By Joan Spero, Senior Research Scholar, School of International and Public Affairs, Columbia University
Wealthy individuals and families in developing countries have a long tradition of making contributions to alleviate social problems, including poverty, hunger, and disease. In recent decades, the number of wealthy individuals and families in the emerging BRIC economies— Brazil, Russia, India, and China—have grown exponentially as these countries have developed rapidly, liberalized, privatized, and globalized. Some newly wealthy entrepreneurs, families, and their companies are “giving back” to their societies through foundations or other mechanisms.
There are a number of common forces behind the new giving in the BRICs. Culture and religion, even in formerly communist Russia and communist China, shape individual values and motivate acts of charity. Economic liberalization in the BRICs, which began in the 1990s, created new wealth, the growth of a middle class, and the accumulation of vast fortunes by a new business class.
Liberalization also resulted in the unequal distribution of that new wealth in already unequal societies, causing new problems, especially environmental problems that governments were not addressing. Political change also played a role. The end of military rule in Brazil, the fall of communism in the former USSR, and some limited opening in China created the opportunity for the creation of civil society organizations including foundations. In some cases, these national forces were enhanced by Western donors, foundations, and governments, which offered grants and technical assistance to support the creation of civil society and foundations.
Emerging civil society
Much of the giving in the BRICs remains informal and family oriented and many civil society organizations are not legally organized. Nevertheless, civil society is coming out of the shadows and growing, while corporations and families are establishing foundations.
BRIC governments are gradually putting in place or updating tax, legislative, and regulatory regimes that both authorize and control civil society organizations and foundations. Russia and China’s autocratic regimes view civil society and foundations as both potential sources of financial support and potential political threats. Thus, their laws seek to enable the creation of organizations that provide social services while constraining activity related to social and political advocacy and discouraging foreign organizations and foreign funding.
India and Brazil, which are democracies, are more welcoming of civil society. However, the regimes governing civil society and foundations are outdated, complex, and, in India, bureaucratic.
Despite these roadblocks, organized philanthropy is growing rapidly. Although there is a dearth of data about foundations and grants, there is clear evidence of the flourishing of the sector.
Russia and China: avoiding controversy
By the end of 2006, for example, affluent Russians had established over 20 foundations, some making significant grants. These included:
- The Vladimir Potanin Charity Fund, based on wealth from Norilsk Nickel and Rosbank
- The Foundation for Cultural Initiatives, created by Mikhail Prokhorov of Norilsk Mining Company
- The Dynasty Foundation, established by Dr. Dmitry Zimin who made a fortune in wireless telecommunications
- The Open Russia Fund, established by Mikhail Khordorkovsky, who controlled the oil giant Yukos. However, when Open Russia and Khordorkovsky himself began to engage in political advocacy, he was arrested and his foundation closed.
The Hurun Research Institute has identified 100 Chinese donors who made charitable contributions amounting to the equivalent of $1.6 billion between January 2011 and March 2012. These contributions were made by Chinese individuals, foundations controlled by families, or family-owned corporations.
In both Russia and China, giving focuses on “charity” (i.e., supporting social services such as health care, education, poverty alleviation, disaster relief, social welfare) as well as culture and sports, which are politically noncontroversial. There has been only limited giving in more politically sensitive fields as civil and human rights, environmental protection, or other advocacy causes.
India and Brazil: philanthropy born from corporate wealth
India, a democracy with a vibrant civil society, has many new foundations based on corporate wealth. In addition to the long-established Tata Foundation, new foundations include:
- The Azim Premji Foundation, based on wealth from outsourcing company WIPRO
- The Bharti Foundation, based on a fortune in telecommunications and telephony
- Several trusts to support education and sports created by Lakshmi Mittal, whose wealth has come from the steel industry
- The Shiv Nadar Foundation, based on wealth from information technology.
Most new foundations in Brazil are corporate foundations based on new wealth. These include Fundaciau Itau Social created by Brazilian Banco Itau, the Gerdau Institute, based on a steel fortune, and Fundacao Vale also based on steel wealth. Brazil also has a number of private family foundations, including Fundacao Tide Setubal, based on wealth from the financial sector.
Giving in India and Brazil is focused on social services but also includes important funding for education and efforts to bridge the socio-economic divide.
Interestingly, many of Brazil’s corporate foundations have embraced the concept of corporate social responsibility. The country’s growing civil society has pressed Brazilian businesses to pay attention to poverty and inequality and to the broader social impact of their businesses, particularly in sectors such as mining, and in communities close to their operations.
Brazilian businesses have faced foreign competitors at home and abroad and have been exposed to new ideas about the role of corporate social responsibility as a business strategy to enhance competitiveness and business opportunity. Many Brazilian corporate leaders have come to see corporate social responsibility as a way to address problems at home, gain favor with local communities and governments, improve the image of Brazilian business, enhance corporate branding, and improve the environment for business and their own business opportunities.
Thus, giving in the two democratic BRIC countries, India and Brazil, is beginning to bridge the gap between “charity” and “philanthropy” as practiced in the west, which is intended to promote social change and address the root causes of social ills by reducing inequality, improving health systems and outcomes, and fostering education and research.
Continued challenges despite a growing field
While the philanthropic sector is growing and even thriving in the BRICs, many challenges remain. In Russia and China, an organized and active civil society that engages in public advocacy is seen as a political threat. Historical concepts of the central role of the state in providing services combined with instances of corruption, and a lack of knowledge about what foundations do, mean that civil society and foundations are often viewed by the public and governments with suspicion and as illegitimate. Legal and tax regimes as well as bureaucratic practices are constraining, difficult to navigate, and act as a deterrent.
One way for foundations to respond is by creating standards of behavior including greater transparency. Another way to address these challenges is through the organization of the philanthropic sector itself.
The giving sector in the BRICs is becoming organized and more professional through the creation of formal and informal networks and institutions that bring together donors to exchange information, develop standards, and even propose new legal frameworks. These include the Russian Donors’ Forum, the China Foundation Center, the Grupo de Institutos, Fundaçoes e Empresas (GIFE) in Brazil, and the Sampradaan Center for Philanthropy in India. Moreover, The Conference Board’s own Global Social Investing Council is bringing together corporate philanthropy executives from around the world to discuss international giving practices.
Worldwide Initiatives for Grantmaker Support (WINGS), based in Brazil, addresses donor issues at an international level and provides another forum for exchange of information, ideas, and ways of doing business in the new philanthropic world.
These issues are explored in greater depth in my study, Charity and Philanthropy in Russia, China, India, and Brazil, recently published by the Foundation Center and WINGS.
About the author:
Joan E. Spero is a Senior Research Scholar at Columbia University’s School of International and Public Affairs, where she researches and writes about international philanthropy and its role in the global system. She is the author of The Global Role of U.S. Foundations (2010) and Charity and Philanthropy in Russia, China, India, and Brazil (2014). From 1997 to 2008, Ms. Spero served as President of the Doris Duke Charitable Foundation. From 1993 to 1997, she was Undersecretary of State for Economic, Business, and Agricultural Affairs. From 1981 to 1993, she held several positions at American Express Company, the last being Executive Vice President, Corporate Affairs and Communications. Ms. Spero is Trustee of the Wisconsin Alumni Research Foundation and the International Center for Transitional and a Director of IBM, International Paper and Citigroup.