It's not about managing your money. It is about freeing you to earn more.
It is important to manage it well to keep all in the family.
Your financial needs are different, so should the investment option be.
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
12 SEPTEMBER, 2017
Philanthropy is more than just a charitable donation. It is an effort that an individual or organization takes to improve the human welfare and/or social conditions. That said, the ecosystem in India has been witnessing a great rise in the last half decade. This is due to the combined efforts of the public and private sectors. While the government remains the largest contributor, private contributions accounted for 32% of the total contributions in 2016 according to Bain’s India Philanthropy Report.
This article, gives you an overview of philanthropy and various ways of engagement.
Essential aspects to be covered before entering philanthropy
A philanthropic journey is complex, and writing a cheque is just the first step. There is a wide range of philanthropic practices that you can adopt depending on your philosophy, life experience, time availability, social interests, goals, etc. But before you get yourself involved in the noble cause, it is important that you have the clarity about certain aspects.
Here are a few questions that you must have answers for:
Impact is different for each philanthropist. For instance, for some, it may be about the number of children they were able to admit in a school, while for the rest it maybe about knowing what those children learned.
Below is a list of some of the most conventional ways used by philanthropists to bring about the desired impact:
Grant making Philanthropy
These are non-repayable donations that are made to monetarily support a non-profit organization and help them manage their general operating expenses, specific programs or sustainability needs. In order to receive a grant, they either have to write a proposal or an application. The structure of a proposal varies according to the type of proposal, the type of project and the organization. Therefore it is important to draft the proposal according to the required guidelines that proposals require and must cover all the basics like: the plan of work, budget, qualification, experience, and so on.
Venture philanthropy offers a long-term approach to support for-profit social organizations that work towards a cause. It addresses the growing need for support and flexible funding by using the three core practices of customized financing, organizational support and, impact measurement and management. This is done by applying the concepts and techniques from venture capital finance and business management. Donors are often seen taking seats as board members of the organizations they fund as well.
Program-Related Investing (PRI) Philanthropy
PRIs hold incredible potential and are usually made in the form of deposits, loans or equity investments to support charitable activities and are required to be repaid. PRIs allow philanthropists to make investments and regain them along with a reasonable rate of return and tax benefits. Such kinds of investments bring private sector discipline in social ventures and make it mandatory for the organizations to prove the validity of their business model first.
Impact Investing Philanthropy
Impact investments are business investments made by investors into companies, organizations, and funds with a purpose to generating social and environmental impact alongside a financial return. The difference here is that the primary purpose of this investment is to make profits, with an additional expectation of social and environmental benefit by investing in for-profit social enterprises. while socially responsible investing generally adopts a "do no harm" approach, impact investing not only seek to create a positive impact but also measures and reports the impact in a transparent way.
Socially Responsible Investing (SRI) Philanthropy
SRI a.k.a., Sustainable investing or Responsible investing, takes into account a company’s environmental, social and corporate governance (ESG) policies and records, to generate long-term competitive financial returns and positive societal impact. These are investors who encourage corporate practices that promote environmental supervision, consumer protection, human rights, etc., and avoid businesses that have a negative impact on the society and/or environment.
Unconventional ways of philanthropy
It is a common notion that being a philanthropist is simply throwing money at a cause. That’s definitely not the case! A good philanthropist works towards solving underlying problems and making society a better place to live. Here are some wonderful, creative and interesting ways to give back, support your favorite causes, and simply make things better.
Giving away belongings for charity
We all have some items that can be put to better use. These can be anything from clothes, toys, glasses, cell phones, computers, hearing aids, ink cartridges, to the gifts that we receive. You can do this on a larger scale by making your friends and family a part of this drive too.
Volunteering for activities
Philanthropy is not just about giving money; donating your time for valuable causes is equally important. If you can, do try to donate your time for charity. You'll find several volunteering opportunities online. These could be anything from teaching children, adopting villages to feeding them, skill development, etc.
Teaching children the importance of kindness
You can take children to an animal shelter and teach them about caring for pets, take them to an old-age home to show them the importance of elders, teach them how to sow seeds and give them complete information about plantation, and so on. You can do this activity for several schools at a time as well.
Participating in an activity for a cause
It feels great when we get to do something that benefits not just yourself but someone in need as well. Take for instance marathons, walkathons or cyclothons – most of these support a cause, and participating in such events for charity can be the perfect way to merge your passions with a noble cause.
There are several opportunities through which you can help animals. Some of these include: going vegan, adopting an animal, volunteer at your local animal shelter, not supporting animals in entertainment, educate your friends and family about the above, and so on.
Making social good a part of your company culture
If you own a company, then you can incorporate social good into your company’s culture. You can ask your employees to volunteer for a full day every quarter at any not-for-profit organization or philanthropic activity of their choice on company time.
Go Pro Bono
Pro bono are voluntary services to help the underserved population who lack the money to pay for your expertise. Not-for-profits are always in need of good talent, but they are never able to afford the packages they draw; while, for-profit employees are always on the look out to support a good cause in some way. Pro bono is the best solution that solves the problem for both issues.
Successful philanthropy is similar to a successful business - only this time, it is not just about profits!
You have already rated this article