New Philanthropies Court Prosperous Indian-Americans

Last year’s earthquake in the Indian state of Gujarat, which killed thousands of people and left tens of

thousands homeless, prompted an outpouring of support from around the world to aid the survivors and help them rebuild. The magnitude of the disaster also managed to shift the philanthropic landscape among Indian-Americans.

When Bill Clinton asked India’s prime minister, Atal Behari Vajpayee, what assistance he could offer following the catastrophe, Mr. Vajpayee suggested that the former president help mobilize a response among wealthy Americans of Indian heritage. Mr. Clinton, who joined a group of Indian-American entrepreneurs and business executives on a tour of the region, agreed to serve as honorary chairman of the new foundation that had emerged from their brainstorming.

The American India Foundation, now one year old, last year raised $7.5-million from the Indian-American diaspora — people of Indian heritage now living in the United States. Of that sum, $1-million went to victims of the September 11 attacks, and the remainder has gone toward relief efforts and rebuilding homes and lives in Gujarat.

The creation of the foundation represents a significant departure for Indian-American philanthropy.

“Historically, giving in the Indian diaspora has been very informal,” notes Anjali Sharma, the foundation’s marketing director, who works in its New York City office. “There’s always been lots of giving to extended families, temples, and churches.”

Lata Krishnan, the foundation’s president, whose office is in Milpitas, Calif., says that, because “the Indian diaspora is very family-oriented, lots of money is sent through relatives or friends or other trusted parties, who can ensure that it is delivered to the right beneficiary and used appropriately.”

Many Indian-Americans who wanted to respond to the earthquake found such channels inadequate. After a catastrophe of that magnitude, “everybody wants to give in some way but doesn’t know how to,” Ms. Sharma says, particularly given that India has a history of charity-related scams and mismanagement. With the creation of the American India Foundation, she adds, “we’re providing them a channel that will be very accountable.”

The fund boasts a blue-chip board. Victor Menezes, chairman and chief executive officer of Citibank, N.A., is a co-chairman, while another early champion has been Rajat Gupta, managing director of McKinsey & Company, the international management-consulting firm, which has donated office space and some services.

Ms. Krishnan’s own biography illustrates the mobility of the Indian diaspora. Born in the Indian state of Kerala, she spent a dozen years in Kenya and a dozen more in Britain before arriving in the United States in 1986. Trained as an accountant, she was a co-founder in 1988 of Smart Modular Technologies, a Silicon Valley company that designs and manufactures computer memory cards and communications equipment. When the company went public a few years later, she and her partners benefited handsomely from investors’ faith in high-tech enterprises, thus enabling her to work full time for the foundation for $1 a year.

Beyond Gujarat

The foundation has broadened its efforts beyond Gujarat to focus on elementary education and on improving the lives of women by lending them small sums of money. It also runs a Service Corps program, similar to the Peace Corps, in which young Indian-Americans work in rural India for several months, and a Digital Equalizer program, to introduce computers to poor kids in urban centers. Foundation staff members in India help coordinate those activities.

In all its programs, the foundation hopes to model the kind of tolerance and respect for differences that its supporters believe are crucial to the ultimate success of a nation torn by clashes over race, caste, economic status, language, and religion.

“We do have issues, as you can tell from the horrendous riots going on now in Gujarat” involving deadly clashes between Hindus and Muslims, Ms. Krishnan observes. “It would be wonderful if we could come together as a diaspora in common cause, to work for the social and economic development of India.”

Yet in the absence of a catastrophic earthquake, she acknowledges, it may be difficult to galvanize support among the 1.7 million Indian-Americans for projects half a world away.

“Now that Gujarat is done, are we going to be able to rally people around a more general cause like education?” asks Ms. Krishnan, who hopes to raise another $7.5-million this year. “It’s a challenge, because we don’t have an event to which people are emotionally tied. Also, because the financial markets have tanked, people’s pockets are more depleted than they were before.”

Each of the foundation’s 53 board members is committed to raising or donating at least $100,000 a year. Much of the rest comes by word-of-mouth solicitations and through special events, like special premieres last month of the new Merchant Ivory film, Mystic Masseur, which raised $125,000.

Wooing Indian-Americans

In addition to new players like the American India Foundation, some community foundations are wooing Indian-American donors, a move that can require broadening their geographic focus to include grant making overseas.

The Community Foundation Silicon Valley, for example, which serves a population that includes some 300,000 Indian-Americans, has made grants to organizations in India. At the behest of the Indus Entrepreneurs, a network of Indians in the high-tech industry, the community foundation opened a fund to accept donations for relief efforts following the Gujarat earthquake. The fund raised $2.67-million from 1,150 donors.

“We see some interesting patterns of giving among Indian-Americans in Silicon Valley,” says Peter Hero, the community fund’s president. Lots of money is remitted back to relatives for their personal needs, though it is not strictly charitable. Some donors support large educational or research institutions in India, while others focus on smaller Indian nonprofit groups, often choosing ones with ties to U.S. groups, which gives them greater credibility.

But of increasing importance to many Indian-American donors in Silicon Valley, Mr. Hero says, is investment in high-tech start-up companies in India as part of an “economic freedom” movement. “The idea is that, by supporting small businesses, you’re providing a countervailing weight to a relatively corrupt, socialistic government,” he says.

“Information technology has become the great hope of the Indian people,” Mr. Hero adds. “There’s a great sense of investing back into the country, of making it as great as it can be. The lines between economic development, entrepreneurship, and philanthropy are all kind of blurred.”

Avoiding ‘Bottomless Pit’

One champion of that free-market view is Kanwal Rekhi, who was born in Rawalpindi (now part of Pakistan) in 1945, emigrated to the United States for graduate school, and co-founded a computer-networking company that was sold to Novell in 1989 for $210-million. He now works as a venture capitalist, providing seed money for entrepreneurs in India and the United States.

“I’m not a charitable person in the sense of giving money to many poor people,” Mr. Rekhi says, “because poverty is a bottomless pit.” He says he thinks “in terms of investment: How do we provide more education? Stronger institutions? Almost all my activities have been focused on that.”

‘They Were Shocked’

In 1997, Mr. Rekhi gave $2-million to help build the Kanwal Rekhi School of Information Technology at the Indian Institute of Technology, in Bombay, where he had studied before coming to the United States. Because he hoped to inspire other Indians to make similar gifts, he required the institute to raise the same amount from other donors. “When I gave them the money, they thought that nobody would match it, because whoever heard of matching gifts in that part of world?” he says. “But it was matched within five months — they were shocked.”

Mr. Rekhi observes that while most American colleges solicit donations from alumni virtually from the moment they graduate, Indian institutions make few such demands on those who have benefited from their services.

“I’ve done well in life, after getting a free education at IIT,” he says. “This notion of giving back to your alma mater as payback has not been there. That was the tradition I was trying to start.”

But his giving is motivated by more than a sense of repaying an obligation, Mr. Rekhi acknowledges. The world’s political and economic stability are to some degree also at stake.

“India is a noble experiment that one must support,” he says. “It gained its independence from Britain through peaceful means, and is trying to build a nation in a democratic fashion while maintaining its cultural traditions. If they succeed, one-sixth of humanity will be living in a prosperous democracy.”

As more and more Indian-Americans achieve a degree of affluence, some observers predict, they will increasingly have both the means and the inclination to seek to improve their American communities and their homeland in strategic ways.

“There are many of us who sat on the fence for years wondering how to make a difference,” Ms. Krishnan declares. “At some point, we have to jump into the fire and see how we can make even a small difference.”