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What will you give this festival season?

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November 14, 2004
The Sunday Express
Monika Halan

happiness comes from giving A-I want to give to help those less fortunate than me, but I don't want to see my money spent on air conditioners and transport facilities for the NGO staff, says Shivani De, a regular contributor to good causes but wary of organised charity. DeÂ's fears articulate the feelings of many other middle class Indians who have seen their wealth grow in the first decade of liberalisation. These people are feeling financially secure, sure that this wealth will not vaporise or be annexed by the state.

Along with this feeling of security, comes the awareness of another reality: the dichotomy between their bubbles of affluence and the crushing poverty of those across the road in the slums and 10 km out of the metros. This vast disparity makes them want to share their wealth. But where to give remains the biggest wrinkle in the problem sheet. To get over the end-use problem and a general lack of trust in the NGOs, prompts most people give to those around them, where the end-use of money being used is obvious. Like to the domestic helpers or office help. Or they take the easy way out and give to a religious organisation. This attitude is reflected in the first ever survey on Indian giving by Sampraadan Indian Centre for Philanthropy in 2000-01. The survey found that 89 per cent of the people polled across 22 cities had given to other individuals, 87 per cent to religious organisations and only 51 per cent to organised charity, with the average ticket size of donation being Rs 1,420.

Why people give?

Concern, responsibility, sharing, guilt, fear? Or maybe a combination of all of these emotions prompt people to give. "Giving one time is a spontaneous emotional response, giving regularly on the other hand represents the union of emotion and intellect," says V K Madhavan, a career NGO worker, currently with CHIRAG, Uttranchal. Agrees Shankar Venkateswaran, another long-term NGO participant, "It is not the very rich who give, but the middle class. It probably has something to do with the upbringing, the value system and a sense of being a part of the larger whole." For whatever reason people give, the fact is that they do. The Sampradaan survey found that Rs 1,616 crore had been donated by individuals in one year (1999-2000) in India. This number has only grown as wealth has come to the average middle class Indian.

Are we ready to give regularly?

Middle class India is at the stage where it has seen a decade of wealth, the disposable incomes are at a point that even after all consumption and EMIs, there is a surplus left. Is this the stage that long term charity begins and is middle class India in a position and willing to give? "Yes, most certainly," says a vehement Venkateswaran, "but not enough people are asking," he says. He feels that giving is like a credit card payment – there must be the ability and the intention to give, and both are there today. Venkat Krishnan, Director of GiveIndia feels that while a lot of people are thinking about it, some others do still need a push. He feels that middle class India has both the ability and the intention to give, but does not know where to give with confidence. An event like the Gujarat earthquake mobilised hundreds of crores of rupees in cash and kind within no time, but this giving is a one-time knee-jerk reaction and has not translated into long-term regular donations


Name & Address

Area of Work
Action Aid Funds aggregator and donor that has been using unconventional corporate approaches to giving recently
Charities Aid Active in corporate community initiatives, has pioneered the concept of employee payroll giving
Child Relief and You Channels resources to fund grassroots organisations working to restore the four basic rights of underprivileged children as defined by the UN
Concern India Funds aggregator that supports development-oriented organisations working for the empowerment of the individual and environment conservation
Give India
Interface between Indian NGOs and donors, assures 100 percent transfer of money to the chosen NGO. List of partner NGOs on website
India Works for the cause and care of older people with a special focus on income generation and micro-credit
National Foundation of Fund raising, grant making organisation that supports voluntary work for national development
UK based international funds aggregator and donor that has a large presence in India
Sampradaan Indian Centre for Philanthropy Works to promote philanthropy for bringing about social change and progress; it assists donors to make informed choices to ensure that charitable funds have a maximum impact
World Vision International Christian organisation that is an aggregator and donor. Works at the grassroots level, specially with underprivileged children
These are a few names (in alphabetical order) in the Indian NGO space that work as nodal points for donations The list is neither exhaustive nor an endorsement by the newspaper.

What stops us?

"How and where the money will be used is the big road block to giving," says GiveIndiaÂ's Krishnan. Almost all the people in the NGO sector we spoke to agreed that this indeed was the chief problem. Who to give, how to give and where the money will be used are the three questions that prevent regular long-term giving to charitable organisations. The problem is like this: the grassroots level organisations are too small and too involved in their work to spend time and effort on urban collections. Urban retail donors are unable to access the actual NGOs on the ground. This leaves the third party aggregators who collect retail charity and funnel it to the grassroots organisations. Wherein lies the problem: middle class India is yet unsure of where it wants its money to go. Like the first time tourist, who only wants to do the obvious and goes to Shimla, the first time giver looks for getting the maximum bang out of each charity buck and wants to 'see' his money at work. Third party aggregators are looked upon with suspicion and retail donors are unwilling to pay the organisational cost of the fund raisers. It is the lack of trust in the organisations that act as intermediaries between the actual workers and themselves that makes it difficult for people to give consistently to organised charity.

How to choose

Some of the NGOs have understood this problem and are trying to solve it in their own way. GiveIndia, for example sees its role as a vehicle that takes money to the causes. It seeks to solve the very problem that vexes middle class India: it promises to transfer 100 per cent of a donation to the NGO of the donor's choice. The list of 85 NGOs that work across 10 causes all over India is on GiveIndia's website for donors to choose from. Right now the 17-18 per cent of the fund raising costs of GiveIndia are met out of grants. But the aggregator is experimenting with innovative ideas. For example, it is asking some of the companies on its payroll donation list to take care of the fund raising costs, so that the entire donation out of the payroll each month goes directly to the chosen NGO.

Another effort is to make the NGO sector accountable. Says Ranjan Roy Yerdoor, Executive Director of Credibility Alliance, the consortium of NGOs who have come together to formulate norms for self-governance: "We are working to give accreditation to voluntary sector organisations, like a CRISIL does in the corporate sector." The norms will be around issues of financial transparency and diligence, governance and a standard reporting format. The final norms are still a year away, but once done, the retail donors will have a handle with which to evaluate an NGO.

Apart from new initiatives, older aggregators like Child Relief and You, Charities Aid Foundation, Oxfam, Helpage and Action Aid are the established names in the industry and have years of credibility behind them (see chart).

What we must remember?

While the stage is being set for regular, consistent retail charity, what the wealth-sharing middle class India must remember is this: we can either buy the goat for the poor farmer ourselves, or if we can't (who will go there, who will find the farmer, who will monitor it?) and need to go through an organisation, we must be willing to pay for this service. Just as a mutual fund manages our money and we pay an annual management fee to the fund, so also we need to understand that the organisation that facilities our giving has costs. While some people put this cost anywhere between 10 and 30 per cent, the cost differs across sectors and work. What we need to demand is transparency about these costs and those of the grassroots NGOs.

Tax breaks on charity

Each time you give, you may become eligible to get a tax break on the money you give. For the salaried individual tax breaks are available under Section 80G of the Income Tax Act. If you want the tax kick, make sure that the organisation you give to is eligible to issue Section 80G certificates. There are four categories here:

• Donations made are eligible for 100 per cent deduction without any qualifying limit. You can give any amount unrelated to what you earn and this gets you a full deduction from your taxable income. If you give Rs 50,000, out of a taxable income of Rs 4 lakh, your taxable income now becomes Rs 3.5 lakh. Organisations like the Prime MinisterÂ's National Relief Fund and the National Foundation for Communal Harmony come under this category.

• Donations made are eligible for 50 per cent deduction without any qualifying limit. You can donate any amount to organisations like the Prime MinisterÂ's Drought Relief Fund, Jawaharlal Nehru Memorial Fund and the Rajiv Gandhi Foundation to get a 50 per cent deduction. Continuing the earlier example, your taxable income is now Rs 3.75 lakh since half of Rs 50,000 is the deduction allowed.

• Donations made are eligible for 100 per cent deduction subject to qualifying limit. You get a full deduction, but for an amount that is equal to or less than 10 per cent of your adjusted gross total income. You can donate to an approved local authority, an approved sports authority amongst others.

• Donations are eligible for 50 per cent deduction subject to the above qualifying limit. Most private and religious charities come under this category.

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