Wednesday, August 4, 2010

Will Indian billionaires donate like Americans? Not yet

Forty wealthy families and individuals have joined Microsoft Corp. co-founder Bill Gates and billionaire investor Warren Buffett in a pledge to give at least half their wealth to charity. Six weeks after launching a campaign to get other billionaires to donate most of their fortunes, the chairman and CEO of Berkshire Hathaway Inc. released the first list Wednesday of people who have signed what he and Gates call the "giving pledge." Buffett decided in 2006 to give 99 per cent of his fortune to charity. Then, he was worth about $44 billion. After five years of investment returns while making annual gifts to five foundations, Buffett's fortune totals nearly $46 billion. Buffett said he, Bill and Melinda Gates, and a few others have made 70 to 80 calls to some of the nation's wealthiest individuals. The people who agreed to the pledge are from 13 states, with the most participants in California and New York. Among those who haven't signed the pledge, some prefer to keep their philanthropy anonymous, some were not available to talk, and others were not interested, Buffett said. Many on the list will be asked to call others, and small dinners will be held across the country in coming months to talk about the campaign. "We're off to a terrific start," Buffett said. Buffett said he and Bill Gates also will meet with groups of wealthy people in China and India within the next six months to talk about philanthropy. They hope the idea of generosity will spread, but they have no plans to lead a global campaign, Buffett said. Gates and Buffett estimate their efforts could generate $600 billion dollars in charitable giving. In 2009, American philanthropies received a total of about $300 billion in donations, according to The Chronicle of Philanthropy. In addition to making a donation commitment, Gates and Buffett are asking billionaires to pledge to give wisely and learn from their peers. The group has no plans for combined giving, and none of the philanthropists will be told how or when to give their money. "Everybody has their own interests," said New York Mayor Michael Bloomberg, who participated in the teleconference as one of the individuals who has signed the giving pledge. "That's what's wonderful about private philanthropy." Bloomberg, who has a fortune estimated by Forbes magazine at $18 billion, said he has changed his personal philosophy over the years from wanting to be more private about his giving toward trying to play a leadership role. He said his whole family is in tune with his giving plan. "I've always thought your kids get more benefit out of your philanthropy than your will," he added. Others who have signed the pledge include filmmaker George Lucas, media mogul Ted Turner and Microsoft co-founder Paul Allen.
At home, charity is still beginning. In India, there's every sign that the count of the supernaturally wealthy is climbing. The world's five wealthiest people, according to Forbes Magazine, include two Indians - Mukesh Ambani and Lakshmi Mittal. Several of the country's leading business houses, like the Tatas, Birlas or Godrejs have traditionally run or supported charities.
"If you look at the amount of philanthropy in India compared to the size of the economy, you'll see that it is growing," says Adi Godrej, Chairman of the Godrej Group. A recent study on Indian philanthropy however says the country is behind the curve. Business consultancy Bain and Company found that India currently has 1.15 lakh high-net-worth individuals. This elite group is growing faster in India than anywhere else in the world. The study says that since 2000, the elite group has grown at an average of 11 percent annually. And between 2006- 2007 the number of wealthy individuals surged by 23 percent . But individuals and corporations account for only 10 per cent of charitable giving. In fact, nearly 65 percent is donated by India's central and state governments with a focus on disaster relief. In the US, individuals account for 75 per cent of charitable giving. The balance of the philanthropy comes from foreign organizations and the government. Lila Poonawala, who is in her 60s, heads Fila Rozil, Fila Rozil is into the horticultural business. Her foundation, the Lila Trust, provides scholarships to young girls. "In the US, corporates have been generating wealth for ages. Ours is a new generation. I am sure 5-10 years down the line, there will be many more corporates in charity," she says. Godrej says even those who're not donating money can help shape a better financial environment. Godrej says it's easy to be judgemental of those who aren't publicly acknowledged as givers. "If you look at Indian entrepreneurs they are at a stage where they can contribute a lot by re-investing and expanding their businesses. Remember a entrepreneur just by running a successful business is adding a lot of value by creating employment." But in a country where those who don't get one square meal a day are found at every traffic light, perhaps it's time to up the ante and give a little more.