Business

Apart from Azim Premji, nobody is really giving till it hurts, says Ingrid Srinath

Updated : November 21, 2019 12:44 PM IST

Director of Centre for Social Impact and Philanthropy calls for regulatory tweaks to promote philanthropy.

Every NGO that has taken the government to court challenging their FCRA withdrawal has won.

Far too often, the words philanthropy and charity are used interchangeably. While both entail donations (of wealth or goods), there is a significant difference between the two; charity is largely individualistic and done from personal preference, philanthropy is strategic and often done with a vision and a plan. Historically, charity has been part of Indian culture for ages. Rich people have often donated huge sums for religious purposes and rescue efforts. Yet, philanthropy is relatively new. As the list of billionaires and millionaires grows, there is a growing self-realisation, that "sharing wealth" should not be a choice but a responsibility. Philantrophy is thus gaining roots in India.

Ingrid Srinath, Director, Centre for Social Impact and Philanthropy, Ashoka University, has been right in the midst of this shift. For over two decades, she has been associated with a variety of companies and institutions, from being advertising to advocacy.

Shashwat DC caught up with Srinath to get her views on philanthropy in India and more pertinently to discuss why NGOs in India suffer from a credibility crisis. Excerpts from the interview:

How is philanthropy space evolving in India?

The best thing I can tell you about philanthropy in India is that we don’t know very much. There is virtually no data of any kind. Anecdotally, we feel that the bulk of giving in India is either religious or within one’s extended circle.

When it comes to hard data, we know that the home ministry tells us that there is foreign funding of around Rs 20,000 crore coming into the sector. CSR reporting – because that is mandatory, so we now know something about that – says something like Rs 15,000 crore is coming from there, putting the number at approximately Rs 35,000 crore. The best estimates we have of the balance, which is giving by foundations, high net worth individuals (HNIs) and ordinary individuals, is in the ballpark of Rs 30,000 crore.

This is our best guess at this point in time but one of the key items on our agenda is to figure out how to reliably estimate private giving.

Philanthropy in India is still dominated by high net worth individuals (HNIs) and the big guys and of course there is only one individual if we keep him apart, the whole thing is different. How do you think we need to move from that to microgiving?

There are lots of things that need to be done. I think the whole ecosystem needs to be invested in. At the moment, it is actually the opposite because it is so hard to give. The government insists on proof of address and those kinds of things. So the one-touch giving that you could be doing based on a QR code or something like that is quite hard to do. There are some regulatory tweaks that need to happen, there is some investment in promoting the idea of online giving, thanks to campaigns like GivingTuesdays.

Another issue is about tax incentives. Even the tax incentives that we used to have like 35A has been withdrawn. Now we are down only to 80G which is you get to reduce your taxable income by 50 percent of the contribution. Compare that to Singapore where you can reduce your taxable income by 125 percent of the amount.

There's a lot of excitement on new platforms like Milaap, etc. How do you feel about it?

There are lots of different innovative solutions to this. One of the things that funders can do is to fund that innovation. So, for example, if I am Ketto, Wishberry, Milaap, GlobalGiving, or Impact Guru, or GiveIndia, if I had let us say even Rs 1 crore in a year, then I could use to test different things – let me test this and see if it works, let me see that and see if it works, let me try out different models.

According to a study, India’s rank on the World Giving Index has also fallen and how would you relate to that?

I don’t think that study necessarily is a reliable indicator because I don’t think it is rigorous enough in terms of covering enough of the population and asking the right questions. But can we give more? We certainly can. As a country should we be giving more? Wealthy people can and should be giving more; currently apart from Azim Premji and a couple of others, nobody is really ‘giving till it hurts’. Everybody is giving microscopic percentages of their income, forget about their wealth.

On the other hand, there was a campaign run recently, which asked ordinary citizens to pledge 50 percent of their assets to charity, you could give it away either during your lifetime or at your death. The pledge was simple, as long as you have Rs 1 crore in assets, whatever that maybe, your house, your whatever, you can qualify for this campaign. The campaign was quite successful. There were many people who signed up for this pledge, even young professionals who have a bright future in front of them.

So I think we are not really exploring the full potential of giving in India for multiple reasons, including mistrust. So people are comfortable giving to people they know and they are comfortable giving to 2-3 large organisations that are well-known. But the average NGO doesn’t have access to that kind of money because they haven’t been able to build the trust.

It could be credibility crisis, NGOs have been renowned for – there are many bad eggs.

This is not true in my experience. If I have to say percentagewise politicians, media, business and NGOs I will say NGOs; they are very trustworthy institutions, they don’t indulge in scams.

You are comparing to a very bad lot..

That is right so certainly if you live in a country where all institutions are discredited then NGOs I think should be less discredited than others. But that is not how it is actually works in practice. People are willing to invest money, in all kinds of fly-by-night schemes, where they lose money without batting an eyelid; whereas giving Rs 500 for the NGO is somehow seen as some sort of a risk. What I find really troubling is that people who have no difficulties spending Rs 5,000 on restaurant meal, will have 100s of queries while donating a fraction of that to an NGO. Do you ask the restaurant guy how much do you pay to the waiter, how do the vegetables cost? No. You are paying for an experience and you trust them that this is something that they are going to make it worthwhile.

For much smaller sums of money, there seems to be an inherent mistrust. I don’t think it is the NGOs necessarily, I think as a society we are mistrustful.

But over a period of time, there have been many stories of NGOs indulging in financial impropriety. Quite a significant percentage.

There is no data. I would hazard a guess that such NGOs that you talk of account for less than 5 percent of the sector. When you compare that to business or sports or Bollywood...

When the government was tightening the screws on the NGOs, there were so many accountancy issues. So many NGOs that had to - they just vanished away.

I wish the government would share that data. I wish that we could find out how many of those registrations that were cancelled were NGOs who had multiple registrations who now decided to settle for one. So let us say that I am an NGO for example like Ekta Parishad and I have chapters in 25 states and may be each of them is independently registered and I had independent FCRAs for a large variety and then when this whole reporting requirements became much more onerous, I said one second, this is too much work, let us just settle for one and I cancelled or I didn’t file returns for 20 of them.

I would love to know how many of these NGOs were NGOs, which once got a grant only once from foreign soil. So there has been a very successful narrative put out there. That says NGOs are either ineffective or inefficient or corrupt or anti national.

None of those are substantiated by the evidence. This is why we need good research and good data so that we can uncover the truth of these allegations if there are any allegations. Every NGO for example that I am aware of that has taken the government to court challenging their FCRA withdrawal has won, there is not a single case that the government has won. Sadly, the NGO put under suspicion gets reported, the NGO being exonerated never gets reported.

But why haven’t there been attempts made to build credibility in the NGO sector?

There have been attempts made, but I don’t think they have been successful. For example, there was an initiative sometime in the early 2000s called Credibility Alliance which went through a very detailed process of evolving reporting frameworks and NGOs reported not just their income and expenses but even your CEO salary and all sorts of things. Sadly it did not take off. Another attempt was GuideStar India that had some 9,000 NGOs signed up with full transparency - multiple attempts to do it. None of them have been particularly successful.

NITI Aayog, on their portal has 40,000 NGOs – even if NITI Aayog cannot get transparency then we have something really serious to deal with. Part of it has to - NGOs report to more authorities than businesses do. Having sat in that seat and have to file my income tax return, my FCRA reports, my excise duty when we used to sell cards, greeting cards, all the usual corporate ones, PF, ESIC, you name it, shops that have establishment acts, Octroi, there were like 20 compliances we had. So we are reporting a lot, but for some reason that is not getting consolidated and reported out to say okay.

For the sake of illustration, out of a rupee, how much typically gets spent as operating expenses versus the actual spent on a cause?

There are two factors that determine that ratio. One is the nature of your work. For example, if you are a centre for policy research where you do policy analysis and research, the bulk of your cost is overhead. I would not be surprised if a think-tank or that kind of NGO had 75 percent overhead ratio.

If on the other hand, I am feeding children like Akshaya Patra does, then 90 percent of my expenses will be programme cost. So the nature of your work in some ways determines your overhead ratio. If you are delivering services then you are going to have a low overhead, if you are doing more research advocacy campaigning that kind of thing then you will have a higher overhead. So that is one factor.

The second factor is how you choose to raise your money. If I get all my money from a Foundation, my cost of fundraising will be negligible. If I choose instead to go to 500,000 Indians and say give me Rs 2,000 each, my cost of fundraising will be high. So when you make those two choices, what is the nature of your work and how do you want to raise your money – that will determine what your overhead costs are.

In India philanthropy has been there for quite some time. So the corporate social responsibility (CSR) thing – there has been a fillip to this. How would you relate, has there been a positive or negative impact?

At best we can tell and this is based on expert opinion because there is no pre-data; there is only post-data. We think that it has doubled corporate philanthropy. If today we are raising Rs 15,000 crore; we think before this it must have been Rs 7,000-8,000 crore. So that’s one straight impact that it has increased the pool of money available to the sector. The second thing it has done is because of the way the law is written, it has got senior corporate involvement in it. This is a boardroom discussion now; it has not left to some young person in the PR department or in the communications department to do it on their own. The fact that its mandatory reporting is there is more emphasis on impact and impact measurement and finally, because most corporates are trying to also use it as a way to engage employees, is also widening the circle of people that are engaged with the sector.