It has reported that philanthropy of the corporate variety, to those prompted by piety, has always been integral to Indian social mores and tradition. In recent times, Azim Premji and his cohorts in technology – Sunil Mittal and Shiv Nadar – have helped it achieve a national profile through their work in education.
Now, another of their ilk, Nadathur S Raghavan, or NSR, as he is popularly known, cofounder of Infosys, wants to deploy his millions, expertise and network to change the dynamics of philanthropy itself: how it is set, organised, governed and practised. Samhita Social Ventures, the newlyminted arm of the Nadathur Trust, hopes to alter the Indian philanthropic landscape through a series of initiatives. The first of these is Samhita.org, a philanthropy exchange or aggregator, like GiveIndia or GuideStar India, that connects givers with causes and NGOs.
This is just for starters. What NSR hopes to do is chaperone Indian philanthropy from a charitable, crisis-alleviation mode to a sector that can perhaps take on, and address, larger developmental issues. The emphasis is on engendering transformational change. He would like to do this by catalysing meaningful collaborations between foundations and donors on one side of the spectrum, and by building capacities and synergies among recipient NGOs on the other. Much of philanthropic money is directed at core causes, and little is deployed to strengthen and build capacities of institutions.
If this continues, the absorptive capacity for funds among recipients will remain stunted, to the detriment of the entire sector. As a technocrat, NSR would also like to see greater infusion of technology in improving systems and processes, efficiency and impact. “We have to seriously look at the consortium approach to issues and delivery of services ,” says Raghavan. “There has been little innovation (of the institutional type) in the social sector.”
From isolated impact…
NSR, since his voluntary retirement from Infosys as joint managing director in 2000, has nurtured a bouquet of investments in tech-enabled and lifescience start-ups , and today manages an investment portfolio of about $600 million. His interests include management education – NSR Centre for Entrepreneurial Learning at IIM Bangalore – and the social sector through Fame India, his NGO that focuses on children with autism and learning disabilities.
Motivated by his work with children, especially the ‘uttejana programme’, which seeks to expose school children to social issues, Raghavan would like to start from the roots itself. “The feeling that ‘I have to give’ should be inculcated from childhood itself; it generates empathy,” he says, while lamenting that the ‘act of giving’ is not as it ought to be in India. There is a degree of truth in his opinion . For a very long time, Indian philanthropy has been characterised by well-meaning initiatives on alleviation of misery across swathes of the underprivileged and some forward movement on issues like education. But all this has been in small, geographic pockets, and in doses that fit the vision, reach and capacity of individual givers or grant-making organisations. The Indian social sector is littered with silos of exemplary activity, but with little interaction, cooperation, common standards, pooling of investments, or sharing of resources.
Even credible data is hard to come by. “We can no longer fritter away resources sub-optimally ,” insists Vijay Mahajan of Basix, a livelihoods and microfinance group. This is perhaps the reason why, despite decades of giving, India is still bereft of a vibrant philanthropy ecosystem : that resonates countywide, that influences public policy and the citizenry, that bares tangible, measurable impact, or that begins to inspire a whole new generation of givers. “Unfortunately, collaborations and partnerships are seen as new-fangled ideas thrown up by the west,” says Priya Naik, CEO of Samhita. “It’s an imperative for emerging economies.” Naik, an alumna of Yale and the University of Michigan, has worked with the Poverty Action Lab of the Massachusetts Institute of Technology in the US. What is this new approach that Samhita is championing? And, why is the timing right for a transformational shift in Indian philanthropy?
Partnerships or collaborations are not novel to the social sector. The attempt now is to foster a much more cohesive, perhaps more institutionalised efforts. Collective impact, for instance. The winter 2011 issue of the Stanford Social Innovation Review (SSIR) describes ‘collective impact systems’ as a structured process that leads to a common agenda, shared measurements, continuous communication and mutually reinforcing activities among participants. Ideally, it should have its own infrastructure and dedicated staff. For example, Strive, a collective, nonprofit initiative on education in the US, coordinates the efforts of organisations with a total budget of $7 billion.
Four Freedoms Fund of the US, which works on mainstreaming new immigrants, is a pioneering example of a donor partnership. It was midwifed by the Carnegie Corporation, with the Ford Foundation, Open Society Institute, the Mertz Gilmore Foundation and the John S and James L Knight Foundation as founding members . The Bill & Melinda Gates Foundation joined up recently. The Partnership for Higher Education in Africa (PHEA) is another stellar example in collaborative investment. Indian grant-making and NGO activities are still centred on ‘independent activity’ and ‘isolated impact’. The SSIR paper argues that the shift from “isolated impact to collective impact is not merely a matter of encouraging more collaborations or public-private partnerships. It requires a systemic approach to social impact that focuses on the relationships between organisations and the progress towards shared objectives.”
Tapping new riches
NSR and Naik have got the timing right. Wealth creation in India and the potential for serious giving is taking on a new meaning. According to the World Wealth Report 2011, put out by Capgemini and Merrill Lynch last week, India has raced to the ‘top 12’ countries with the highest number of rich people. The number of high net worth individuals (HNIs) in India increased by 21% in 2010 to 153,000. HNI wealth in Asia-Pacific , at $10.8 trillion, exceeds that of Europe ($10.2 trillion). Another recent report – the ‘Top of the Pyramid,’ by Kotak Wealth Management and Crisil – predicts that the total net worth of India’s super rich, the ‘ultra’ high net worth household (UHNH) will touch . 235 trillion by 2015-16 , from an estimated Rs 45 trillion today . The report defines a UHNH as one with a net worth of 250 million.
A sizeable chunk of this wealth created ought to flow into the social sector . It can be absorbed only if a facilitating philanthropy ecosystem kicks in. The other significant factor that is germane to what Samhita is up to is the rise of ‘impact investing’ , which can be roughly defined as investments made with the intent of creating social and environmental benefit in addition to financial return. This concept is being spearheaded by a host of global foundations, venture capitalists, bankers and a new breed of entities like the Acumen Fund, which channelise philanthropic capital to social entrepreneurs in the form of loans and equity (not grants).
Acumen has invested about $25 million in a dozen Indian social ventures, including LifeSpring, Water Health International and Husk Power Systems. As is evident from trends, philanthropic capital is moving from traditional sectors to a whole new set of challenges like water and sanitation, renewable energy, maternal health and affordable housing, all of which require dollops of money. And if these issues are to be addressed effectively, existing philanthropic systems will have to make way for the new. A recent report by JP Morgan predicts that up to $1 trillion in impact investing could flow into areas like affordable housing and rural water delivery over the next decade, generating $183-667 million in profits. Marketbased solutions, and for-profit social enterprises, are coming to the fore like never before, for they are seen as more sustainable and efficient.
They are also amenable to scaling-up , the bane of the Indian NGO sector. Even our small, eastern neighbour boasts of a BRAC, which is almost like a parallel government in Bangladesh. It serves about 138 million of the poor; 1.8 million children are currently enrolled in BRAC’s 66,000 schools. Much of the impact investing action is expected in emerging economies, where expected returns are pegged at 8-11 .9% for debt investments and 20-24 .9% for equity. By comparison, the return expectations in developed markets are 5-7 .9% for debt and 15-19 .9% for equity. The association between entrepreneurship and philanthropy is evidently attaining a new grammar and it is being vigorously promoted globally; some quarters even position impact investing as the new philanthropy. So, Indian philanthropy will have to debate , absorb, regurgitate all these trends, and position itself anew.
For now, Raghavan wants to deal with the grant-making form of philanthropy , as we know it. He is, however, certain that for-profit social enterprises will eventually enmesh into a larger social system that will emerge. “They will only enrich the philanthropy ecosystem; we cannot exclude them in that sense,” he says. “And in any case, many of these for-profit social entrepreneurs work in tandem with NGOs.” Rohini Nilekani of Arghyam and Pratham Books, who has been an enthusiastic participant and commentator on the evolution of the social sector , is certain that leaving everything to free markets is fraught with danger.
She would like to see philanthropic capital come in and buttress spaces where market solutions don’t do well. “We also have to learn to work with governments,” she says. “There is no way, either markets, or us philanthropists , can universalise, say, education or healthcare in the country.” She indicates that the political context, therefore, and its pulls and pressures would have to be factored in as the new idiom for Indian philanthropy takes shape. Nilekani, Vijay Mahajan, and Paula Johnson of The Philanthropic Initiative of the US, were some of the principal voices that guided an exploratory conference on new philanthropy in Mumbai recently, hosted by Samhita and the Centre for Advancement of Philanthropy (CAP).
A small clutch of donors – including the Sir Dorabji Tata Trust, KC Mahindra Education Trust, Wockhardt Foundation, NM Wadia Charities, The Bombay Community Public Trust – impact investors, philanthropy intermediaries , wealth management firms, HNIs and a few NGOs spent an entire day debating the new giving approach for India. It was suggested that some sort of a ‘network’ or better engagement and collaboration among donors be created, as a starting point, the nuts and bolts of which are to be determined by an appointed task force. “We have to ratchet the potential of giving to the next level,” says Noshir Dadrawala of CAP. An association or network of donors is a means to achieving it.
It’s quite common abroad, with over 70 associations worldwide. Some of the prominent ones are the Community Foundations of Canada, The East African Association of Grantmakers, the Council of Foundations in the US, the European Foundation Centre and the Grupo de Institutos, Fundacoese Empresas (GIFE) of Brazil. Noshir is on the board of the Sao Paulo-based Worldwide Initiatives for Grantmaker Support (WINGS).
The process of creating and fostering a new approach to Indian philanthropy is not going to be easy. Many of those present wondered how their individual contributions and work would be recognised in a collective. Vijay Mahajan pointed out to the gathering that “we take our autonomy too seriously” and that it was about time to display some humility, and “subsume” individual identities into a larger one for the greater common good. Nilekani, however, was more charitable and insisted that unlike in other fields, individual efforts in giving , even in joint efforts, would have to be applauded and celebrated. But it was agreed, pooling, of all hues and sizes, is the way to go.