Indian UHNI (ultra-high net worth individual) contribution has not kept pace with wealth creation and continues to be narrow with a 5 per cent contraction in FY2022 despite an increase in cumulative UHNI net wealth by 9.2 per cent in FY2022, according to Bain & Company and Dasra’s ‘India Philanthropy Report 2023’.
Further, UHNI with a top level of greater than ₹50,000 crore wealth witnessed a 19 per cent jump in cumulative net wealth in FY2022.
“Over the years, growth in contributions by top donors has been moderate, with a compound annual growth rate (CAGR) of 7 per cent (excluding Azim Premji) from FY2020-22, compared to their wealth increase of 24 per cent and NIFTY50 growth of 25 per cent. 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,” the report added.
Compared with the US, UK, and China, Indian UHNIs donate substantially less across all wealth levels. Last year’s ‘India Philanthropy Report’ also noted that Indian UHNIs could boost their total contribution by 8-13 times if they matched their counterparts in China, the UK, and the US.
Focus on education
UHNIs’ allocation in India has traditionally been skewed towards education. Azim Premji gave about ₹16,000 crore towards education over FY2020 and FY2021. Even excluding Azim Premji’s contribution, healthcare and education made up 49 per cent of UHNI giving in FY2021.
In FY2022, too, education and healthcare accounted for 58 per cent of total giving, while contributions to sectors such as art, culture, and heritage and rural development and livelihood enhancement dropped.
On the other hand, Jishnu Batabyal, a Partner at Bain & Company’s Mumbai office noted that while historically preferred sectors such as education and healthcare continue to be supported by both inter-gen and now-gen funders, these cohorts are beginning to focus on underrepresented causes within these sectors, including life skills, teacher training, special needs education, tuberculosis, palliative care, eye care, and cancer care.
The findings are based on the analysts’ conversations with GivingPi members, a network of family philanthropists in India.
Ways to improve philanthropy
Talking about reducing the barriers to giving for HNIs and UHNIs, Neera Nundy, Co-founder and Partner at Dasra noted that an increased number of trusted intermediaries who focus on institutions and talent are needed to bring more professionalism and nuanced skilling to the philanthropy sector.
“They can also streamline the connection between affected communities, nonprofit organisations, and funders. Signs of this shift are visible as givers are promoting participatory approaches and feedback loops,” she added.
Also, increased collaborative funds and innovative finance platforms providing greater visibility on impact can unlock significant potential amongst HNIs and affluent donors.
“Some progress on this has already been made through the setup of funds such as ACT Grants, GROW fund, Young India Philanthropic Pledge (YIPP), and Rebuild India Fund. Private equity funds and innovative finance platforms with newer vehicles such as returnable grants, blended finance, and interest subvention methods are also being adopted,” the report noted.
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