Dot-com bust hits NRI philanthropy

[Guest guest]

http://www.rediff.com/money/2003/may/24nri.htm

 

Two out of three Non-Resident Indians in the Silicon Valley have been significantly affected by the dot-com bust and the impact has reflected in the community's philanthropy.

 

Two surveys, one conducted last month and the other two years ago, show how NRI attitudes in the Valley towards philanthropy have changed with the economic cycle of boom and bust.

 

A survey conducted last month, among 46 charter members of The IndUS Entrepreneurs (TiE) on the impact of the dot-com bust says that NRIs are now giving lesser amounts to fewer charities.

 

"The nature of the impact has been predominantly to 'give less.' There is a 3-to-1 decrease in giving over increase. Of those giving less, two-thirds have reduced their giving by 50 per cent or more," says Shahnaz Taplin of Shahnaz Taplin & Associates who has conducted the study.

 

Many Indian Americans in the Silicon Valley have reduced their charitable giving by narrowing the scope of their philanthropy. They are now giving to fewer causes compared to earlier.

 

Yet the reduction in giving has brought some good news to India. The proportion of funds flowing to India versus the US has increased.

 

This contrasts heavily with attitudes two years ago.

 

At the peak of the boom, Professor Tyzoon Tyebjee of Santa Clara University and Shahnaz Taplin and Associates had conducted a qualitative study, 'NRIs: Care, Commit, and Contribute.'

 

The study focused on Silicon Valley NRIs, specifically, social entrepreneurs and IT professionals and showed record giving at the peak of the economic boom by Silicon Valley.

 

"It was sparked off by stories in The New York Times and Forbes magazine that profiled NRI cyber-billionaires and raised the question: Could these cyber-gurus be catalytic converters of social and economic change in India?" says Taplin.

 

The study highlighted patterns and profiles of giving and factors like childhood imprints, family traditions, religious teachings and socio-economic reasons that influence the Diaspora generosity.

 

It focused on attitudes, motivations and deterrents to philanthropic giving among 'Midnight's children' (born around the time of India's Independence), Generation X and women.

 

The study threw up highlights stylistic differences and modes of giving among social entrepreneurs and IT professionals: job creators - who focus on wealth creation rather than grant giving; institution builders -- who initiate or improve existing institutions; social venture capitalists -- who focus on incubator projects that have potential for social change; angel investors -- who champion one cause exclusively; and helping-hands -- who support traditional charitable giving, often through checkbook charity.

 

The philanthropic support of the Valley's NRIs varied by demographics and gender:

 

Social entrepreneurs who are between 40 and 60 years are more inclined to support higher education, 'bricks and mortar' at their alma mater, though some also support primary education;

Entrepreneurs and IT professionals who are Generation X'ers (27-40 years) support primary education;

Women are motivated by personal and emotional connection, and favour 'small is beautiful,' support small projects and like to 'make a difference' even if it is only in one person's life. Women are more inclined to philanthropically support women and children issues.

At the peak of the economic boom, many NRIs were contributing increasingly generously to Bay Area non-profits believing, that 'charity starts at home in their own backyards.'

 

The bust reversed this trend, as NRIs now prefer to then send contributions to charities/non-governmental organisations in India.

 

However, commitment to philanthropic funding among social entrepreneurs, IT professionals, and TiE's charter members does remain strong.

 

Seventy-five per cent of respondents to the latest survey say that they will increase their funding once the economy recovers. A turnaround in the economy could mean that funding levels would return to their two-year-old levels.

 

The deterrents to philanthropic funding, however, continue to be challenge that could impact giving.

 

The lack of accountable, trustworthy and credible institutions through which NRIs can transmit funds to Indian NGOs has been cited as a reason that acts as a significant barrier towards charity.

 

Secondarily, the survey also throws up the need for public education and visibility with regard to key issues of development and causes in India so that NRIs can be better informed of causes that need their help.

 

"The implications of the research are clear. Once NRIs have confidence in reliable institutions, social entrepreneurs will not only care and commit but they will also contribute to education, employment and empowerment in India," says Professor Tyzoon Tyebjee, Department of Marketing, Santa Clara University.