WHAT'S WRONG WITH MANDATORY CSR?
By Ruma Dubey
Two years ago, Warren Buffett and Bill Gates were in India; not to invest but to urge more Indian industrialists to take to philanthropy, like themselves. Well, not many industrialists were inspired enough to give but a report - India’s Philanthropy Report 2012, conducted by Bain & Company, gives us a new insight.
The report stated that the young wealthy Indians gave a small proportion of their income to charitable causes in 2011, almost one third of entire charity was done by those below the age of 30. The report surveyed 400 wealthy individuals with more than Rs.4 lac each in assets, excluding primary residence, consumables and collectibles. Nearly everyone in the survey group supported Education, and were giving or planned to contribute for improving the educational sector in the country. Food and clothing came second in their ‘to give to’ list and the top three was rounded off by Housing and shelter. Compared to 2010, HNIs have increased their proportion dedicated to charity from 2% to 3.9% in 2011. It is an improvement, definitely, but still way below the ‘giver’ market leader, USA, where HNIs pledged 9.1% of their income to charity.
In this era of “I, me and myself” philanthropy for many, rich and the famous has essentially been about giving for the sake of either making news or for looking good. Or better still because charity gives them tax breaks. There are very few of the growing wealthy clan in India who give because they want to give or believe in the cause of giving. And it speaks volumes about the value system we live in today.
Warren Buffett is undoubtedly the guru when it comes to investing in the stock market. Many amongst us read his nuggets of wisdom and get inspired. If many got inspired with his ‘money making’ gyaan, why not the same inspiration for ‘money giving’? Buffett, like his investing advice, had golden words for charity too – he said he was only giving away dollars that did not add anything to his life. He said he has never given up a meal to give away money, or given up going to a movie or given up a family vacation to give away money. He said he has everything and more. Buffett says, “That money has no value for me and but has value for other people and that makes nothing but sense”.
Why this tight-fisted attitude of Indian industrialists? When we talk about giving away, there are only a handful which come at the top of the mind – Azim Premji, Anu Agha, Nandan Nilekani, Shiv Nadir and Narayanamurthy on an individual basis and corporate group as such – Tata’s, Birla. The latest to get inspired and give has been the GMR group. There is also the Sobha Developers promoter, PNC Menon who has pledged to give 50% of its fortune for charity. With over 4000 companies listed on the BSE, these are only few names which came up. At a time when India has some of the richest in the world, why this stinginess in giving? And in this context the mandatory Corporate Social Responsibility contribution of 2% of three-year average net profit by companies having turnover of over Rs.1000 or more, either net worth of Rs.500 crore or more or net profit of Rs.5 crore or more is very good. It may sound like a tax for many. But when companies do not spend, what’s wrong in making them pay for it compulsorily?
A look around and what becomes apparent is that in India, philanthropy is dictated by caste, religion and community. Building temples and churches is probably high on the list. But with rising inequalities, can charity in current times be at the mercy of religion alone? And if it is religious principles which guide, then is it charity at all? Isn’t that more selfish than not giving?
We are ready to embrace the US business culture in India, but sadly their way of sustained individual giving is conspicuous by its absence in India. Building roads in their ancestral villages or building homes and schools for their employees is done by many industrialists but somehow, this comes forth more as an another self-elevating move.
A quick synopsis of probably reasons why Indian industrialists don’t give or give little:
1: Wary of showing wealth
2: Lack of community spirit
3: Dearth of right channels to donate which instill trust and ensure transparency
4: Ingrained feeling of insecurity – if I give away, will I have enough?
5: Charity guided by religious compulsions
6: Giving away little itself makes them feel they have done enough, let the others do the rest.
Well, it is great that Indians are willing to not just voice but even financially support needy causes. However, for this percentage to increase and for real change to occur, our system needs to be more transparent. Lack of accountability among charitable organizations increases our distrust and like the young voice of today’s India says “If you want our money, show us what you do with it!”