The scope of private actors in investment
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.