India has emerged as one of the leaders in charitable giving among emerging markets, compared to other nations such as China and Brazil. In 2010, Indians gave 50% more since 2006 as a percentage of GDP at approximately $5-6 billion, up from $2 billion in 2006, according to a report released by global consultancy firm Bain & Company.
Private charity contributions were largely dominated by money pumped in by foreign funds with individuals constituting only 26% of the overall $5-6 billion. In the US, on the other hand, individual philanthropy totals up to as much as 75% of all private giving while in the UK it stands at 60%.
The report, which includes a survey of over 300 wealthy individuals, said there was optimism that philanthropy is poised to rise further in India as the population of rich individuals grows and more advanced systems come into place to help people give more. The report added that 40% of wealthy Indian individuals plan to increase philanthropic donations over the next five years.
Talking to TOI, Bain & Co's Arpan Sheth, author of the report, said, "In the last 18 months private philanthropy has gone up primarily due to an increase in wealthy individuals, a shift in attitude of high net worth individuals, and the younger generation of entrepreneurs increased their intent to give."
Although, India's private charitable donations between 0.3% and 0.4% of the GDP in 2010 was up by 0.2% in 2006, it's still far behind the developed countries. While in the US, private philanthropy accounted for 2.2% of the GDP in 2009, in the UK it was 1.3% in 2010.
"The culture of each market is different from the other. In the developed markets, the institutions for giving are also much advanced unlike here in India. But the real disparity is because individual donations in India still constitute only 26% of all private charitable contributions," said Madhur Singhal, the co-author of the report, here on Wednesday. In contrast, individual philanthropy mounted to 75% of all private giving in the US while in the UK it stood at 60%.
The most popular causes for philanthropy were education, housing and shelter, and food with the majority of 40% saying education was the top cause of donation. The survey also pointed out that wealthy Indians are giving away between 1.5-3% of their annual household income into charity however, the wealthiest of Indians are donating much less as compared to their US counterparts who contribute about 9% of their income.
Singhal from Bain & Co added that Indian corporates will have to lead the way as far as private giving goes to up the contribution. The report said individual contributions from current estimates of $1.5 billion to as much as $4.6 billion by 2015.