If Americans of Indian origin donated to their full potential for social causes in India, they could raise $1.2 billion every year – more than ten times the amount of $116.4 million that the United States sent as foreign aid to India in 2014.
This analysis has emerged from “Giving Back to India”, a report on philanthropy among the Indian American diaspora, published on Monday by international non-profit advisory organisation The Bridgespan Group.
The report notes that while Indian-Americans traditionally sent in philanthropic money for their families and communities, they are now increasingly expanding their donations to more broad-based social causes that could contribute to the development of the India as a whole.
“As a nation built by immigrants, the United States has a long history of diaspora groups giving back to their countries of origin,” the report says. “But compared to many immigrant groups, Indian-American diaspora giving is relatively new and rapidly evolving.”
Even as Indian American philanthropy evolves and expands, however, the report notes that their ability to contribute to the development of their country of origin could be hampered by factors such as licensing and regulatory constraints as well as a distrust of Indian systems among donors.
Number crunching
A major milestone for diaspora philanthropy was when a group of Indian-Americans set up the American India Foundation to collect funds for disaster relief after the Gujarat earthquake in 2001. The Foundation has been extremely successful and in the past 14 years, it has around $100 million to 248 Indian NGOs.
The US has 3.5 million residents of Indian origin, of whom 1.9 million are India-born first-generation immigrants. They have amassed significant wealth over the past few decades. According to the Bridgespan report, the median annual income of Indian-led households in the US is $89,000, higher than the general US median income of $50,000. “The combined annual discretionary income of Americans of Indian origin is approximately $67.4 billion,” it says.
If the Indian diaspora in the US were to donate the estimated $1.2 billion a year, it would represent more than half the entire amount of annual official development aid received by India from all countries – $2.2 billion, on average, from 2005 through 2013.
But donation of money is not the only kind of philanthropic contribution Indian-origin Americans could make. As a group that is well-educated, often influential, with a strong representation in the fields of science, technology and engineering and with a high degree of familiarity with Indian culture, Indian-Americans could contribute through “non-financial assets” as well, the report says.
The hurdles
Despite this, the Bridgespan report claims that there are three major barriers that hamper philanthropy from the Indian-American community: donor distrust, regulatory constraints and disconnected second-generation Indian-Americans.
“Indian communities are deeply relational. People not willing to trust the system at work, they are often hesitant to write cheques unless the charity they are donating to is vetted by someone they know on the ground,” said Rohit Menezes, a partner with Bridgespan in Mumbai and a co-author of the report. For most diaspora Indians – particularly the younger generation – there is a perception of Indian systems being extremely corrupt, leading to a lack of trust in Indian non-profit groups and intermediaries.
“Our hypothesis is that if Indian Americans do some basic research to get knowledge about what is happening in India, it will help them stretch beyond their presumptions,” said Menezes.
The biggest regulatory concern, according to the report, is the government’s increased scrutiny of foreign funds flowing into India, particularly to non-profit groups. The recent cancellation of more than 4,000 licenses and the scrutinising of Ford Foundation grants have sent a negative message, it says.
Possible improvements
One of the ways in which the contribution of Indian Americans can be improved, according to the Bridgespan report, is by investing in “professionalising Indian NGOs”. For instance, five well-known Indian non-profit organisations – Akshaya Patra, Brahmananda Saraswati Foundation, Ekal Vidyalaya, Pratham, and Sankara Eye Foundation – formed US-based affiliates in the past few years for the sole purpose of fund-raising from the Indian diaspora there. “Taking that step helped those organisations increase the funds they raised collectively by 45% in four years, from $18.6 million in 2008 to $34 million in 2012,” the report says.
The report also recommends that fundraisers try to target Indian-origin residents beyond the major cities of the east and west coasts of the US, which is the usual target group. Targeting the same people repeatedly could lead to “donor fatigue”, whereas fundraisers could actually be approaching Indians in other “less-targeted” parts of the US. As an example, the report notes the success of the Ekal Vidyalaya Foundation – the American fundraising arm of the Ekal Vidyalaya schools in India that are affiliated to the Rashtriya Swayamsevak Sangh – which has been hosting Bollywood concerts and other fundraising events all through the interiors of the US.
“Our diaspora can play a distinctive role in the development of our country,” said Menezes. “We believe there is an opportunity for them to give more, and give more effectively.”
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This analysis has emerged from “Giving Back to India”, a report on philanthropy among the Indian American diaspora, published on Monday by international non-profit advisory organisation The Bridgespan Group.
The report notes that while Indian-Americans traditionally sent in philanthropic money for their families and communities, they are now increasingly expanding their donations to more broad-based social causes that could contribute to the development of the India as a whole.
“As a nation built by immigrants, the United States has a long history of diaspora groups giving back to their countries of origin,” the report says. “But compared to many immigrant groups, Indian-American diaspora giving is relatively new and rapidly evolving.”
Even as Indian American philanthropy evolves and expands, however, the report notes that their ability to contribute to the development of their country of origin could be hampered by factors such as licensing and regulatory constraints as well as a distrust of Indian systems among donors.
Number crunching
A major milestone for diaspora philanthropy was when a group of Indian-Americans set up the American India Foundation to collect funds for disaster relief after the Gujarat earthquake in 2001. The Foundation has been extremely successful and in the past 14 years, it has around $100 million to 248 Indian NGOs.
The US has 3.5 million residents of Indian origin, of whom 1.9 million are India-born first-generation immigrants. They have amassed significant wealth over the past few decades. According to the Bridgespan report, the median annual income of Indian-led households in the US is $89,000, higher than the general US median income of $50,000. “The combined annual discretionary income of Americans of Indian origin is approximately $67.4 billion,” it says.
If the Indian diaspora in the US were to donate the estimated $1.2 billion a year, it would represent more than half the entire amount of annual official development aid received by India from all countries – $2.2 billion, on average, from 2005 through 2013.
But donation of money is not the only kind of philanthropic contribution Indian-origin Americans could make. As a group that is well-educated, often influential, with a strong representation in the fields of science, technology and engineering and with a high degree of familiarity with Indian culture, Indian-Americans could contribute through “non-financial assets” as well, the report says.
The hurdles
Despite this, the Bridgespan report claims that there are three major barriers that hamper philanthropy from the Indian-American community: donor distrust, regulatory constraints and disconnected second-generation Indian-Americans.
“Indian communities are deeply relational. People not willing to trust the system at work, they are often hesitant to write cheques unless the charity they are donating to is vetted by someone they know on the ground,” said Rohit Menezes, a partner with Bridgespan in Mumbai and a co-author of the report. For most diaspora Indians – particularly the younger generation – there is a perception of Indian systems being extremely corrupt, leading to a lack of trust in Indian non-profit groups and intermediaries.
“Our hypothesis is that if Indian Americans do some basic research to get knowledge about what is happening in India, it will help them stretch beyond their presumptions,” said Menezes.
The biggest regulatory concern, according to the report, is the government’s increased scrutiny of foreign funds flowing into India, particularly to non-profit groups. The recent cancellation of more than 4,000 licenses and the scrutinising of Ford Foundation grants have sent a negative message, it says.
Possible improvements
One of the ways in which the contribution of Indian Americans can be improved, according to the Bridgespan report, is by investing in “professionalising Indian NGOs”. For instance, five well-known Indian non-profit organisations – Akshaya Patra, Brahmananda Saraswati Foundation, Ekal Vidyalaya, Pratham, and Sankara Eye Foundation – formed US-based affiliates in the past few years for the sole purpose of fund-raising from the Indian diaspora there. “Taking that step helped those organisations increase the funds they raised collectively by 45% in four years, from $18.6 million in 2008 to $34 million in 2012,” the report says.
The report also recommends that fundraisers try to target Indian-origin residents beyond the major cities of the east and west coasts of the US, which is the usual target group. Targeting the same people repeatedly could lead to “donor fatigue”, whereas fundraisers could actually be approaching Indians in other “less-targeted” parts of the US. As an example, the report notes the success of the Ekal Vidyalaya Foundation – the American fundraising arm of the Ekal Vidyalaya schools in India that are affiliated to the Rashtriya Swayamsevak Sangh – which has been hosting Bollywood concerts and other fundraising events all through the interiors of the US.
“Our diaspora can play a distinctive role in the development of our country,” said Menezes. “We believe there is an opportunity for them to give more, and give more effectively.”