The reverse brain-drain in philanthropic funding


The recent success of Sundar Pichai, Satya Nadella and other Indian-born CEOs of global companies has shown how meritorious students with no ‘family background’ can succeed professionally and economically. The co-relation between success and education is particularly strong for those from financially underprivileged backgrounds who went on to study pure sciences or its applied fields like engineering. This is a narrative that echoes of an earlier generation; Shiv Nadar, Narayana Murthy and others who were raised in small towns before attending elite engineering colleges.

It’s no surprise then that those who attribute their professional success to their education are most keen to make philanthropic gifts to educational institutes. The Beyond Philanthropy GIZ Dasra Report 2014 found that education is one of the most popular choices for donation because people have a sense “of being deprived of a high quality education. Many either persevered to their current status in spite of not having access to a decent education, or only because they were lucky enough to find a helping hand to complete their education. There is also a belief that contribution to education is the most sustainable strategy for uplifting not only individuals but entire families from poverty.” A shot at a better life and chance to build a legacy through one’s work feature not just in their professional careers but in their personal ones as well. We examine how these professionals envision their philanthropy.


India loses many a Narayan Murthy and Shiv Nadar because of the levels of poverty in our country. Sundar Pichai – who didn’t have a phone connection in his house – went to Stanford on a scholarship. Raghuram Rajan requested MIT to consider his application even though he could not afford the fees. The cost of studying abroad is prohibitive. Even making it to a graduate degree in India is beyond the reach of many. Narayana Murthy had to turn down an offer from IIT because his family couldn’t afford the fees.

India has reached a position where a high quality education and developed professional skills can guarantee entry out of a low-income household and into the aspirational middle class. A number of Foundations have been filling this gap with scholarships for deserving students. The Sir Dorabji Trust, Bharti Foundation, Shiv Nadar Foundation, Inlaks Shivdasani Foundation Scholarships, Foundation for Excellence India Trust (FFEIT), Vidya Poshak, and several others are set up only to award scholarships, many of them exclusively for higher education in STEM (Science, Technology, Engineering and Mathematics) field. FFEIT, for instance, feels that “the multiplier effect on the society of enabling a talented child to become a high income earning professional is huge. By a conservative estimate, each rupee invested in a talented child returns 140x to society.” Other NGOs offer scholarships for various stages of education as part of their other programmes.

Building for the future

Scholarships, however, are only the tip of the iceberg as far as higher education is concerned. Other philanthropists are focusing their sights on a bigger picture. Narayana Murthy recently created a storm in a teacup when he questioned the contribution of Indian universities to promoting scientific breakthroughs or creating innovative products. He pointed out that services like GPS, Bionic Prosthesis, Microchips and others were designed thanks to research at universities like the Massachusetts Institute of Technology. In 2014, the World International Patent Organisation recorded over 1,000 patent applications from 5 leading American Universities (University of California, Massachusetts Institute of Technology, University of Texas, Harvard University and Johns Hopkins University). U.S. universities account for 13 out of 20 universities filing patents worldwide.

He may have drawn flak for his remarks, but he has a point. World-class universities house well-funded research labs that foster innovations which transform industries of the future. Many Indian-born CEOs got a competitive advantage through exposure to cutting edge technologies and developments at their university. Indian research institutes are catching up, but have a long way to go to compete with their peers. They lose out not only on scientific breakthroughs but in the subsequent economic prosperity that accompanies it. A 2011 Stanford study found that companies formed by alumni of the college “generate world revenues of $2.7 trillion annually and have created 5.4 million jobs since the 1930s.” Another study in 2007 found that 13.4% of Silicon Valley start-ups were founded by Indians. Creating Indian universities that produce world-class researchers and entrepreneurs will require significant investment. It will reduce the current brain drain and create economic opportunities for India. However, it will require a future-oriented mind-set that envisions India’s role as a thought leader going forward.

Some entrepreneurs who perhaps share this vision are setting up Foundations to fund research and development in nascent fields of science and technology. Institutes of excellence like IIT have played a large role in shaping the minds and career paths of their students. In turn the students are grateful for the academic and non-academic opportunities and networks given to them by their alma maters. A recent Hindustan Times article threw light on a number of other interesting investments in the science and technology field. IIT-M alumni and Infosys co-founder Kris Gopalakrishnan has given to IIT Madras and IISc Bangalore to study brain science. IIT Kharagpur has received donations to the tune of a million dollars each from its alumni Arjun Malhotra, PK Sinha and Asoke Deysarkar. Meanwhile Vinod Khosla has committed $5 million to support research at alma mater IIT Delhi, while entrepreneur Anurag Dixit has donated more than $4 million towards a centre there. They’re not alone; a lot of other businessmen have swelled these ranks.

Institutions of the future

Leading institutes of higher learning in India like the Indian Institute of Science (IISc), Tata Institute of Fundamental Research and the Tata Institute of Social Science were set up in the past thanks to the largesse of the Tata group. It’s a sign of maturing philanthropic giving that there are now more philanthropists entering into university education and not just funding primary schooling.

A few are taking the less-trodden path and setting up universities of their own. Shiv Nadar’s Foundation set up the Shiv Nadar University in 2011. In 2014, the University offered approximately Rs34 crores in scholarships to its students. This followed on the heels of the Azim Premji University, which was founded in 2010. APU is focused on finding “key responses to the challenges confronting the education and development sectors in India”, and offers degrees in education and development. The Ashoka University, set up in 2014, aims to bring an “Ivy League” quality undergraduate education to India. A consortium of 46 investors guided by investment banker-turned philanthropist Ashish Dhawan raised over Rs350 crores to establish the university. Many of these universities focus on non-commercial or non-profit areas of study and are not intended to bring revenue for the founder.

The Infosys Foundation has been in the news for meeting the 2% CSR spending target. They’ve drawn less attention about the fact that they’ve provided corpus funding to the IISc, Bengaluru to endow professorships or that they helped the Chennai Mathematical Institute improve their infrastructure and provided similar support to a number of educational institutions. They’ve also set up the Infosys Science Foundation to award an annual award to recognise researchers doing seminal work in pure sciences, applied sciences, humanities, social sciences and mathematics. The award carries with it a purse of Rs65 lakh, enabling researchers to continue their academic work without concern for money.


Indian entrepreneurs are being held in high regard abroad and the Indian economy is performing better than its counterparts. What we need to take our place on the global stage is a workforce of talented individuals who are not held back because of birth, caste or income. Funding education is one of the best ways to guarantee our future and these philanthropists have found a way to ensure it happens.

New-age forms of philanthropy!

There are many ways in which you can donate to charitable organisations. Most donors prefer to write out a cheque, drop cash into a box or personally hand over money to NGOs with which they are familiar. Other donors are rocking that boat a little. These philanthropists engage establish sophisticated instruments to generate funds for their pet causes. We introduce new-age forms of philanthropy!

More popular:

  • Shares, stocks, and interest: Azim Premji donated shares worth Rs12,300 crore[2] to a trust that will fund the Azim Premji Foundation and his other philanthropic entities. Bill Gates, meanwhile, funds the Bill and Melinda Gates Foundation with the sale of Microsoft shares[3]. He and his wife have signed a pledge to eventually give away 95% of their wealth to charity[4]. Rakesh Jhunjhunwala currently gives away 25% of his dividend income from investments to philanthropy[5]. These gifts are a way of creating assets for non-profits that they could not otherwise have amassed.
  • Donor-advised funds: Community Foundations work as grant-making bodies that pool donor funds to create a multiplier effect. Donors can choose sectors to which they can give their money, set up donor advised funds or have the money go into a common pool. The money is then directed to organisations working for beneficiaries in the area. The Silicon Valley Community Foundation is best known for the donations it has received from Facebook co-founder Mark Zuckerberg, Go Pro founders and other internet giants. It now houses 1650 philanthropic funds and manages $4.7 billion in assets.[1]

Lesser known:

  • ‘1% equity’: Tech companies are known to make millionaires of founders overnight. Several young co-founders are starting to pledge 1% of equity. The 1% will be donated to the charity of their choice when the business is sold, so it works as a future investment for founders who desire to give to charity but don’t have the money. The plus point: 1% can turn into a huge amount depending on how much the company got acquired for. Australian startup Atlassian ended up donating $35 million to the Atlassian Foundation they established on being acquired[6]. Imagine what 1% of equity of a Flipkart or Amazon would be, and what it would mean for the organisation it goes to!
  • Mutual funds: Can mutual funds be a philanthropic instrument? HDFC Mutual Fund shows us how. In 2011, it launched a close-ended debt fund called the HDFC Debt Fund for Cancer Cure. Investors had to invest a minimum of Rs1 lakh with a lock-in period of three years. The total principal was then invested in debt/money market instruments or government securities. Investors could then choose to donate 50% or 100% of all dividend earned to the Indian Cancer Society, an organisation that sponsors treatment and therapy for patients in need. Investors could claim a tax deduction under Section 80G on any dividend amount they donated. HDFC reports that the total donations received under the scheme totaled Rs10.87 crores till December 2013[7]. A second series was launched in February 2014, with HDFC offering to match any donations made through the fund.

The world is changing at a rapid pace and philanthropy is evolving with it. We’re sure there are more innovative instruments and donation options coming in the future.

[5] ‘Rakesh Jhunjhunwala’s next target: Shed 20 kilos, give away Rs5000 crore to philanthropy’,, accessed on 4th December 2014