The time was the early 1990s and the occasion was a gathering of industrialists called by India’s prime minister, PV Narasimha Rao. Representing the Tata group were former Chairman of Tata Sons Ratan Tata and JJ Irani, former managing director of Tata Steel. “The prime minister proposed that we business people set aside 1 per cent of our net profit for community development projects totally unconnected to the workers and industry any of us was involved with,” recalls Mr Irani. “Mr Tata and I looked at each other; we didn't make any comment. Later, we drew up a chart that quantified Tata Steel’s contribution on Mr Rao’s scale. We discovered that, over a 10-year period, the company had been dedicating between 3 and 20 per cent of its profits to social development causes. In the years since, depending on profit margins, the figure has continued to vacillate within this band.”
The Tata Steel example is not an anomaly for a Tata company. If there is one attribute common to every Tata enterprise, it has to be the time, effort and resources each of them devotes to the wide spectrum of initiatives that come under the canopy of community development. The money numbers are staggering: by a rough estimate, the Tata group as a whole, through its trusts and its companies, spent about 3 per cent of of its net profits on development-related programmes, in 2011.
A matter of principle
The Tata tradition in community development has, since the earliest days of the group's history, been defined by its core values. It never was charity for its own sake or, as group Founder Jamsetji Tata put it, "patchwork philanthropy". Sustainability, says Kishor Chaukar, a member of the Tata Group Corporate Centre, is of fundamental importance. "I don't believe charity makes a substantial impact on society," he explains. "All you are doing, then, is satisfying the mendicant mentality. The real contribution comes when communities are enabled in a manner that has a sustained developmental impact. That way you empower people, educate them, and give them instruments of income, a feeling of self-respect and dignity, a reason to live."
Reinforcing the implicit beliefs the group brings to its mission of sustainable development is an explicit set of structures, embodied most notably by the Tata Council for Community Initiatives (TCCI). The Council has, in collaboration with the United Nations Development Programme (India), crafted the Tata Index for Sustainable Human Development, which measures and improves the community work that Tata enterprises undertake.
In India and abroad
The big boys in the group, the likes of Tata Steel, Tata Tea and Tata Chemicals, have in-house organisations dedicated to the community development task, but that does not mean smaller companies lag behind. "Each Tata company has its own priorities in social development," says Mr Chaukar. "They take up whatever is relevant to the communities and constituencies in which they function. Somebody is working in water management, somebody is in education, someone is in Aids containment, someone in income generation; the range is huge. You have to take on board different desires, anxieties, and requirements."
Arts and sports
The panoply of the Tata engagement in community development encompasses much more than can be encapsulated in a few pages. As management guru Peter Drucker says: "A healthy society requires three vital sectors: a public sector of effective governments; a private sector of effective businesses; and a social sector of effective community organisations." While there's not much it can do about the first sector, the Tata group is contributing all it can to the other two.