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Philanthropy Now in Debt to Private Equity!

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July 16, 2013
Times of India
Ahona Ghosh

PE fund managers donating between . 80 lakh and . 10 crore every year

Mumbai: Ajay Relan first experienced the joy of giving 15 years ago when he helped start an elementary school in Mumbai’s Madh Island area. Shiksha Kiran, the school Relan still supports with . 30 lakh a year, has grown slowly to about 200 kids. So has his commitment to help the underprivileged. Relan, the founder of private equity firm CX Partners and a veteran fund manager, has recently stepped up his overall giving to about . 80 lakh a year, or roughly a fourth of his net salary. Now, his son, who is based in the Silicon Valley, is spurring him to give away 40%. Like Relan, a handful of private equity fund managers, including Blackstone India Senior Managing Director and Chairman Akhil Gupta, KKR India CEO Sanjay Nayar and Warburg Pincus India Managing Director Nitin Nayar, are joining the philanthropy caravan in India. Others like Amit Chandra, Managing Director of Bain Capital, are already seasoned givers. On an average, each of them is donating between . 80 lakh and . 10 crore every year. Chandra gives away 75% of his income besides playing an advisory role on NGO boards. Blackstone’s Gupta now gives about 5% of his pay, but he has met over 50 NGOs in the past two years in an intentional effort to give more time and money. PE fund managers earn anywhere between $0.5 million and $5 million (. 3 crore to . 30 crore), according to a leading executive search firm. This includes ‘carry’, the amount they make on big exits. The new private equity fund managers-turned-philanthropists have illustrious predecessors in Ashish Dhawan, co-founder of ChrysCapital PE, and Luis Miranda, who started IDFC Private Equity. Both left their corporate suites to become full-time philanthropists. Personal Experiences a Big Motivation for Fund Managers

Dhawan created the Central Square Foundation, a . 75-crore philanthropic fund, last year to improve education for children from lowincome families. Miranda has turned into a guide, connecting causes and donors, and pushing his peers to give money and time to organisations he supports. For some new givers, the motivation to donate comes from personal experiences. Like Relan knows how hard life can get. During his childhood, son of a Pakistani refugee, Relan had little money and only one change of clothes. He has come a long way since then. “He has a lot of empathy,” says Vishal Marwaha, partner at Henderson Global Investors, who has known Relan. He introduced Relan to a friend who worked in palliative care for children suffering from cancer and says Relan committed to the cause by the end of the first meeting. “I believe the way out of poverty is by educating our children. It is the best thing for the development of our people and country,” says Relan. Then there’s Chandra of Bain Capital, who sets targets to increase his donation every year with his wife. He has donated up to 75% of his salary besides a significant amount of time. Three influences shaped his philosophy: success, family values and Irish-American philanthropist Chuck Feeney’s biography ‘The Billionaire Who Wasn't: How Chuck Feeney Made and Gave Away a Fortune Without Anyone Knowing’.

Success had come early on for Chandra. He was already running DSP Merrill Lynch’s investment banking by his late twenties and was named a Young Global Leader by the World Economic Forum in 2007. He joined Bain Capital in 2008. His family taught him that giving does not relate to the extent of wealth one had. Feeney, the co-founder of Duty Free Shoppers group who also founded the Atlantic Philanthropies, the largest private philanthropic foundation, inspired him. Chandra spends 35% of his time on philanthropy. Eighty per cent of his donations go to support 5-6 major organisations while the remaining is spent on ad hoc causes. He holds board positions in most NGOs and diligently attends every meeting. He also supports education for children, healthcare and advocacy to encourage giving. He built the platform ‘Joy of Giving Week’ with GiveIndia, which has become a national event today.

More recently, he has donated to build a children’s multi-specialty hospital in Mumbai, which will be run by Devi Shetty of Narayana Hrudayalaya and S Ramadorai, exboss of TCS. This, according to him, is his largest commitment to a single project.

According to Dhaval Udani, CEO of GiveIndia, Chandra was the first donor to the project, which was conceptualised in 2011. “Amit was instrumental in achieving financial closure of this project,” he says. The project has raised . 85 crore from 30 ultra-high net worth individuals (UHNIs).

Chandra wants to continue his legacy of giving. He wrote a letter to his daughter some time ago explaining why he and his wife are giving away so much of their wealth to charity. For Sanjay Nayar of KKR India, the exposure to philanthropy started during his days at Citibank, which he left as CEO India and South Asia in 2009. “I realised that giving money alone doesn’t help. Spending time and effort is the main thing,” he says.

This learning came during his earlier days, when he would end up buying a piece of art or a table at a charity event — the proceeds of which would go to charity. But he never got the report of where the funds were used. Now, he focuses on fewer causes and works with 4-5 NGOs full time. “We help them institutionalise the platform, ranging from fund-raising in India and overseas to governance, by becoming more involved, including board memberships,” he says.

Nayar spends 10-15 days a year on his philanthropic work and supports Habitat for Humanity, an international non-profit body that builds affordable homes for the poor; Pratham, an NGO providing education to underprivileged children; Head Injury Foundation, which works in prevention and treatment of brain trauma; and India Cancer Society, the NGO working for cancer care.

Nitin Nayar of Warburg Pincus India has realised the benefit of committing support over a longer duration, at least 3-5 years. “This allows the impact of your giving to take effect, before deciding whether to recommit,” he says.

He is passionate about education — specifically higher education for those most in need. He has been supporting NGOs to provide management training, tools and support to promising NGOs to maximise their chance of success. “Demand for qualified management talent in the social enterprise sector in India far exceeds supply. As a result, many promising nonprofits find it difficult to scale their activities, limiting their potential impact,” says Nayar. To achieve this, he supports organisations like Mumbai-based philanthropic foundation Dasra, which provides strategic, financial, HR, executive training and other advisory services to NGOs. “I have made multi-year commitments to both Dasra and my alma mater (Harvard Business School), so in aggregate it will make a difference,” says Nayar without disclosing his yearly give away.

While others like Chandra and Nayar spend significant time with the charities they support, Gupta of Blackstone is more traditional in his approach. He provides money rather than working on the ground. While Relan provides strategic advisory support to NGOs, he finds visiting schools and cancer patients emotionally draining and leaves that part to his wife.

Gupta says he has been supporting the education of girls in rural India and mentoring young social entrepreneurs, investees of Acumen, a philanthropically-backed impact investment fund. He has made a one-time donation to them. In 1991, Gupta was attending a charity function and found himself next to George Soros, the Hungarian-American investor, who told him ‘it is easier to make money than to give smartly’. That has perhaps shaped Gupta’s giving style.

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