Thursday, 24 March 2011

Buffet and the Gates are in India to encourage billionaire philanthropy

An appeal to India’s rich: Start giving back
NEW DELHI— From Thursday's Globe and Mail

Warren Buffett and his friends Bill and Melinda Gates are hosting dinner in Delhi Thursday night, in the marble embrace of the Oberoi Hotel. The guest list, like all else about the evening, is hush-hush, although an insider did let slip that dinner would be, fittingly enough, buffet. The subject of conversation, however, we know: money.

The three uber-wealthy Americans, now as famed for giving money away as for earning it, have brought their “Giving Pledge” to India. They have already talked about 60 rich Americans into committing to give away half their wealth to the charity of their choice, and they had some success in China last autumn. So now they are after India, the country with the world’s fastest-growing list of billionaires.

Good luck, sniff pundits in the astringent India press.

The Giving Pledge dinner has triggered a fit of self-appraisal, a national debate about philanthropy that has Indians asking hard questions about what’s being done with all this new money. Private giving and volunteering in India is less than 0.4 per cent of GDP, compared with more than 2 per cent for the United States and more than 4 per cent for Sweden, according to analysis from the Johns Hopkins Comparative Nonprofit Sector Project. While India is adding billionaires, some 450 million people still live below the World Bank’s global poverty line, on less than $1.25 (U.S.) a day.

“You look at our high-net worth individuals, and they don’t give – I’m not talking about giving to your driver’s children’s school fees or your local temple – they don’t do organized philanthropic giving,” said Priya Viswanath, co-founder of Singapore-based Dana Asia, which advises the wealthy on philanthropy, and former head of the Charities Aid Foundation India.

“In my experience, people who make $250,000 [a year] give less than $500,” she said. The United Way and the other top two payroll-contribution organizations have only 100,000 donors – in a country of 1.25 billion people, she noted.

Thus, Ms. Viswanath said, the Giving Pledge conversation may founder in cultural translation. “[The Gates and Buffetts] are right in their context but wrong in ours – all the big business barons here do their own kind of giving but whether [they] would leave all or part of their wealth to a public charity? I don’t think so. They will all give to stuff they care about but if tomorrow someone stands up and says, We need the money, nobody is going to write a cheque to them, or not their whole wealth in any event.”

But other truths have also emerged from this debate: Indians give, but they give differently than philanthropists in the West, or other Asian countries – for a host of cultural and logistical reasons.

Many of the wealthiest businesses in India are controlled by families who face pressure to pass capital on to future generations, Rohini Nilekani said. She heads a water access equity charity called Arghyam, is the wife of one of the country’s great technology tycoons and has emerged as a leading voice in the philanthropy discussion.

Surveys show India’s successful business people have a deep mistrust of the charitable sector, fearing money will be wasted, misused, or, in a best-case scenario, not spent as efficiently as it would be in the private sector, she said. (Ms. Viswanath noted sardonically that the same people who fret about entrusting funds to charities are the ones who make fortunes in a volatile stock market).

And the riches are recent: it is less than two decades since economic liberalization kicked off this frenzy of wealth accumulation. “Twenty years is not very much in the lives of an economy or a country or even a person,” she mused. “First you say, ‘Is this for real?’ I think many people wanted to be sure [before they began philanthropic commitments] … the wealth came, it may go.”

One family that presumably won’t be at dinner tonight is that of N.R. Narayana Murthy, chairman of technology giant Infosys: when his wife Sudha Narayana Murthy was asked about the Giving Pledge by an Indian newspaper, she replied that she thought giving should be a personal and private matter. Ms. Viswanath says this is true across Asia, but especially in India.

This has to do, in part, with religion: The requirement to give is central to the Hindu tradition, but a donor strives to have no expectation for the outcome of a gift – a sharp contrast to a Western philanthropist who gets involved in a charity in the hands-on way exemplified by the Gateses.

And often what is needed here is not money as much as ability – charities have a limited capacity to usefully absorb funds, and despite the funding there is a lack of skilled people or strategic ability to get schools or clinics built or renewable energy supplied to rural communities.

“The capacity of civil society organizations is not that great, so even if you wanted to put in a lot of money it’s a question of where you would put it,” Ms. Nilekani said.

Instead, Ms. Viswanath said, business barons often decide to give on their own, to a cause that interests them. “It’s a control-freak thing,” she said, at best – or an ego one.

But Ms. Nilekani described a new generation of givers seeking to change how philanthropy is done here. “They want to give as they get. These young corporate guys – at age 30 they say, ‘I have more than I need and I don’t want to live in a society that is so unequal.’ ” The new donors have market-driven ideas, and an obsession with outcomes – she compared them to the technology millionaires who emerged in California in the early 1990s.

Sanjith Shetty, who heads a hot renewable energy firm in Bangalore, is on a campaign to get computer labs into rural schools in the areas where his Bangalore-based Soham Energy works.

“I belong to an area that is supposedly the IT heartland of India but kids going to college haven’t seen a computer,” he said. He is working with the existing school system, but providing hardware, teachers and transport to get students technology education.

“I found a gap, to see where we could give our expertise in an intelligent way,” he said. “I need to put our profits back into our business. But we need to do this too. We’re part of this society.

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