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Art of giving is turning into a science

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April 08,2012
Times of India

Mumbai: Giving back has always been synonymous with the Indian ethos but charity now comes with a professional touch. Even as the debate on whether the Indian rich are doing enough for the underprivileged continues to rage, a large number of millionaires are bringing the same kind of rigour to philanthropy that they bring to business.


For starters, a high networth individual's (HNI) decision to give back is no longer dependent on mercurial moments inspired by poignant sightings through tinted windows. Instead, the desire to give back is being scientifically monitored and analyzed by a growing breed of personal wealth managers who are mapping out the entire philanthropic landscape for the HNIs. And as the business of giving matures, the personal wealth manager is also sharpening his skill-set to not only help HNIs grow their wealth but also identify avenues for charity and do due diligence on potential recipients.


The ecosystem in the business of giving is therefore also changing dramatically, something that happened in the US in the 90s, when UBS became the first bank to offer this service as an add-on to its clients. In India several banks like Barclays, Ambit, Altamount Capital Management, RBS NV and Kotak have recently followed suit.


Here's how it now works. Wealth managers get in touch with large strategic philanthropy foundations (SPFs) such as Dasra, Give India and United Way, which in turn shortlist NGOs working in the HNI's favoured areas of charity. The strategic SPFs evaluate the NGOs and their ability to absorb large funds. "In the West, the personal wealth manager is almost a confidante but the relationship is slowly transforming here," says Deval Sanghavi, CEO of Dasra, an SPF that defines itself as a "catalyst for social change". Also, HNIs are now more interested in giving effectively than blindly writing a cheque," says Sanghavi, who often identifies an NGO for an HNI.


In India, businesses have been largely dominated by the family-run structure and it's the 'munshi' or accounts manager that is usually the trusted lieutenant. But as more companies are transforming into professionally-managed organizations, banks are sniffing an opportunity. Growing private donations spur professional touch Banks are beginning to realize that this service will strengthen their relationship with the client," says Deval Sanghavi, CEO of Dasra.


Since legal restrictions don't allow personal wealth managers to recommend avenues for philanthropic investments, umbrella organizations like Dasra, Give India and United Way double up as philanthropy advisors, usually presenting three or four options with detailed reports on the work of each NGO.


Echoing the sentiments of a section of HNIs, Piruz Khambatta, chairman of soft drinks concentrate maker Rasna, says he feels the need for professional help in identifying an NGO to channel funds for charity. "Identifying one is the biggest challenge," says Khambatta, adding that a large part of his group's philanthropy currently benefits religious trusts.


So what's in it for banks and their wealth managers? The success of events like the Indian Philanthropy Foundation where roughly 150 HNIs raised upto $250 to 300 million, could be one. The burgeoning population of HNIs, reportedly expected to treble in the next five years to 2.19 lakh, is another. Then there's the perennial shortage of time faced by HNIs busy dealing with the complexities of their own businesses.


Sutapa Banerjee, CEO (private wealth) at Ambit Capital, feels that the trend of private wealth managers helping HNIs in philanthropic activities has been fuelled by the growth in private charitable contributions, which is up 200% from 2006 to 2010.


Once brought on board, the next step is to scout for an ideal fit. "After an HNI identifies a cause he or she feel passionately about, he/she wants to know if the NGO is run professionally and with integrity, the reach and effectiveness of the work, and actual change brought about," says Richa Karpe, a director at Altamount Capital Management.


For Ashish Khaitan, head of private wealth at Kotak, this service is a natural extension. "Since we have an important role in financial planning we are also routinely asked about where to give. While the trend of private banks structuring charity needs globally started about eight years back, it's a comparatively new phenomenon here, but getting more active lately with business families getting more focused. Most families have a fair idea of the causes they want to support. We act as the bouncing board and help them in fine tuning their philanthropic activities," he says, adding that two areas which receive the most funds are education and healthcare.


It's already big business for private bankers globally who have positioned themselves with a firm eye on philanthropy. While Credit Suisse launched a philanthropy event that featured European royalty and Peter Buffet with their private wealth managers, Barclays sponsored an Indian philanthropy event called "Coffee with Philanthropy" to tackle what they diagnosed as "the cheque book syndrome" among India's rich.


However, there are some who are not as buoyant about the trend yet. Dhaval Udani, a volunteer from Give India, believes that while the seed has been sown, there is more ground to be covered."Indians are still getting used to their wealth and to the idea of giving it away. Wealth managers don't suggest options proactively yet. While banks have introduced this conceptually, they have failed to move ahead to any great extent," says Udani.


Ajay Piramal, chairman of Piramal Healthcare, would perhaps agree. He has committed investments of Rs 200 crore for philanthropy but still does most of it without help from wealth managers. "Among others, we run an education project for youth leadership on our own, and a health call centre along with the government," he says.


The dynamics of giving is changing at the top, but it 'll take a while for its impact to be felt at the grassroots.

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