Family and Corporate Philanthropy: Emerging Trends In India
Several such individuals and their families have set up their own private foundations for philanthropy. Most are either first or second generation entrepreneurs such as Azim Premji or multi-generational family businesses.
A family foundation is broadly defined as a charitable organisation managed by individuals with family ties and supported by donations from those individuals, their businesses and other investment income. In such individual or family foundations, promoters play an active role in formulating strategy and often in micro level activities, again depending on the interest and availability of time. An extreme case of the entire family and the organisation itself being dedicated to selfless service is the case of Aravind Eye Hospital (Exhibit 1) Family-Corporate Jugalbandi What we call family-corporate jugalbandi is the most common model of philanthropy in India. Since most Indian business organisations are family businesses, a separate philanthropic organisation is created, in the form of a foundation or trust. This is largely funded by the business, but often run under the leadership of the business family. One such example is the Krishi Gram Vikas Kendra (KGVK), an NGO set up by Usha Martin Limited, which receives a fixed annual grant from the company. GMR Varalakshmi Foundation, GMR group's family foundation, is another example of family-corporate jugalbandi where the family business contributes a fixed percentage of its surplus to the foundation annually.
In all these cases, family members take an active part in deciding the range of philanthropic activities and in overall programme review. However, they recruit high quality non-family professionals to develop structure, systems and processes for successful execution of these philanthropic programmes. These organisations tend to get into partnerships with other like-minded organisations - whether local, national or foreign - for aid and sharing of expertise. The major benefits of such a model include higher accountability, knowledge sharing, talent acquisition, an ability to scale up programmes quickly, and system and process optimality brought in by external funding.
Philanthropy is no longer understood as simple charity. Current philanthropic initiatives are in alignment with current social realities and aim to attack social problems at their root. Contemporary business philanthropy strives to create awareness about environmental issues such as afforestation, water harvesting, global warming; about issues like foeticide, discrimination against girl child, and about the spread of diseases like HIV-AIDS.
This metamorphosis has been in tandem with changes in the economy in recent years, as economic development has picked up momentum with liberalization and progressive economic policies.
As shown in Exhibit 2, the change has been for the better in all respects. In recent years, philanthropy has become both efficiency and effectivenessoriented, thanks to larger corpuses of funds, more strategic planning, a more professional approach and more rigorous outcome/impact measurement of the amounts spent on philanthropy.
Path of Institutionalisation Indian philanthropy has emerged in recent years as a mainstream professional activity, thanks to rapid economic growth, and the globalisation of knowledge and funding resources. Organisational leadership now insists on the best use of their resources for inclusive growth. Family businesses are fast opting for an entrepreneurial approach to problemsolving, both in terms of identifying new areas of activity and improving existing ones.
Philanthropy now aims at capacitybuilding of the target group. The professional approach to solving complicated issues, the use of metrics, and strategic decision-making has transformed philanthropy from mere monetary giving to targeted goal-oriented support to worthy causes. Also, as the breadth of activities and range of possible ways of contributing to any specific cause have expanded, immense possibilities have opened up for volunteers and donors. In the post-globalisation landscape, individual entrepreneurs and business families have increasingly accepted a tri-fold bottomline of growth that includes community and environment. What is noteworthy is that the fundamental premise of philanthropy ¬ its motto of service ¬ continues as before.
Though philanthropy is still at a nascent stage in India, there are clear signals of the potential contribution it can make to building a better planet for this generation and beyond. With further refinements in strategy, processes and resource allocation, we can expect better synthesis and synergy in the meaning and relevance of trusteeship, conveyed through the organised and strategic philanthropic initiatives of businesses and their families.
[This article has been reproduced with permission from ISB Insight, the research publication of the Indian School of Business, Hyderabad (India)]
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