Why and How to Give Away Wealth

By Nishant Parekh and Winnie Dholakia

Is the rich world aware of how four billion of the six billion live? If we were aware, we would want to help out, we’d want to get involved’. – Bill Gates

The pandemic has shown us how the world unites in the face of adversity.

We united against this deadly virus and went all out to help those in need in terms of monetary help to staff or distribution of dry ration kits, and meals to the less fortunate, providing cars for ferrying patients to hospitals or providing oxygen cylinders across various cities.

NGOs and organisations working towards relief activities recorded a tremendous spike in donations over the past two years.

But do we really need to wait for a tragedy of this magnitude to make us realise the fragility of human life? Aren’t there already enough issues ailing us that need our attention and intervention?

Having the power to improve the lives of others is a privilege that comes with its own sense of obligation.

How India donates

In India, religion plays a large part in influencing the way an individual donates.

It is common to see huge amount of wealth being donated to places of worship or to a godman having a cult like following.

Needless to say, most of the times there is little or no accountability in terms of where these funds are used. It is all done in blind faith!

A handful of donors use the internet to ‘research’ about NGOs before donating to them purely based on popularity, social media ads or word of mouth recommendations.

Then come those who ‘donate’ to political parties or the ubiquitous funds set up by the Central and State Governments. Whether such contributions can be considered as ‘charitable giving’ or not is a different conversation altogether.

There’s also a category of donors – known to all of us – who believe in helping the less privileged in their own circle, typically their domestic help, chauffeurs, etc. Provide groceries, garments or maybe even sponsoring the cost of education of their children.

These donors want to do social good and make a difference. But due to a lack of knowledge about NGOs or maybe due to a trust deficit, they choose the simpler philanthropic journey rather than a structured and strategic one.

The people in the last category of donors are those who are extremely clear and fixated on the cause they wish to support because of how strongly it resonates with them. E.g. A donor who has seen a loved one suffer from terminal illness will support an NGOs working to provide a better life to the terminally ill.

In order to see the ‘impact’ of our donations, it is imperative that we, as donors, see beyond our immediate circle and broaden our horizon. Think of supporting well-structured programs of NGOs that support the society at large.

After all, we are the product of the environment we live in. We cannot expect to have a secure home without a safe neighbourhood.

Why should you donate?

Your money is yours to spend but resources belong to the society. We all know there are countless people in the world living in unimaginable situations with a scarcity of resources.

For India to be a stable society where opportunities are created for millions to further their lives, it’s imperative that we support the many good NGOs who help the less fortunate of our country and provide them with opportunities to flourish.

We know from our years of study of NGOs that a vast majority of them strive hard to raise funds for their programs. They often do not have the bandwidth, expertise or access to manage fund raising campaigns. Thus, they end up wasting valuable resources in the process.

By giving to charity, you are participating in a cause that is much larger and more significant than yourself. Research has shown that those who give to charity find themselves experiencing an overall improved sense of happiness.

Crowdfunding is a ‘cool’ trend that has gained momentum in recent times where do-gooders invite friends and family to donate to NGOs/ causes they are supporting.

There are millions of NGOs in India. How can you choose a ‘good’ one?

Globally there are 10 million registered NGOs and of this, 3.3 million are registered in India. It is reported that a very small % of these have complied with filing annual returns with the Registrar.

In India, nearly 22,600 NGOs are registered to receive foreign donations under the Foreign Contribution (Regulation) Act, 2010 (FCRA). Since 2011, nearly 20,600 NGOs have lost their registration because they were in violation of the FCRA law.

Also, due to some notorious NGOs who are exposed by the media periodically, there is a huge trust deficit among the donor community and there is a need for transparency in the social sector!

HelpYourNGO (HYNGO) has been set up with the goal of promoting transparency in the social sector and helping donors make donation decisions in an enlightened, strategic, and impactful manner.

As a donor transparency should be of paramount importance. Your first choice of NGOs should be the ones who are transparent about disclosing how your donations are being used and sharing periodic program reports.

It’ your right as a donor to be informed. Another important factor to consider is the percentage spent on beneficiaries i.e. how much of your donation is actually reaching the end beneficiary and how much is spent on overheads and marketing expenses.

Needless to say, an NGO with a higher percentage spend on beneficiaries should be preferred.

On HelpYourNGO, you can find and donate to 650+ NGOs across 13 causes that have been financially and qualitatively assessed, beyond statutory fiscal audits using structured, and systematic analytical tools.

Arriving at the percentage spent on beneficiaries is our USP. Users of our website find this extremely valuable in making their donation decisions.

Our Research Analysts have highlighted how some of the extremely popular NGOs spend an exorbitant 35% on marketing expenses – if you were aware of this, would you choose to support such an NGO?

Just as you do not rely merely on desktop research or hearsay for planning your financial journey, you must consider seeking the advice of experts to assist you in effectively planning your philanthropic journey!

How to decide on a cause to support?

There are a lot of do-gooders in this world – we’ve all read about the wealthy pledging their assets for social causes – but there’s a lot more that needs our attention and resources.

Education, health, livelihood, women empowerment, gender inequality, rural development and several others.

Pick any cause that you can resonate with and is aligned with your beliefs. If you can align your philanthropic journey with your core area of work, that could be a beautiful marriage. A finance professional may choose to support programs imparting financial literacy, a car manufacturer may choose to support a program that provides skill development training to the underprivileged, an artist may choose to support a school that exposes underprivileged children to different forms of art.

Pick any cause/s that you’re enthusiastic about and support a credible NGO vetted/recommended by an expert.

How frequently should you donate – One time or Recurring?

The answer is simple. Are you looking at making an impact?

If yes, your philanthropic journey must be strategically planned keeping in mind what change you wish to see in the targeted beneficiaries/community. Do you reckon a one-time donation can achieve that?

HelpYourNGO launched the Systematic Giving Plan (SGP) in 2018 – a first of its kind initiative in the world – which enables mutual fund investors to contribute 10% of their investment with any Mutual Fund to be directed towards supporting credible and vetted NGOs.

The objective is to create a steady stream of fund flows for genuine and vetted NGOs working towards various UN SDGs and causes. SGP allows NGOs to focus on implementing the great work that they do, rather than wasting resources on fund raising – which they may not be good at.

University endowments and foundations invest their corpus for long term capital appreciation. For example, Harvard University’s endowment has built a corpus of over $40 billion (2020). Bill & Melinda Gates Foundation Trust endowment was $49.8 billion (2019).

Typically, the earnings/capital distributions from these endowments tend to fund 30% to 50% of their annual operating budgets. Imagine if NGOs in India could rely on a similar pool of capital to implement their work!

No amount is too small to give. You could choose to give as little as the amount you’d spend on one month’s OTT platform subscription fees or as much as you’d spend on buying a new house, or more.

Have an SIP? How about starting an SGP (Systematic Giving Plan)!

We are aware that steps by the regulator, SEBI have already revolutionised the Indian mutual fund industry.

Collectively, there is approximately ₹ 37 trillion of Assets Under Management (AUM) in the equity funds. Even if 1% of this corpus would move to SGP units for distribution to NGOs for furthering the UN SDGs, which would be ₹ 370 billion of AUM.

And if 10% of this was disbursed each year to hundreds of NGOs, that would be ₹ 37 billion every year! That’s the potential cascading impact of SGP!

Quantum Mutual Fund is the first fund house which plugged its systems and investor base into the SGP framework and branded their product as the SMILE facility.

The power of small (or large) pooled donations via the SMILE units has the potential to systematically support NGOs selected by individual investors. Like the Harvard University, these NGOs can then focus on improving the impact of their great work.

Products like SGP can leverage partnerships to unlock opportunities for stakeholders working towards social change and build a more equitable and just world.

In an era where we are meant to do more than just focus on profit, let’s opt for this simple but powerful Systematic Giving Plan unit and help India achieve the SDGs.

A Systematic Investment Plan secures our future. A Systematic Giving Plan could secure the future of millions.

And the future of our nation.

Conclusion

Take a moment to think of the legacy you wish to leave. How much is enough? Or is it ever enough?

When do you say I have enough and now it is time for me to start giving back to society?

Life is busy, and it can sometimes be easy to forget to express gratitude for all that we’ve been given…do it while there’s still time!

Again, there is no right or wrong but as Helen Keller said, ‘Alone we can do so little; Together we can do so much’.

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