Plan Your Philanthropy

HelpYourNGO spoke with Gaurav Mashruwala, Certified Financial Planner, about his views on philanthropy in the context of financial planning.

A key change that Mr. Mashruwala has witnessed within the social sector, is the increased willingness among Indians to talk about giving and raising money. While a few donors remain reticent, the Tatas for example, others are more vocal about the impact their charity has created. This change serves a purpose – it acts as a reminder to others that they should also give.

Donating is not charity. Rather, Mr. Mashruwala positions the act of giving money to a non-profit as a repayment of debt to society. His passionate advice: ‘If you haven’t been doing it till now, you should start donating from today. Consider any cause like catastrophes, climate, wildlife or children.’

How does one incorporate philanthropy in financial planning? Does it form a part of people’s financial planning or do people give spontaneously?

GM: Philanthropy does not really form part of people’s financial planning. However, I strongly recommend that you should allocate a certain portion of your financial wealth to repay to society. There are four ways of giving – physically by working, socially by being responsible (example: conserve water), emotionally through moral support and financially through donations. When a donor engages solely in financial giving, his ego may come into play. The donor tends to talk about his donation, tries to establish a level of one-upmanship with his peers, resulting in insecurity and comparison. The recipient retains his benefit though.

My belief is – it is important to bring a mindset change to the approach to charity. Think of your giving as repaying your debt and the thought will bring you calmness and serenity. The moment you think its charity and you are obliging someone, it hurts you.

Compare a person who earns Rs50 lakh per annum and sends a cheque for Rs20,000 to Kashmir, with another who has significantly less means, yet borrows money to get a ticket to cold, wet Kashmir and works there. Who has contributed more? We need to look at this giving in a philosophical way. One person could choose to give Rs10,000 as a donation to Rotary, get a photo taken for a magazine while another would help someone through a year of dialysis. The moment you say ‘I donated x amount to Tirupati, so I should be first in line for darshan’ – it becomes a case of ego.

Methods of giving

People tend to make one-time donations. Should one explore SIPs as a method to regularize an individual’s giving?

GM: SIPs are a good option for people who lack discipline. For most people an automated process works really well. Say you have a goal like saving for your daughter’s wedding. The SIP is the instrument you use to transfer an amount from your bank account on x date each month. You could use this methodology to create a corpus or large donation for an NGO. There was also a special mutual fund started by HDFC known as the Cancer Fund (HDFC Debt Fund for Cancer Cure).

The regularity of giving is also dependent on the person’s source of income and temperament. Some professionals earn erratic incomes – like film stars. They could plan their giving as a percentage of their pay whenever they get it.

My take is more on the philosophy of giving.

Another way to create greater discipline is to link giving to special days like birthdays, anniversaries and festive occasions. You could make a start by ensuring that you donate the equivalent of the amount you spend on yourself. During Diwali, for example, you could total the amount you spend on sweets, crackers, new clothes and gifts and give an equal amount to an NGO.

People struggle on a few counts to follow this philosophy – how much to give (how to quantify the amount), when to give, people procrastinate due to inertia. (Our HelpYourNGO Yearbook can help! Mr Mashruwala feels that having names and addresses of NGOs in one place could make it easier to give.) NGOs which have created a seamless automated process to receive donations, earn higher revenues through donations than the ones whose process is less simple.

How do you choose a good NGO to support?

GM: I would look at the balance sheet as well as understand the nature of work being done by the NGO. [You could look at the financial analysis that HelpYourNGO presents on NGOs]

I donate to the Ravishankar Eye Hospital near Nadiad – we send money around birthdays. We get back simple, neatly packed reports. No colour-coded fancy documents, the reports and simple and yet relevant. To me, this indicates a forward-thinking NGO which engages with its donors while continuing to do its fulfilling and meaningful work.