20% jump in philanthropic activities in FY21 due to govt spending: Report

Social sector funding or philanthropic giving in India has reported a 20 per cent jump in FY 2021. This rise in social sector funding has been triggered largely due to the increased government expenditure. Moreover, at the same time, philanthropic donations have been estimated to grow at 12 per cent annual growth in the next 5 years, as per a recent report by Bain and Company and Dasra.  

The report -- called 'India Philanthropic Report 2022' -- argues that this growth in philanthropic activity across the country will be triggered by growth in three main segments – CSR, family philanthropy which includes high-net worth individuals (HNIs) and ultra- high-net worth individuals (UHNIs), and retail.

As per this report, India is still short of NITI Aayog’s estimate of the total funds required to achieve its UN Sustainable Development Goals (SDG) commitments by 2030, with total supply of funds at an average of 7 per cent of the GDP in recent years and 8.3 per cent of the GDP in 2021.

Private sector funding or private philanthropy has two sources: domestic and foreign philanthropists. Domestic philanthropists are corporations – corporate social responsibility and corporate trusts and individuals. Foreign philanthropists are categorised into high-net worth individuals (HNIs), ultra-high-net-worth individuals (UHNIs) and retail, depending on their net worth and donation amount.

As per the findings of this report, overall private giving – domestic and foreign—has remained relatively flat over the past 5-6 years and reported single-digit growth even before coronavirus pandemic impacted our lives. While private foreign giving has contracted from ~26 per cent in overall private giving in FY2015 to ~15 per cent share in FY2021, private domestic giving has gone up at a moderate pace from 8 per cent to 10 per cent on-year on the back of CSR contributions.

“Economic volatility and an increase in contributions to quasi-official funds coupled with lack of reliable information on where to give especially during COVID has affected the inflow of funds into the sector,” according to Ashoka University's Centre for Social Impact and Philanthropy’s Ingrid Srinath. The centre contributed to the report's findings.

The report also states that CSR mandate that began in 2014 in India, making it the only country to mandate corporations to fulfill their social responsibility. CSR activities in India have risen from Rs 10,066 crore in FY2015 to an expected Rs 23,665 crore in FY2021.

CSR is also the most widely distributed as 70 per cent of CSR funds were allocated across sectors like education, healthcare, rural development, environmental sustainability and poverty over FY2018 through 2021. Due to its wider distribution, CSR affects sectors like animal welfare, art and culture, women empowerment and sports which struggle to get funding from other sources.

Prime Minister’s National Relief Fund (PMNRF) and healthcare emerged as the focal sectors of CSR activities in FY2021 on the back of various COVID-19 related relief activities. Due to this, sectors like education and rural development saw a decline in CSR funding.

Approximately 50 per cent of CSR funding is distributed among 10 states led by Maharashtra, Karnataka and Gujarat with respect to geographical allocation. States like Uttar Pradesh, Kerala and Himachal Pradesh also saw a growth in CSR funding at 32 per cent, 33 per cent and 48 per cent respectively from FY2015 to FY2021.

In order to ensure equitable distribution, CSR funding and activities need to move beyond cities, as per Goonj’s Anshu Gupta. Gupta notes, “CSR now needs to move beyond cities. Money givers are willing to give to the work in the cities and also villages in Maharashtra, Gujarat, Andhra, Telangana and some more states, but what about Uttarakhand, Bihar, Jharkhand, Meghalaya, and so many other states and regions where they don’t have business establishments and factories?”

CII’s Pradeep Bhargava believes that imposing progressive tax slabs on CSR is one way to ensure that corporates can increase their CSR activities. Bhargava notes, “As key stakeholders in the development of India, corporates can do more. I believe there is room to have progressive tax slabs in CSR, just like our income tax structure. A company making Rs 10,000 crore in profit can certainly give more than 2 per cent.”

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