Giving back: Techpreneurs reshape philanthropy, one donation at a time

Move over the traditional sector’s ultra-rich and famous who have long played an important part in the private funding of philanthropy for years. A new breed of young technology entrepreneurs or techpreneurs who have joined the ultra-high networth individual (UHNI) category and whose numbers are on the rise might still only account for 8 per cent of the total UHNI wealth in 2020-21 (FY21), but they contributed to 35 per cent of the total donations in this category, reveals the latest India Philanthropy Report 2022 conducted by Bain & Company and Dasra, a non-profit organisation supporting the philanthropic sector. Last year, they had contributed 25 per cent of the total donations.

UHNI is classified as those with a networth of over Rs 1,000 crore, making donations of over Rs 5 crore.        

Overall UHNI wealth has seen a sharp upturn in FY21. The cumulative networth of those with wealth over Rs 1,000 crore went up 50 per cent in FY21 and their numbers by 28 per cent over the previous year. It was even more sharper for those with wealth over Rs 50,000 crore (it went up by 80 per cent). Yet their overall contribution to private funding for philanthropy has fallen from Rs 16,000 crore in 2014-15 (FY15) to Rs 12,000 crore in FY21, observes the report. Their share in private funding, too, has fallen from around 19 per cent to 12 per cent in the same period.   

The report also brings to the fore the fact that their contribution to philanthropy — based on a share of their networth — is far lower than the rich and famous in other countries like the US, the UK, and even China.

The average contribution of donation as a percentage of their networth in FY21 for Indian UHNI with wealth over Rs 50,000 crore was a mere 0.09 per cent, compared to 2.52 per cent in the US, 1.48 per cent in China, and 0.44 per cent in the UK.

For those with networth between Rs 1,000 crore and Rs 10,000 crore, it was 0.14 per cent, compared to 1.82 per cent in the UK, 1.41 per cent in China, and 1.19 per cent in the US.   

But the Dasra-Bain report is optimistic that UHNIs will once again get back to playing a major role, albeit this time it will led by the techpreneurs. It says by 2026, the overall UHNI contribution will grow at a compound annual growth rate of 14 per cent between FY21 and 2025-26 (FY26) and hit a robust Rs 23,000 crore, compared to a negative growth rate of 5 per cent between 2014-15 and FY21.  The reason they say is that as more techpreneurs and now-generation philanthropists enter the fray, this cohort will play a crucial role in meeting the country’s social sector funding.

The report observes that private funding has hit Rs 1.03 trillion in FY21, from Rs 64,000 crore in 2019-20 (FY20) and is expected to cross Rs 1.8 trillion in FY26. 

Also corporate social responsibility (CSR), especially after the central government mandated that corporates need to earmark 2 per cent of their past three-year net profits towards CSR, has become a key contributor.

The total share in private funding has gone up from 26 per cent in FY15 to 23 per cent in FY21 and expected to hit 32 per cent in FY26. However, 90 per cent of the companies which contributed towards CSR were unlisted — only 3 per cent spent more than Rs 10 crore in FY20; 70 per cent contributed less than Rs 50 lakh.