Mark Sidel - The Rockefeller Archive Center

New economy philanthropy in the high technology communities of Bangalore and
Hyderabad, India: Partnership with the state and the ambiguous search for social
innovation
Mark Sidel
University of Iowa College of Law
and Obermann Center for Advanced Studies ∗
"For too long we have debated about how wealth in this country should be distributed
equally. But before we can distribute wealth, we need to create wealth, or all we can
distribute is poverty."
"Things no longer appear in a linear, predictable manner. Use your imagination.
Innovation comes from it. I do not mean incremental improvement…but generating
radically different ideas. This needs an inventive spirit and the courage to move out of
the comfort zone." Azim Premji, founder, Wipro (Bangalore) 1
In India as in the United States, the philanthropy that is emerging from urban-based "new
economy" entrepreneurs is beginning to demonstrate significant differences from the
philanthropic giving of an earlier generation of entrepreneurs. In India a new generation
of high-technology corporate leaders, their families and their companies are seeking – not
always with immediate success – to explore new paths in social innovation through
philanthropy just as they have pioneered new forms of corporate development. The
∗ The author served as the Ford Foundation’s first program staff member focusing full-time on
philanthropy and the nonprofit sector outside the United States, establishing a program to strengthen
philanthropy and the nonprofit sector in India and South Asia from New Delhi, India in 1999 and 2000. He
is currently Associate Professor of Law at the University of Iowa and a research fellow at the University's
Obermann Center for Advanced Studies.
The author is grateful to numerous Indian colleagues for discussions and assistance in understanding Indian
philanthropy and the newer developments in Bangalore and Hyderabad. They include Niloy Banerjee,
Mathew Cherian, Atreyee Cordeiro, Murray Culshaw, Noshir Dadrawala, Shankar Ghose, Sundari Kumar,
Narayana Murthy, Mohan Pai, Bina Rani, Tarun Sarwal, Abha Shankar, Pushpa Sundar, Rajesh Tandon,
Shankar Venketeswaran, and Priya Viswanath (as well as several anonymous Bangalore police officers for
assistance during the public disturbances associated with the Rajkumar kidnap incident in early August
2000). The author is also grateful to Kathleen McCarthy, Eugene Miller, and participants in the workshop
on philanthropy and the city convened by the City University of New York, Center for the Study of
Philanthropy and the Rockefeller Archive Center (September 2000) for comments on an early version of
this paper, and to participants in the Harvard Asia Seminar, at which some of this material was also
presented in February 2001. This work represents the author’s views and not those of the Ford Foundation.
Copyright c Mark Sidel 2000, 2001.
[Mark Sidel, University of Iowa College of Law and Obermann Center for Advanced Studies, Iowa City,
Iowa 52241 USA; mark-sidel@uiowa.edu]
1
The first quote is from tech.indiainfo.com/profiles/premji1.html. The second is from Premji is next only
to Bill Gates now, Economic Times, February 22, 2000 (www.economictimes.com/220200/).

activities of these Indian new economy philanthropists are just emerging, and one
purpose of this paper is to provide information and analysis on their activities.
It is already clear, however that in the choices of philanthropic goals, targets, forms and
partnerships, the road to social innovation for these new Indian entrepreneurs will be
even rockier than the path to economic innovation has been, and that the overlapping
burdens and goals of their philanthropic endeavors will require both clear thought and
some sorting out in the years ahead. This paper also seeks to analyze the choices and
challenges these new Indian philanthropists face.
When we consider philanthropy in India, we usually think of older traditions – charitable
giving for the poor, destitute and sick; religious giving at Hindu temples and to Hindu
religious and cultural groups; zakat and other forms of Muslim giving in the large Indian
Islamic community if we think beyond the Hindu context. 2 In the twentieth century,
these traditional modes of giving were supplemented by newer styles of philanthropy,
usually based in the wealthy, urban manufacturing and financial houses of Bombay
(Mumbai)-based elite families such as the Tatas and the Birlas. This newer, often more
secular, and often more institutionally focused philanthropy also emphasized traditional
needs such as schooling and health care. But several elements were new: an emphasis
on institution-building, a willingness to support institutions of higher education, nongovernment
organizations and other kinds of civil society institutions as development
intermediaries, a willingness to work well beyond the state, and an emphasis on corporate
responsibility, in addition to personal and family philanthropy. 3
In their willingness to grow endowment assets, to deploy some of those assets through
family foundations, to build institutions, to work with intermediary and recipient NGOs,
and to recognize the role of the corporation in social good, the modern sensibilities of
Tata and other philanthropy has presaged the forms and choices that face and challeng
India's "new economy" philanthropists. But the "new economy" philanthropists are also
challenged and benefitted by other, more recent developments in Indian philanthropy as
2
For useful reviews of the state of Indian philanthropy from a variety of perspectives, see among other
works Charities Aid Foundation/India (ed.), An introduction to the nonprofit sector in India (Charities Aid
Foundation, 2001, forthcoming); Noshir Dadrawala, Management of philanthropic organisations (Centre
for Advancement of Philanthropy, 1996); R. M. Lala, The heartbeat of a trust: The story of the Sir Dorabji
Tata Trust (revised 3d ed., Tata McGraw Hill, 1998); Pushpa Sundar, Directory of Indian donor
organisations (Indian Centre for Philanthropy, 1999); Pushpa Sundar, Beyond business: From merchant
charity to corporate citizenship, Indian business philanthropy through the ages (Tata McGraw Hill, 1999);
South Asia Fund Raising Group, A guide to resource mobilisation for voluntary organisations in India
(New Delhi, 2000).
3
The Sir Ratan Tata Trust and the Sir Dorabji Tata Trust are the most prominent of the family
foundations to have emerged in India, though there are many others also affiliated with prominent Indian
business families. The Sir Dorabji Tata Trust is the subject of R. M. Lala, The heartbeat of a trust: The
story of the Sir Dorabji Tata Trust (revised 3d ed., Tata McGraw Hill, 1998). Both these trusts and other
Tata giving vehicles are described in summary form at www.tata.com/0_beyond_business/trusts/. A
superb discussion and analysis of these twentieth century innovations in philanthropy is Pushpa Sundar,
Beyond business: From merchant charity to corporate citizenship, Indian business philanthropy through
the ages (Tata McGraw Hill, 1999).
2

well. In recent years, for example, tightly controlled family foundations and corporate
giving have itself been supplemented by national, non-family, private foundations with
independent boards that have chosen to work on a broader array of topics – poverty
alleviation, the rights of minorities and women, arts and culture among them. 4 And a
nascent discussion of community foundations and community funds in India promises
further to enrich the mix of options available for philanthropy, for the "new economy"
wealthy, and for many other givers in India. 5
In the past several years, however, newly wealthy Indian entrepreneurs based in the "new
economy" of information technology, biotechnology and other fields and centered in
Bangalore and Hyderabad have begun to develop their own modes of philanthropic
giving. In doing so they have challenged some of the precepts of earlier urban-based
Indian philanthropy. In particular, their early grantmaking has, explicitly or implicitly,
challenged the emphasis that the Tatas and others placed on institution-building, their
emphasis on working with non-governmental organizations as development
intermediaries, and their frequent willingness to eschew the state in the private
philanthropic and development process.
In Bangalore and Hyderabad, which along with Bombay are key cities of the Indian new
economy, large information technology companies such as Infosys and Wipro lead both
in corporate growth and in new forms of giving that are emerging from the rapid creation
of wealth in a relatively few hands. These sectors are the most rapidly growing parts of
the Indian economy, and they are generating significant wealth for managers and
professionals, both in terms of stock options and in cash compensation.
Some of this new institutional and individual wealth is, in turn, being channelled to
public purposes as philanthropy – but a philanthropy that directly challenges both the
giving and the receiving of the past. The giving that is emerging from these newly
wealthy and the new middle class is diverse, it is focused, it is often allied with state
interests, it is often anti-institutional and anti-intermediary – and it is growing with
exceptional speed.
The new economy philanthropy of Bangalore and Hyderabad is also influenced by and
encouraging heavy inflows of diasporic giving by Indians based abroad, often from high
technology centers of the San Jose valley and other American “new economy” centers.
Tracking those diaspora gifts in detail is exceptionally difficult, but the main priorities of
4
The most prominent of India’s private national foundations are the National Foundation for India
(webpage nfidel.tripod.com), which funds in a range of areas, and the India Foundation for the Arts
(profiled briefly at www.cafonline.org/cafindia/ on the NGO page), which focuses on support for arts and
culture. An analogue in Bangladesh is the Bangladesh Freedom Foundation, www.aurorabd.com/bff/.
5
Community foundations are under discussion in Ahmedabad, Bangalore, Delhi and elsewhere, in some
cases with small grants from the Ford Foundation. India's sole existing community foundation is the
Bombay Community Public Trust, founded in 199x. For a useful review and analysis of the BCPT's first
years, see Pushpa Sundar (ed.), xxx. A community fund on the United Way model is being built in
Bombay (Mumbai) as well, with support from United Way International.
3

that giving include higher education and training in science and technology. Giving for
those purposes has, at least according to the interview and anecdotal data available,
rapidly dwarfed most other Indian diaspora giving into the high technology centers of
Bangalore and Hyderabad and into other Indian regions as well. 6
The new Indian philanthropy seeks, at least in rhetorical terms, to be as socially
innovative as its underlying corporate foundations have been innovative in the economic
and technological arenas. But at least in its early years this new philanthropy is finding it
more difficult to locate and pursue approaches to social innovation than it did in its core
businesses. And the pro-state, anti-intermediary and anti-institutional focus of the new
Indian philanthropists is under pressure as philanthropic donations increase and ways
need to be found to evaluate and track grantmaking.
Beyond India’s Gateses and India’s Microsofts: The emerging diversity of the new
Indian philanthropic givers
In the brief time in which philanthropy has begun to flourish in the Indian "new
economy" cities of Bangalore and Hyderabad, attention has already focused on several
large companies (information technology giants Infosys and Wipro among them) and on
their wealthy founders (Narayana Murthy and Azim Premji). But while, in different
ways, Infosys, Wipro, Murthy and Premji are very important to the development of new
philanthropy in the Indian new economy, the picture is considerably more diverse than
those companies, individuals and their families.
Instead, in research and interviews in India, a considerably more diverse and
differentiated picture has begun to emerge. In Bangalore and Hyderabad expanding
charitable and philanthropic giving is channeled through individual gifts ranging from
small to very large amounts, self-generated collections of donations and volunteer time
by corporate employees organized on a horizontal basis (which I call here "giving
circles," though that is not a term used in India), corporate giving and volunteer
programs, corporate foundations, family foundations, slowly emerging payroll giving,
and in other ways. And, of course, more traditional giving patterns persist as well:
extensive charitable and relief giving, active Rotary, Lions, and other service
organizations, 7 and very active religious charity and philanthropic work, among Hindu,
Christian and other communities. 8
Understanding the diverse channels of the new giving in the Indian new economy is
particularly important because our attention – and the attention of Indian civil society
6
For the best study thus far of the Indian diasporic experience in philanthropic giving, see Priya
Viswanath, [Indian diaspora giving from the U.S.] (Charities Aid Foundation, New Delhi, 2000).
7
On the activities of the service clubs in Bangalore, see for example www.rotaryclubofbangalore.org,
www.welcome.to/lionsclub; for Rotary and Lions activities in Hyderabad, see www.andhratoday.com/rchn/
and www.hydsouthlions.org. The Masons and other groups are also active in south India.
8
For a review of forms, methods and goals in Indian religious giving, see xxx.
4

organizations – can easily be drawn aware by the good work of a few large institutions
and wealthy individuals. But it is a serious mistake to reduce the “new Indian
philanthropy” to the work of certain individuals or certain companies, for that loses a
forest of useful giving for a few tall trees.
From business focus to philanthropic focus: Beyond relief and charity
The new Indian philanthropy is beginning to eschew some of the relief and charitable
giving of the past and to focus on a few key areas of developmental effort. That is not to
say that financial support for relief and charity does not remain, for it does, perhaps
primarily in the individual giving and religious giving circles. But much of the
prominent new philanthropy is increasingly focused on two or three developmental fields.
Primary education
Perhaps the most important of these, and the area with the broadest appeal in Bangalore,
is primary education. A number of key corporates and individuals driving the
development of philanthropy in Bangalore and Hyderabad have focused on primary
education is a key baseline sector for sustainable development in India – and as an
important area for philanthropic intersection with state interests. The focus on primary
education spans corporate as well as individual giving, and it now includes volunteer
activities at a number of high technology companies as well. And giving for primary
education giving is not limited to a few companies and wealthy individuals but has been
taken up in horizontal "giving circles" and by middle class givers who work in the new
economy companies.
Philanthropic attention to primary education takes the form of support for innovative,
small-scale but scalable projects, as well as giving for large-scale primary education
support activities in which state governments also play a significant role. Several
examples will suffice to outline this trend. In Bangalore, giving by large numbers of
managers at new economy companies and by groups of mid-level employees gathered
together ("giving circles") focuses improvements to local schools. Individuals and
groups have provided cash to keep elementary schools running, volunteered extensively
in the school system, and gathered peers to install technology in the schools. At the
institutional level, both of the new, high-profile private foundations in Bangalore have
focused on primary education as a key priority.
At the Bangalore information technology giant Wipro, one of India’s fastest growing and
most successful “new economy” corporates, philanthropic focus is also on the primary
education sector. Wipro corporate giving and volunteering programs emphasize working
with primary schools in Bangalore, Karnataka and other states in which Wipro has
significant operations.
Perhaps most important, at the Azim Premji Foundation, the family foundation now
under development by the chair of Wipro Technologies and one of the world’s wealthiest
individuals (at mid-2000) along with his wife, primary education is the key programming
5

focus. The Premji Foundation is adopting 200 government-run schools in Karnataka and
will work with the state government on improving primary education in those schools.
The Foundation will also expand its primary education programming to Andhra Pradesh
and other states in which Wipro has strong professional and commercial links, in
collaboration with state education authorities. 9
At root, then, primary education has become ground zero. It is a topic of undeniably
strong personal, social and institutional commitment by India’s new economy
philanthropists. It is also a basic currency of the political economy of the new Indian
philanthropy – a process in which state governments and other authorities are becoming
at once regulators, customers, partners and grantees of some of India's largest and most
influential new economy companies.
Giving by the Indian diaspora community also frequently focuses on primary education.
In late 1999, for example, the Indian co-founder of U.S. technology firm Exodus
Communications, B.V. Jagadeesh, committed $1 million to improvements in primary
education in Bangalore, 10 and other Indians in the diaspora have reported provided
substantial resources for primary education in Bangalore and other parts of India. 11
Strengthening higher education
In addition to primary education, there is extensive focused giving at the higher
individual income levels for improvements to higher education. This new giving for
higher education in India has emerged almost entirely from the individual resources of
some of the wealthiest of India's new economy citizens and pioneers, and from a number
of overseas Indian entrepreneurs.
Higher education is not a priority of philanthropically-minded corporates, for whom the
broader emphasis on primary education motivates employees and institutions far more
strongly than giving to specific colleges and universities can do. Rather it is based on
individual links to individual higher education institutions, generally at higher levels of
wealth, and only beginning to reach down into donations from the middle class.
Philanthropic gifts to higher education in India by entrepreneurs based within and outside
India have garnered significant attention in recent years. Infosys Technologies has made
significant gifts to the Indian Institute of Information Technology (Bangalore) to
9
For the best description of the planned work of the Azim Premji Foundation, including its emphasis on
primary education, see A Premji Primer for Primary Education, The Economic Times, June 30, 2000 (also
available at www.economictimes.com and www.propoor.com). The school adoption program is
summarized at Azim Premji Foundation to adopt 200 schools, The Hindustan Times, October 25, 2000
(www.hindustantimes.com).
10
The experiment of businessmen involving themselves in Bangalore's development will start a trend,
Rediff on the Net, January 27, 2000, (www.rediff.com/business/2000/jan/27jagdis.htm).
11
Priya Viswanath, Diaspora philanthropy and non-resident Indians in the US (Charities Aid Foundation
(India), 2000).
6

establish an information technology library, and to engineering colleges and universities
to upgrade the skills of computer science faculty. 12 Diaspora and domestic entrepreneurs
have made substantial donations to the new Indian School of Business in Hyderabad. 13
Infrastructure and civil development in Bangalore
The new wealthy in Bangalore have also committed funds and time for infrastructure and
civic development in Bangalore, not only in primary education but in other areas of social
services as well. Infosys and its key executives have taken a leading role in the
Bangalore Agenda Task Force, which brings together public and private actors to
improve the infrastructure of Bangalore for citizens and businesses, a private-public
partnership that epitomizes one of the goals of the Indian new economy philanthropy.
Infosys chief operating officer Nandan Nilekani and other Infosys personnel (including
Narayana Murthy) have devoted substantial time to the work of the Task Force. 14
Infosys has donated corporate funds for Bangalore improvements, including a 1997
donation of funds for an ambulance and motorcycles for police traffic management. 15
Nilekani and Sudha Murthy, Director of the Infosys Foundation and spouse of Narayana
Murthy, have each committed extensive personal funds to improving sanitation and other
civic amenities in Bangalore as part of the public-private partnership through the
Bangalore Task Force. 16 Other wealthy individuals and companies have also contributed,
both to the work of the Bangalore Agenda Task Force and for specific civic amenities in
Bangalore.
This focus of activity appears to be occurring because of the strong, continuing and
expanding Bangalore base of many of IT companies, a combination of strong individual
and institutional desires to see Bangalore become an effective, “modern” city, and a
willingness to employ private-public partnerships to thicken and strengthen relationships
with state authorities that are at once regulators, customers, partners and grantees of the
new economy companies. The Bangalore IT, biotech and other new economy industries
12
See Infosys announces grant of Rs. 1 crore to Indian Institute of Information Technology, Bangalore
(www.itlinfosys.com/newsroom/iiit-b.html); see also www.itlinfosys.com/corporate/comminv.htm.
13
See Indian School of Business aims big, 21 December 1999, www.domain-b.com. ISB Indian trustees
include Anil Ambani of Reliance, Rahul Kumar Bajaj of Bajaj Auto, Kumar Mangalam Birla of the Aditya
Vikram Birla group, Keki Dadiseth of HindustanLever, Yogi Daveshwar of ITC, Adi Godrej of the Godrej
group, K.V Kamath of ICICI, Anand Mahindra of Mahindra & Mahindra, N.R. Narayana Murthy of
Infosys Technologies and Deepak Parekh of HDFC.
.
14
For extensive information on private philanthropic engagement with the Bangalore Agenda Task Force,
see the Agenca’s website, www.blrforward.org.
15
Infosys Technologies 1996-1997 Annual Report, available at www.itlinfosys.com/investorrelations/reports/.
16
The experiment of businessmen involving themselves in Bangalore's development will start a trend,
Rediff on the Net, January 27, 2000, www.rediff.com/business/2000/jan/27jagdish.htm.
7

speak in terms of “being proud” of their city, and in terms of “helping city officials
understand” concepts of modern management. At the same time there are clear corporate
interests involved as well, for an improved Bangalore (particularly infrastructure,
amenities and education) provides a stronger base for IT, biotech and other new economy
expansion, and thickened relationships with an often compliant state provides many
advantages to powerful economic entities.
The key institutions of Bangalore and Hyderabad philanthropy
While it is important not overly to focus on the larger new philanthropic institutions of
Bangalore and lose sight of the enormous giving that is occurring outside large and
prominent institutions, several new and prominent philanthropic institutions have set a
pace for explorations of philanthropy in Bangalore and it seems useful to identify such
institutions and their interests.
Infosys Foundation
One such group is the Infosys Foundation, established in 1997 by the rapidly growing
software firm Infosys Technologies to reflect the corporation’s "strong sense of social
responsibility,…commitment to help the people, and communities, commitment to
enhance the living conditions of the rural population and … commitment to improve
education." 17 The Foundation’s work is directed by Sudha Murthy, a social activist and
university teacher who is also the spouse of Infosys founder Narayana Murthy, along
with two other full-time staff.
The Infosys Foundation’s current key program areas include "social causes for the rural
poor and underprivileged," health care for the poor, primary education, and promoting
Indian arts and culture. In 1998-1999 and 1999-2000, funded projects included
constructing an orphanage, hospital wards, classrooms and a science center, providing
hospital equipment and ambulances, school books, and ancient Indian music cassettes
and recorders. By April 1999 the Foundation had committed Rs. 17,337,000 (about US$
435,000) for projects in the state of Karnataka and Bangalore. 18
Infosys Technologies
Separate from the philanthropic work of the Infosys Foundation, Infosys Technologies
has also contributed directly to a number of philanthropic activities. Giving priorities for
the Infosys corporate involvement campaign include strengthening metropolitan life and
infrastructure in Bangalore (including donation of an ambulance and motorcycles for
police traffic management in Bangalore), as well as support for higher education.
17
Infosys Technologies 1998-1999 Annual Report, at 214, available at www.itlinfosys.com/investorrelations/reports/.
See also www.bangalorebest.com/others/ngowatch.asp.
18
Infosys Technologies 1998-1999 Annual Report, at 214, available at www.itlinfosys.com/investorrelations/reports/.
The 1999-2000 Annual Report available at the same web address, does not provide
commitment figures.
8

In this area the key program provides support for computer science faculty at leading
Indian engineering colleges and universities to understand IT trends.” 19
The corporation has also contributed to primary and secondary education. A “Catchthem-Young”
program “identifies bright high school students for short-duration courses
in programming fundamentals.” A “Computers@Classrooms” program provides used
PCs and Microsoft-donated software to schools. And the “Rural Reach” program “aims
to increase awareness of computers among children in the semi-rural areas. Local
language interfaces have been created using specialized software to make the learning
experience more meaningful.” 20
Wipro
The other key giant of the Bangalore IT revolution is the hardware and software
corporation Wipro, headed by Azim Premji. At mid-2000 Wipro was new to the giving
business, much newer than Infosys. Corporate giving and employee volunteering was
focusing on primary and secondary education, including providing computers and
software to schools. A more ambitious effort was underway within the Premji family,
which has amassed wealth to the point that, at one point in 1999, Premji was regarded as
the world’s second wealthiest individual.
Azim Premji Foundation
Thus the Azim Premji Foundation was established in 2000 by the Wipro founder and
largest shareholder with an initial capital donation of $50 million. Within several years
the Premji Foundation is expected to be India’s largest foundation both in terms of assets
and outlays, eventually dwarfing the efforts of the Tata family and companies through the
long-standing Sir Ratan Tata Trust, Sir Dorabji Tata Trust, and other Tata entities.
Directors of the Foundation include Premji, Wipro’s corporate executive vice president
for human resources, Dileep Ranjekar, and a Wipro trustee also long active in the ICICI
bank and investment banking house in Delhi.
The Premji Foundation is initially focusing its programming efforts in education, with a
strong focus on improving primary education in Karnataka, Andhra Pradesh and other
southern Indian states in which Wipro has had a long and strong presence, because “it
was one area which required urgent attention and resources but received little of
neither….” 21 The Premji Foundation is adopting 200 government-run schools in
19
Infosys Technologies 1996-1997 Annual Report, at 6-7, available at www.itlinforsys.com/investorrelations/reports/
(on contributions to Bangalore). This information is provided by Infosys to illustrate its
community involvement. See www.itlinfosys.com/corporate/comminv.htm (on contributions to higher
education).
20
See www.itlinfosys.com/corporate/comminv.htm.
21
A Premji Primer for Primary Education, The Economic Times, June 30, 2000
(www.economictimes.com and www.propoor.org/news/ar62.html).
9

Karnataka and will work with the state government on improving primary education in
those schools. The Foundation will also expand its primary education programming to
Andhra Pradesh and other states in which Wipro has strong professional and commercial
links. 22
The Premji Foundation’s initial programming efforts – closely watched in India because
of the size the Foundation is likely to become -- are strongly aimed at collaboration with
government in large-scale initiatives to improve public primary education. Other,
personal giving by Premji and his wife Yasmeen Premji has included work with the NGO
community in Bangalore and elsewhere. And as members of the Ismaili community,
Premji and his family provide religious and philanthropic giving through that community
as well.
New giving in another new economy city: Similarities and differences in Hyderabad
Hyderabad, the capital city of Andhra Pradesh and another of India’s booming new
economy cities, presents an interesting comparison in philanthropic experience to
Bangalore. In Hyderabad, not in Bangalore, four of the largest privately-owned
corporations have collaborated with the state’s aggressive and intelligent Chief Minister
and wealthy Andhra (Telugu) emigres in the United States to establish an institution akin
(in a very loose sense) to the first community foundation in southern India. 23
Andhra Pradesh and Hyderabad are home to growing corporate wealth, an aggressive,
policy-oriented Chief Minister who has established strong links with business, and a
well-connected, wealthy group of overseas Indians bound together by their common
cultural and linguistic (Telugu) roots. 24 The corporates – newer and older, new and old
economy alike – have a sharply etched, prominent local tradition of charitable and
philanthropic giving. The foundation that these forces have established, the Naandi
Foundation, holds some promise as a new philanthropic force in Andhra Pradesh, and as
another in the growing array of philanthropic models available around India.
22
For the best description of the planned work of the Azim Premji Foundation, including its emphasis on
primary education, see A Premji Primer for Primary Education, The Economic Times, June 30, 2000 (also
available at www.economictimes.com and www.propoor.com). The school adoption program is
summarized at Azim Premji Foundation to adopt 200 schools, The Hindustan Times, October 25, 2000
(www.hindustantimes.com).
23
Another community foundation, the Bombay Community Public Trust, has worked in Mumbai since
[1988], primarily on education and charitable activities in the city. For further information, see the Indian
Centre for Philanthropy report, Bombay Community Public Trust in the Centre’s Indian Foundations
monograph series, available from the Centre (www.indev.nic.in/icp/). A brief description is available on
the Charities Aid Foundation India webpage, www.cafonline.org/cafindia/, NGO directory page.
24
For information on history and current status of the Telugu diaspora, see Telugu diaspora in the United
States, www.return2india.com/diaspora/. Telugu associations are found throughout the United States; two
of the largest confederations are the Telugu Association of North America (TANA, www.tana.org), and the
America Telugu Association (www.ata.org and www.telugu.com).
10

Naandi Foundation
The Naandi Foundation was formed in November 1998, at about the time Andhra
Pradesh Chief Minister Chandrababu Naidu was visiting the United States and lobbying
overseas Telugu entrepreneurs to invest in Andhra. Four of Andhra’s key industrialists
joined the Foundation as charter trustees: Dr. K. Anji Reddy, Chairman of Dr. Reddy’s
Group (a major pharmaceutical firm); Ramesh Gelli, Chairman and Managing Director of
Hyderabad-based Global Trust Bank; B. Ramalinga Raju, Chairman of the Satyam Group
(computers and software), and K.S. Raju, Chairman of the Nagarjuna Group.
Each of the charter trustees contributed about $110,000 to establish the Foundation’s
corpus fund.
Naandi’s founders spoke of “bond[ing] people together for a common cause, a resurgent
Andhra Pradesh,” and of the Foundation as “a bridge connecting people to transfer
resources, knowledge and services to … needy communities and individuals and
organisations working for them. ‘Naandi endeavours to [channel] and promote
philanthropy and voluntarism involving eminent citizens of Andhra Pradesh, both within
and outside….It is a platform for promotion and dissemination of ideas to … promote
public welfare. It promotes institutions, systems, processes and mechanisms that bring
about socio-economic development. Its area of operation includes [the] entire Andhra
Pradesh with a specific focus on the less developed areas.’” 25
The Andhra Chief Minister, Chandrababu Naidu, endorsed the Foundation both while in
the United States and in public comments in India. In May, 2000, he told the national
newsmagazine India Today that Naandi is “coordinating NRIs and government agencies
to take up … projects [including] irrigation projects, school buildings, watershed
development and … children who need help for education on the Internet. All these
things will be monitored very closely on a regular basis….” 26
About a year later, the charter trustees of the Naandi Foundation announced the
Foundation’s first round of grantmaking, financed by [additional] contributions from the
charter trustees [and/or] their companies. The grants announced support lift irrigation
projects, farmer management of lift irrigation projects, construction of village sanitary
facilities, 27 “promotion of self-reliance in tribal areas of Visakhapatnam district,” and
promotion of science and environmental education in rural schools and communities. All
are being implemented by well-known, Andhra-based NGOs.
25
For brief reports on Naandi’s formation, see NRI foundation launched to aid welfare projects, India
Abroad, 11 June 1998. For an extensive report on Naandi’s formation and initial activities, from which
much of this information is drawn, see Naandi Foundation clear five projects in AP, Hindu Business Line,
24 December 1999, available at www.hindubusinessline.com. A Naandi Foundation website,
www.naandi.org, is under construction [March 2001].
26
Andhra Pradesh and Vision 2020: A chat with N. Chandrababu Naidu, Chief Minister of Andhra
Pradesh [conducted 10 May 2000], India Today, web edition, www.india-today.com/chat/.
27
A version of the sanitary facilities project is discussed at www.tana.org/lavatories.htm.
11

The trustees were frank about the multiple goals of this initial grantmaking: “We hope
that these projects will serve as models for socio-economic development of the State. We
expect that the successful implementation of these project[s] will attract further funding
from NRIs, both individuals and organisations such as TANA, as well as resident
Indians….” 28
Four Hyderabad-based companies -- Dr. Reddy’s Group (pharmaceuticals), Global Trust
Bank (banking and finance), Satyam Group (software), and the Nagarjuna Group (agrichemicals)
– have served as the key corporate backers for the Naandi Foundation. Two
of these, Dr. Reddy’s Group and the Nagarjuna Group, are also among the more active of
corporates in the Hyderabad and Andhra communities.
Dr. Reddy's Foundation for Human and Social Development
Dr. Reddy's Group, a diversified pharmaceutical research, development, production and
distribution firm, is among the most publicly active and prominent in the Andhra
corporate world. In 1996 the Group established Dr. Reddy's Foundation for Human and
Social Development, which provides grants for a number of charitable and social
activities.
The Foundation for Human and Social Development – currently the most active corporate
philanthropy and social responsibility program in Andhra Pradesh, and one of the most
active in India -- supports a used clothes bank for poor families, initiated in Hyderabad
and planned for expansion to other major Indian cities, entrepreneurship training for rural
women and street children (including a Livelihood Advancement Business School
(LABS), a joint venture with the city of Hyderabad and UNICEF), 29 symposia and other
activities on the social issue of children at risk, 30 a Child and Police Program (CAP)
intended to reduce child labor, livelihood promotion and microcredit, vocational training,
and other activities. 31
Nagarjuna Group
28
See Naandi Foundation clear five projects in AP, Hindu Business Line, 24 December 1999, available
at www.hindubusinessline.com.
29
See Making a living through 'Livelihood,' The Hindu, 25 July 2000, www.the-hindu.com, and
www.hyderabad-best.com/others/labs.asp.
30
See Millenium conference to study justice system, The Hindu, 10 June 2000; Plea to eradicate child
labour, The Hindu, 16 June 2000, both at www.the-hindu.com; Reducing the risk, Financial Express, 30
June 2000, www.expressindia.com.
31
Detailed information on the Foundation's activities is available at Ready for the challenge, Financial
Express (India), 3 January 2000, www.expressindia.com, at the Dr. Reddy's corporate website,
www.drreddys.com/drfh.html and agnchairmanspeech.html, and at www.indianngos.com/
corporatecitizensdrreddy.htm. Dr. Reddy's Foundation is headed by Ms. Nalini Gangadharan, an Indian
Ashoka Fellow.
12

The Nagarjuna Group is a diversified agri-chemical conglomerate specializing in
production and distribution of fertilizers and chemicals, power, and finance. Operating
under the motto "serving society through industry," Nagarjuna has joined in the founding
of the Naandi Foundation but has also supported a range of other philanthropic work.
Philanthropic projects include an Andhra-based agricultural training center, the KCK
Raju Krishi Vigyana Kendra, a "young farmers development programme" that seeks to
train young resource people in improving agricultural productivity, several adopted
villages, most near Nagarjuna plants, and a green belt near its primary fertilizer and
chemical production facilities. 32
Beyond these, other organizations concerned with the development of philanthropy in
Hyderabad and Andhra Pradesh include the Cooperative Development Foundation, which
has convened regional and national discussions on the Societies Registration Acts that
govern the formation and operation of many Indian nonprofits, and which seeks to
support and promote the work of cooperatives. 33
The different nature of state partnership in Andhra Pradesh
The distinctive feature in the Hyderabad philanthropic scene is the cooperative founding
of the Naandi Foundation, a result of the close links between corporate, political and NRI
groups and the close engagement of the state's Chief Minister. Currently a number of
corporate philanthropic initiatives (particularly the Dr. Reddy's Foundation for Human
and Social Development) are better-funded and more active than the Naandi Foundation
itself, but the partnership approach expressed in the founding of Naandi holds hope for
joint as well as separate activities.
It also points to a distinctive feature of the new philanthropy in Hyderabad as well as
Bangalore – a clear willingness to partner with government in working on difficult but
relatively uncontroversial social issues, such as livelihood promotion. The private-public
partnership approach institutionalized through the establishment of Naandi holds promise
for work on commonly agreed social issues, but it is less likely to facilitate aggressive
work on social action, rights and other pressing problems. It does represent something of
a challenge to more traditional if rights-based philanthropy in other parts of India, which
32
The company "aims to have a strong relationship with environment and the community and
demonstrate this commitment by: Working as partners with local residents through creation of
employment opportunities, supporting and improving upon the local ecological system, adopting a sincere
approach to the principles of sustainable development, [and] contributing to the physical, academic and
economic well being of the community." This statement and other information about the philanthropic
activities of the Nagarjuna Group are drawn from www.nagarjunagroup.com. The quote is from
www.nagarjunagroup.com/philo.htm.
33
For detailed information on the Cooperative Development Foundation (Hyderabad), see
irma.irm.ernet.in/~cip/ ipcdf.html and fnf-southasia.com/cdf.htm. For a useful review of other charitable,
philanthropic and NGO activity in Hyderabad, see A time to give, at www.hyderabad-best.com/
others/floodrelief.asp, and related webpages at NGO watch, www.hyderabad-best.com/others/ngo.asp.
13

has often emphasized separation and independence from government partnership and
government programs.
In this sense Hyderabad philanthropy seems to be moving from traditional charity to a
developmental focus, but it is a developmental focus without conflict, one based on
mutually agreed perceptions of need and appropriate action. 34 Hyderabad, like
Bangalore, is not yet moving from charity and development to philanthropy focused on
social action that may, at times, take government as opposition rather than as partner.
Regulating philanthropy: Law’s changing roles in Indian new economy giving
Law often bedevils philanthropy and the nonprofit sector in India. It guarantees certain
rights to the sector, but it is also an instrument of state attempts to track and restrain an
irascible, often highly critical portion of Indian civil society. The constraints are
numerous, subject to almost continuous attack and reform strategizing in the nonprofit
sector: Nonprofit organizations must register under a complex series of state-based
societies registration acts or other legal regimes. Nonprofits and foundations cannot
accept funds from abroad (including, in some cases, Indian diaspora funds) without
complying with the arduous and sometimes costly processes of the Foreign Contributions
Regulation Act, administered by the Ministry of Home Affairs and local home affairs
offices. The tax regime, while not as unfriendly to nonprofit giving as in some other
countries, is highly complex and often requires complex approvals and licenses from tax
authorities. 35
India’s new economy philanthropy, at least in Bangalore, rests on a considerably more
friendly relationship with the state and thus, perhaps not coincidentally, different and
more liberal legal premises embodying a somewhat less onerous regulatory regime.
A significant portion of the wealth created in recent years in Bangalore is through stock
options, in which employees of new economy companies are provided with warrants to
buy their own company’s stock when it reaches a certain price. Granting of stock options
– especially at Infosys, but at other companies as well – has been a crucial means of
securing employee loyalty and activism. And stock options (more particularly the often
34
Philanthropic partnerships with the state extend beyond Andhra-based corporates; the Azim Premji
Foundation (Wipro) has also announced a partnership with the Andhra state government to strengthen
primary education. See Azim Premji Foundation (APF) to work with AP Government for elementary
education, www.reachouthyderabad.com/newsmaker/apf.htm.
35
For a baseline review of the situation in 1986, see Upala Devi, Laws and regulations for the voluntary
sector in South Asia: The Indian scenario, in Voluntary Action Network India (VANI) (ed.), Laws, Rules
and Regulations for the Voluntary Sector (Report of the South Asian Conference, March 1996, Delhi).
More recent analyses include Noshir Dadrawala et al (Society for Participatory Research in Asia), Legal
framework in India for voluntary non-profit organizations (May 2000); Mark Sidel, Controlling the state’s
discontents: Reconceptualizing the role of law in nonprofit-state relations in India (unpublished
manuscript).
14

substantial cash derived from the sale of those shares by their holders) has proven to be a
significant channel for philanthropic giving. 36
Under earlier Indian law, employee stock options (ESOPs) were taxed as salary income
when the shares available under the option were purchased by the employee at the time
the stock option was exercised. The stockholder/employee was then taxed again as
capital gains when the shares were eventually sold. This double taxation – once on the
purchase of the stock optioned shares by the employee, and again as capital gains when
those shares were sold for cash -- led to bitter complaints from both leaders and
employees of new economy companies. The primary complaint that the state was taxing
and reducing employee stock options to the point that they were beginning to become
severely reduced as a significant device to motivate employees.
In 2001, faced with opposition to the double taxation of employee stock options, the
Indian central government reformed the taxation rules to eliminate the first taxable event,
the taxation as salary income when options are exercised and the shares initially
purchased by company employees. This leaves the capital gains provision as generally
the sole taxable event in the stock options process, a result that pleases new economy
companies and their sometimes option-laden employees. 37
Under these revised regulations, where the sole taxable event is on the sale of the
optioned shares (as capital gains), even a portion of that single remaining taxable event
may be ameliorated through donation of some or all of the proceeds from the sale of the
optioned shares. Where the nonprofit is approved under section 35AC of the Income Tax
Act, the donor of cash derived from the sale of optioned shares can claim up to 100% of
the amount donated as a deduction from income. 38 In turn the charitable organization
36
This section relies significantly on exceptional assistance from Sanjay and Renu Agarwal of
Accountaid, a Delhi-based consultancy serving the accounting needs of the Indian nonprofit sector with
superb skill and notable commitment. See education.vsnl.com/accountaid/.
37
The older law had also allowed the gifting of employees’ optioned shares were gifted to a tax-exempt
nonprofit as a non-taxable event, because the gift of the shares was not considered a sale or transfer of
stock, property or assets under section 47(iii) of the Income Tax Act. The problem with this approach was
that other provisions of Indian law specifically applicable to charities did not allow charities to hold shares
beyond one or two years after receipt, during which they were required to sell the shares. The penalties for
violation are fairly severe: potential loss of tax-exempt status, for example, and tax liability on financial
suplusses for each year in violation.
The section 47(iii) exemption was also eliminated in the 2001 Income Tax Act amendments, meaning that
donors were liable for capital gains tax on the transfer of shares and that the donation in kind (of shares)
would not be allowed as a donor deduction from income under Income Tax Act sections 35AC or 80G.
But since transfer of shares to charities appears not to have been frequently utilized under the earlier, more
liberal regulations (because of the prohibition on charities holding shares beyond a short period) its
elimination does not appear to be, to date, a significant legal event for new economy giving in the nonprofit
sector.
38
If the charitable organization is approved under section 80G of the Income Tax Act rather than under
section 35AC, then the deduction to the donor would be for 50% of the value of the donation rather than
100%, and the total deduction is limited to 10% of the donor’s income. Conversely, if the charitable
organization is approved under section 35(1)(iii) of the Income Tax Act (conducting research in the social
15

eceives cash rather than difficult-to-handle shares (that must be sold), and as a tax
exempt organization incurs no tax implications from the donation.
This regime has advantages both for Bangalore’s new economy givers and for the
organizations to which they donate. For the new economy givers, the streamlined tax
treatment eliminates taxation on the purchase of the shares under the options and carries
the potential to reduce the capital gains tax otherwise due when those shares are sold, if a
part or all of the proceeds are donated to approved nonprofit. For approved nonprofits,
these provisions are likely to increase donations while encouraging those donations to be
made on a cash basis rather than the considerably more restricted and problematic share
basis. Perhaps most importantly, this process simplifies, reduces and limits donor
interaction with tax authorities, a distinct advantage in a country with a significant,
complex, difficult tax bureaucracy.
Eschewing intermediaries but needing assistance: The conundrum of Bangalore
philanthropy
The “new Indian philanthropy,” at least as it is currently developing in Bangalore, also
seeks to eschew dependence on intermediary institutions (such as NGOs that carry on
onward funding) that separate donors from specific projects at the grassroots level. The
new Bangalore philanthropy prefers – for the most part – to interact directly with
projects, and often bypasses intermediaries that can play a funding and reporting role to
provide support directly to projects at the grassroots. A sense of a strong, at times defiant
anti-institutional and anti-intermediary approach comes through clearly in conversations
with leaders of the “new Indian philanthropy.”
But that “new Indian philanthropy” also has needs that may conflict with its strongly held
anti-institutional and anti-intermediary views. Software exports alone from Bangalore are
expected to grow more than eight times over the next ten years to over $80 billion per
year, for example, creating substantial additional wealth and, we can expect, substantial
additional giving – not to speak of hardware development, biotechnology, other services,
and the growth of domestic as well as international markets. Already the new
philanthropists of Bangalore understand that their desire to work directly with the
grassroots – to give funds directly to a specific school or day-care center, often multiplied
by twenty such institutions in twenty direct approaches – may be overtaken by the giving
that will emerge from a rapidly growing economy.
The new Bangalore philanthropy will be defined, over the next five to fifteen years, by
the conflict between these new givers’ strongly-held anti-institutional and anti-intermediary
views and their strong need for implementation, reporting, accountability and
leveraging of funding from other domestic and non-resident Indian sources of giving.
How these diverse goals and approaches are resolved in ways that provide effective and
sciences or statistics), the donor deduction may reach 100% or, under special circumstances, even 125%. If
the charitable organization is approved under section 35CCB of the Income Tax Act (environmental or
afforestation programs), the donor donation is also 100%.
16

efficient means for philanthropic and charitable giving will fundamentally define much of
the “new Indian philanthropy” and the new Bangalore philanthropy.
Will new institutions emerge to mediate these conflicts?
It may be that new forms of effective, efficient, credible, accountable and leverageable
institutions emerge to assist in the efficient programming of the new Indian philanthropy
and the new Bangalore philanthropy. Already explorations of lean, corporate-supported
community foundations closely tied to values of social justice, social development and
diversity are underway in such new giving centers as Bangalore, Ahmedabad, and Pune.
In Hyderabad four major corporations representing both new and old economies have
formed a new foundation, with support from the state’s chief minister, jointly to
undertake development projects and leverage additional domestic and overseas Indian
funds.
So we may see various approaches to the clear anti-institutional and anti-intermediary
sense of many of the new Indian philanthropists, as well as their strong sense that as the
new Indian economy grows ways will need to be found to imbue the new philanthropy
with efficiency, effectiveness, accountability, credibility and an ability to leverage
substantial additional funds at home and abroad.
The new philanthropic challenge to Indian civil society organizations
Civil society organizations in India – particularly those working in and seeking support
from areas of rapid growth – will need to understand and address the changing concerns
and values of the “new philanthropy.” They will not find it easy to do so, because the
new philanthropy raises challenging, even hostile questions of economic efficiency in
small voluntary organizations; the management, financial and social sector skills of NGO
managers and personnel; and the true, measurable economic and social returns from
education, health and other projects.
Embedded in the concerns and approaches of the “new Indian philanthropy” is a
fundamental challenge (if yet not fully voiced) to the very structure of the Indian
voluntary sector in thousands of small organizations with overlapping goals and highly
inefficient, redundant structures of staffing, infrastructure and internal operating costs.
The “new Indian philanthropy” and the new Bangalore philanthropy will directly
challenge the traditional organizational and personalized structures of the Indian
voluntary sector.
From their distinct perspective, the “new Indian philanthropy” will ask without any
apology whatsoever why every NGO and voluntary sector manager seems to have his or
her own small organization and will aggressively question the enormous economic,
social, political and other inefficiencies that result from what they consider an “old
economy” structural approach to social justice and social development. The Indian
voluntary sector, and voluntary sectors in other parts of the world that seek to engage and
17

access the “new philanthropy” will need to be prepared to address these direct challenges
to their traditional modes of structure and operations.
These challenges will take place as this new philanthropy also builds new bridges and
alliances with the Indian state apparatus, a government machinery with which it shares
thickened relationships as regulator, customer, partner and now grantee. The paths of
those dual relationships – the complex, sometimes conflictual relations between this new
philanthropy and the NGO sector, and the increasingly cooperative relations between the
new philanthropy and the Indian state – are likely to define the role and effectiveness of
India’s urban new economy philanthropy in the years ahead.
18