India’s Philanthropy Spending Reaches $280bn - Praxis
India’s Philanthropy Spending Reaches $280bn

India’s Philanthropy Spending Reaches $280bn

A recent report paints a compelling picture of the growing need for investment in India’s social sector and reveals how India’s philanthropic community is poised to position the country as a hub for social innovation

 

The Indian social sector spending over the last five years experienced a robust annual growth of 13% and currently stands at approximately INR 23 lakh crore ($280 billion) in FY2023 (8.3% of GDP). Public spending constitutes most of the social expenditure (95%), per the India Philanthropy Report 2024 from Bain & Company. Yet, India still falls behind NITI Aayog’s estimated spending requirements (13% of GDP) stipulated in line with the 17 UN Sustainable Development Goals (SDG) commitments by 2030. These include eradication of poverty, quality education and healthcare, gender equality, and climate action, among others.

While the Indian donor base is broadening, corporate social responsibility (CSR)and HNI(HighNet-worth Individual) or Affluent donations are growing moderately. Private philanthropy grew 10% in FY2023, to INR 1.2 lakh crore ($15 billion). This faster growth (vs. FY2018–2023’s 5% annual growth) was driven by growth in family philanthropy (15%) and retail (12%), states the report.

However, segments like CSR and (HNI)/ affluent donations grew moderately at 7%, despite an expanding donor base, according to the report. Data indicates that HNIs and affluent individuals have a higher propensity to give than UHNIs (more than 0.7% of net worth vs. 0.1% for UHNIs). Hence, there is potential to unlock a significant upside in donations from this segment with the surge in the Indian economy and capital markets.

There has been a notable increase in corporate givers, as evidenced by the proportion of companies complying with the CSR mandate (2% of profits), which increased from approximately 30% in FY2018 to more than 60% in FY2022. Additionally, the share of non-BSE 200 companies participating in CSR initiatives rose from 50% in FY2018 to 59% in FY2022. CSR spending, however, grew moderately at 7% in FY2023. Under family philanthropy, the above 60% growth in Ultra-High Net-worth Individual (UHNI) donations was driven by concurrent donors.

CSR has seen a significant surge in compliance, with more companies adhering to the mandated 2% contribution requirement. Regulatory amendments have prioritised transparency and accountability, leading to improved reporting and increased CSR spending. In FY2023, CSR spending is estimated at INR 28,000 crore, with its share of domestic private giving increasing to 30% from 22% in FY2018.

The report highlights a shift in the types and durations of CSR projects, with a growing focus on multi-year initiatives aimed at driving sustainable impact. Companies are increasingly prioritising environmental and sustainability initiatives, complementing the emphasis on ESG (Environmental, Social, and Governance) strategies.

Family Philanthropy and Retail Giving: Unlocking the Potential

Family philanthropy emerges as a key driver of growth in India’s private funding landscape, with a projected CAGR of 12-25% during FY2023–2028. The report also underscores the potential of retail giving, which has seen moderate-high growth driven by increased donations to NGOs and community initiatives.

To unlock the full potential of HNI and affluent donors, the report suggests addressing barriers such as lack of trust and transparency in the sector. Professionals are also proactively engaging in philanthropy, motivated by personal reasons and a desire to strengthen the ecosystem.

Women Philanthropists: Reshaping Narratives and Driving Impact

Women philanthropists are playing a significant role in shaping the philanthropic landscape in India. The report highlights their emphasis on adopting a GEDI (Gender, Equity, Diversity, and Inclusion) lens in their giving approach, which is often correlated to their lived experiences in the Indian context.

Funding narratives are being redefined by women philanthropists and this is transforming philanthropic institutions as well. Women donors are tackling complex societal challenges such as caste-based discrimination, social inequity, and intersectional mental health. Their contributions are not only driving impact but also shifting power dynamics and fostering societal healing.

Collaborative Philanthropy: Strengthening the Ecosystem

The report notes a five-fold increase in the number of collaboratives established yearly since 2020, with a focus on addressing intricate challenges through collective action. Intermediaries are playing a crucial role in anchoring these collaboratives, ensuring a structured and neutral environment.

However, collaborative philanthropy faces several hurdles, including insufficient long-term funding, trust barriers, and operational inefficiencies. Addressing these concerns through transparent communication, unrestricted long-term funding, and strong governance structures can unlock the full potential of collaborative giving.

 A Call to Action: Investing in India’s Social Sector

The report paints a compelling picture of the growing need for investment in India’s social sector. The deficit in social sector funding could rise to about INR 15 lakh crore by FY2028, underscoring the urgency for strategic and sustained giving.

Philanthropists and corporate donors are urged to make big bets and long-term commitments, focusing on intersectional approaches that prioritise GEDI and climate action. By collaborating with local and international partners, India’s philanthropic community can create a positive global impact and position the country as a hub for social innovation.

 

Acknowledgement: India Philanthropy Report 2024 | Bain & Company

 

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