Last year, the Tata Trusts, one of India’s leading philanthropic institutions, completed 125 years of existence. But, over the past five years, they have changed in the manner in which they are run. While charity continues to be a part of what the Trusts do, the focus has shifted to initiatives that deliver impact and, more importantly, are sustainable. That may have disappointed some of the non-governmental organisations the Trusts have supported in the past, but recent works in chosen areas like enhancing nutrition or safe drinking water have started to bear fruit. In a free-wheeling interview, the venerable Ratan Tata, chairman emeritus, Tata Sons, and chairman, Tata Trusts, speaks with Business India on a range of issues related to being socially responsible, creating impact and demanding results
If Tata Trusts were to invest in for-profit entities, don’t you think the social environment is such that it won’t accept that?
We can’t invest in for-profit companies. The law doesn’t permit us to do so.
Foundations in the US do not distinguish between for-profits and not-for-profits.
They pay tax on everything that’s taxable. I was part of the Ford Foundation for nine years. They invested in Google when it was founded. They had an investment team as good as any on Wall Street. And they invested in profitable companies where they made a profit, paid tax on it, and where they did not make a profit they wrote it off or wrote it down.
I think we have to focus more on the founder or founders. For example there is this group of young guys who are founding an enterprise to send a vehicle to the moon. Here are guys who don’t have Caltech or jpl to turn to, but have done a terrific job to put together and to improvise on the basis of getting information from others. But they can’t get funding. Whatever funding I have promised them is not going to make it happen. They may win a prize but the prize involves actually shooting it to the moon and landing, and they won’t get to do that.
Do you see a solution?
We need to emulate what the United States has done with darpa (Defence Advanced Research Projects Agency) or nasa (National Aeronautics and Space Administration). These agencies invest substantial amounts in a particular technology, funding it for six to seven years. Most of the time it would provide enough advancement of that technology, so that it can be taken commercially from there. They have done this in many advanced strategic areas as well as areas which spearhead r&d activities which have potential commercial applications like life sciences, biotechnology, aeronautics, aerospace and certainly in electronics and material sciences. We need to create an entity like darpa for areas the Government of India is willing to fund. Unfortunately, India will establish a modest fund that will not provide enough funding to have meaning. They need to do this on the basis of merit. For example, darpa is run by the US Department of Defence and channels huge amounts of money to develop technology. They have funded work in artificial intelligence and pattern recognition. They are also funding private sector companies to do this.
Can government finances permit such a
thing? To commit $10 billion or $20 billion to research projects?
This would demand a really long term vision and technology oversight.
Most scaling requires multiple stakeholders to sit together, especially government and
the private sector. With a shared vision,
agreed upon measurements and evaluation.
In India, in the social field, do you feel this is easy or difficult?
Our own experience working with the state governments has been very good. We are working with about 10 state governments in nutrition, in cancer, or in drinking water and sanitation. Our funding has been modest as compared to the resources committed by the state. All they desire is partnership, managerial assistance and monitoring of the projects. In Maharashtra, which is where we started, we’ve selected a bunch of young mba graduates who are willing to go into the field as a one- or two-year exercise attached to the local state government mechanisms in the area, work in the area and monitor the progress against the plan. It is the best thing that has ever happened because suddenly the state’s budgets go further than they ever did and you’re beginning to see results. The people in the area are also seeing results. Other states have also expressed an interest in adopting this initiative.
This is good news. It’s a sign that collaboration is possible.
Yes indeed. Similarly in nutrition we found very fast that malnutrition in children had no meaning unless you also included the mother. Because the mother was anaemic and she produced many children, she could never adequately nourish the child during her pregnancy. Supplements don’t provide enough. The Trusts decided to try to find a way to embed micronutrients in staple food. We found a technology in Toronto that was co-developed by an Indian researcher for embedding iron in salt, and the institute gave us the technology free if it’s for a public purpose. We first took it to Rajasthan, and then to Uttar Pradesh, where the chief minister introduced this into the public distribution system, making it available to all the people of UP. Now that we have iron fortified salt, we propose to embed micronutrients in rice, wheat and milk. Bread and roti will be fortified. The results are visible much quicker than people thought.
These wouldn’t have been possible without the collaboration with state governments.
Can meals be made more nutritious? Agencies say that they can’t change specifications because they have to go by what the government prescribes. Is that a stumbling block?
Golden rice, was a rice look-alike but turned partly yellow when you cooked it. People didn’t like it because rice was not white any longer. So we are working on a technology that encapsulates the iron. You add it to staple food such as salt, rice and wheat in a proportion but it doesn’t turn
yellow and has no taste, so it is acceptable and thus successful.
You were able to work with a state government and make it happen. How do you get people together?
We were able to do it for two or three reasons. I was sceptical about how we would be accepted in the rural areas. Because people would want to know why are you doing this and what’s in it for you? In Maharashtra we started in areas where people would rarely go. But we went to these areas, the inhabitants began to trust us and we were able to get traction in those areas. What we found is that the local machinery, the collectors and the various government officials, when they see organisations with no vested or commercial interests, are more than willing to collaborate. When it works in one state, the other states want to follow.
In general, are business and government not talking to each other?
There has to be somebody who gives without taking back. The Trusts are doing several things that have a cost. This technology, we have brought here, we have adapted it to India, we have made it possible. We monitor it so that the margin that the state governments have to subsidise is minimal and not exploitable. The end user doesn’t see this. But the states that have food fortified with micronutrients like iron, Vitamins A & D etc., are going to see their kids with better health, both mental and physical.
What would you look for in partnering with a local ngo?
In the past we were a grant giving Trust, so mainly gave grants to ngos. These ngos picked a community, and served them well by doing charity and subsidising the livelihood of the community. But over time as a Trust, if we had supported an ngofor several years, we may want to move that money and do it in another area. In such a case, the ngo collapses, the community collapses. And we, who had supported that community for 10 years, become the nasty persons who collapsed it. So we have been asking the ngos for their plans for sustainability. Let’s stop giving handouts to people, and let’s look seriously about what we can do to gain dignity through sustainability. If it means giving an additional grant to have a community go into say fisheries or into bamboo development. We should look at that additional grant, but we have to look at whether the ngo has the capability to ensure sustainability. If it doesn’t, in three years we will pull our funds out. We may become quite unpopular with some of the ngos who just have been doing the same thing year after year.
Earlier every ngo defined themselves by being independent, to show results which allowed them to move away from one donor, to the next donor. Are your Trusts changing?
Some of them are adapting. Right now one could go into a meeting of ngos and some of them would condemn us for what we are doing. They haven’t looked at sustainability as an issue and they don’t understand why this is a reason for backing out of continued funding for them.
There are however exceptions, for example, we set up a cancer hospital in Kolkata. Fifty per cent of the beds are supposed to be free. However, 70 to 80 per cent of the beds are taken up by children who have leukaemia. We can’t ask them to pay. So that’s different. We are sustaining it by paying for those beds from the Trusts. But not every ngo is facing that. We need to create a sustainable source to help them – by creating a meaningful income flow that sustains that community.
What if companies say we won’t do chequebook charity. What if they say we want impact and will pay per result. Is that bad?
No, that’s good. That thinking is not there, though it is headed that way. Right now, it is an investor who has investible funds. He is taking a risk on a return that he expects and that’s it. This de-risks the project for the government. The investor has a way to track results.
Tata values are very strong. If the Trusts were to be thinking of this approach, would it still be within the value systems?
If we were getting a return, we would plough that back. It’s perpetuating it by ploughing it back. We don’t write a cheque on which we expect a return. Nandan [Nilekani], Vijay Kelkar and I have created Avanti Finance, a financial inclusion platform, where each of us will plough back the returns so generated. In the West, investors are promised a return that they will keep, or they will write off the capital if they do not get results.
I don’t know how it will work. With the University of California, San Diego, we funded a project in India to deal with malaria. We re-programme the dna of mosquitoes so that with a mating process, they cannot carry the malaria virus. And in two generations of a mosquito, which is a few weeks, that swarm of malaria mosquitoes may bite you but will not infect you. This can then be extended to Zika and other mosquito-borne diseases. Our issue now is to find the places to scale this and plough the returns (if any) back into growing the venture.
csr is now more or less compulsory. How are the Tata companies and the Trusts evolving?
The companies that come to the Trusts do so because we are equipped to disburse these funds on bona fide projects. There are three models. They could say, here is the money, channel these funds to worthwhile projects, or they could say that they have a project, and would like the money to be spent in a particular area. Or if they like a project run by the Trusts, they could fund part of it.
How large is the Tata Trusts today?
About 250 people are working in the Trusts directly and about 750 in various projects of the Trusts, up from about 100 when I took charge. Part of our manpower is auditing our grants, so we are monitoring the ngos what they are doing with the money. Many of our grants are for more than one year. Plus we are now doing projects that we were never doing earlier.
What about measurements? Are you measuring outcomes?
We have in our Trusts something interesting rising out of third party audits. Some ngos haven’t been spending funds well and we have stopped giving them grants, and in some cases receiving money back from them.
If you look at the Ford Foundation or the Rockefeller Foundation, they chose a strategy and in different countries they spent the money according to that strategy. The Tata Trusts are more important to India than the Ford Foundation is to America. Have the Trusts leveraged their learning and money in strategic giving?
In the last four or five years we’ve gone through a transformation of moving from charity to causes that leave a lasting impact. Two things have happened. The earnings from dividends in Tata Sons have risen quite exponentially. We have more funds than we have ever had before. Second, we are still doing charity, but it is a much smaller part of the $100 million that we are spending annually.
Right now, I can say that we have a major nutrition project. It’s maybe a R75crore a year project. We have a safe drinking water and sanitation project. We are working on distributed energy in the villages by having solar lanterns or solar-powered charging stations. It changes the way villagers live. The day doesn’t end when it gets dark. To do it from a mega power project will take years.
What the government is doing for cancer treatment with the National Cancer Grid is something very far-sighted. The Trusts in partnership with several state governments and the Department of Atomic Energy are participating in setting up a number of cancer hospitals. They will have to conform to certain standards. In association with leading oncologists and the National Cancer Grid, we are setting the criteria for uniform care and treatment. These facilities will be manned by doctors who will be trained and will practise cancer treatment. And there will be a primary centre in each village which will be manned by the technician and not the doctor, but can wirelessly send images to doctors in hospitals and get a quick response from a Digital Nerve Centre. That would save lives because the cancer was caught early enough rather than being mistreated for a long period. The network will be 100+ hospitals, which is a huge number if you consider that each one has 300 to 400 beds. We are definitely making a big difference.
We see about eight million patients with advanced cases of cancer coming to our hospitals all over India. What we don’t know is how many people are stricken but not reported. Many of them are kids from Assam and the Northeast. The real challenge for us is to find a way for cancer treatment, which is becoming treatable, to reach the poorer segments of Indian population in an affordable and accessible manner. The prime minister has announced a R5 lakh health insurance for families, that’s a terrific start!