Go on, give it all away

Berkshire Hathaway Chairman Warren Buffett isn’t going to leave any money to his children in his last will and testament. Neither is eBbay founder Pierre Omidyar. Nor are New York City Mayor Michael Bloomberg, celebrity chef Nigella Lawson and rockstar Gene Simmons. Action movie star Jackie Chan has also said he’s not going to do it.

Instead, these business tycoons and celebrities intend to donate 100 per cent of their wealth to charitable causes when they turn up their toes. In fact, media mogul Ted Turner — a signatory to The Giving Pledge popularised by Bill Gates — has stated that he wants to just have enough money at the time of his death to cover his funeral expenses.

It’s a trend that you never thought would catch on in India. Why should it, in a setting where generations of a family stay under one roof?

But the ball seems to have started rolling when one wealthy Indian signed The Giving Pledge to bequeath at least half of his wealth to charity last year. Wipro Chairman Azim Premji has indicated that he would donate the bulk of his $16-billion fortune when he is no more. “I was deeply influenced by Gandhiji's notion of holding one's wealth in trusteeship, to be used for the betterment of society and not as if one owned it,” Premji reportedly wrote in his letter to the Giving Pledge foundation.

He’s already made quite a start to his philanthropic pursuit, having donated an estimated $4.4 billion to charity — including a 12.5 per cent stake in Wipro — placing him firmly in the ranks of the world’s top five givers. That’s even more than what the world’s second richest man, Carlos Slym Helu — with a personal fortune that’s nearly five times the size of Premji’s — has donated thus far.

Inspiring others His action has inspired others: His friend and Biocon Chairperson Kiran Mazumdar-Shaw has declared that she would like to donate 75 per cent of her wealth to charity when she passes on. PNC Menon, the Dubai-based promoter of real-estate firm Sobha Developers said he will donate almost half of his $600-million fortune , asserting, “After a certain point in time, money cannot make a difference”.

Subsequently, in December 2013, Romesh Wadhwani, the Founder Chairman and CEO of Symphony Technology Group, signed The Giving Pledge, committing to give over 80 per cent of his $2-billion fortune. And Rohini Nilekani, Infosys co-founder, Nandan Nilekani’s wife, has indicated that the couple has considered signing up.

While pledging half their wealth to charity is a commendable act, it isn’t quite the same as pledging everything and the kitchen sink, leaving your children with nothing.

“With most Indian families, the majority of wealth is transferred to their family members only. This could be tradition-driven or because there are no tax incentives as in the case of some Western countries where charity to some extent is exempted from inheritance tax,” says Neeraj Aggarwal, Assistant Vice-President, Family Office Services at IL&FS Trust Company. “In every case, it’s not all the wealth. We just cannot take America as an example,” says IAS Balamurugan, Co-Founder and Director, Metis Family Office Services.

“Indian families bequeathing their considerable wealth to charity are limited to professionals/entrepreneurs who have built substantial wealth in their lifetimes. Many such families are global Indian ones with exposure to philanthropy in the west. The trend is increasing but still insignificant,” says Aggarwal.

But the premise that Indians aren’t as generous as their foreign counterparts doesn’t quite ring true. It may be argued that Indian billionaires are not really big on publicising their charitable activities, preferring to let their donations do the talking.

“Except in the case of families with no children, the percentage of donation to total wealth is very low… We are of late seeing some change in mindset, especially across wealthy professionals who believe that their next generation should earn their own wealth,” says Aggarwal.

“Beyond a point, wealth doesn’t change your lifestyle,” says Balamurugan.

In the Indian context, big, family-run businesses are passed down through generations and might have even been set up with ancestral wealth. There isn’t much willingness or even scope to part with them.

No proper channel But one reason for the perceived resistance to such charitable acts in India is the fact that the channels for giving are fewer. There are also worries about corruption, that the money they donate could just end up in the pockets of a few racketeers.

Instead, businessmen like Premji, HCL’s Shiv Nadar and Bharti Airtel’s Sunil Bharti Mittal prefer to start their own foundations or trusts to channelise their money.

“There are three sets of people. The first “I want to donate, I don’t have time”. The second “I want to give money and I know what purpose”.

The third “I want to give money, I know what purpose and I know which place”. In all three, the biggest challenge is finding the right people to give money,” says Balamurugan.

No financial security

What’s the reason cited by the global wealthy for not leaving any money to their children?

Well, in the case of celebrities like Chan, Lawson and Simmons, it’s their belief that their children would be spoilt to the point of ruin if they don’t have to earn their money. “I am determined that my children should have no financial security,” Lawson has stated.

“If he is capable, he can make his own money. If not, then he will just be wasting my money,” Chan told Channel NewsAsia.

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