The rise of India’s reputation as a center of technology innovation has in recent years been matched by the country’s growing reputation as a hub of social innovation, and now Indians living abroad are rising as a force for philanthropy in their country of origin. In light of this, The Bridgespan Group, Dasra, and Stanford Social Innovation Review have joined forces to create and publish Impact India, a magazine for philanthropists and social innovators targeting India.
On a September evening in 2014, more than 600 Americans of Indian origin gathered with friends at the Museum of Modern Art in New York City for a gala to raise money for Pratham, one of the largest NGOs in India. For more than 20 years, Pratham has worked to improve reading and math skills among India’s poorest children.1 Guests generously pledged more than $2 million to advance its mission.2
The event was a success. But there’s more to the story. The guest list also said a lot about the elevated social and economic standing of the Indian diaspora that has settled in America. This influential group now numbers more than 1.9 million Indian-born immigrants and another 1.6 million Americans who report having Indian ancestry. 3 And the gala highlighted an important new direction for Indian diaspora giving from the United States. Traditionally, money has flowed from Indian Americans primarily to family and community. Now it is increasingly supporting organizations with broad social missions and evidence of impact, like Pratham.
The timing of this trend is important. Much attention has been paid to India’s growing middle class, but the country still needs massive investment to create more jobs, housing, and infrastructure to meet soaring aspirations, according to the World Bank.4 The United Nations Development Program found that nearly 75 percent of India’s population lives on less than $2 a day, and the average Indian attains fewer than five years of schooling. A shift in giving from family and community to broad-based social issues could advance the pace of change to address India’s pressing needs.
The Time is Right
As a nation built by immigrants, the United States has a long history of diaspora groups giving back to their countries of origin. (See “Jewish Diaspora Giving to Israel” sidebar, below.) But compared to many immigrant groups, Indian-American diaspora giving is relatively new and rapidly evolving.
In part, this evolution is due to the rise of foundations and philanthropic intermediaries that are focused on supporting Indian causes. These organizations, based both in the United States and in India, have encouraged and enabled Indian-American philanthropy to become more strategic in several dimensions: geography (from local communities of origin to populations and needs across India); focus (from perceived need to established need); mode (from personal connections to more professional intermediaries and NGOs); and accountability (from subjective milestones to measurable results). They are a critical link between well-intentioned donors in the United States and high-impact organizations operating in rural Indian outposts, villages, and cities.
That link is more important than ever as the status and wealth of the Indian-American diaspora rise. (See “Segmenting the Indian-American Diaspora” sidebar, below.) As a group, Indian immigrants to America have fared well and amassed significant wealth. Indian-led households have a median annual income of $89,000 (compared to the US median income, $50,000), and 27 percent of them earn more than $140,000, putting them in the top 10 percent of earners nationally.5 As a result, the combined annual discretionary income of Americans of Indian origin is approximately $67.4 billion.
If their philanthropic contributions were consistent with those of other US households in similar income brackets, and if they directed 40 percent of their philanthropic giving to India, $1.2 billion per year would flow from Indian diaspora donors to Indian causes. This sum would dwarf official US foreign aid to India ($116.4 million in fiscal year 2014).6 What’s more, it would represent more than half the entire amount of annual official development aid received by India from all countries—$2.2 billion, on average, from 2005 through 2013.7
Indian Americans also have significant nonfinancial assets to offer. They are highly educated8 and well represented in science, technology, engineering, and math professions.9 They have been active and successful in technology and entrepreneurship,10 and they increasingly occupy roles of political and social influence that track their economic ascendance.11 These nonfinancial assets—education, expertise, and positions of influence, combined with familiarity with Indian culture and communities—could all be applied to great effect in India to build the capacity and professionalism of India’s civil society organizations and the philanthropic entities that support them.
Diaspora Giving Has Evolved
A watershed moment in Indian diaspora giving occurred on January 26, 2001, when a 7.9 magnitude earthquake struck Gujarat in northwest India. More than 19,700 people died, and 166,000 were injured. With the support of US President Bill Clinton and Indian Prime Minister Atal Bihari Vajpayee, a group of philanthropists created the American India Foundation (AIF) to channel diaspora donations to relief efforts in India. AIF soon began aggregating funds from the Indian diaspora to provide relief from natural disasters beyond the Gujarat earthquake. Over time, the organization shed its disaster-response focus and pursued various issue-based initiatives that channeled large-scale investments from Indian Americans (and others) to NGOs in India. By June 2015, AIF, which does not operate with an endowment, had raised and distributed about $100 million to 248 Indian NGOs.12
Concurrent with AIF’s emergence, and perhaps in part because of rising awareness of need, many of the largest US-based associations serving Indian Americans stepped up their efforts to meet social needs in India as well. The Asian American Hotel Owners Association, the American Association of Physicians from India, and The Indus Entrepreneurs, among others, have led fundraising campaigns to provide relief after natural disasters. These organizations also have set up other philanthropic activities in the past 10 to 15 years that reflect their members’ expertise and eagerness to tackle other social issues in India.13
More recently, an increasing number of Indian NGOs have opened US offices, typically focused on fundraising alone. Some, such as Pratham, have successfully targeted various segments of the Indian-American population to raise funds. In other instances, ultra-high net worth individuals have donated to specific NGOs. For example, Desh Deshpande, an Indian-American venture capitalist and entrepreneur, has provided significant financial and nonfinancial support to Akshaya Patra, which was founded in 2000 and now provides a midday meal to 1.4 million Indian school children each day. (See “Q&A with Desh Deshpande.”) Deshpande was introduced to Akshaya Patra through the Social Innovation Sandbox he had developed in Hubli, Karnataka, where Akshaya Patra had built its largest kitchen.
Government Support for Diaspora Giving
Meanwhile, during the past 15 years, the Indian government has taken several steps to make diaspora giving easier:
New visa standards for nonresident Indians, adopted in 1999, made it easier for diaspora members to visit, invest, and open rupee bank accounts in India.
An annual conference of overseas Indians—Overseas Indian Day (Pravasi Bharatiya Divas—was created in 2003 to facilitate networking and to celebrate emigrants who have helped India.
The Ministry for Overseas Indian Affairs was established in 2005 to coordinate trade, academic exchange, heritage exploration, and philanthropy between India and its diaspora.
A 2011 law allowed Indian citizens residing abroad to cast votes in their home constituencies.
By and large, the trend looks set to continue under Prime Minister Narenda Modi, who announced a further easing of visa and travel requirements during an appearance at Madison Square Garden on his inaugural trip to the United States in September 2014.14 Modi’s administration seems particularly attuned to the upside potential for financial and nonfinancial support from the Indian-American diaspora. His focus on bilateral India-US initiatives15 may be an indicator of his openness to connect with US constituencies, including Indian Americans, that could contribute meaningfully to India’s development.
As Modi cultivates the diaspora, a new law at home has initiated a tectonic shift in India’s social sector, with positive implications for diaspora giving. The 2013 Companies Act requires large firms to spend 2 percent of profits on corporate social responsibility (CSR) activities in India. It also requires companies to establish a boardapproved CSR policy and a board-level CSR committee. Despite a great deal of uncertainty about all the ways in which the new law will play out, early developments suggest strongly that corporate actors are impatient for high-quality NGO data to guide their decisionmaking. Over time, increased corporate sector activity in India’s civil society should nudge NGOs and intermediaries toward greater transparency with regard to performance data, which in turn will offer them another lever to use in engaging and mobilizing the already motivated Indian diaspora.
Barriers to Giving Back
Although the shift to more strategic diaspora giving has unmistakable momentum, it faces numerous challenges. In fact, three serious barriers hamper giving by the Indian-American community: donor distrust, regulatory constraints, and disconnected second-generation Indian Americans.
Donor distrust | Virtually all the people we interviewed said that widespread distrust of NGOs and intermediaries in India is the primary obstacle to increased giving, strategic or otherwise. First-generation immigrants told us that their hands-on experience with corruption in their homeland has influenced their views on Indian civil society organizations. And these views appear to have influenced the attitudes of their US-born children; many of those we interviewed seem to consider corruption in India systemic.
Some of their concerns about corruption may be well-founded, but we were struck by how little many donors know about Indian NGOs that have proven trustworthy. Many of these NGOs are listed on the websites of reputable giving intermediaries such as Dasra, Kiva, Give India, and Global Giving. Several of these intermediaries work with Indian NGOs and social enterprises to encourage giving by Indians in the United States. In addition, nonprofit evaluators like Charity Navigator—which rates nonprofits’ financial health, accountability, and transparency—have reviewed some US affiliates of Indian NGOs. For donors wary of Indian NGOs, these resources can add a critical level of reliable information about organizations with successful track records.
Regulatory constraints | Despite the Indian government’s steps to make diaspora giving easier over the past several years, the country’s active scrutiny of foreign money flowing to India’s NGOs remains an issue. The 2010 Foreign Contribution Regulation Act (FCRA) restricts giving to NGOs by foreigners, reflecting official apprehension about foreign contributions to groups considered a threat to national security. Under the act, NGOs must register if they wish to receive funds from sources outside India.16 To be eligible, an organization must have been in operation for at least three years. Younger organizations can accept foreign funds only if they apply for and receive permission from the Indian government for a specific purpose and amount.17
The Indian government also retains and exercises the right to reject FCRA license applications and permission for outside funds for any reason.18 Some NGOs may decide to accept such funds without registering under FCRA, but they risk being fined, reprimanded, or shut down.19 In June 2015, the government cancelled the licenses of 4,470 NGOs for violations of the act. In addition, the current Indian government has been actively scrutinizing funding by the Ford Foundation, a clear signal to non-Indian funders that their social sector activities may not be welcome.
JEWISH DIASPORA GIVING TO ISRAEL
The giving experiences of the Indian-American and Jewish-American diasporas merit comparison. The rationale is clear: both are relatively small communities that have enjoyed outsized economic and social achievement in the United States. Indeed, the Jewish-American diaspora, which has a longer track record than its Indian counterpart, can be considered an exemplar because of the sustained role it has had in the economic and social development of Israel.
But there also are dissimilarities that make it difficult to translate lessons easily from one diasporan experience to the other. The population of Israel, for example, is much smaller than that of India, and so it is likely easier for the Jewish-American diaspora to exercise greater overall influence in its homeland than it is for the Indian-American diaspora to influence India. In addition, the existential threat to the state of Israel has nothing comparable in the Indian experience.
Nonetheless, we observed at least two aspects of the Jewish-American experience that provide food for collective thought among Indian Americans motivated to give to India. First, Jewish-American donors have long benefited from trustworthy channels by which to support Israeli development. Since World War II, Jewish-American donors have been able to channel their funding reliably through several centralized mechanisms, most notably the Jewish Federations of North America. What’s more, over the past few decades, the number of American Friends of Israel organizations linked to Israeli NGOs and private foundations has exploded.
Second, Jewish organizations have actively cultivated a connection among newer generations of Jewish-Americans and Israel. A recent example of this work is Birthright Israel, a nonprofit that sponsors free 10-day trips to Israel for Jewish young adults living in other countries. Since 1999, more than 300,000 people from the United States and Canada have taken advantage of the offer.
FCRA thus effectively limits the number of NGOs eligible for foreign contributions, and in doing so, likely discourages many Indian NGOs from attempting to raise foreign funds.20 These obstacles stand in stark contrast to the mechanisms available to the Jewish diaspora’s giving to Israel, which are far less restrictive. And it appears that the regulatory environment in India is unlikely to change much in the near future. In fact, it may become more complex in the short run as the scrutiny of foreign-funded social sector efforts in India continues.
Disconnected second-generation Indian Americans | Our research found that Indian-born diaspora members—a group that has grown by 1.5 million since 1990—are more motivated to give to India than are second-generation Indian Americans, who often lack direct ties to the homeland of their parents.21 Our interviews with fundraisers suggest that absent active cultivation, second-generation Indian Americans are not as motivated to give to India as their parents. Those who do give, however, are less constrained by birth ties to particular communities. Rather, they are interested in supporting organizations with broad social-impact missions wherever they operate. Major diaspora organizations should heed these shifting demographics, and Indian NGOs need to find new ways to connect with younger members of the diaspora or face the prospect of eroding financial support.
What Donors Can Do
The barriers to diaspora giving are real enough, but not insurmountable. Our research points to four complementary steps that Indian-American donors can take to expedite the shift in diaspora philanthropy toward more strategic giving that is pan-Indian, focuses on established need, is facilitated by professional organizations, and achieves measurable results.
Invest in professionalizing Indian NGOs | Increasing the professionalism of Indian NGOs in fundraising, management, and impact measurement will enhance their performance and pave the way for increased giving by Indian Americans. For example, consider five well-known Indian NGOs—Akshaya Patra, Brahmananda Saraswati Foundation, Ekal Vidyalaya, Pratham, and Sankara Eye Foundation—that formed US-based affiliates with professional staffs to raise funds from Indian donors. (See “Case Study on Akshaya Patra,” here.) Taking that step helped those organizations increase the funds they raised collectively by 45 percent in four years, from $18.6 million in 2008 to $34 million in 2012.22
Other Indian NGOs also are boosting their professionalism. For example, Magic Bus, which helps children develop life skills using a curriculum focused on activity-based learning, is assembling a team of fundraising professionals in the United States to design and roll out a new marketing strategy. (See “Case Study on Magic Bus,” here.)
The value of investing in a professional approach to fundraising and marketing stands out when we compare American Friends of Israel organizations in the United States with their Indian-American equivalents. The 25 India-based NGOs that raised the most from foreign contributions received approximately $350 million in fiscal year 2012 from all sources including the United States, according to the most recent FCRA report.23 By comparison, the five largest US-based affiliates of Israeli NGOs raised roughly $1 billion a year from the United States alone between 1998 and 2009.24 An in-depth study of the Israeli experience found that strategic investments in human resources and fundraising were the key to the growth.25
We found that fundraising professionals who are focused on Indian Americans appear to have deep knowledge of their own regional markets and a strong sense of the most promising segments of the Indian-American population to target. To date, however, our interviewees noted that fundraisers tend to target the same Indian-American communities through galas and other events concentrated on the East and West Coasts—leading to a sense of donor fatigue. Outreach to less-targeted US markets could be productive and might take some of the pressure off the most frequently targeted communities. In addition, interviewees suggested that high-potential donor communities are growing among Indian Americans living in Florida, the Carolinas, and the Midwest. (See “US States With the Most Indian Americans” below.)
One organization that has used that strategy effectively is the Ekal Vidyalaya Foundation, dedicated to bringing education and village development to rural India. It has been successful in raising significant funds in cities outside traditional fundraising areas by staging charity concerts featuring Bollywood music.
Become a strategic partner and visible champion for NGOs | Most Indian NGOs need more than financial support. They need visible and passionate champions who can help in a variety of important ways, including navigating the FCRA registration process (as Give2Asia.org does with its NGO partners);26 providing advice and management expertise, sometimes even assuming leadership roles; and tapping their own personal networks to raise additional funds.
Vijay Goradia provides a striking example. Goradia came across Pratham on a trip to India and was so impressed that he went back home to Houston and became a dedicated full-time advisor, advocate, and fundraiser for the organization. His tireless advocacy for Pratham and his credibility within his community have led to successful fundraising in Houston and 14 other cities across the United States, including Dallas-Fort Worth, Los Angeles, and Phoenix.
It’s not necessary to go to the same lengths as Goradia to make a meaningful difference. As visible supporters, patrons build trust for an organization in the broader Indian community and influence their peers to join in. For inspiration, they need look no further than a for-profit analogue, The Indus Entrepreneurs. This group, founded in Silicon Valley in 1992, today boasts 61 chapters in 18 countries—including India—and 13,000 members, who provide role models, structured one-on-one coaching, and business support to aspiring entrepreneurs.
Look for program models that offer effective or promising solutions | NGOs such as Pratham showcase their impact with profiles of individual children and outcomes data. Success stories are particularly useful at fundraising events to raise awareness of the organizations’ program models. At a 2014 conference on giving to India organized by Dasra—one of India’s leading strategic philanthropy foundations—Goradia explained that the main reason he became a dedicated supporter of Pratham was its lowcost model for helping children achieve literacy and its ability to provide compelling data documenting effectiveness.27
Join and support intermediaries that connect donors with NGOs | A growing number of intermediary organizations focus explicitly on connecting donors with high-performing NGOs in India. These groups help overcome trust and information deficits by conducting due diligence on Indian NGOs, educating donors about various options, and providing regular updates on NGO performance. They also put a lot of information online to facilitate quick and easy access by potential donors. These organizations include:
Dasra, which provides in-depth research, organizational advice and leadership training, donor reporting, and other intermediary services (such as organizing Giving Circles) to connect philanthropists around the world with high-performing NGOs and social enterprises in India.
GiveIndia, which vets, selects, lists, and channels donations to Indian NGOs. Donors choose from among 200 NGOs that have been scrutinized for transparency and credibility. GiveIndia then reports back to donors to confirm that donations have reached their target.
GlobalGiving, which vets, selects, profiles, and channels donations to NGOs around the world, including in India. Based in the United States, it provides reports on donated dollars reaching their destination.
Another intermediary to keep an eye on is the national NGO monitoring hub being developed by the Indian Institute of Corporate Affairs. The Indian government commissioned the hub as part of the follow-through on India’s 2013 Companies Act.
The Indian Diaspora Investment Initiative, recently launched by the US-based Calvert Foundation, the US Agency for International Development, and several private financial institutions in India, is another promising venture. The initiative will help make it easier for Indian Americans to invest in sustainable development across India.
The Indian Diaspora Investment Initiative will target investments in health care to rural communities, improving water and sanitation, and opening up financial services. Indian Americans and other investors will be able to fund the growth of social enterprises in India while earning a financial and social return. The initiative’s success could pave the way for other such funds.
Results in Our Grasp
The rising affluence of the Indian-American community and its desire to give back coincide with the growth of new intermediary organizations that facilitate giving to high-quality Indian NGOs. The scale of potential giving—as much as $1.2 billion annually by our rough estimate—could certainly be consequential to the economic and social development of India. The time is right for Indian-American diaspora giving to grow while shifting its focus from family and community to pan-Indian issues of pressing need.
SEGMENTING THE INDIAN-AMERICAN DIASPORA
Approximately 3.5 million people of Indian origin live in the United States: two million Indian immigrants and one million American-born. Another half million were born elsewhere and are not included in the segmentation below. Our research identified five groups with different approaches to giving back to India. Our segmentation is rough, but it is a helpful starting point for understanding how different life experiences and philanthropic motivations within the diaspora may influence giving practices.1
1. Ultra-high net worth individuals. These Indian Americans each have more than $30 million in assets, and most immigrated to the United States before 1990. We estimate that there are between 250 and 1,500 people in this segment,2 collectively controlling assets of between $20 billion and $115 billion.3 These people live primarily on the coasts or in major metropolitan areas. Some of them are motivated to contribute both in the United States and in India, some are leaders in Indian philanthropy and have helped develop and fund NGOs, and others remain untapped by Indian NGOs but are making large contributions to nonprofits serving the United States.
2. Older professionals and entrepreneurs. Approximately 278,000 Indian-Americans immigrated to the United States before 1990 and live in households that have an annual income of more than $80,000. Most are older than 45, and they likely possess total assets between $500,000 and $30 million. These people credit their success to their US communities, and they tend to be active givers to those communities or to their hometowns in India. Their philanthropy tends to be based on personal contacts. Through their professions (as doctors or hotel owners, for example) they are sometimes members of close-knit and well-networked groups.
3. Newly immigrated professionals. The roughly 1.5 million Indian Americans in this segment immigrated to the United States after 1990, often to work in skilled jobs requiring H1-B visas. Two-thirds of them have a median annual income of more than $80,000. They tend to be younger than 45, and many are Indian nationals. Many have strong, recent ties to particular communities in India, send remittances to their families, and participate in smaller-scale philanthropy. Given the trajectory of previous waves of Indian immigrants to the United States, the economic assets of this segment could grow considerably over the next few decades, providing a large opportunity for giving. Roughly half of this segment plus the previous one—older professionals and entrepreneurs—have settled in a handful of geographic areas. California is home to approximately 278,000, the New York City metro area about 238,000, Texas about 118,000, Chicago about 77,000, and the Washington, D.C., area about 77,000.4 The rest (some 459,000) live in areas scattered across the country and represent a population that has not been targeted in a meaningful way by organizations fundraising to meet needs in India.
4. Middle-aged professionals and entrepreneurs born in the United States. The approximately 56,000 individuals in this segment are affluent Indian Americans who were born in the United States, are older than 35, and are part of households with an annual income of more than $80,000. They tend to be the offspring of older immigrant professionals and entrepreneurs. Most have never lived in India and have few personal ties to specific communities or regions there. As a consequence, we believe they are rarely tapped to give through traditional diaspora networks. This segment may be more likely to support pan-Indian issues. More than half of US-born middle-aged professionals and entrepreneurs live in six states: California (11,500), New Jersey (3,800), New York (7,400), Texas (3,500), Illinois (3,600), and Maryland (4,000).Migrahave few personal ties to specific communities or regions there. As a consequence, we believe they are rarely tapped to give through traditional diaspora networks. This segment may be more likely to support pan-Indian issues. More than half of US-born middle-aged professionals and entrepreneurs live in six states: California (11,500), New Jersey (3,800), New York (7,400), Texas (3,500), Illinois (3,600), and Maryland (4,000).5
5. Young people born in the United States. Approximately 897,000 people who identify as Indian and are under age 35 were born and live in the United States. The median annual income of the households they live in is between $120,000 and $160,000. As members of this group mature, they are likely to use data, online intermediaries and networks, and other technologies to learn about Indian NGOs and make giving decisions. We believe that this group’s ties to India are not as strong and immediate as those of other segments we identified, so encouraging this segment to give to India may call for purposeful education and exposure to the needs of the country, reinforced with data and evidence.6 These people are more evenly dispersed across the United States than other segments of the diaspora. About 189,000 live in California, 95,327 in New York, 96,000 in New Jersey, 82,700 in Texas, 54,000 in Illinois, 27,000 in Georgia, 26,700 in Massachusetts, 24,000 in Michigan, and 21,000 in Maryland.7