The scope of pri­vate ac­tors in in­vest­ment

The Pak Banker - - 6BUSINESS - Seema Chowdhry

AC­CORD­ING to Cen­tral Sta­tis­tics Of­fice data re­leased last month, the per capita in­come in real terms (at 2011-2012 prices) in 2015-2016 is set to reach Rs.77,431 as com­pared to Rs.72,889 in 20142015. Surely that is good news, but when you take a step back and look at the Hu­man De­vel­op­ment In­dex (HDI) rank­ings, In­dia stands at 130 out of 180 coun­tries.

The United Na­tions de­fines HDI as an av­er­age achieve­ment in key di­men­sions of hu­man de­vel­op­ment: a long and healthy life, be­ing knowl­edge­able and hav­ing a de­cent stan­dard of liv­ing. A rank of 130 means that even to­day In­dia can­not claim that a vast ma­jor­ity of its cit­i­zens have ac­cess to health­care, education, food, and a de­cent liv­ing.

In the last year or so, we have had politi­cians, sur­veys and now even a stu­dent tell us that our so­ci­ety has vast in­equal­ity, and if things are to change, then all of us-the very-rich, the middle- class, the cor­po­rate sec­tor, and In­di­ans liv­ing abroad-along­side the govern­ment, have to par­tic­i­pate to bring about this change.

While ac­knowl­edg­ing the govern­ment as the lead pro­tag­o­nist in de­vel­op­ment, the MacArthur Foun­da­tion-In­tel­le­cap re­port Strength­en­ing Phil­an­thropic Giv­ing and Im­pact In­vest­ing for De­vel­op­ment in In­dia, which is due for re­lease on Satur­day at the Dasra Phi­lan­thropy Week 2016, looks at the scope of pri­vate ac­tors in phil­an­thropic giv­ing and im­pact in­vest­ing and what needs to be done to help th­ese peo­ple in even­tu­ally aid­ing In­dia's tran­si­tion to a more ro­bust and equal so­ci­ety.

"Given In­dia's de­vel­op­ment con­text, we be­lieve that pri­vate ac­tors will need to pro­vide more fo­cus to both phil­an­thropic giv­ing and im­pact in­vest­ing. We be­lieve that th­ese two are very dif­fer­ent tools, and the range of needs that ex­ist re­quire dif­fer­ent kinds of so­lu­tions," said Mou­tushi Sengupta, di­rec­tor, In­dia Of­fice, at John D. and Cather­ine T. MacArthur Foun­da­tion.

The re­port, which de­fines phil­an­thropic giv­ing as a "de­sire to pro­mote wel­fare by gen­er­ous con­tri­bu­tions of money", and im­pact in­vest­ing as "in­vest­ment made in a for-profit en­ter- prise to serve un­der­served ben­e­fi­cia­ries will­ing to carry third-party as­sess­ment, and fol­low­ing reg­u­la­tory norms", is based on re­views of ex­ist­ing lit­er­a­ture and sur­veys.

Also, more than 40 stake­hold­ers, in­clud­ing high net-worth in­di­vid­u­als (HNIs), ul­tra HNIs, cor­po­rate so­cial re­spon­si­bil­ity (CSR) teams, not-for-prof­its, and in­ter­me­di­ary or­ga­ni­za­tions like foun­da­tions and grant-mak­ing agen­cies in In­dia, were in­ter­viewed by In­tel­le­cap, an or­ga­ni­za­tion that pro­vides busi­ness so­lu­tions to scale prof­itable and sus­tain­able en­ter­prises ded­i­cated to so­cial change.

The re­port fo­cuses at­ten­tion on four groups, namely, UHNIs and HNIs, cor­po­rates, In­dian di­as­pora and retail givers, and looks at how they are en­gag­ing with giv­ing and im­pact in­vest­ment. The re­port, while ac­knowl­edg­ing the ab­sence of ho­mo­gene­ity even within the groups, comes up with some sug­ges­tions to im­prove giv­ing and im­pact in­vest­ing.

Ac­cord­ing to Ab­hishek Hum­bad, co­founder at NextGen, a CSR man­age­ment firm, "The de­ci­sion on which CSR pro­ject to in­vest in has to be taken con­sid­er­ing all stake­hold­ers. How­ever, in­di­vid­ual giv­ing is as per the choic- es and in­ter­ests of the in­di­vid­ual. Hence, it is good to sep­a­rate in­di­vid­ual giv­ing and cor­po­rate giv­ing... How­ever, there need to be syn­er­gies and part­ner­ship be­tween all de­vel­op­ment pro­grammes-ei­ther through in­di­vid­ual giv­ing or through CSR or any other medium, in­clud­ing govern­ment projects."

"Most is­sues in terms of driv­ers for par­tic­i­pa­tion cut across fun­der groups as they broadly seg­ment into in­di­vid­u­als (HNIs/UHNIs, retail and di­as­pora) and in­sti­tu­tional (cor­po­rate CSR). Apart from regulation, many of the other driv­ers are com­mon from our re­search and in­ter­ac­tions," ex­plained Prashant Chan­drasekaran, as­so­ciate vice-pres­i­dent, busi­ness con­sult­ing ser­vices, at In­tel­le­cap. He is also one of the au­thors of the re­port.

Chan­drasekaran be­lieves that In­dian phi­lan­thropists, by and large have a lim­ited un­der­stand­ing or aware­ness of im­pact in­vest­ing. "This is one of the chal­lenges high­lighted in the study. For most phi­lan­thropists, there is a clear dis­tinc­tion be­tween giv­ing (for do­ing so­cial good) and in­vest­ing (to gen­er­ate prof­its and re­turns)," he said.

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