India faces $8.5 trillion development funding hole

Homegrown philanthropy overtakes foreign giving as the country struggles to keep on track to meet global goals

Philanthropy is vital to help India plug its $8.5 trillion funding shortfall to achieve the Sustainable Development Goals (SDGs) –  a UN-backed set of targets to eliminate poverty – by 2030, according to a new report.

Private philanthropy’s growing share of development spending makes it a key actor to help bridge the gap, said the study by Indian nonprofit foundation Dasra and consultancy Bain and Co.

Private donations made up 32 per cent of total contributions to India’s development sector in 2016, up from 15 per cent in 2011. While the government remains the biggest aid spender, public funding for development in a country of some 1.3 billion people has been declining steadily, the report said.

The scale of the funding gap reveals how much remains to be done. India ranked 130 out of 188 countries on the UN’s Human Development Index (HDI) in 2014 and 110 on the SDGs Index in 2016, lagging its peers. In comparison, the Philippines ranked 115 and 95, respectively.

A domestic boom has contributed to the changing landscape. Homegrown philanthropy has now overtaken foreign philanthropic sources; in particular, the rise of giving by wealthy Indian individuals boomed six-fold between 2011 and 2016, said the study. The increase reflects the country’s economic resurgence, as the number of ultra-high-net-worth individual households in India doubled in the five years to 2016.

“The rapid growth of philanthropy from individuals bodes well for the sustained growth of Indian philanthropy,” noted the study. India ranks fourth on the Forbes list of countries with the most billionaires.

Still, raising enough funds to fill the gap is a tall order. The government’s compulsory CSR spending rule for companies – which obliges firms to give at least 2 per cent of profits to charity – does not appear to be bearing as much fruit, for example. The share of corporate philanthropy to the overall development pot fell to 15 per cent in 2016, down from 30 per cent in 2011.

Focusing on effectiveness would help make the money go further, according to Dasra. Founded in 1999, the nonprofit aims to promote strategic philanthropy in India by helping donors share lessons and build partnerships to kickstart social change. Partnering with other donors is one route to maximising the impact you can have, Dasra cofounder Deval Sanghavi told Philanthropy Age in an earlier interview.

“Today, every rupee we spend should generate at least 100 rupees of impact,” said Archana Chandra, CEO of Jai Vakeel Foundation, and Amit Chandra, managing director at Bain Capital, in the study. “That equation was very different five years or 10 years ago.”