Total private philanthropic giving in India estimated to grow at about 12% annually

Total private philanthropic giving in India is estimated to grow at approximately 12 per cent annually in the next five years to reach ₹180,000 crore in 2026, according to the India Philanthropy Report 2022 (IPR), co-created by Bain & Company and Dasra.

As per the report, private philanthropic funding in India is expected to grow over the next five years on the back of robust growth in the three main segments—CSR, family philanthropy (UHNI and HNI), and retail. Within the context of the overall trends, the report delves deeper into these three major segments that are expected to lead India’s private philanthropy moving ahead.

Overall, India’s total social sector funding has witnessed a 12 per cent annual growth over the past five years. FY 2021 witnessed a sharp increase, with a 20 per cent growth and most of this rise has been a result of increased government expenditure.  However, as per the report, gaps remain.  “With the total supply of funds at an average 7 per cent of GDP in recent years (8.3 per cent in 2021), India is still short of NITI Aayog’s estimation of the total annual funds needed to achieve its UN SDG commitments by 2030. The result is a deficit of ₹8 lakh crore for FY 2021 and ₹10 lakh crore for FY 2026, if the same trajectory continues,” according to the report.

Radhika Sridharan, partner, Bain & Company, said, “Economic indicators establish that although the country’s economic trajectory has been strong, its development story can hardly be called inclusive. Progress and access to opportunities have missed the most vulnerable geographies and populations. It is imperative that the pace of action accelerate towards inclusive and sustainable development—now more than ever”.

Private-sector funding sources

Private sector funding comes from two major sources—foreign and domestic philanthropists. Domestic philanthropists include corporations (corporate social responsibility and corporate trusts) and individuals. Domestic individuals can be further categorised into family philanthropy (ultra-high-net-worth individuals and HNIs) and retail, depending on their net wealth or income and donation amount.

Private giving stays flat

The report highlights past trends for each of these funding sources indicating that overall private giving (domestic and foreign) has stayed relatively flat over the past few years. 

While private domestic giving has grown at a moderate pace of 8-to-10 per cent year over year (y-o-y), private foreign giving has contracted in FY2021. CSR has grown both in absolute terms and in its contribution to overall private giving. Retail giving in India is mostly unorganised and often an emotional and impulsive decision. “Unlike CSR and family philanthropy, retail donations are unorganised and not systemic in nature,” it said.

Retail giving

Retail giving constitutes between 25 and 30 per cent of total private domestic giving.  It has grown at a modest 5 per cent annually from ₹21,000 crore in FY 2015 to ₹28,000 crore in FY 2021. “But with the ballooning middle class and the sheer growth in the number of donors,” it is expected to grow at approximately 10 per cent annually and contribute one-fourth of total private giving by FY 2026, as per the report. 

Over the past five years, crowdfunding platforms have disrupted the retail giving segment by “offering greater accessibility, flexibility, and ease of payment to donors along with a substantially wider reach to individuals and charities raising money.”

Although India has shown progress, a massive opportunity remains to formalise the sector.

On the other hand, as per the report, “Family philanthropic donations by the wealthy have declined in their total contribution to private giving but have the potential to grow over the next five years.”

CSR, family philanthropy and retail giving cumulatively contribute about 84 per cent of the total private philanthropic capital in India. These segments will act as “three strong pillars” going forward.  The report also highlights the CSR mandate, which began in 2014. “Riding on rapid economic growth, formalisation, and more companies coming under its umbrella,” CSR contributions are expected to grow at 19 per cent annually, with its share expected to reach about 32 per cent of total private giving by FY2026.

According to IPR 2021, family philanthropy will play a key role in the giving landscape of India, which could generate an additional annual investible corpus of ₹60,000 to ₹100,000 crore for the non-profit sector.

As per data estimates in the report, positive trends are visible for family philanthropy which is expected to grow at 12 per cent to 14 per cent, with both UHNI and HNI contributions growing. 

Role of  tech entrepreneurs  

“With a disproportionate increase in wealth during the pandemic and a possible increase in relative giving (giving as a percentage of net wealth) as more tech entrepreneurs and NowGen philanthropists enter the fray, this cohort holds the potential to play a crucial role in meeting the country’s social sector fund requirement,” the report further added.

However, compared with other countries including China, the UK, and the United States, Indian HNIs donate substantially less across all wealth brackets. 

The trend can change, however, especially with the rise of Indian start-ups and young tech entrepreneurs. “UHNIs from the technology sector, in fact have donated more generously than other sectors, similar to what we noted in IPR 2021,” the report said.

Arpan Sheth, partner, Bain & Company, said, “Family philanthropy is becoming more visible and slowly shifting away from charitable work in the form of funding food, education, and scholarships to newer concepts and deeper focus areas. This shift is the result of the higher risk appetite of NowGen philanthropists, who are more entrepreneurial, socially aware, and innovative in their approach. It is critical to provide hands-on support to this promising cohort so that they can spearhead India’s journey to achieve SDG.”

The way ahead 

“As we advance towards transforming India and propelling its growth story at the scale and pace needed, investing in India’s philanthropy infrastructure will be key to unlocking more equitable funding in the next decade. There exists a real opportunity to invest in and support different funder groups across CSR, family philanthropy, and retail giving,” the report further added.

CSR can potentially be transformational in the short term with recent CSR mandates having opened the gateway to a larger, more predictable annual inflow of funds to the social sector. 

Additionally, the pandemic prompted a rise in retail giving, bringing new donors into the ecosystem through online crowdfunding platforms. “While infrastructure to support micro-level and UHNIs continues to evolve, a high-potential segment that lacks a supportive ecosystem is HNI family philanthropists. This segment needs an enabling ecosystem of knowledge- vehicles networks—reliable, organised data and knowledge about sectors and organisations that can accelerate giving decisions,” it said.

“NowGen givers are emerging as the promising torchbearers of Indian philanthropy. It is critical to provide hands-on support to this promising cohort so that they can spearhead India’s journey to achieve SDGs. In addition, Indian NGOs need to invest in institutional capabilities for more effective funder engagement and stronger feedback loops with funders. Therefore, making the case for more funders to adopt institutional funding within their grants,” it further added.

Further, all funder segments must be more knowledge-led and flexible in their giving and must engage with their grantee partners as equal stakeholders.