On Wednesday, Facebook Inc’s chief executive officer, Mark Zuckerberg, like millions of other parents, put up a Facebook post about the birth of his first child. More uniquely, he also announced in the note that over the course of their lives, he and his wife Priscilla Chan will give away 99% of their Facebook shares. The stock is currently valued at about $45 billion – about the equal of the annual gross domestic produce of a small country such as Serbia.
As impressive as this pledge is, Zuckerberg isn’t alone. Fellow American tycoons Bill Gates and Warren Buffett (worth over $150 billion combined) have announced that most of their wealth will be donated to the Bill and Melinda Gates Foundation. The two have even started a campaign to encourage the super rich to donate at least half of their wealth.
India has its own philanthropy superstar, Azim Premji who has, till date, donated almost half his shareholdings – worth Rs 53,000 crore – in Wipro towards philanthropy. To put that in perspective, Rs 53,000 crore could finance the National Rural Employment Guarantee Scheme for 18 months.
Billionaire leader
Premji, however, is a bit like Sachin Tendulkar in the Indian cricket team of the 1990s – after him, you might as well stop watching the match, because there really isn’t much batting to come. Globally, most leading philanthropists commit 2% to 5% of their net worth to charity nearly every year, a figure that India’s jet set are very far away from. Leaving out topper Premji, everyone else in India performs abysmally. The country’s richest man, Mukesh Ambani, gave away only 0.4% of his wealth for philanthropic causes in 2014 and only three Indians gave away more than Rs 1,000 crore. According to consulting firm Bain and Company, in the United States, philanthropy accounts for 2.2% of the country’s GDP while the figure is only 0.6% in India.
Even while India’s philanthropy donations are low, India does very well in producing rich people. India is the country with the third-largest number of billionaires in the world, lagging only China and the US. Moreover, not only is the number of billionaires high, the amount of wealth they control is rather obscene. The World Bank, for example, calls India’s billionaire wealth “exceptionally large”. The ratio of billionaire wealth to gross domestic product in India stood at 12% in 2012. In Vietnam, it was under 2%. This number has grown: it was only 1% in the mid-1990s, before the effects of liberalisation could take root.
India, in fact, has wealth inequality that compares to highly developed nations such as the UK and Canada and is substantially more than China.
Human development laggard
At the other end of the spectrum, India does significantly worse when it comes to human development. In preventing malnourishment of its children, for example, it lags behind sub-Saharan Africa. A baby born in India has a far greater chance of dying before its 5th birthday than if it had been born across the border in Bangladesh. India comes in at a lowly 135th on the Human Development Index rankings.
With such dismal amounts of poverty and large concentrations of wealth, India's ultra rich should have been on a philanthropic overdrive rather than limping behind as they do now.
What explains this? Is this a cultural thing? Is the Indian worldview, in spite of the terrible deprivation around, somehow more parsimonious than that of, say, Americans?
Faith tops charity
In some ways, yes. Even while Indians lag behind the West in donating to charity, they do, for example, donate heartily in one sphere: religion. Data generated in 2014 by the consulting firm Bain, for example, shows that high net worth individuals in India give more to religious causes than education. And this involves some big bucks. If the famous Venkateswara temple at Tirupati, for example, donated its annual earnings, it would become the country’s second-largest philanthropist.
Of course, that said, a one-is-to one comparison might not be justified given the different timeframes of development of industry in India and the West. The Western culture of philanthropy has been developed over centuries of industrialised development. It might be unfair to expect India to match that in its current stage of development.
And things are getting better in India. Bain’s report on philanthropy in India shows that the proportion of Indians donating money went up from 14% in 2009 to 28% in 2013 (although this figure also includes religious donations).
CSR law
Another more abrupt change has been mandated by the law: from 2014 onwards, every company with a net worth of Rs 500 crore or more or a turnover of at least R.1,000 crore or a net profit of Rs 5 crore in a year should spend 2% of their profit of the last three years on corporate social responsibility programmes.
However, like most top-down initiatives this seems destined to fail. The Global Reporting Initiative, an international independent standards organisation that works issues such as climate change, human rights and corruption, sounded a warning on this measure:
Even more worrying is the suspicion that this mandatory CSR amount, the first of its kind in the world, will in effect, soon become a government tax. The measure has been opposed by Indian industry, including Aziz Premji himself, who said, “My worry is the stipulation should not become a tax at a later stage ... Spending two per cent on CSR is a lot, especially for companies that are trying to scale up in these difficult times. It must not be imposed."
Actually inculcating a culture of philanthropy then, it seems, will have to be a slow broad-based change of mindset, rather than a quick fix such as a new law.
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As impressive as this pledge is, Zuckerberg isn’t alone. Fellow American tycoons Bill Gates and Warren Buffett (worth over $150 billion combined) have announced that most of their wealth will be donated to the Bill and Melinda Gates Foundation. The two have even started a campaign to encourage the super rich to donate at least half of their wealth.
India has its own philanthropy superstar, Azim Premji who has, till date, donated almost half his shareholdings – worth Rs 53,000 crore – in Wipro towards philanthropy. To put that in perspective, Rs 53,000 crore could finance the National Rural Employment Guarantee Scheme for 18 months.
Billionaire leader
Premji, however, is a bit like Sachin Tendulkar in the Indian cricket team of the 1990s – after him, you might as well stop watching the match, because there really isn’t much batting to come. Globally, most leading philanthropists commit 2% to 5% of their net worth to charity nearly every year, a figure that India’s jet set are very far away from. Leaving out topper Premji, everyone else in India performs abysmally. The country’s richest man, Mukesh Ambani, gave away only 0.4% of his wealth for philanthropic causes in 2014 and only three Indians gave away more than Rs 1,000 crore. According to consulting firm Bain and Company, in the United States, philanthropy accounts for 2.2% of the country’s GDP while the figure is only 0.6% in India.
Even while India’s philanthropy donations are low, India does very well in producing rich people. India is the country with the third-largest number of billionaires in the world, lagging only China and the US. Moreover, not only is the number of billionaires high, the amount of wealth they control is rather obscene. The World Bank, for example, calls India’s billionaire wealth “exceptionally large”. The ratio of billionaire wealth to gross domestic product in India stood at 12% in 2012. In Vietnam, it was under 2%. This number has grown: it was only 1% in the mid-1990s, before the effects of liberalisation could take root.
India, in fact, has wealth inequality that compares to highly developed nations such as the UK and Canada and is substantially more than China.
Human development laggard
At the other end of the spectrum, India does significantly worse when it comes to human development. In preventing malnourishment of its children, for example, it lags behind sub-Saharan Africa. A baby born in India has a far greater chance of dying before its 5th birthday than if it had been born across the border in Bangladesh. India comes in at a lowly 135th on the Human Development Index rankings.
With such dismal amounts of poverty and large concentrations of wealth, India's ultra rich should have been on a philanthropic overdrive rather than limping behind as they do now.
What explains this? Is this a cultural thing? Is the Indian worldview, in spite of the terrible deprivation around, somehow more parsimonious than that of, say, Americans?
Faith tops charity
In some ways, yes. Even while Indians lag behind the West in donating to charity, they do, for example, donate heartily in one sphere: religion. Data generated in 2014 by the consulting firm Bain, for example, shows that high net worth individuals in India give more to religious causes than education. And this involves some big bucks. If the famous Venkateswara temple at Tirupati, for example, donated its annual earnings, it would become the country’s second-largest philanthropist.
Of course, that said, a one-is-to one comparison might not be justified given the different timeframes of development of industry in India and the West. The Western culture of philanthropy has been developed over centuries of industrialised development. It might be unfair to expect India to match that in its current stage of development.
And things are getting better in India. Bain’s report on philanthropy in India shows that the proportion of Indians donating money went up from 14% in 2009 to 28% in 2013 (although this figure also includes religious donations).
CSR law
Another more abrupt change has been mandated by the law: from 2014 onwards, every company with a net worth of Rs 500 crore or more or a turnover of at least R.1,000 crore or a net profit of Rs 5 crore in a year should spend 2% of their profit of the last three years on corporate social responsibility programmes.
However, like most top-down initiatives this seems destined to fail. The Global Reporting Initiative, an international independent standards organisation that works issues such as climate change, human rights and corruption, sounded a warning on this measure:
The 2% ruling could lead to forced philanthropy, 'tick box' behaviour, tokenism or even corruption, and masking of data to avoid having to comply. Time will show if this legislation will have a real impact on poor people's lives and prevent actual environmental degradation.
Even more worrying is the suspicion that this mandatory CSR amount, the first of its kind in the world, will in effect, soon become a government tax. The measure has been opposed by Indian industry, including Aziz Premji himself, who said, “My worry is the stipulation should not become a tax at a later stage ... Spending two per cent on CSR is a lot, especially for companies that are trying to scale up in these difficult times. It must not be imposed."
Actually inculcating a culture of philanthropy then, it seems, will have to be a slow broad-based change of mindset, rather than a quick fix such as a new law.
