Philanthropy expenditures in India have grown by an average annual rate of 13% during the past five years, reaching the equivalent of $280 billion. That amount constituted 8.3% of the country’s gross domestic product (GDP) during fiscal year 2023.
Despite the robust annual increases, however, the current total falls short of the 13% of GDP analysts at NITI Aayog, an Indian government public policy think tank, believe is necessary for the country to meet its commitment to achieving 17 United Nations Sustainable Development Goals by 2030. The UN goals include climate change measures, increased access to quality education and healthcare, gender equality and the eradication of poverty.
NITI Aayog sources estimated the demand for philanthropic aid in India at $426 billion during FY2023. The $146 billion deficit between need and current contributions is seen as growing to nearly $183 billion in FY 2028, when estimated funding of $511 billion will fall short of an anticipated $694 billion need.
The good news is giving in India is growing. The five-year increase in philanthropic giving was spurred by family philanthropy, which jumped by 15%, and retail-generated giving, which grew by 12%, according to India Philanthropy Report 2023, a study from Boston-based consultancy Bain and Company and Dasra, a strategic philanthropic organization based in Mumbai, India. Family philanthropy and retail giving contributed to overall private philanthropy growth of 10%. But despite these two sources’ contributions, that growth rate was pulled down by corporate social responsibility structures and high-net-worth individuals increasing their giving by only 7% apiece. In total, private philanthropy amounted to $15 billion during fiscal year 2023.
A look beneath the hood reveals that the numbers offer more than a hint of potential growth. New corporate givers are coming online, possibly at lower initial levels of donating as they ramp up participation, as corporations increasingly comply with corporate social responsibility (CSR) mandates. These regulations call for companies to contribute 2% of their profits to philanthropy. During FY 2018, the percentage of participating companies stood at around 30%. By FY 2022, more than 60% of companies were in compliance.
Participation is increasing among all levels of companies, the data shows. Among firms outside of the Bombay Stock Exchange ranking of the top 200 companies (as ranked by marketing capitalization), the percentage participating in CSR initiatives increased from 50% during FY 2018 to 59% in FY 2022.
Among individual funders, several signs point to untapped or burgeoning potential. As the report authors noted, “Data indicates that [High Net Worth Individuals] and affluent individuals have a higher propensity to give than [Ultra-High Net Worth Individuals] UHNIs (more than 0.7% of net worth vs. 0.1% for UHNIs).” Given the surging Indian economy and capital markets, these sectors are ripe for additional solicitation.
Other sectors of the Indian population show equal, if not greater, potential for giving. Among the more prominent:
* Women, who because of social structures have historically controlled less wealth, are increasingly influencing family philanthropy. Their largess tends to focus on societal challenges such as gender equity, diversity and inclusion (GEDI) issues.
* Now-Gen donors (first-generation wealth creators) and Inter-Gen givers (the current generation of traditional family philanthropists) had added GEDI and climate change concerns to their traditional focuses on education and healthcare. What is even more encouraging is that among the under-40 Indian population, 36% fall into this category.
* Professional donors, a funder class that includes C-level executives in the private sector, are people who are accumulating wealth and engaging in philanthropy on an individual, as opposed to family, basis. These individuals are especially likely to fund programs that build capacity or research capabilities.
A full copy of the report is available here: https://www.bain.com/insights/india-philanthropy-report-2024/
