Beyond Money
The Art of Giving

Sucheta Dalal on GIVE Foundation which has brought professionalism into charity

One of the biggest travails even of simple charity in India is the nagging worry about whether one's money will be correctly spent. Another is the effort involved in reaching aid to those NGOs that pursue your special concerns. Give Foundation ( is an NGO that aims to answer both these concerns through efficient and effective 'giving'.

Give Foundation in India was conceptualised by N.Venkat Krishnan, an IIM Ahmedabad graduate, who was always certain that the regular corporate rat race is not for him. After a brief stint at the Times of India, he took off to promote an unusual school in Gujarat and later 'Giving' in India with corporate support.  He aims to ensure that efficient and effective NGOs find resources to pursue their cause through a variety of platforms that encourage easy 'giving'.

In 2000 GIVE created an Internet platform to promote online donations. This has already channelled Rs two crore to various NGOs. A second platform is 'Payroll Giving' where all employees of a company donate a small part of their monthly salary to causes of their choice. Already, it has a list of 20 odd companies (such as Star TV, ICICI, IMRB, Hewlett-Packard, H &R Johnson and WPP Media) whose employees contribute Rs 100-500 a month to help educate a child, donate eyes or wheelchairs. Sometimes the employers match the employees' contribution.
Another strategy is to be part of high-profile events. The Standard Chartered international marathon, which has become a significant event on Mumbai's social calendar, is probably its most successful effort. This single event allows Give Foundation to help raise a big chunk of money for scores of genuine causes and provides a social dimension to the event.

GIVE's strength is its two-way support system. On the one hand, it helps NGOs professionalise their accounting and reporting systems to meet donor requirements and improve transparency (this includes cash-flow planning, fund management, internal control processes, document design and systems implementation). On the other hand it helps donors with Grant Management services so that every rupee donated is correctly spent.

It has screened over 1000 NGOs in the last couple of years, helping disburse funds for the Gujarat earthquake and Orissa flood relief, having apparently helped channel Rs 220 crore of grants and services for government departments, individuals and companies.

It has a Give2India scheme for donations of $10,000 and above. This allows donors to route funds through an ICICI Bank escrow account, a deposit or specially designed structures that transfer funds through ICICI Bank to a chosen NGO in milestone-based installments. This has allowed a venture capitalist to donate a hefty $100,000 for "livelihoods in Rural Karnataka"; a banker in Singapore to donate $60,000 to "electrify villages in Orissa using Biodiesel technology of project SuTRa"; a Swiss business owner to donate $60,000 to set up an Orphanage near Mumbai; a doctor in Manchester to donate 50,000 Pounds to support the mentally ill and an old-age home in Tamil Nadu; and a senior executive to provide $20,000 to promote 'entrepreneurship in Assam".
The foundation has even helped large corporates (Godrej, the Taj Group, the Bombay Stock Exchange) develop a comprehensive philanthropy strategy. According to Give India's website, its uniqueness is that it treats the donor as an 'investor', who is looking for a return of some kind - most often just the satisfaction of knowing how his/her money is well spent. All donors get a report on their donations.

GIVE makes a stretched comparison between financial intermediaries and various kinds of Non-profit structures operating in social development efforts. It is involved in helping the evolution of some of these, such as a credit or performance rating of NGOs and an informal self-regulatory alliance.

According to GIVE, "If Indians gave back to society in the same proportion as Americans do, we could be donating Rs 60,000 crore a year to help those in need". This would exceed the government's allocation for healthcare and education. As against this, Indians apparently donate anywhere between Rs 1000-5000 crore. Clearly, we have a long way to go.


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Investing Abroad? wait!

Fund companies are offering a chance for geographical diversification.

India now attracts the whole world's attention. From direct investors who put money in Indian business operations to financial investors who buy Indian equities, foreign institutional investors are scouring India for opportunities. India is now mentioned in the same breath as China because India now offers both domestic business opportunities and skills to grab export opportunities. The Indian market has gone up 100% in two years pulling Indian mutual funds out of a decade of pathetic performances. Attracted by this, Indian savings are moving into Indian mutual funds which are recording massive collections. In a situation like this, in the last budget the Finance Minister raised the ceiling on aggregate investment by mutual funds in overseas instruments from $1 billion to $2 billion. More importantly, the government has decided to remove the silly requirement of 10% reciprocal shareholding for investment abroad. Under that rule, a domestic fund could invest in the stocks of only those foreign companies, which have a listed Indian subsidiary with at least a 10% share holding in it.

When India is a hot destination for the rest of the world, why would you put your money anywhere else? Well, the government of India, in its wisdom has allowed this and Franklin Templeton has been first off the mark to seize this opportunity. Should you bite? Theoretically, there is a case for investing outside the home country, especially when it seems that for a variety of long-term reasons, the domestic economy will not do too well. Companies may be trapped in structural problems of the macro economy (as in the case of African countries or India of the mid-90s or Germany and France now) and therefore investors would be better off investing in countries where entrepreneurial activity is far more rewarding.

But that is theoretical. It can be nobody's case that enterprise is not rewarding in India. Certainly not now. There is an upsurge of activity in India and for the first time ever, all sectors are booming at the same time, in a self-reinforcing manner.
There is a second reason to put your money abroad and that is valuation. It could well be that a certain market today is in the same state as India was in 2003 and it may make sense to get in there. Unfortunately, this too does not apply. From Japan to Kuwait and from New Zealand to Brazil, markets are making multi-year highs everywhere. It would have to be sheer wizardry to be able to discover undervalued opportunities in other parts of the world. Here are some reasons to avoid this fund now:

The fund would be invested in either another country funds or stocks. How much do you know about them? Domestic investments are something we understand best. There is nothing you know about Brazil's Companhia Vale do Rio Doce or Korea's Korea Telecom.

Track record
It is not clear whether Templeton India's fund managers would be the ones ultimately picking the global stocks and on what basis. Templeton is a global organisation with varying investment styles. They track the global economy, various countries and markets. This can be a hindrance or an advantage. After all, Templeton's domestic performance under the emerging markets guru Dr. Mark Mobius was quite pathetic before Templeton India bought Pioneer and the fund management team from Pioneer took charge. {break}

Funds that put your money in other countries offer another round of diversification. The question is: do you need it? We don't see how you can derive additional returns without reducing risk. After all, understanding the risk profile of companies and funds is tricky enough. Understanding the risk-profile of countries is nearly impossible.

Leaving aside the risk aspect for the moment, where are the returns? The US markets which are the biggest, the busiest and among the most transparent have been poor performers. Indeed, it could well be that a fund reduces your return when it invests in a different country. The S&P 500 went up just 11% in the last 12 months. Markets of Germany, Japan and Canada are up between 25%-40% - much lower than India and Brazil.

Every year some international market will perform supperbly But many of these markets are just too volatile. In the first five months of 2004, the China Fund, listed in the US lost 50% of its value. Between 2001 and 2002, the Canada Index lost 60% of its value and from March of 2000 to October of 2003, the German index dropped 73%.

If you must invest…
It will be necessary to monitor whether the fund has a strategy of geographical diversification. A fund that follows the latest fad and invests in geographies that are currently doing well can be leading you into a high-risk zone. While raising money a fund can say several things as a matter of strategy but what it actually does is another matter. This needs to be monitored. It would be great if money is spread over key economic regions. In fact, when investing internationally, a fund has a huge menu to pick from. It can choose not only from fast-growing countries but stocks that are growing fast in an otherwise slow-growing region. It can buy regional funds or indices that spread their investments across a whole region. It can spread its money between momentum and value-based countries and sectors. The question is why would you want to your money to do any of all this? Because you trust your fund manager blindly?  That is not a very sound argument.


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