Indian ultra-high net worth individuals (UHNIs) continue to donate substantially less compared with their peers in the US, the UK and China. As per the latest India Philanthropy Report 2023 released by Dasra, a strategic philanthropic organisation, and management consulting firm Bain & Company, contributions of UHNIs (people with net worth above Rs 1,000 crore) have been volatile with donations (excluding contributions by Azim Premji) dropping by 5% in FY22, despite a 9% increase in their cumulative wealth.
The overall UHNI philanthropic giving has dropped to Rs 4,230 crore in FY22 from Rs 11,811 crore in FY21, largely influenced by Premji’s individual giving reducing by Rs 9,000 crore (due to the share buyback in 2021 benefiting foundations directly), the report said.
This is in sharp contrast to the cumulative UHNI net wealth in India that climbed by 9.2% in FY22, with the top level of greater than Rs 50,000 crore wealth witnessing a 19% jump. Over the years, growth in contributions by top donors has been moderate, with a compound annual growth rate (CAGR) of 7% (excluding Azim Premji) from FY20-22, compared with their wealth increase of 24% and NIFTY50 growth of 25%.
Given the decline in total donations and the overall increase in wealth in the last year, UHNIs’ giving as a percentage of net wealth declined, the report said.
Compared with the US, UK, and China, Indian UHNIs donate substantially less across all wealth levels. As highlighted in last year’s India Philanthropy Report 2022, Indian UHNIs could boost their total contribution by 8-13 times if they matched their counterparts in China, the UK and the US.
Amid the rising wealth of UHNIs in India, more individuals must step up their giving, the report suggested. Jishnu Batabyal, partner at Bain & Co, said: “The weight of social sector commitments is being carried largely by the government. However, public funding growth will likely level out to pre-pandemic levels. Therefore, the imperative is on private philanthropy to realise its full potential and bridge the funding gap in India. Private philanthropy can play a catalytic role in building bridges at the intersection of government, businesses, foundations, civil society, and communities.”
Meanwhile, family philanthropy (which includes UHNIs, HNIs and affluent individuals) in general has grown at 12% over the last five years, reaching $3.6 billion (Rs 29,600 crore) in FY22, driven primarily by a growth in HNIs/affluent givers (net worth of Rs 7-200 crore), the report noted.
Overall, private philanthropy has grown at a moderate pace of about 8% from FY17 through FY22, despite foreign funding remaining stagnant. In FY22, private contributions totalled about $13 billion (Rs 1.05 trillion).
Neera Nundy, co-founder and partner, Dasra, said: “Indian philanthropy is led by families who bring their values to the journey. This segment has seen a steady rise, with growth in HNIs/affluent givers, and further expected to increase by 12% from FY22 to FY27. Philanthropy infrastructure is critical to leverage this growth and mitigate volatility.”
Meanwhile, corporate social responsibility (CSR) spending has grown at 13% over the last five years, reaching $3.3 billion (Rs 27,000 crore) in FY22. While it grew at a slower pace in FY22, the report expects it to sustain its historical growth and reach $6.4 billion (Rs 52,000 crore) by FY27.
Retail giving in India continues to be community-driven, with just over 22% of contribution value coming from formal giving. It has grown at a modest 6% annually from FY17 to FY22, with contributions reaching $4 billion (`32,700 crore). However, with the expanding middle class and the sheer growth in the number of donors, retail giving is expected to grow at 9% annually and contribute about 29% of total private giving by FY27, the report said.
Cumulatively, CSR, family philanthropy and retail giving contributed about 86% of private philanthropy in India and is expected to remain the foundation of private giving in India, the report said.
India’s social sector spending as a percentage of GDP grew from 8.6% in FY21 to 9.6% in FY22 due to 35% growth in public spending. Despite this progress, India remains well short of NITI Aayog’s estimate (13% of GDP) of total annual funding required to achieve United Nations Sustainable Development Goals (SDGs) by 2030. “The public sector has been carrying the weight of social sector spending in India, accounting for 95% of total spending. However, with an expanding budget deficit, higher debt burden, and increased crude oil prices, private philanthropy needs to step up and play a catalytic role in bridging the funding gap in India,” the report noted.