If you got it give it
The Economic Times — September 28, 2005

Corporate Social Responsibility (CSR) is a business buzzword these days, but there are a few companies that go back a long way in history with it. All the way to 1892, in fact, with the Tata group. That's when Jamsetji Tata set up the JN Tata Endowment Scheme. Tata realised many promising young Indians were unable to realise their potential as future leaders. Reason: the lack of funds.

He teamed up with Freney Cama, one of the first Indian women gynaecologists, to set up the scheme and over the years, its beneficiaries have included former president KR Narayanan, scientists like Raja Ramanna and R Mashelkar and playwright-cum-artiste Girish Karnad. However, with the Endowment Scheme, Jamsetji Tata was doing more than just building future national leaders. He was laying the principles that would guide the Tata family on a programme of philanthropy with no parallel in Indian corporate history.

First, and most important, don't just give, but give to build. Jamsetji didn't want to practice what he termed the 'patchwork philanthropy' that just gave handouts to the poor. That had its place, he acknowledged, but the expertise and resources of businessmen like him were better employed developing the leaders and larger projects that would have a long term impact on national welfare. Second, bequeath most of one's personal wealth to philanthropic trusts.

Since his heirs were wealthy enough through their involvement with the business, Jamsetji saw no obligation to leave all his wealth to them. In 1898, foreseeing the importance science would play in the new century, he pledged half his personal wealth for the creation of a top-of-the-line educational institution for science. In 1911 this was realised with the Indian Institute of Science, IISc, the precursor to the IITs that have helped change the image of India today.

Jamsetji's sons Dorabji and Ratan were to take this further, bequeathing not just the bulk of their personal fortunes, but even their ownership stakes in the Tata group to the two giant trusts set up in their names - Sir Dorabji Tata Trust and Sir Ratan Tata Trust, respectively. Over the years, other family members have done the same, creating a constellation of trusts and endowments that support an amazing range of activities.

These include internationally important scientific institutions like the Tata Institute for Fundamental Research, the Tata Energy Research Institute and the Lady Tata Memorial Trust (one of the first international organisations for leukaemia research); top academic institutes like the Tata Institute for Social Studies; humanitarian institutions like the Tata Memorial Hospital; cultural institutions like the National Centre for the Performing Arts; rural development programmes (one of the first corporate rural relief programmes was started by the Sir Dorabji Tata Trust in 1952 at the instigation of John Mathai, India's first FM who, after retirement, became chairman of the trust); and many smaller, yet significant initiatives - such as, the Sir Ratan Tata Institute for indigent women, the best place to eat dhansak in Mumbai!

These activities are impressive in their variety. Yet, the Tata trusts are notable in another way. Through all the family's bequests, the Tata trusts now control 65.8% of the shares in Tata Sons, the holding company for the group. Therefore, with every Tata enterprise, it is now wellknown that a large percentage of profits are bound for philanthropy - the companies pay dividends to these trusts as shareholders, which are then ploughed into philanthropy.

This doesn't let individual companies off the hook for CSR. The philanthropic philosophy embodied in the Trusts is meant to be followed by all group companies. The Trusts provide them expertise on CSR activities, but the cost comes from the companies themselves. All this adds up to quite a bit. One rough estimate puts the total value of CSR activities, from Trusts and companies, at around 30% of the group's profit after tax - which would give it a value, in '03-04, of around Rs 1,700 crore.

However, this includes the philanthropic activities of some Tata group companies too. Individually, Sir Dorabji Tata Trust disbursed over Rs 44 crore the same year, while Sir Ratan Tata Trust disbursed over Rs 32 crore. Yet, all this is conducted in a low-key and efficient way, not designed to draw any particular attention to the Group.