Difference Between Philanthropy & Donation

Charity in India isn’t something new. Words like philanthropy and donations are often used interchangeably in the country. However, not many realize that both these terms carry very different connotations. Yes, both can be characterized as an act that involves contributing one’s resources for the greater good.

That said, both of these terms differ with regard to the methodologies, motivations, and long-term impact involved. As a prominent platform for donations in India, here at Let It Count we clearly understand what distinguishes philanthropy from the concept of donations.

In this article, we would like to unravel the nuances surrounding both of these philosophies. In doing so, we want to shed light on the transformative effect that sustained philanthropic endeavors can have.

So without much further ado, let’s dive in.

Understanding the Distinction between Philanthropy and Donations

As we mentioned before, the concepts of donations and philanthropy in India are often used interchangeably. Most don’t feel there is any difference between the terms. However, they cannot be any further from the truth.

Take donations for example. Donations entail an act of giving where financial or material aid is offered with the primary goal of meeting needs and crises that are urgent. In essence, donations are more akin to giving someone a fish to momentarily satiate their hunger.

Philanthropy, on the other hand, involves a far more strategic, long-term approach to solving societal issues. In many ways, philanthropy resembles the act of teaching someone to fish rather than offering the fish to them. Philanthropy is a force that strives towards sustainable change and that is what differentiates it from the philosophy of donations.

Philanthropy and Donations: A Quantitative Perspective

Now that you know what both of these concepts entail and what distinguishes one from another, let’s dive even deeper with a more quantitative perspective on both. For this, we can turn to reliable sources like Niti Aayog and the UN.

According to the UN’s Sustainable Development Growth Report 2023, the world at large is struggling with key progress targets on hunger, climate, and poverty. Nearly, 110 million people around the globe have been displaced due to war, conflict, and human rights violations.

The same report also states that if current trends continue, 575 million people will still live in poverty, 84 million children will be out of school, and 660 million people will have no access to crucial energy supplies by 2030.

The pandemic interrupted any steady progress being made to reduce poverty and the climate crisis is worsening with each passing day. None of these issues can be resolved effectively with traditional donations. The report clearly states how instrumental philanthropic contributions have been and will continue to be in accomplishing sustainable change.

This is a sentiment echoed by India’s own policy think tank – Niti Aayog. Ever since its inception, Niti Aayog has been very clear in highlighting how significant a role philanthropy has to play in the overall economic and social development of India.

The government of India has always been on board with the idea of philanthropy. It was through “The Companies Act of 2013” that the GOI mandated companies to spend a specific portion of their profits on philanthropic efforts.

Here at Let It Count, we couldn’t agree more with the government when it comes the act of charity. This is why we host NGOs and social projects on our platform that agree with the philosophy of philanthropy.

You can explore the wide range of projects we promote by visiting “Our Projects” page now.

Challenges Plaguing Philanthropic Efforts

its potential to drive change. Disparities in resource allocation are quite common around the world. There is also a greater need for seamless collaboration between NGOs, governments, and philanthropists to ensure contributions reach the people who need them the most.

Perhaps the biggest challenge facing philanthropy today is the biases influencing NGOs at the center of it all. We all know that NGOs are imperative for the success of philanthropic endeavors. However, it is also important to acknowledge that they aren’t without their challenges.

When you donate to NGOs in India, you need to realize that some of these entities are completely driven by certain biases. Some of these organizations push agendas that are directly influenced by factors like culture, geopolitics, and donor preferences. This bias, whether intentional or not, can affect the overall impact of philanthropic interventions.

According to the United Nations Development Programme (UNDP) report 2021-22, certain issues or sectors are more likely to attract philanthropic attention than others, thus resulting in unequal resource allocation. This disparity in the allocation of resources is best reflected in the India Philanthropy Report of 2022 published by Bain and Company.

The report states that nearly 60% of the funds received from community giving and family philanthropy in India went to education and healthcare. This results in other critical issues like animal welfare, women empowerment, environmental problems, etc. being completely ignored.

Needless to say, the issue of bias isn’t exclusive to NGOs but also individual and corporate donors. For philanthropic efforts to have their desired impact, there can be no room for biases. All causes need equal attention from all classes of donors.

Bias isn’t the only thing rendering NGOs ineffective in their philanthropic endeavors. In India, NGOs face a diverse range of issues. Most of these organizations have to depend on external funding. Sometimes this funding is inconsistent, leading to financial instability.

Furthermore, India’s NGO landscape is rampant with fraudulent practices. This has led to many well-meaning people in India treating such organizations with skepticism. An NGO must be transparent in the way it receives funding and dispatches the donations it receives. Only then can the issue of trust be resolved.

It also doesn’t help that most NGOs confuse donations with philanthropy. You can’t expect an organization to be effective at something if they don’t understand the integral message of its goals.

On the other hand, we have misinformed donors, both individuals and corporations, whose contributions go to waste on causes that ultimately do nothing to bring lasting change in society. Donors also seem to be very hesitant when it comes to supporting certain causes via NGOs because of inadequate transparency.

Most corporations and individual contributors are alien to problems that affect the underprivileged communities spread all across India. Despite ample resources, many corporations do not bother doing any form of due diligence before they contribute to a social cause.

So it should come as no surprise that most contributions made by donors end up being funneled to perfunctory initiatives. That said, there is a solution to all these challenges.

Solutions to Philantropic Challengesion

NGOs, for instance, can make some effort to be transparent with their donors. Providing donors with evaluation reports and keeping them in the loop after a donation is made could be a good start to building donor trust.

Moreover, donors, NGOs, and the government need to educate themselves on the concept of philanthropy and how it is different from traditional donations. They need to understand the difference between on-the-spot donations that offer temporary relief and philanthropic contributions that may take their sweet time but eventually lead to long-lasting change.

Corporations need to better educate themselves on the various social causes plaguing the people of this country. The government needs to introduce special courses and academic topics that revolve around India’s ailing social sector.

For philanthropy to have its desired effect, this country will need philanthropic leaders. These leaders will only come when we have educated donors, transparent NGOs, corporations that indulge in altruism out of genuine care rather than PR, and a government that takes initiatives to fortify India’s social sector while keeping all of the above stakeholders in check.

Philanthropy in India and its Impact

Since time immemorial, there has been a rich tradition of charity in India. Every year, numerous people across the country make contributions to various causes. Family business owners, in particular, have showcased significant philanthropic commitment for ages.

According to the India Philanthropy Report 2021, over 90% of such families are actively engaged in charitable endeavors. This is considerably higher than the global average of 65%. To understand just how ingrained the act of giving is in Indian society, let’s take the example of two notable philanthropists.

First, there is Azim Premji, the founder of Wipro Limited. Through his organization – Azim Premji Foundation, he is funneling a considerable portion of his wealth to social and educational development. The organization has been instrumental in enhancing education quality and promoting sustainable change in rural areas of India.

Another example is that of Ratan Tata. This former chairman of Tata Group is as renowned for his philanthropic acts as he is for his business prowess. In his lifetime, the man has committed enormous funds to the betterment of education and healthcare in India.

Through the Tata Trust, Ratan Tata has spearheaded many initiatives to uplift the underserved section of Indian society.

The Long-Term Impact of Philanthropy

It should be clear to you by now that philanthropy is integral to yielding change that is lasting and sustainable. Unlike the temporary relief provided by donations, philanthropy aims to address the root cause of various societal issues.

Donations are important to address an immediate need. However, they do little to nothing to resolve an issue for good. A donor will donate his or her old clothes and thus meet their immediate need for clothing. A philanthropist like Ratan Tata or Azim Premji, on the other hand, invests in initiatives that make the person in need self-reliant.

Here at Let It Count, we understand that this is what we need to finally break the cycle of poverty once and for all.

Conclusion

Philanthropy and donations may share the same principles in rhetoric. However, it is the transformative potential they carry that distinguishes one from another. While donation is critical to offer immediate relief, philanthropy strives for a more profound change.

Key insights from reliable sources like the UN and Niti Aayog, clearly underscore how significant philanthropy can be in addressing critical societal issues. Furthermore, you have examples of rich philanthropists proving how long-term investments in charitable initiatives and programs can lead to lasting change.

This is why we at Let It Count put a spotlight on NGOs and initiatives that strive to make India’s marginalized and underserved communities self-reliant. Let us not simply give the fish but strive to teach others how to fish. That is how we make a difference in the lives of millions of Indians… by creating a future where communities can thrive on their own.

If you wish to join us in fostering this future for India, we suggest you hop on to our projects page and explore all the initiatives that need your support.