Wipro founder Azim Premji’s $21-billion bequest to his education-oriented trust has certainly raised the bar as far as Indian philanthropy is concerned. The latest bequest, in the form of donated earnings from 34 per cent of shares in Wipro, India’s fourth-largest software services firm, represents the fourth transfer of wealth by Mr Premji — after 2001, 2010 and 2013. With this, the reclusive billionaire, who has consistently stayed in the upper reaches of India’s rich lists, has committed 67 per cent of Wipro’s shares to his charitable foundation (out of 74.3 per cent that family-controlled entities own). It also places Mr Premji among the world’s top philanthropists and leagues ahead of a rarefied group of Indians who have chosen to donate their wealth — Shiv Nadar, Kiran Mazumdar Shaw, the Nilekanis, to name a few.
Indeed, consultant Bain and Company’s latest Indian Philanthropy Report shows that Mr Premiji’s donations — and this predates his latest bequest — only serves to underline the poor record among rich individuals in charitable donations. The study shows that ultra-high net worth individuals (UHNI, defined as contributing Rs 10 crore or more) account for 55 per cent of individual philanthropist funding — but, astonishingly, Mr Premji’s donations account for 80 per cent of that amount. If that contribution were excluded, the segment has actually seen a 4 per cent drop between FY14 and FY18. This, the report points out, is particularly problematic, given that UHNIs have grown at a rate of 12 per cent in the past five years and are expected to double in both volume and wealth by 2022.
The report has made an impassioned case for more domestic private sector funding to help achieve the 2030 Agenda for Sustainable Development, suggesting that economic growth alone cannot improve India’s human development indicators — indeed, India’s Human Development Index and Sustainable Development Goals rankings have barely moved in the past four years. Improving these metrics via private agency remains a rising challenge with both the current and former governments crimping overseas funds flows by cancelling the foreign contribution permission for thousands of NGOs.
The corporate social responsibility (CSR) mandate, introduced by the United Progressive Alliance and notified in 2014, requires corporations above a certain profit and turnover threshold to set aside 2 per cent of their profits for designated CSR mandates. The pay-or-explain mandate has proven problematic for various reasons. The Bain study shows that 15 per cent of CSR funds remain unspent, and several assessments of CSR programmes suggest that they suffer from poor implementation as a result of a proforma approach to the issue. There are also tax issues. CSR spending is not tax-deductible, a fact that tends to encourage corporations to sign cheques for tax-deductible charities, including the Prime Minister’s Relief Fund, defeating the purpose of the mandate. As for individual philanthropy, the stellar record of US and European billionaires, from the Rockefellers onwards, has a prosaic explanation. The wealthy in these jurisdictions sequester large portions of their wealth for philanthropy during their lifetime to avoid steep death duties. India does not have death duties, though charitable trusts do enjoy tax breaks. Even so, for India Inc, Mr Premji’s bequests are a hard act to follow.
via The philanthropy mirage | Business Standard Editorials