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Private Sector Funding: ‘Family philanthropy up over three-fold in FY20, to remain resilient amid Covid’

Private sector funding for philanthropic activities in India comes mainly from one of four sources, namely, foreign funding, corporate social responsibility (CSR), retail or individual donations and high net worth individuals (HNIs) or family-backed funds.

Written by Aashish Aryan | New Delhi |
Updated: March 16, 2021 8:33:32 am
On Tuesday, police arrested Vinit Bharadwaj and recovered Rs 70 lakh.

The corpus of family-backed philanthropies in the country grew more than three times to Rs 12,000 crore during 2019-20, while the total private sector funding for philanthropic activities rose 23 per cent on-year to Rs 64,000 crore, according to India Philanthropy Report 2021, a study undertaken by global consultancy Bain & Company and philanthropic organisation Dasra.

Private sector funding for philanthropic activities in India comes mainly from one of four sources, namely, foreign funding, corporate social responsibility (CSR), retail or individual donations and high net worth individuals (HNIs) or family-backed funds.

Of these, while funding from foreign sources has already taken a hit due to complex regulations surrounding Foreign Contribution (Regulation) Act of 2010, others such as individual donations and CSR corpus from domestic companies is also likely to be hit in 2021.

CSR spending, comprising 28 per cent of total private philanthropic funding, however, is likely to decline by 5 per cent during 2021, owing to a decline in profitability of most publicly listed companies in India after the March 2020 lockdown, the report said.

“Compounding this challenge, the CSR corpus has shifted away from traditional non-profits and sectors to Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM Cares) and other Covid-19 relief initiatives,” the study noted, adding that the cascading impact of the Covid-19 pandemic-induced slowdown will compound and result in a reduction in individuals and private persons donating to charities.

The only bright spot for philanthropic funding in 2021, the study said, is that family-backed funding which has been resilient throughout the pandemic. Quoting a research conducted by PwC, the study by Bain & Company and Dasra notes that nearly 95 per cent of family business owners have some form of philanthropic interests or commitments.

“Family philanthropy has fewer constraints than other sources, enabling a broader impact on the social sector. These donors have a greater ability to innovate, influence public policy, build institutional capacity, and experiment with new forms of funding,” it stated.

Though most of the funds spent by family-backed philanthropies have been in education and health-based initiatives, the trend is in line with the spending by other private sector contributors such as foreign funders, CSR or retail donors, the study said.

“While we see this cause bias amongst family givers as well, they often play an important role in supplying risk capital to underrepresented areas within the broader health and education sub-sectors. They help support innovation that enables effective interventions or NGOs to leapfrog and scale intersectional themes such as gender in healthcare and horizontals such as data, technology, and talent to enable greater impact and efficiency.”

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