When stock market wizard Rakesh Jhunjhunwala decided to open his purse strings and make an announcement of giving away Rs 5,000 crore in charity, it made headlines for that it is a rare declaration from Dalal Street in recent times. The announcement was timed with Dana Utsav or Joy of Giving Week that is on for a week from 2-8 October.
The list of who's who share their personal wealth for noble causes and to NGOs in the country are many in Corporate India with the House of Tatas leading the list of donors. In 2014, Infosys co-founder NR Narayana Murthy, Nandan Nilekani, K Dinesh and SD Shibulal’s wife sold 32.6 million shares valued at Rs 6,484 crore ($1.05 billion). In 2016, Infosys co-founders S Gopalakrishnan and SD Shibulal, and some of the latter's family members sold 7.5 million equity shares of the company for Rs 862 crore on exchanges to partly aid philanthropic activities.
The recently published Hurun List revealed the top 10 of the country’s richest in India Inc who also figured in the 2015 Hurun India Philanthropy list. Azim Premji, who is sixth on India’s rich list, was at number one position in the 2015 philanthropy list. The others who were on top 10 in the rich list includes Mukesh Ambani, Pallonji Mistry and Shiv Nadar also figure in the Philanthropy list.
How charitable are people on Dalal Street with their eyes locked on the ever changing graph of shares on the bourse? There are a few others, but definitely not on the scale of Jhunjhunwala.
An informal group with representatives from the stock markets, financial wizards and people from other fields set up Caring Friends in 2002, which acts as a bridge between NGOs and donors. It is founded by Ramesh Kacholia, a former entrepreneur and Nimish Sumati, an investor. It has no bank account and the offices of the co-founders function as its office.
Caring Friends is associated with NGOs in 10 states that work on various issues — cares for farmers and the physically challenged, looks after the needs of the tribal population, helps NGOs working on government reforms, besides welfare of children and women. It also has an American chapter -- Arpan Foundation.
"We provide funds sometimes when one of the donors mention it to the group and sometimes NGOs approach us. We do due diligence and then provide funds," said Sumati.
He said that NGOs in India do not have the ability to scale and that makes it difficult to invest large sums of money into any of them. "Any of us who at Caring Friends for a cause share it with others and whoever is interested send cheques directly to the Foundation and NGO," he said. Sumati and Kacholia and the Foundation visit the places that they have given funds to. Caring Friends on an average give Rs 25-27 crore to charity but this year the Marathwada drought has seen donations of Rs 35 crore so far.
“I made over two dozen trips to Marathwada where we were focused on aiding drought-hit people. What is important is to not give excess funds at one’s disposal but to give time and talent to the NGOs as they largely lack managerial capability," said Sumati.
He said that there are many brokers in the stock market who give money to charity but "none on the scale of Jhunjhunwala yet." However, he said that this donation is too much for any NGO to handle and there are not that many NGOs in India with whom this money can be shared.
India’s rich and NRIs are actively giving away some portions of their wealth largely to three causes: education, health and women’s empowerment. Earlier, there was a trend of giving money to the villages or hometowns of the donors. Though that tendency still exists, it is being largely replaced by donors wanting to give their funds towards causes where a family link still exists — like a relative who is suffering from cancer and so the donor wants to help cancer afflicted, etc.
Rajesh Iyer, Head, Advisory Services and Family Office, Kotak Wealth Management, said that the recently released Kotak Top of the Pyramid 2016 report, reveals that India's ultra High Net Individuals (HNI's) with a Rs 25 crore net worth and above reserve 5-6 percent of their total income to charity.
Kotak Wealth Management only accepts customers who have upwards of $1 million in investible surplus as its clients. Iyer said that a new feature being noticed is that e-commerce and baby boomers too have joined the rank of those who want to give a part of their wealth to the needy.
However, compared to the number of people and companies that are doing well on the bourses, the amount spent on charity by the successful firms is actually minuscule, said an analyst.
A senior executive of a leading mutual fund firm said that what he has noticed is that there are a lot of announcements made of giving to charity but in reality, nothing progresses much beyond the announcements. He clarifies that he does not doubt Jhunjhunwala’s intentions but, “I have seen too many promises that do not materialise and so I am skeptical."
“I deal with sharks in the financial world and rarely do I meet people willing to share their wealth with the needy without associating it with the name of the company or their relatives with it. I only hope that Jhunjhunwala’s announcement meets its objective and more people on Dalal Street follow his example," the executive said.
(Data support from Kishor Kadam)