High-Earning Professionals Seek Fin Advisers’ Help To Plan For Philanthropy

S Suresh, 48, a senior executive in a company in Chennai, recently invested in NCDs (non-convertible debentures) of a corporate house.This might have been just another method of personal finance management if not for one detail. Suresh set aside the income from the investment for charity.This is not new for Suresh, who has contributed to a rural school’s infrastructure and has also sponsored a girl’s high school education. What is unique is the way he has gone about it. While planning his personal finances with his consultant, Suresh sets aside 10-15% of his annual income towards a charity fund.

He is not alone in such a charity endeavour. IT professional Sathish Subramanian who returned to India almost a decade ago after spending eight years in the United States got into the charity act soon after arrival. “When I returned, the disparity between the rich and the poor in India became more evident as in the US, it’s a more egalitarian so ciety,“ he said. Today , he is associated with numerous organizations and donates 10% of his annual savings (post investment) towards charity .

Individual philanthropy is gaining ground and the emergence of an ecosystem, financial advisers and lawyers is helping high-paid professionals to set aside a portion of their yearly earnings (as much as 10%) towards some common cause.

Suresh Parthasarathy , a certified financial planner in the city, has almost 200 clients out of which around 60 are individuals and HNIs who come to him for personal finance planning. The questionnaire that Suresh uses contains one striking question. The clients are asked to mention the amount they would like to set aside for charity . In fact, he is at present working with an NRI (non-resident Indian) based out of Dubai to set up a Rs 20 lakh charity fund based on equity over the course of five years. Similarly , the Chennai office of FundsIndia, which has 200 clients earning more than Rs 10 lakh annually , advises them to earmark 10% of their annual income to wards charity .

Moreover, such philanthropy at the individual level is not driven by tax considerations and benefits anymore.“There is only 100% exemption in case of donations to the Prime Minister’s Relief Fund and 50% in case of other specific donations,“ Parthasarathy said.

And if you have heard stories of rich Americans leaving behind everything to charity and very little for family, Indians have also started to mention something for charity in their will. Advocate Narmadha Sampath of the Madras high court cites the example of prominent Tamil writer R Chudamani’s will, in which organizations affiliated with the Sri Ramakrishna Math in Chennai and VHS (Voluntary Health Services) were the biggest beneficiaries. “While in some religions, it is considered obligatory to contribute towards charity , increasingly , more Indians are incorporating a charity element while drafting their will,“ Sampath said.

The current environment and religion are also playing a role in the individual philanthropy movement. “Seniors whose children are well-settled and have a surplus are keen to leave behind something for charity . They are guided by motives like salvation from the life they lead,“ Sampath said.

But such karmic enlightenment is not the preserve of elders alone. “In the face of the recent slowdowns and rising job uncertainties, many middle-aged professionals feel if they contribute towards some philanthropy it will lead to some good karma along the way ,“ Parthasarathy said.

Perhaps what’s really heartening is that while corpo rates sometimes use the charity brigade to garner some goodwill from the public, many individuals feel that donating to charity is an extremely private affair and if details of it are disclosed, the power of the good deed would be lost. “Contribution towards charity by corporates is a strong marketing tool, but in the case of individuals, many a time, it’s one individual helping out the other, like sponsoring a child’s education,“ S Sridharan, head, financial planning, FundsIndia said.

As S Suresh puts it, there may be many who have the intention to donate but the challenge is to have a disciplined way of setting aside money for it. “Allocating capital for charity as a part of planning my finance has helped me a lot“, said Suresh.

But there are some hindrances in the quest for charity and perhaps ultimately moksha. “The difficulties come during execution of the will, especially when family members feel they have been largely left out of it. So, there may be very little push from their side towards execution of the will,“ Sampath said.