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India’s Ultra-Rich Showed Less Kindness In FY22

Despite the cumulative wealth of India’s ultra-rich jumping by over 9% in the last financial year ending March 2022, their contribution to the social sector through donations shrank by a big margin in this period.

‘9% More Wealth, 60% Fewer Donations’

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Philanthropic contributions made by India’s ultra-high net worth individuals (those having net worth of over Rs 1,000 crore) have fallen sharply to Rs 4,230 crore in FY22, from Rs 11,821 crore the previous financial year, according to the India Philanthropy Report 2023 by the non-profit Dasra and consulting firm Bain & Company, which was released on Wednesday, as per Business Standard.

The report says that the dramatic fall of over 60% was due to the fact that contributions by the Azim Premji Foundation dropped by Rs 9,000 crore due to a share buyback of Wipro, which helped the foundation to access liquidity directly.

The fall in donations comes out to be 5% if Premji’s contributions were excluded in this calculation due to a one-time Wipro share buyback in 2021 because of which his foundations were able to access liquid directly and his individual contribution dipped to Rs 484 crore in FY22 from over Rs 9,000 crore a year ago. “Given the decline in total donations and the overall increase in wealth in the last year, UHNIs’ giving as a percentage of net wealth declined,” said the report.

Excluding Premji, UHNI contribution by all others fell to Rs 3,843 crore in FY22, compared to Rs 4,041 crore in FY21.  

And the fall in the quantum of philanthropic contributions, the report says, has taken place despite the fact that UHNI net wealth in India went up by 9.2 per cent in FY22, with the top level of those with a wealth of Rs 50,000 crore witnessing 19 per cent growth.

CSR Spending Increases

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In contrast, corporate social responsibility (CSR) spending on the social sector grew 5% over the previous financial year, amounting to Rs 27,000 crore in 2021-22. Many businesses, the report found, have started giving more than the 2% of the average net profit of the last three years that have to mandatorily be given as part of CSR, with BSE 200 companies contributing an additional INR 1,200 crore over the 2% minimum amount in FY 2022. Retail, or individual, giving also grew, by about 18%, as per ET.

Overall, India’s social sector spending as a share of GDP grew a percentage point to 9.6% in FY 2022, driven by a jump in public spending. Total spending on the social sector amounted to Rs 22.6 lakh crore in FY 2022. However, with about 95% of this coming from the government, both state and central, in FY22, the report emphasises the need for private philanthropy to play a larger role, particularly considering NITI Aayog’s estimate that social sector spending needs to go up to 13% of GDP if India is meet United Nations Sustainable Development Goals (SDGs) by 2030. 

Also Read: Bill Gates Vows To Donate All Wealth & Drop Off From Rich List

Private Foreign Donations Fall Too

“We are obviously disappointed that despite the increase in wealth, the giving has gone down. But we still see a growing appetite to actually engage with philanthropy, from UHNIs to HNIs, and there is a need to support that,” said Dasra co-founder Neera Nundy. Private foreign donations, too, saw a dip of 3% to Rs 15,000 crore in this period from a year ago, again highlighting the need for domestic private philanthropy to accelerate, says Nundy, as per the ET report.

Within the ambit of family philanthropy, those with first-generation wealth and the current generation of traditional family philanthropists are shifting away from the traditional priorities of education and healthcare. Over 90% of donors surveyed in this cohort expressed their interest to be more involved in causes like climate change, gender, equity, diversity and inclusion and improving philanthropic systems. 

“This is an extremely important realisation that has to be built upon over the next few years so that India moves ahead on its path of philanthropy,” says Jishnu Batabyal, partner, Bain & Company.

Also Read: Warren Buffett Donates $758 Million To Charity

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