From Hermes to salvation, you can buy anything in India. And as business has grown, so has philanthropy: the new Corporate Social Responsibility (CSR) Act now requires all large Indian companies to donate 2% of their net profits to philanthropic causes.
The CSR Act is the first of its kind worldwide. Signed into law in 2014, but only now beginning to be enforced, this compulsory philanthropy is set to generate an estimated $3 billion annually in corporate contributions.
That’s the good news.
The bad news is well known: The law represents big money in a country with even bigger problems, from open sewers that contribute to one of the highest disease burdens in the world to infrastructure so crumbling that buildings routinely fall of their own accord. Some problems are even more explicitly life or death: In New Delhi, the abysmally skewed gender ratio of 895 females to 1,000 males is a dark reminder of the city’s selective abortion problem.
Every philanthropic dollar is important and cannot afford to be wasted. However, this money will soon begin to disappear down our (open) drains, if we do not find a way to give more innovatively.
Many corporations in India set up foundations that contribute to wings of charitable educational or medical facilities. Part philanthropy and part public relations, “direct giving” is laudable but dwarfed by the scale and complexity of the country’s education and healthcare problems.
Research conducted by consulting firm McKinsey indicates that corporate foundations might be more effective if they focused on “niche issues” such as the rehabilitation of criminals or the promotion of sports. But these issues attract fewer eyeballs than education or health and thus, only a handful of donors venture to pick this relatively low-hanging fruit. Among non-profits, this encourages competition to attract donor attention, which leads to stifled creativity, replicated models and overlapping results.
Overall, Indian donors are being strangely timid with their philanthropic spending. Yet, Indian businesses have historically created wealth using a uniquely Indian blend of creative survival tactics known colloquially in Hindi-Urdu as jugaad. So why are India’s original jugaadus being so conservative with charity?
Firstly because many of us are jaded.
Since India’s Independence in 1947, corporate India has watched the government consistently prepare Five-Year Plans that set ambitious targets for improvement in every social sector. Year after year, the targets of these plans were missed with the same consistency with which they were laid out. An entire generation of Indians has grown up thinking that social change in India is impossible.
The second reason India Inc. gives so conservatively is mistrust.
According to a Times of India report, India has one NGO per 600 people, but even with millions of organisations in operation, donors recently stated in a research interview that they “did not know of a sufficient number of credible organisations or foundations.” [Emphasis added.]
Some of this fear is with good reason. It is widely known in India that many unsavoury characters operate under the guise of NGOs, camouflaging extortion and other operations under the innocuous banner of a non-profit. Fraudulent non-profits are so commonplace now that they have ceased to even be newsworthy. The offending organisations are usually noiselessly added to government lists of “blacklisted NGOs.” In the eyes of corporate givers, these growing lists sully the reputation of all non-profits.
But for every extortionist who sets up shop, there are heroes defying the odds.
I have met women in Tamil Nadu manufacturing their own sanitary napkins using banana fibre, Rajasthani groups teaching villagers how to demand change from local government, and Assamese silk-weavers using smartphones to create new markets for their centuries-old craft. Many of these world-class organising efforts are constrained by a lack of funding as well as strategic oversight. They are the ones who could benefit from corporate philanthropy, and furthermore, could grow in partnerships with corporations, which specialise in growing, training, streamlining and operationalising.
After channeling $4 million in funding to eight non-profits, Mumbai’s Dasra Giving Circles have provided over 2,000 days of capacity-building support to such organisations. This support includes assisting non-profits with leadership training, implementing IT systems, devising marketing plans, quantifying success and strengthening recruitment strategies—the nuts and bolts of a sustainable outfit, in other words.
It’s time to think of philanthropy as a strategic investment that can deliver returns with measurable results. But before Indian businesses write the $3 billion cheque that the CSR Act will demand, givers must engage in that most corporate of activities: due diligence. Just as in the normal course of business, it is wise to step off the beaten path and seek opportunities in less crowded spaces.
And for maximum return on our investment, we must roll up our shirtsleeves and get involved.
Almost half a million children under five die of diarrhoea in India every year. A majority of these deaths are preventable with a sachet of oral rehydration salts. Why is it that these sachets don’t make it to the villages, while shampoo and hair oil are available in every corner store? Clearly, corporations know a thing or two about distribution networks and organisational building that could help save countless lives. Would it kill us to work together?
Because it will if we don’t.