Philanthropy likely to focus on sustainability and circular economies

In a world where change is the only constant, the realm of philanthropy is no exception. Already into 2024, it’s crucial to stay ahead of the curve and understand the emerging trends that will shape the landscape of giving and altruism.

According to the ‘India Philanthropy Report 2024’ by Dasra and Bain & Co, family philanthropy has increased by 15 per cent in 2022-23. This figure is projected to grow at an annual rate of 16 per cent until March 2028, adds the annual report. Family philanthropy includes contributions from Ultra High Networth Individuals (UHNIs), High Networth Individuals (HNIs) and affluent givers.

The report classifies UHNIs as those having a net worth of over Rs. 1,000 crore. Anyone with a net worth in the range of Rs. 200 to Rs. 1,000 crore is categorised as an HNI. Individuals with a net worth of less than Rs. 200 crore ($25 million) but more than $850,000 are considered affluent. The report adds that Azim Premji, former chairman of Wipro, increased his contributions by more than $125 million, while HCL founder Shiv Nadar increased his contribution by $85 million in the previous financial year.

The number of UNHI philanthropists in India has grown from 100 to 120 between April 2020 and March 2023. Of these, 70 have been consistent donors, while 50 have donated sporadically.

Meanwhile, donations from HNIs and affluent individuals highlight India’s economic rise in the post-liberalisation era. Philanthropic activity by HNIs and affluent individuals grew by seven per cent to reach Rs 26,000 crore in the previous financial year.

Over the next five years, the number of HNIs and affluent individuals is expected to grow to 1.7 million, the report says, adding that they represent a cumulative net worth of nearly $5.6 trillion.

In fact, HNIs and the affluent, the report argues, have a higher propensity to donate for causes than UHNIs. Currently, they constitute 22 per cent of India’s private philanthropy. This figure can potentially reach over 35 per cent of total private philanthropy by March 2028.

“We anticipate an increase in philanthropy among HNIs and UHNIs in India, driven by growing wealth in capital markets and a strong desire to contribute to society. Maximizing their giving potential and impact requires a focus on transparency, governance and heightened awareness within the sector,” says Sonali Pradhan of wealth management firm Julius Baer. The recent rise in family-led donations in India is commendable. But they pale in comparison to countries like the United States, United Kingdom and China, where the ultra-rich contribute up to 10 times more.

Moreover, private philanthropy is still just a fraction of India’s social sector spending. At least 95 per cent of the social sector spending is still public-driven. It stood at Rs 23 lakh crore in FY23. Even this huge figure is not enough for a country as massive as India. As a percentage of the Gross Domestic Product, social spending stands at 8.3 per cent of GDP, instead of the desired 13 per cent needed until 2030.

At the moment, private philanthropy, including those by the super-rich, provides hope to India’s massively under-funded social sector. The report notes: “Private philanthropy can play a much more catalytic role at the intersections of government, business, foundation, civil society, and community.”

Philanthropy trends: In our increasingly interconnected world, digital philanthropy is on the rise. The fusion of technology and altruism enables donors to contribute effortlessly, whether through crowdfunding platforms, blockchain-driven transparency or virtual reality experiences that allows donors to witness the impact of their contributions firsthand.

In 2024, the concept of “doing well by doing good” will become even more prevalent. Impact investing, where financial returns are combined with measurable social or environmental benefits, will attract a growing number of socially conscious investors seeking both financial growth and positive global change.

Donors now demand more than just transparency; they seek personalized experiences. Nonprofits will use AI and data analytics to tailor their communications, offering donors the opportunity to engage in projects that align with their passions and values. Higher contributions from billionaires like Premji and Nadar, has seen donations from UHNIs increase by over 60 per cent in 2022-23 to Rs. 6,850 crore.

As environmental concerns grow, philanthropy will increasingly focus on sustainability and circular economies. Donors will fund projects that aim to reduce waste, promote recycling, and support eco-friendly initiatives, thereby contributing to a greener future.