In March 2011, Bill Gates and Warren Buffett visited India to talk about their ‘Giving Pledge’ campaign — an effort to encourage the world’s wealthiest to give to philanthropic causes.

They came to urge India’s ultra rich to pledge their wealth for philanthropy.

Three years later, only four Indians have signed up for the campaign. Are wealthy Indians reluctant to give? Not quite so. They just seem content doing it their way.

Ad-hoc giving Though giving has been an age-old tradition in India, it is mostly done in an informal way.

Small donations may be regularly given to local and religious organisations; the education expenses of the children of household help are taken care of, but formal giving was limited.

However, there is a growing awareness among the high networth individuals (HNIs) to give more, says Rajesh Saluja, CEO & MD, ASK Wealth Advisors. But there are many impediments when you try to translate the intent into action.

HNIs who want to give are put off by the constant follow-up and aggressive fund-raising approach of many non-profit organisations, says Sumeet Vaid of Ffreedom, a financial planning firm.

When donating, especially large sums, you need to ensure that the organisation is using the funds in the right way.

Donors usually pick organisations that are well-known in their line of service; or go by references.

In spite of this, donors are mostly clueless about how well non-governmental organisations (NGOs) use the funds and who the beneficiaries are.

Bridging the gap

One way HNIs are overcoming such drawbacks is through the use of services provided by wealth managers. For instance, Edelweiss has an arm called EdelGive Foundation with a portfolio of 18 NGOs focused on education and livelihood development.

These organisations are picked after a due diligence process. EdelGive staff work on the NGO’s growth strategy, and improve their human resources, monitoring system, and operational methods.

As a donor, you get to know who the actual beneficiaries are and also receive periodical reports on the status.

This level of involvement can be expensive. Vidya Shah, CEO of EdelGive Foundation, indicated that it costs 12 per cent of the funds dispersed to run EdelGive Foundation.

And this is lower than the 20-25 per cent that foundations typically charge, as EdelWeiss covers the staff salary on its own.

Finding NGOs If you are passionate about a cause or particular about donating to organisations operating in a certain geographical area, you may want to fund a non-profit that is doing good work in that field. Wealth managers such as Entrust Family Office Investment Advisors offer services ranging from identifying NGOs that work on various issues, to auditing and managing the funding on an ongoing basis.

The fee varies based on the scope of work and hours spent; it is about 60 to 70 per cent of what would be charged for wealth management service, says Rajmohan Krishnan, Co-founder and Managing Director of Entrust.

You can also take the help of ‘rating agencies’ such as GiveIndia, which rates non-profits and helps connect donors with pre-screened NGOs.

The non-profit organisations go through a three- to six-month evaluation process, during which their governance, regulatory, and operational systems are verified through visits and appraisal of beneficiaries.

To increase transparency, NGOs are asked to disclose on their website details such as compensation received by the management, board meetings, and foreign trips made by them, says Daval Udani, CEO of GiveIndia.

To offer such services, GiveIndia charges HNIs between 2 per cent and 8 per cent of the donated amount as fee.

GiveIndia also works with the NGOs on an ongoing basis to understand various issues and validate reports prepared by them.

Larger role But if you prefer to be personally involved in a cause, setting up a family trust may be the way to go. For instance, running a school or a girl’s college in a community will obviously require more effort and continuous involvement than standing on the sidelines and writing out a cheque to an NGO.

In case you lack the expertise or funds, pooling with other families or trusts can be a better option.

Some HNIs involved in social work prefer to play a larger role after some years.

For instance, Ameeta Chatterjee, a philanthropist in Mumbai, who started out as a member of GiveIndia’s First Givers Club, works two days a week with Ekam, an initiative to provide healthcare to children. Ekam Mumbai raised around ₹65 lakh last year.

“Other than funds, HNIs have resources such as their contacts, network, and corporate support. By tapping into these, the efficacy of the money spent can be vastly improved,” she notes.

Not just individuals, but even foundations such as Wadhwani, tend to be more involved.

For instance, they do not follow the grant-making model typically used by foundations overseas, but instead execute programmes through their dedicated staff.

Social angels Besides these traditional methods, there is also a growing trend of philanthropists making investments through social or impact funds, which select and hold a ‘portfolio’ of ventures.

Donations are in the form of investments in firms that cater to the needs of those at the bottom of the pyramid.

As the start-ups turn sustainable, funds may be returned for other ventures.

Not just social ventures, but almost all start-ups could use angel funds to grow. And HNIs can play a role in this with their cash pile and expertise.

Jay Jhaveri of Wealth-X Asia, a provider of intelligence on ultra HNIs, says a lot of wealth is expected to be transferred to the new generation in the years to come and these young folks tend to be very conscious about social change. That should make for a really strong foundation for organised philanthropy.

Worth signing up for

Romesh Wadhwani, one of the Indians who has signed up with Giving Pledge in December 2013, has committed to giving over 80 per cent of his wealth to his foundation.

According to Forbes, his net worth is $2 billion.

The Wadhwani Foundation was started in 2003 and has been, among other initiatives, running the National Entrepreneurship Network to create jobs by promoting entrepreneurial skills.

Around 700 new companies have been founded by students from 600 colleges across India, says Ajay Kela, CEO of Wadhwani Foundation.

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