersectional approach that can direct resources to conventionally underfunded areas, like mental health.

Also read: When will Indian CSR come of age?

CSR has only grown at a moderate pace of 7 percent in FY23, despite the proportion of companies complying with the CSR mandate (donating 2 percent of profits) increasing from 30 percent in FY18 to over 60 percent in FY22. The share of non-BSE 200 companies participating in CSR initiatives rose from 50 percent in FY18 to 59 percent in FY22. However, the share of CSR spending—estimated at Rs28,000 crore in FY23—in domestic private giving increased to 30 percent from 22 percent in FY18.

CSR contributions for FY23 include the impact of the two Covid years, which affected profitability, and given the increased compliance and profit growth, these contributions are only likely to increase from here, says Sridharan. “The change in mandates allowing for funds to be accumulated over three years has enabled corporations to allocate better instead of being forced to deploy them in the same year,” she says.

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