It seems on the face of it like a family pulling in different directions: a large majority of members devoted to the cause of making money in a classic capitalistic fashion, only for a substantially endowed minority to diligently give it away in a manner that could be described as characteristically altruistic. There is no dichotomy at play here, though, because the moneymakers and the money givers are entwined components of a business that has been crafted, by tradition, philosophy and practice, to do precisely that.
Welcome to the world of the Tata group, and to a rationale quite unlike any other in modern-day entrepreneurship. Welcome, also, to a multifaceted and multi-layered business organisation that generated revenues of Rs3.2 trillion ($67.4 billion) in 2009-10, with a global workforce of nearly 400,000 people, and 28 publicly listed companies and shareholder base of 3.5 million in India. The most significant of these shareholders, the Tata charitable trusts — two-thirds owners of Tata Sons, the promoter company of the group — are a lot less concerned about quarterly earnings and analyst reviews than they are about enhancing and extending their charity canopy to provide shade and succour to a remarkably diverse spread of people, causes and institutions.
The Tata trusts are the protagonists in a singular saga of structured philanthropy under which, in 2009-10, well in excess of Rs4 billion (about $105 million) was donated to support initiatives in health and education, livelihoods and agriculture, human rights and culture, the environment and more, in India and abroad. Include the contribution of Tata companies in funding social development programmes and the total adds up to about 4 per cent of the net profits of the Tata group. This is not about random generosity or any egoistically inclined effort to score charity points. Rather, it is the central tenet of the trusteeship concept seeded by Jamsetji Tata, the Founder of the Tata group, and cemented by those who followed in his footsteps, most prominently his sons, Dorab Tata and Ratan Tata.
As an article in a recent issue of The Economist had it, “Tata is admirably restrained by the flashy — it is tempting to say money-grubbing — standards of modern India.” But does its legacy and heritage place an extra burden on the extended Tata group? Is it obliged to operate by and live up to higher standards than other business houses? Dr Jamshed J Irani thinks so. “That is because of the Tata credo,” asserts the celebrated former managing director of Tata Steel and current chairman of Tata Quality Management Services.
Dr Irani, a titan who has been with the group for about as long as Mr Tata, says there is more to it than the group having a greater responsibility to display good business behaviour. “We cannot go about our task like just any other company. Our image and the confidence we have created in the public mind will not allow it. We have nurtured this brand for more than 140 years and civil society expects us to live up to the standards we have set, much more than some of the newer brands that have come up.”
He hastens to add that values or ethics are not the preserve of the Tatas, citing examples of other Indian groups such as Godrej, Mahindras and Sundaram, but the pressure on the group to stay on the straight and narrow is far greater. “There always are antagonists waiting to pounce and target the Tatas, like has happened with the Dharma port project. That’s the price we have to pay for being well regarded.”
Having said that, Dr Irani is certain that the advantages of being part of the group far outweigh the disadvantages. For evidence, on a lighter note, he tells a story concerning a parliamentarian from Jharkhand, a strife-torn state that has received some of the largest outlays of development funding from the Tata trusts and assorted Tata companies. “This parliamentarian once told me that he could not visit his own constituency without a posse of policemen to protect him, but that we Tata people could go about our jobs freely. Our community development programmes are not premised on getting returns, immediate or otherwise, but they help us in different ways.”
Mr Chaukar is under no illusions that TCCI’s mandate can be fulfilled in a hurry. “I am a bit of a socialist in that I believe everybody has to have the chance to live a decent life,” says Mr Chaukar, whose background in, and experience of, the social development sphere is extensive. “If even one person or family does not get a proper shot at that chance, then the mandate cannot be realised. The challenge facing organisations such as TCCI is to keep moving towards realising their goals, while knowing that there is plenty of work left to be done.”
For someone new to the Tata ethos, this commitment to the community can be disconcerting, even cause for disbelief. It certainly was for Dr Irani back in 1968 when he first came to Jamshedpur, fresh from a decade spent studying and working in the UK. “It was one of our anniversary days and there was this big banner that stated. ‘What comes from the people must go back to them many times over.’ I took one look at it and thought, ‘What nonsense. Why should it go back to the people? What’s so wrong if we keep it for ourselves?’ That’s the immediate reaction of a person who comes from outside, particularly of young people who have been exposed to the other side of life, so to speak.”'
Wisdom dawned on Dr Irani, with time and with the imbibing of what may at first seem like an alien approach, as it has with all those who have become part of the Tata family. “You come to realise that this is how the house has been built. Jamsetji Tata and everyone down to JRD Tata [the late Chairman of the group] put more back than what they took, which is why our current Chairman will never make it to any list of the world’s 100, or even 1,000, richest people. It’s a culture that rubs off on you. I tell every newcomer to the group that if his ambition is to become a multimillionaire then he should not join the Tatas. I keep getting selected to these different committees and such. That’s not because I am JJ Irani; it’s because I am part of the Tata group.”
That’s how the trusteeship concept influences those in the thick of the business side of Tata, and this holds true for those who work for a group entity in India as much as it does for the increasing number of non-Indians who have come into the organisational fold as Tata companies expand their wings to reach global destinations.
Dr Irani says he used to be concerned, two-three years back, about whether the group would be able to stick by its traditions as it pressed on with its globalisation agenda, mostly so with regard to people. “But I have been quite happy to see, especially in the US and Britain, that ethical standards are so much higher that acceptance of our principles is never an issue.”
Any understanding of how the Tatas function must necessarily begin with knowing that there is a thick line separating the world of corporate Tata from the work that the Tata trusts support. The Tata founders ensured that the group’s business operations and the financial benefits that accrue from them had to be in two distinct halves. “The trusts really have no obligation to the companies from which they draw their monies,” explains Dr Irani. “There is no quid pro quo and, consequently, no burden on the Tata group as a whole.”
There has been logic and method behind the formation of the Tata trusts, though their proliferation may seem to suggest otherwise. The first of these, the JN Tata Endowment Scheme for higher education, was established by Jamsetji Tata in 1892 — its beneficiaries include former Indian president KR Narayanan, scientists Raja Ramanna and Jayant Narlikar and writer and actor Girish Karnad — and it marked the beginning of what would become the defining feature of the Tata idea of wealth sharing.
Speaking on a momentous February day in 1911, at the opening of the path-breaking hydroelectric project in Lonavala in Maharashtra, Dorab Tata said: “To my father the acquisition of wealth was only a secondary object in life; it was always subordinate to the constant desire in his heart to improve the industrial and intellectual condition of the people of this country… It is a matter of the greatest gratification to his sons to have been permitted to carry to fruition the sacred trust which he committed to their charge.”
His sons would far exceed what Jamsetji Tata had set out to accomplish. A while before his death on June 4, 1932, Dorab Tata bequeathed most of his personal wealth — including one of his most cherished possessions, the Jubilee diamond, which he had purchased in England for about Rs3 million in the late 1920s — to the newly registered Sir Dorabji Tata Trust. The amount totalled Rs30 million and he wanted the trust to work for the benefit of all Indians.
Dorab Tata was an exceptional amalgam of business genius, aesthete and altruist, and it was he who must be credited with giving final shape to the trusteeship archetype. His younger brother, the artistically inclined Ratan Tata, was no less munificent, supporting freedom fighter and social reformer Gopal Krishna Gokhale’s Servants of India Society (he donated Rs10,000 annually for a period of 10 years for its welfare work) and Mahatma Gandhi’s mission in South Africa (between 1909 and 1913, he provided Rs125,000 for this cause). Ratan Tata died in 1918 at the age of 47. A year later, the trust bearing his name was established.
There are a variety of other Tata trusts, and they function in accordance with the interests of those who donated their wealth, in measures small and large, for causes that were close to their hearts. The Sir Dorabji Tata and the Allied Trusts is today the largest philanthropic entity in India, committing Rs2.9 billion for charitable causes in 2009-10; club the Sir Ratan Tata Trust and the Navajbai Trust with it (Rs1.7 billion in disbursals in 2009-10), and the combined entity dominates the development funding landscape in India.
The Tata trusts, while providing financial backing to a smorgasbord of individual and institutional initiatives, do not themselves undertake development work. The principal conduit for implementation has always been non-government organisations or non-profits. Time was when the trusts, reticent by nature, stayed in the background and did little more than deliver the resources for deserving non-profits doing development work. That attitude has changed dramatically, particularly so since 2000. Now they strive to set the development agenda, by identifying newer spheres that require backing — such as urban poverty, migrant labour and human rights — and by seeking out and supporting non-profits of merit.
“Earlier, we used to have a much smaller team of programme officers and we were dependent on ideas that came from the outside,” explains AN Singh, managing trustee of the Sir Dorabji Tata and the Allied Trusts. “Now we have a much larger team. It’s not just three or four people dispensing the money but a team of 30. That allows us to take a more mature look at projects and it gives us more focus. Back then we were almost entirely in response mode; now we are proactive. We bring forward issues that we believe need to be addressed, we find partners and educate them.”
Given their place in the funding matrix that the trusts operate by, non-profits are critical to the success of any project. That means finding and backing the right non-profits; no easy task given the mushrooming of these organisations — some of them with dubious credentials — and the manner in which the sector has been transformed in recent years. The positive here has been the professionalism that non-profits now have. The downside is the difficulty they face in finding, and retaining, good people.
Being part of a large and renowned corporate group such as Tata brings with it a heightened sense of responsibility for the trusts. “We don’t feel constrained in anyway, but being a Tata trust means you don’t ever want to compromise anybody,” says Mr Singh. “We are aware of this and we take extra care to ensure that nothing tarnishes the Tata name.”
Working with Tata companies on their corporate social responsibility programmes is another no-no. “We maintain an arm’s-length distance from corporate Tata because it would amount to a curious sort of situation if we were to fund some of these companies and their programmes,” says Mr Singh.
“Their money comes to us in the form of dividends. We cannot route it back to them; that would be unethical.”
That’s a valid argument but, as Dr Irani says, there is scope for improved coordination and cooperation between the trusts and Tata companies in terms of sharing knowledge and expertise. “We have kept the two so separate that Tata companies don’t know what the trusts are doing and vice versa. I think there should be more of views being exchanged and the like. I know the coordination is not as good as it could be, but I would be wrong in presuming that enhanced coordination will be better for everybody involved; you could end up falling between two stools. There are many things in the trusts’ domain that don’t belong to the corporate half of Tata.”
What does belong to the entire Tata group is the collective bequest, the traditions and the vision that have given it shape and substance. And at the heart of it all is an empathetic view of business and all it encompasses. “Empathy is the most valuable resource in our world,” says Simon Baron-Cohen, a writer and professor of psychology and psychiatry at Cambridge University. “Given this assertion, it is puzzling that empathy figures hardly at all in politics, business, the courts or policing.”
The 2010 edition of BrandFinance Global 500, a listing of the world’s most valuable brands, places the Tata group first in India and 65th worldwide. Had they factored empathy into this equation, Tata — with its trusts leading the way — may well have been in a league of its own.