Azim Premji has shaken the corporate world through his gracious gift of over a third of the company’s shares to charity. While India Inc is mandated to part with 2% of the profit, Premji’s generosity of transferring 67% economic ownership of the company to charity is unparalleled in the history of corporate giving and is seen with pride, grace, and with a bit of jealousy too in the corporate world.
Azim stands out as a flamboyant and a scaramouche of the wealthy by becoming a cynosure of ultra-rich standing far outside, the usual crop of billionaires’ club preferring to be inherited to next kin. In his journey towards transforming his family-owned $ 2 million small business into a $ 7.5 billion corporate conglomerate, Premji has left behind a new legacy on giving for both the business and wealthy lot with many key takeaways:
Putting philanthropy on a pedestal of incremental growth
Premji was perhaps the first billionaire in India to sign in the Gates’ and Buffet’s co-promoted Giving Pledge committing half the fortune to the social cause. Premji scripted a new order in corporate philanthropy raising the bar in terms of volume giving a new meaning to the donation by taking grants along the growth of the company through donating in terms of ever-rising company shares. The exponential ascent of giving from Premji is something that both business and billionaire communities would like to emulate as they scale new peaks in wealth with many economies showing signs of rebound and growth. From a modest giving of $1.2 billion in 2013, the donation has grown to $ 7.5 billion in 6 years taking the total contribution to $ 21 billion. As you grow, take the constituency along and it is important that the whole ecosystem around you must graduate to a level you are comfortable with and relate to. Premji stands committed to the proverb, the more you earn the more you give very much true to testaments of most religions.
Simplicity breeds public spirit
Born simple and humble, Premji’s lifestyle is known for nimbleness and frugality rooted on the principle of self-help making him (hu)man before being a Manager shunning display of wealth and leading an austere life. Being simple while empathizes with the needy, takes them along by increasing ownership, besides ensuring saving for others’ cause. Premji being a strict disciplinarian is not keen to flaunt the card of splurge exhibiting opulence by being modest and non-ostentatious in day to day administration and thus cultivating a modest living by leading the example as a true follower. The quality of being humble is deeply ingrained in his genes having inherited from his beloved mother, a born altruist.
Belief in inspiring the ecosphere
Premji’s benevolence of donating thrice the mandated Corporate Social Responsibility (CSR) of Indian corporates is likely to inspire many corporates to pursue magnanimity and likely to up the ante for a new corporate order with a renewed CSR. With India being home to 106 billionaires in 2019, it should not be too far to get the pie from their plates too which has the potential to accumulate to not less than $ 100 billion directly, but also through ripple effect can size up at least another $ 100 billion making corporates make a beeline for the social conscience far above the legally binding benchmarks. That way Premiji was smart in daring to multiply impact several folds by giving a wakeup call to business houses who hold high potential as benefactors with bleeding hearts. With India galloping to mop up billions to meet the UN’s 2030 Sustainable Development Goals(SDG), carrying a huge deficit of $ 60 billion if it is to achieve even 5 of the 17 SDGs by 2030, and with only 18.57% of private funding representing CSR funds in 2019, unless individual philanthropism grows in India there are fewer prospects for strengthening the third arm of the development triad. Premji spurred spontaneous giving in the age of forced philanthropy reiterating private sector role in the social good creation.
Taking the foundation route
Premji, an early bird in the crop of 175 and odd business houses in India espousing the foundation route sends out a strong signal to corporates that while being a patron of community development doing social good may be a necessary but not a sufficient condition for solving problems at scale driving them out of the traditional unidimensional approach of writing out cheques to a holistic model. It is also the capacity to quickly import best-in-class technical expertise for being accountable for results and delivery in time with more control, focus on the programs and legacy advantage it confers on businesses with huge visibility and branding. There is also a huge advantage of cost-cutting on layers of program management by subgrantees with a full handle on efficiency and compliance which acts as a disincentive in the model of contracting charities.
Strong conviction in recreating value
Philanthropy in a way inbreeds into business by brand value turning out to be a long term market investment, with stakeholders across governance, management, workers, supply chain, clients becoming responsible and recreating value. The jumping share values, shooting profitability, increasing market share and peaking business volumes in Wipro post the latest donation stand testimony. Equally, Premji believes strongly on the theory of ESG (Environment, Sustainability, and Governance) and profit is the two sides of the same coin.
Becoming small for achieving scale
The foundation is to a major extent an education focussed mission with a vision of improving the equity and quality of the public schooling system. Doing many things might pose a challenge for reaching scale in a world of charities struggling to develop scale models to solve social challenges that can impact millions, but instead ending up creating pilots and eventually resigning to service delivery. With the secret of scale lying pretty much in its smallness, simplicity, cheapness, and adaptability to Government, Premji’s foundation, being the largest player, stands tall through influencing Government system at a larger level.
Driven by a conviction about the cause
The most important of all considerations is related to the cause of donation and being convinced of multiplying impact manifold if directed to causes like education by investing at the system level reforms. Charity work of Premji focusses on engagement at root causes by working at the curriculum reform, textbook development, capacity development of teachers and education system influencing the quality of practices, processes in schools and policies governing the public led education system. Having seen the benefit of social change in communities, Premji swears to take the route of endowment instead of writing out cheques towards the religious cause, food distribution or one-time physical structures. While Premji is a generous donor, there is a good reason he is expecting grantees’ accountability for results and thus multiply the impact through spreading and deepening grants.
One question always pops up though, is what’s next when the tap of munificence tapers down eventually drying up due to competing priorities and how to wean away charities’ (sub-grantees) dependency. With traditional forms of philanthropy giving way to market-based solutions, there is considerable traction in strategic philanthropy and impact investing aided by an enabling ecosystem for entrepreneurship and uptick in technology. New funding models like social enterprise and innovative development instruments like impact bonds are emerging to replace the conventionally aid-dependent models of addressing social challenges. The results-based financing mechanism scaled by Village Enterprise leveraging a drove of impact investors, social enterprise model pioneered by BRAC for self-funding three-fourth needs and use of Government and private sectors for scaling by BMGF offers huge learning for donor-dependent models. The new funding option can not only be an acid test for the grantee landscape within Premji’s philanthropy but holds the potential to propel in the driver seat of the corporate world, with SDGs emerging as a road map for philanthropy.