While donations from high net worth individuals have continuously increased, giving by the super rich has decreased since its peak in 2016
According to the India Philanthropy Report 2023 by Dasra and Bain & Co., which was released recently, philanthropic contributions made by India's ultra high net worth individuals (UHNIs), also known as those with net worth over $1 billion, dropped significantly to Rs 4,230 billion in FY22 from Rs. 11,821 billion the previous financial year. The report, which is a comprehensive analysis of the state of philanthropy in India, gives insights into interesting trends.
Over the past few years, overall private giving (including domestic and international) has remained essentially unchanged, while domestic private giving has expanded moderately (8% to 10 per cent year on year. The report underlines the three areas that will serve as three strong pillars going forward - corporate social responsibility (CSR), family philanthropy (UHNIs and HNIs), and retail giving. Together, they account for around 84 per cent of all private philanthropic capital in India.
In the last seven years, CSR, which is fueled by the 2% mandate, has increased at a rate of 15% per year, with its percentage of total private giving increasing from about 12% in fiscal year (FY) 2015 to 23% in FY 2021. CSR contributions are anticipated to increase at a rate of 19% annually, reaching a proportion of around 32% of total private giving by FY 2026.
On the other hand, family philanthropy has decreased generally. Giving by UHNIs has fallen from its high in 2016, while giving by HNIs has gradually increased. As measured as a percentage of wealth, relative contributions made by Indian UHNIs range from 0.1% to 0.15%, while they range from 1.2% to 2.5% in the US, 0.5% to 1.8% in the UK, and 0.5% to 1.4% in China. The report anticipates a rise in family philanthropy of 13% per year, driven by rising wealth, an increase in the proportion of technology entrepreneurs, and NowGen philanthropists.
The study attributes the decline in philanthropic contributions made by UHNIs to a decrease in the Azim Premji Foundation's contributions by Rs 9,000 crore. The drop in Foundation’s contributions resulted from Wipro's share repurchase, which enabled the foundation to directly access funds. This led to the drastic decline, which was almost by a third.
Even if you exclude Azim Premji’s contribution, the report mentions that Indian UHNI contribution has not kept pace with wealth creation" and is "below par, with a 5% decline in FY2022". UHNI contribution from all other sources decreased to Rs 3,843 crore in FY22 from Rs 4,041 crore in FY21.
The trends suggest that India's UNHIs have chosen to focus on education and health.
Indian HNIs donate significantly less than their counterparts in China, the UK, and the US across all wealth tiers but given the growth of Indian start-ups and young tech entrepreneurs, this tendency may alter. UHNIs from the technology industry have given more generously than those from other sectors, accounting for about 8% of UHNI wealth overall in 2021 but making up nearly 35% of all donations.
The report further reveals that the difference between the top 1% and the bottom 50% has become bigger over time. Moreover, the Covid-19 pandemic has made poverty a reality for more than 200 million Indians. There are still gaps in social sector funding in India, notwithstanding government-driven growth of nearly 12% yearly from about INR 10 lakh crores to over INR 17.5 lakh crores over the past five years.
NITI Aayog suggests that India has to invest almost 13% of its GDP in social causes by 2030 in order to meet its Sustainable Development Goals (SDG) objectives, up from the current average of about 7%.