By Anvitii Rai
Patagonia CEO, Yvon Chouinard, surprised the world as he made “earth the only shareholder” of the $3 billion company. Chouinard, his wife, and two adult children have transferred their ownership of the company to an NGO and a specifically planned trust committed to take actions against climate change as well as protect undeveloped land around the world.
The Patagonia case is a step that is different from the precedent of succession plans, to say the least. In a world where elaborate succession plans for companies are laid out, Patagonia has taken exactly the opposite approach of how a succession can be planned, and also questions the philanthropic actions of the ultra-wealthy. While the Patagonia example is an extreme one, his counterparts in India Inc appear to be still tight-fisted when it comes to giving.
In India, as per the Indian Philanthropic Report published in March 2022 by Bain & Co and Dasra, the picture is stark: private Rs giving’ has remained “flat” throughout the years, and family philanthropy has contracted overall. Presently, it is about a third of the total private giving as opposed to the approximately 37% in FY15. The contribution from ultra-high net worth individual (UHNI) has shrunk drastically from 18% in FY15 to 11% in FY21. In contrast, owing to mandatory CSR, with companies averaging 2%, it has grown year-on-year and has now almost doubled from forming 12% of overall private giving in FY15 to 23% in FY21. Most importantly, according to the report, India severely lags in its social sector spending, which is currently around 7% as opposed to the required 13% to meet the UN’s SDGs.
For high-net-worth individuals (HNIs) and UHNIs, however, a detailed analysis in the report shows that the increase in personal wealth does not correspond with an increase in donations. If donations are considered in terms of percentage of total wealth, only Azim Premji’s contributions show an increase in percentage, with the rest showing a downward trend. This is despite the fact that the number of HNIs and UHNIs have actually increased. According to the report, The number of individuals with wealth of more than Rs 1,000 crore increased by around 20%, from 828 in FY 2020 to more than 1,000 in FY 2021, while their cumulative net worth increased by around 50%, from around Rs 60 trillion to Rs 90 trillion in the same period.
Indian HNIs and UHNIs also lag behind their international peers—compared to the US (1.2-2.5%), UK (0.5%-1.8%), and China (0.5-1.4%), Indian family donations range from 0.1% to 0.15%. Additionally, education has remained the top cause to which this section of domestic donors prefers to contribute to, with other sectors receiving measly donations in comparison. In FY21, of all the UHNI donations, 77% went to education, while healthcare, disaster relief, and rural transformation received 7%, 15%, and 1% respectively.
The report states that all is not lost, and there is still scope for family donations to grow. In fact, it projects that family philanthropy is expected to grow by 13% year-on-year till FY26, owing to the increase in wealth and the increase in the number of what the report calls “NowGen philanthropists.” This is backed by the fact that tech UHNIs, despite having only 8% of total UHNI wealth, were the top contributors (35%) among their peers in FY21. The report states, “Given these positive developments, Indian UHNIs could potentially increase their donations by 8 times, to Rs 90,000-Rs 100,000 crore, given that they match the percentage of giving of their UK and Chinese counterparts, and by 13 times, to Rs 160,000-Rs 170,000 crore, if they can match their US counterparts.”