Accelerating family philanthropy will drive India's socio-economic growth
Like during the pandemic, in the coming years, we will need family philanthropies to continue to make decisions, deploy funds and play a more central role – as partners with other players – to drive more sustainable change
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Giving has long been a part of Indian culture. Strong ties in local communities create socio-economic ecosystems, where well-to-do families have traditionally supported those in need of aid. Over a period, these charitable contributions from families have shifted from charity i.e., giving for an immediate need or to solve the current problem, to philanthropy i.e., giving to drive a more permanent change and to deal with the root cause of a problem.
A major part of the funds donated to social development comes from family philanthropic initiatives. A recent report by Dasra and Bain and Company titled ‘India Philanthropy Report (IPR) 2021' reveals that the corpus of family philanthropy has tripled, growing to nearly Rs 12,000 crore in FY20. This shows the catalytic role that philanthropic families can play in driving positive social change. The concept is not new in India, and remains deeply ingrained in the country’s customs and traditions. Philanthropic families continue to create economic opportunities, invest in initiatives, and chart a course that is central to India achieving its potential.
However, most of these initiatives remain fragmented and skewed towards certain sectors. The report further points out that education [47 percent] where India has a strong score on sustainable development goals (SDG) attracts most of the philanthropic funding. On the other hand, healthcare [27 percent], disaster relief [12 percent], and vulnerable sectors like gender equality [1 percent] get bare minimum funding.
Also, most of the funding is spread across beneficiaries and ends up having little impact on the ground. A study by the Central Bureau of Investigation found that India has at least 31 lakh NGOs. That’s double the number of schools and 250 times the number of government hospitals in the country. Family philanthropic funding or even the mandatory 2 percent CSR donations directed to these NGOs often end up dispersed.
What the pandemic did was highlight the chinks in India’s socio-economic infrastructure. What we need is a holistic social support architecture catering to marginalised populations. However, India’s complex socio-economic development challenges cannot be managed by any individual entity. India is expected to have a shortfall of $60 billion per year to achieve even five of the 17 SDGs. Development requires large and sustained funding with continuous effort—something that is only truly achievable through multi-party collaboration. This is where family philanthropy could act as a catalyst of change.
Given their unique circumstances, family foundations have the potential to catalyse social impact at a scale that far eclipses the financial resources they invest. Free of political pressures faced from the government and foreign funding agencies, as well as shareholder pressures faced by corporations, family foundations have the potential to influence systemic factors by encouraging innovation, funding proof-of-concept projects, influencing public policy, building institutional capacity, and experimenting with new forms of funding.
Family philanthropies joined hands with other donors, governments, NGOs, and consultants to respond nimbly to the Covid-19 pandemic by pooling resources and realigning priorities. Relaxed funding norms, speedier decisions, and digging into their coffers to deploy funds rapidly through collaborative funding platforms led to a sea change.
In the coming years, we will need family philanthropies to continue this approach and play a more central role–as partners with other players–to drive more sustainable change.
Family philanthropy has played a critical role in India’s socio-economic development in the past and continues to remain a critical element in New India’s emergence. The Covid-19 pandemic has once again turned the spotlight on the critical need for organised philanthropic interventions to rebuild lives and mitigate potential risks to lives and livelihoods. It enables holistic and orchestrated multi-stakeholder efforts to find solutions, combining the agility and passion of NGOs and entrepreneurs, with the leverage and influence of governments and international organisations for tangible results. Families are in a unique position to leverage their human, social and financial capital, as well as their long-term mindset and reputational capital to do good and drive positive social change.