Today, what CSR implies is that you factor in the cost of doing philanthropy, good works, engaging with the community, and then whatever is left you call that “responsible profit”
By Cordelia Jenkins
NEW DELHI: At Mint’s Clarity Through Debate Conclave, titled “Social Responsibility: The Business Imperative”, on 29 September, a panel of experts from various fields discussed the state of philanthropy in India today.
What is the relationship between business and philanthropy in India today?
Many people think that they can use one way of thinking when looking at businesses, but when it comes to philanthropy, they find the first organization that’s either close to them or that they’ve heard about and write a cheque in that manner.
Dasra takes a very different approach, an analytical approach, where we spend many times up to six-nine months to understand sectors, see what the government is doing, vet management teams, figure out how you can create the most bang for your buck.
And, through that approach, we create a white paper, similar to what McKinsey would do, to help investors understand where their money can create greater impact, who are the management teams that are doing this work, and, I think more importantly, helping those management teams of non-profit organizations create robust three-five year business plans, which talk about scale, public-private partnerships, working with corporate India, and actually creating impact. It’s using the same analytical approach that we use in the business side but in the philanthropy sector.
Jasjit Mangat, director, investments, Omidyar Network: There’s individual giving, the CSR (corporate social responsibility) aspect, and, at Omidyar Network, our model is perhaps the third leg of the stool, if you will, where we are investing the legacy capital of a very successful businessman, Pierre Omidyar, who co-founded eBay.
It’s harder than it looks to find organizations and to invest in them. It’s also hard to find and invest in whole sectors.
The intent here is that you don’t just support isolated organizations, but you look to create an ecosystem effect, where you have a combination of both for profit-making organizations as well as not-for-profit enablers, platform enablers, government policy, regulations, etc., that make it conducive for a whole area to grow. We have multiple examples of that in our country.
Affordable medical technology is one example; we import most of our medical technology into our country today. The bulk of our population lives at less than $4 a day and there just isn’t enough prevention. But at the same time, we don’t have medical device regulation in the country, certification, we indeed don’t have the ecosystem in which you’d have either the individual companies flourishing or the conditions for those companies to flourish.
That’s where we look to step in and invest both in for-profit organizations as well as in not-for-profit grant-making that, in a sense, improves the ecosystem externalities in which these companies can grow.
What’s changing with the way CSR works in India now?
Pushpa Sundar, founder and former director, Sampradaan India Centre for Philanthropy, and trustee of Partners in Change:
Indian philanthropy or business engagement with the community goes back a very, very long way, right to the origin of the merchant communities from which the Indian business class has come up. And even in those days—pre-capitalist, pre-industrial times—there used to be a lot of merchant charity. Merchants used to set aside a portion of their profits for charity.
From merchant charity, we progressed after industrialization to philanthropy, and then as corporations became the prevalent norm, we went on to corporate philanthropy and, today, we have what is called CSR.
Now, CSR is larger than philanthropy; it’s not about just giving. Earlier, philanthropy was giving out of your net profit, counted after you have paid tax and so forth, and then whatever the surplus was there, you did philanthropy out of it. Today, what CSR implies is that you factor in the cost of doing philanthropy, good works, engaging with the community, and then whatever is left you call that “responsible profit”.
So the model has changed and it’s a much wider concept than before. Today, we talk about the triple bottom line, which is making benefits to your shareholders, benefits to the environment (or at least not harming it), and then of course for society. So there has been a progressive change in concept as well as practice inIndiaand, of course, some of it has been influenced by the West, but it’s not that we ourselves have had a very long tradition of giving and responsible behaviour. At times there have been lows and at times there have been highs.
Vijay Chadda, CEO, Bharti Foundation:
Indians have been engaged in charity; I’m not sure that we have been engaged in philanthropy. So we were giving, but we were not sure about what the impact was, we’d give to temples, we’d give alms, stuff like that, and then when philanthropy came on the scene, it was initially cheque-book philanthropy. Even corporates would write out cheques and not really worry about impact.
But now, I think philanthropy is taking shape where you are actually picking up social causes that are dear to your heart and saying that you will, as a corporate fund or a trust, work in that area to create a meaningful and sustainable impact. It’s getting more and more organized. Even charity and philanthropy are getting corporatized to that extent in terms of systems and processes.
What is the extent of the government role in philanthropic models?
Chadda: Philanthropy has to be directed in areas which will get the government to wake up. For example, in education, we can never replicate the government. There are millions of government schools; the purpose is to make the government sector work. If the government schooling doesn’t work, we are doomed. You have to create a model which will make people sit up and take notice, make them aware; they’ll start demanding quality from the government in services that it is supposed to deliver. No philanthropist can replace the government, but most philanthropists work in areas where the government is supposed to do work but is failing miserably.
Dhaval Udani, CEO, GiveIndia: However much an individual, a corporate, or a foundation can do inIndia, the government is probably spending 10,000 times more—I don’t know what the impact is.
The view that we have held is that 30,000 people donating any amount of money versus 30,000 people in the (anti-corruption) campaign at Ramlila maidan- that’s what we want to see. So we are trying to use the donation as the first step towards building a more engaged society, because only when a society is engaged will it actually work towards uplifting its underprivileged, feeling for the man on the street and relating to him.
Even at the HNI (high net-worth individual) level, if a person actually gives, he starts experiencing change within himself and it percolates down to what he does within his company. And that makes a difference to how the company behaves.
We (GiveIndia) are a marketplace, and just as you have a stock exchange which decides what the right price is for each company, we believe that with sufficient information. That each NGO (non-governmental organization) should provide, a donor will decide which is an effective organization, which is efficient. A marketplace of a million donors can decide better than any group of experts, but we have some way to go to make that happen, which is why we require NGOs to disclose more of what they do.
How much impact did the recent visit by Bill and Melinda Gates and Warren Buffett have on Indian philanthropists?
Sanghavi: The visit created quite a bit of buzz, the media has really taken on philanthropy as a topic for discussion, and people are looking at not just giving to charity per se, but being more strategic about their giving.
I think what we can learn from Bill Gates and the Warren Buffett is not just the quantum of funds that they give, but more importantly, their successes and challenges in giving their money away, and I think that is a dialogue which still hasn’t taken place to a large extent in this country.
I think those discussions where philanthropists are having honest conversations about what has worked and, more importantly, what has not worked, I think, is fantastic and that brings philanthropy onto an intellectual level where we can all discuss what’s the greatest way to create impact, as opposed to what is the greatest way to get our names out.
(Sourced from Mint)