Synopsis
If you have a large amount of money to give, you could either start your own project or make a grant. Ahona Ghosh breaks down what works for whom.
As managing director of Bain Capital, India, Amit Chandra is not short of affluence, but is short on time. That deficiency dictates how the 43-year-old gives away his wealth, something he has been inclined towards for years, with increasing commitment.
“A recent single project has run into a crore,” is all the numbers that Chandra reveals. He donates through GiveIndia, a facilitating organisation that channels donor money to NGOs. “I just send a cheque and all the paperwork is taken care of,” he says. In contrast, Dr K Anji Reddy, founder of Dr Reddy’s Laboratories, did not just want to give money. He also wanted control over his projects and funding. “I was very particular that every rupee I give must be value for money,” he says. “That is not possible if you give through someone else.”
Reddy also could not find any NGO doing substantial work in his area of interest: providing education and livelihood options to rural, underprivileged youth. So, he started his own foundation, the Dr Reddy’s Foundation, in 1996. Reddy says the foundation deploys Rs 15-30 crore a year and has trained a million youth so far. These two examples of contrast sum up the two broad choices before those who have adesire and a significant amount to give: set up your own project or make a grant. The first filter is money, and a small amount all but rules out aproject. “Anyone giving less than .`10 lakh a year should not set up a foundation,” says Dhaval Udani, CEO of GiveIndia.
DO IT YOURSELF
Rohini Nilekani was not dealing with lakhs. She was dealing with .`150 crore, which came from selling some of her shares of Infosys — the IT company co-founded by her husband, Nandan, and in which she still holds 1.4%. In 2005, she set up Arghyam, which works in water security and sanitation. “For large-scale giving, it is more effective to set up a foundation supporting a defined cause,” says Nilekani, chairperson of Arghyam.
Adds Reddy: “As a trustee of my foundation, I can ensure 100% funding is going directly into the field.” Akhil Shahani, director of Kaizen Private Equity, an education fund, says good foundations can leverage their reputation to do more. He cites the example of his family trust, the Shahani Trust, which was set up in 1958 to support various causes. A few years ago, the Cancer Patients Aid Association approached it to plug a shortfall of Rs 22 lakh for a new research centre. The trust gave Rs 11 lakh and raised an equal amount from it s contacts.
This made the Shahanis think about setting up a nonprofit foundation that could accept external donations and increase the funding pool. “Many NRIs don’t know whom to give to,” says Shahani. “When you attach a family name to a foundation, which is well known, donors are comfortable channelling their funding through it.” In 2007, the Shahani family set up the Sage Foundation, which accepts external funding from other high net-worth individuals and also works with NGOs.
Nilekani says, the benefits aside, there are two unintended downsides of running a foundation. The first is of bureaucracy creeping in. The second is choosing between outcomes that are largeimpact but uncertain, or are small-impact but certain
For example, Arghyam implements water and sanitation projects in 19 states, each of which benefits a local community. It also does policy advocacy in this space, the potential benefits of which could touch all Indians. “I try to do a judicious combination of both,” says Nilekani, who, in her personal capacity, also supports institutions that work for the differently-abled.
HAVE OTHERS DO IT
Running a foundation entails responsibility and time. Projects have to be executed and monitored, accounts kept, offices maintained. “Many people don’t want to be bogged down by this and prefer to give to give through a facilitating organisation,” says Noshir Dadrawala, CEO of the Center for Advancement of Philanthropy.
But even in grant-based giving, there are issues. Most donors worry about how much of their grant is going into the project and how much towards supporting the organisation executing the project. “The acceptable amount towards administration costs is 15-20%,” says Shahani.
Another concern of donors is project updates — the lack of it. Priya Naik, CEO of Samhita, a facilitating organisation, gives the example of an American donor who after frequent email exchanges with an NGO in India made a grant to it. “Once the money was given, they never heard back from the NGO,” says Naik.
Many donors have evolved in their giving. Previously, Chandra of Bain Capital used to make grants to NGOs, in education and disability. For the last five years, he has been donating through GiveIndia, which offers an online menu of projects to choose from. “It’s ideal for me,” says Chandra. “It’s like having one bank account, which gives you a debit card, instead of managing 10 bank accounts. Plus, GiveIndia becomes a philanthropy partner (like a personal wealth manager) and helps me achieve my giving objectives.”
Chandra and his wife are founding members of GiveIndia’s First Giver’s Club — a platform of 120 HNIs who commit to philanthropy at least .`5 lakh and 40 hours a year. The Chandras, who average 40 hours a month, work with the NGOs they support to help them problem solve, scale up and organise events. The advantage of going through platforms like GiveIndia, Samhita or Dasra is two-fold. One, they list many small organisations. Two, they do a due diligence on the project and the NGO, saving donors the trouble.
There are also middle-path approaches being forged. For example, facilitating organisations are structuring projects for donors that lets them be more hands-on. Donors form a group, pool their resources for a project, and jointly monitor its execution. “Like a venture capitalist, donors too go though a testing phase of a few years to see what works for them and what doesn’t,” says Udani of GiveIndia. Whatever the method of giving, the excuses for not giving are shrinking. “If you are sitting on a pile of unproductive wealth while society is crying out, that is a crime,” sums up Chandra.