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This paper is an attempt to examine individual charitable giving as a source of funding for voluntary organisations (VOs). The reasons for VOs to rely on individual donors and the approach they need to adopt in understanding giving practices, forms the core of this paper. While it is common knowledge that most people involve in monetary giving, there is not much concerted effort on the part of the VOs to use this source. It is probably the understanding - that people generally give impulsively out of compassion and that they generally give to other individuals in need – that has lead to this situation. There could be other reasons such as the difficulty in identifying and approaching individual donors and non availability of bigger amount from a single source which makes VOs rely more on institutional sources than individuals. Nonetheless it is an area worth exploring in the context of the emergence of new rich urban youth in India, especially in the centres of new economy like Bangalore.

The empirical details used in support of our argument are drawn from a cross section survey being conducted in Karnataka State.

The study is based on the data gathered from 200 respondents, working in different sectors and drawing an annual salary income between Rs.3,50,000 and 6,00,000. The sample respondents are a homogenous group in terms of their educational background, social status and income level. Such a group is considered to be a potential group in terms of affordability and possibility of judicious giving. The sample design is as follows

* Others include officers/executives of Cooperatives, NGOs, Consultants and Executives of MNCs

Individual Charitable Giving (donations in monetary terms) is a common practice among adults throughout the world. It was observed that in UK about 81 percent of adults took to charitable giving in 1993 (Halfpenny and Lowe, 1994). Giving is seen to be a common practice in India also (SICP, 2001, PRIA, 2002, 2003). It is held that Philanthropic acts like 'giving' generally have a high degree of religious background (Landim and Thomson, 1997). However, there are empirical evidences to show that even in countries where religion plays a key role in determining individual giving, there are people for whom giving could be a rational and judicious act. (Dongre, 2003). It is therefore, imperative that the real motives of individual charitable giving vary widely. Determining such motives is an important need for the obvious policy implications they have at any given region or country. A clear understanding of motivations for giving would help VOs devise appropriate strategy for using this source for funding their activities.

There have been attempts to examine the possibility of explaining the phenomenon of individual giving through economic and sociological analysis (Halfpenny, 1999). While this is indeed necessary, the more specific reasoning as to why people take to charitable giving is very crucial. Do people really "choose to make themselves poorer in order to make someone else richer"? (Bracewell & Milnes, 1990). Can we say that giving is an exchange process and even while making charitable donations an individual acts as an economic being and utility maximizer as evidenced by some of the studies? (For instance: Knapp and Kendall, 1991, Marriott and Jones, 1996). If so, how do we explain the phenomenon of anonymous giving where people give without expecting any tangible return? (Ben-Nar et. al., 1998). Can we simply accept that individual charitable giving is a simple act of altruism? (Frank, 1996). Some of the above questions remain unanswered especially in the context of India. We do have a comprehensive survey on individual charitable giving which makes a brief reference to reasons for giving in India (SICP, 2001a). Studies have also analysed the issue of why people give and how they perceive the act of giving (Dongre, 2002’ 2003; PRIA 2002, 2003). The findings of all these studies give sufficient evidence to argue that the donors have very specific choices to make while parting with a share of their earnings in the form of charitable giving. The objective of this paper is to analyse the approaches to understand the act of giving from the perspective of VOs, with a hope of making charitable giving, a rational/judicious act in order to ensure higher giving and better end use of such donations.

There seem to be a fair degree of variation in the motivations for giving in different countries. While religious beliefs are still an important factor (98% in Pakistan, 48% in India, 34% in Canada, - SICP, 2001) there are more rational explanations available for giving.

Individual giving or charity is a common feature, among most who can afford, in India. The first ever detailed survey on individual giving in India estimates that 96 percent of upper and middle class households in urban India donate for charitable purposes (SICP, 2001). Individual giving is a common culture even in rural India where the affordability is supposed to be very low (PNPS Survey, 2002). Traditionally this giving was governed by beliefs and faiths related to religion. Hence it generally took the form of alms to beggars and contributions to temples. Since ‘DAANA’ (giving) is seen as a way of acquiring PUNYA (right virtue), that facilitates a better rebirth, or MOKSHA (salvation), the majority Hindu population involved in giving through many ways. While this has helped many, it is also true that such giving habits have indirectly encouraged large-scale beggary. Many times the giving habits have been grossly irrational, (like that of throwing coins to sacred rivers) and have not been of help to any body. Therefore, our survey tried to find out as to what are the primary considerations for giving among the most educated, rational and affordable group of people in India.

All the respondents of our sample are found involved in charitable giving though the frequency of such giving and the nature and extent of giving varied widely.

On a five-point scale 62 percent of the respondents were found giving Frequently, while those who gave Occasionally and Rarely were 25 percent and 7 percent respectively.

On an average about 5 percent of the annual income of the respondents is flowing towards charities.

There appears to be a good deal of Indirect Giving, (especially among the bureaucrats) where the respondent has been instrumental in making some one else donate.

More than 90 percent of giving is in money form, though a large number of respondents have given food, books and clothing also.

(The respondents were asked to think and rank the reasons for giving. An explanation was given to each answer suggested in the questionnaire)

2.1 "I feel good as I could help the needy". This was the most important reason quoted by an overwhelming 78 percent of the respondents. No doubt compassion plays its part but a cross examination of donors shows something beyond compassion. A feeling that “it can happen to anybody” seem to drive people to give.

"There are causes, which need to be supported" is the most important reason quoted by 11 percent of the respondents.

Only 5 percent quoted religious belief as the primary reason for giving. It should however be noted that 42 percent have given second priority and 20 percent have given third priority to religious aspects as motivation to give.

"Some times you can't say no" is cited as one in top five reasons by 42 percent of the respondents.

70 percent of the respondents have made donations only when an individual or organization approached them and asked to give.

(Our respondents were asked as to whether they think of something else too, when they give. Here we had raised both positive and negative issues and gathered their views mostly through observation in the course of a conversation.)

Experience of poverty, health problems, the understanding as to how education has helped them to gain social and economic status etc., seem to be important issues influencing the decision to give to specific causes, individuals or institutions. More than 50 percent of sample respondents have cited such issues.

"God will give me more if I give to the needy", " I hope to earn some 'Punya (good virtue) by donating to the needy", "My family members/friends/superiors feel good when I give", "It would enhance my social image" are some of the most frequently mentioned motives for giving.

Donating with a hope of facilitating a gain - mostly in career terms and to satisfy someone concerned - too is observed though not as a predominant factor.

There are definite evidences feeling of guilt working as a push factor for giving. Many bureaucrats, executives and consultants have during the course of conversation expressed that when they "could get money through easy sources, they have to compensate by giving"

4.2 One half of the sample respondents feel they would consider giving more, if a clear

Those preferring to give directly to the beneficiary and to an organization for the benefit of the beneficiaries are also divided in equal proportion (48 percent each)

Majority of the respondents (78 percent) does not like to give to the beggars. In fact they consciously avoid it.

Interestingly, about 50 percent of the respondents are not interested to donate to Government and Religious institutions, as they feel the end use may not match their preferred purpose. This is to be viewed in the context of the finding that religion continues to be a major reason for giving.

Help to Orphans, Aged and Handicapped, Support to Education and Support to Animal Welfare etc., are the most preferred purposes for charity in that order.

The major concern for most donors (58 percent) is the proper end use of money donated.

Credibility of the recipient is the major suspicion for the donors. It is very high in case of institutional recipients with 45 percent of donors opining that even though they donate they "very much doubt" these organizations.

16 percent of the donors are eager to get educated about how to give wisely and rationally.

A sizable number (49 percent) of the sample respondents opine they would have given more if only they know more about and very sure of the credibility of the Voluntary Organizations which support the cause dear to them.

Charitable giving by individuals could be an important source of funding for the VOs. The following observations based on our survey establish this very clearly.

The incidence of giving is quite high both in terms of frequency and size of giving. This should help us make projections about the amount available through individual contributions. A rough estimate shows that the 200 sample respondents were instrumental for a contribution of approximately Rs. 500,000 in one financial year. Those seeking funds need to understand this possibility and plan their fundraising strategies accordingly.

Credibility of those seeking funds is a critical area. The voluntary service organizations have to particularly bear in mind that the potential donors are highly unsure of the end use of their contributions. They are willing to give more if only they are convinced that their money will find the right use. This establishes the need for a rating of the organizations seeking funds. It also throws up a crucial question of governance of such organizations. If good governance is ensured, there would be better credibility and then fund raising would be that much easier.

There seem to be ample scope for enhancing the size of individual giving and making it well directed. This should ensure a more sustained inflow of resources to those seeking funds. In these days of dwindling government support and uncertainty of corporate patronage, the voluntary organizations will have to tap this source with greater efforts. There is a need to evolve strategies to make affordable people give more.

There is enough scope to make individual giving a much more rational and judicious act. This establishes the need to educate/inform the donors on the right sources and purposes to give. In fact many of them are looking for such education/information. Such education/information may come from the research organizations or the fund seekers themselves. The need is of a good liaison agent between those willing to give and those equipped to use such contributions for the good of the needy.

A good number among those making donations is not adequately informed of the purposes for which they can give. The decision to give is as much a product of what they perceive as the right cause, as it is of their lack of awareness about the purposes that deserve their support. Creating awareness about the purposes and ensuring end use of funds would facilitate a marked increase in the rate individual giving

The importance of Government as a source of funding is fast dwindling, essentially due to the withdrawal policies as part of market approach to development. Funding from international institutional sources are difficult to acquire and will have many tags attached to it Both governmental and foreign sources directly or indirectly force the recipients to pursue their agenda and the VOs are likely to be guilty of pursuing the ‘donor driven agenda’. Depending on individual sources is likely to give VOs more operational freedom.

Individual charity is a wide spread phenomena and there seem to be an increasing willingness to give on the part of the new rich.

VOs are better placed to receive individual donations since the donors are conscious of the causes to which they want to give.

Our finding that most donors are consciously avoiding donating to beggars, religious institutions and government institutions, makes VOs the most preferred recipients.

Giving is generally understood to be “an act of altruism’. Most empirical studies have identified compassion as a primary motivation for giving and hence lead to believe in the approach of altruism. “Altruism is the analytic model that explains prosocial commitment as a function of a biologically, psychologically or socially grounded impetus or selflessness”. It is an extraordinary act of exhibiting heroism and sacrifice as evidenced by some of the studies ( Piliavin et. al 1981, Simmons et. al. 1987). There is obviously a difficulty in operationalising this understanding of giving. So, many scholars have attempted to reinterpret altruism. They considered giving as an act not of an individual’s selflessness but the result of the utility derived by them from the collective good or public good achieved through their charity. (Knap and Kendall, 1991, Steinberg 1997). However, this understanding cannot help us either to properly establish the motivations for giving or to build strategies for fundraising. The limitations of altruism approach have been well demonstrated over the years (Schervish and Havens, 1997). VOs need to look for other paradigms of understanding giving in order to be able to use this as an extensive source of funding.

The Exchange or Utilitarian approach to giving starts with an assumption that people are selfish and always look for some thing in return from all their actions. They give because they are expecting to maximize their utility. They see their donation as an investment and expect a gain out of their donation. (Jones and Posnett, 1993, Marriot and Jones, 1996). This idea might look somewhat applicable in our context. It might be common to expect something in return (say “Punya” or a tax exemption). The early concept of ,Daana’ as understood both under Hinduism and Buddhism had an exchange element built into it (Thapar, 1978). But such expectation itself cannot be a primary motivation for giving since there cannot be a one to one relationship between the value of what was given and what was earned. Hence fundraising strategies based on this assumption may not be very successful. For instance our survey has clearly shown that ‘tax exemption’

Identification Model (Schervish and Havens, 1997) seems to be a more pragmatic way of understanding charitable giving. The identification approach is built on an understanding that “philanthropy unites individuals in caring relationships that enrich the giver and the receiver alike” (Martin, 1994). Identification model is a rational approach that states that people donate because they identify themselves with community and situations. “Giving derives from identification, identification derives from encounter, encounter derives from relationship and relationship derives from participation” (Schervish and Havens, 1997). Our empirical findings amply demonstrate that giving is a rational act. People have particular choices in terms of ‘why’ and ‘whom’ to give and while making these choices they build a relationship with specific situations. Many donors have in the course of our interview used phrases such as “it can happen to any body you see, to me also”, “I too have come up the hard way” , “After all I am sharing my income with a member of my community” and the like. Trying to project these identities would be the best way of devising fundraising strategies. It is both practical and concrete. Reaching out to the wide spread individual donors would be easier with this understanding of giving practices.

* Revised edition of the Paper presented at the National Seminar on Synergising the State, Market and the Third Sector for Development Bangalore, July 2004

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M. S. Moodithaya**

Globalization, today is affecting the often-blurred relationships among Governments, Corporate, and Non-Governmental organizations (NGOs) in developing countries like India, with increasing concerns for long term social welfare. In particular, Globalisation seems to be encouraging inter-sect oral collaborations or partnerships among the three sectors—especially, Corporate and NGOs, facilitating the advancement of each of their fundamental goals and objectives. The corporate- NGO partnerships, in general, prove to be mutually rewarding. Through the partnership, the NGOs are able to extend their reach to more people than they might ordinarily, given their limited resources. They learn new skills and disciplines. They find new ways to carry out their mandates and fulfill their missions. And they are able to access more financial resources to support their programs. Corporate, too, appear to have a wide variety of reasons for working with and through NGOs in their corporate corporate responsibility programs.

In virtually all cases, the good reputation and moral influence of NGOs is a great asset to the Corporate that successfully partner with them. In some cases, the attraction is contacts and relationships with leaders and organizations that the NGOs possess. Some times, even their particular expertise in the program area that the corporation has identified as its priority becomes an attraction for partnership. Additionally, some NGOs have a presence in several countries where the corporation, especially a multinational company, seeks to expand its corporate responsibility efforts. In other instances, the NGOs’ established management capacity and therefore ability to relieve the corporation of certain kinds of paperwork and grants management tasks is attractive. And, finally, in many instances, Corporate seek such partnerships because of the tax-deductible status of NGOs. Needless to say, not all NGOs have all of these characteristics and strengths, so organizations with these attributes can be an asset for an individual corporation seeking an NGO partner.

Despite the examples of promising or successful partnerships among Corporate and NGOs, the fact remains that these partnerships are very difficult to create and then to sustain. Looking from the NGOs’ perspective, the main concern is the possible tension between their mission and the immediate stakeholders’ expectations and values and the purposes and priorities of the business community. Similarly, there are also concerns of donor dominance and development of a dependency syndrome among the partnering NGOs.

Looking at the problems from the Corporate’ perspective, dependability, track record, professionalism in service delivery, credibility and the compatibility of the causes the NGOs are trying to champion become the issues they should check before venturing in to partnerships with NGOs. While the Corporate (though do not openly admit) try to maximise the immediate or long-term contributions to their “bottom line”, NGOs try to maximise the reach and effectiveness of the causes they are trying to serve. This possibly, sometimes, creates problems in corporate-NGO partnerships.

Given this background, this paper analyses the different dimensions of the corporate-NGO partnerships, providing a unique and insightful look at the requirements of successful partnerships and the challenges that lie ahead. This study conducted in the state of Karnataka recognizes the fact that India has the highest number of public companies in the whole world and that there are innumerable social and economic problems to address. Unfortunately, despite more than five decades of State initiated development efforts millions of people still live in pathetic conditions. As observed by the Human Development Report, 2003, more than a third of the population in India is living with an income of less than one dollar a day. Adult literacy is only 57% and health spending stands at a meager1.3 percent of GDP. Infant mortality is at 68 per 1000 live births and under-five mortality is at 96 per 1000 live births. The corporate sector can’t turn a blind eye on these problems since social development alone can ensure a fertile market for its products and services. Though this study mainly concentrates on the Corporate’ perspectives on corporate-NGO partnerships, the results are relevant to the NGOs and all others concerned with social development.

This paper aims at an analysis of the different aspects of corporate participation in social development in general and the intricacies of corporate-NGO partnerships in particular. In addition to throwing light on issues like the causes the Corporate champion and the consistency in commitment there to, the study analyses in detail, the nature of corporate-NGO partnerships and the possible benefits, such partnerships can offer to the corporate sector. Attempts are also made in the study to probe in to the difficulties the corporate sector faces in working with the NGOs. The study is mainly based on the views of the corporate sector participating in social development.

The present study is based on both primary and secondary sources of materials. The primary data is collected through structured questionnaires, from the corporate executives, executives of Non-Governmental Organizations (NGOs), Government officials and the beneficiaries of corporate participation in social development. The techniques of data collection include both quantitative and qualitative. The quantitative data is collected from the knowledgeable middle level managers, company publications and web sites. The qualitative data is mostly collected from the CEOs or the top executives responsible for deciding the policy on philanthropy. The study is based on a sample of 48 listed public Companies registered in Karnataka with a paid-up capital of more than rupees three crores. These 48 companies are drawn from the engineering, auto ancillary, software, banking, electrical and electronics, petroleum, liquor, and other industries. No distinction is made between companies in terms of their nationality, size, age or nature of activities. However, companies with more than five years of existence only are considered as sample units.

The secondary sources of materials are gathered from books and journals, reports of committees, published and semi-published data from the Govt. departments and reports of special committees appointed by the Government and Non-Governmental organizations and the company websites. The nature of this study is partly descriptive and partly explorative. Conceptual details and theoretical framework are considered but they have been limited only to the extent of supporting the total design of the study. Other details are worked out with an objective of understanding the different dimensions of corporate-NGO partnership in social development in the State of Karnataka in India, mostly from the corporate perspective.

Since the need for corporate-NGO partnership arises only when the corporate sector expresses desire to participate in social development, an attempt was made in the study to seek the opinion of the corporate sector on whether the companies should participate in social development or not. In this regard the field data revealed that there is an overwhelming agreement in the corporate world pertaining to its obligation to participate in social development. 85 percent of the respondents felt that companies have a social obligation to perform and should participate in social development. There has not been a marked difference between the opinions of the domestic and Multinational Corporate in this regard. The difference was only marginal with 89 percent of the Multinational Corporate believing they should participate in philanthropy. Among the domestic companies 83 percent felt that they should have a commitment to philanthropy. Only 15 percent of the respondents felt that as an economic institution, a for profit company should try to maximise the shareholders wealth by adopting all such strategies that contribute to improved bottom line rather than participating in social development.

The respondents supporting corporate philanthropy put forth different arguments for such interventions. The most popular argument has been the social responsibility argument. They feel that since they make use of the scarce financial, natural and human resources of the society, to compensate they have to give back something. Some other respondents put forth a pragmatic view, stating that participation in social development would improve the purchasing power of the people, improving their own business prospects in the long run.

Since the corporate sector is considered to be more organised and professional in its attitude towards whatever it does in comparison with other forms of organisations, an attempt was made to find out whether the companies have a policy on corporate philanthropy, and if so is it in writing. This is significant because, in professional management it is believed that as a part of the planning process an organisation must develop clearly spelt-out policies on different aspects of a business. A well-defined policy gives a direction to the activities of a firm and ensures effective attainment of the organisational objectives. A policy also ensures continuity and consistency in an organisation’s stand on a given issue.

The field data revealed that only 58 percent of the responding companies have a policy on philanthropy. Once again, there has not been much of a difference between the domestic companies and the multinational Corporations on the issue of having a policy on philanthropy. It was found that while 60 percent of the domestic companies have policy on philanthropy, the percentage of the same is only 55 among MNCs.

Since it is desirable to have a policy in writing, data was collected on the nature of the policy as to whether it is in writing or not. It was found that only 43 percent of the respondents having a policy on philanthropy had it in writing. Among the companies having the policy in writing the MNCs lead. While only 22 percent of the domestic companies have their policy on philanthropy in writing, the percentage of the same is 80 percent for the MNC respondents. This clearly indicates that the MNCs with a policy on philanthropy are more focussed and committed with their policies put down in writing. Most of these companies have these policies as a part of their mission statement. They believe that a management that truly cares about business ethics and corporate social responsibility should be proactive rather than reactive in linking strategic action and ethics. As opined by one of the respondent CEOs, “this calls for a policy pronouncement on philanthropy, in writing, that goes to considerable lengths to ensure that the company’s actions reflect integrity and high ethical standards”.

It was observed that due to lack of a clear-cut policy in writing, the intervention in social development are becoming short term and ad-hoc. Obviously, the companies without a clear-cut policy have supported charitable causes unrelated to each other and to their business, subject to the whims and fancies of the top management. Diluted and unfocussed, their philanthropy has not made a significant impact on any particular cause or target group or on the company’s reputation in the community.

The field data also revealed that contrary to the general perception of independent decisions on spending on philanthropy; among 42 percent of the companies, practically, the top management takes decisions on philanthropy. This trend is strongly pronounced among the domestic companies (52 percent) in comparison with the multinational Corporate (26 percent). It is observed that, the multinational Corporate believe more in channeling the funds through Trusts specially formed for this purpose. Accordingly, 32 percent of the MNCs have established separate Trusts to deal with the matters of participation in social development. 20 percent of the sample companies have established separate departments to deal with issues concerning philanthropy. But it was found during discussions with the people in these departments that the faiths of the top management had a far-reaching implication on the decision of these departments to support a specific cause. Only 13 percent of the responding companies have set up separate committees to look in to the different aspects of forming and implementing the policies on corporate philanthropy.

Motives behind corporate philanthropy directly affect the commitment to and consistency in support to the causes and the willingness to join hands with other sectors participating in social development. Therefore, the study analysed the motives behind corporate philanthropy. It was found that 52 percent of the respondents consider corporate philanthropy as a response to their social obligations. These companies believe that as the responsible corporate citizens they have an obligation to the different stakeholders in the company. They assume responsibility not only to the stockholders but also to other sections of the society with whom the company interacts; like the customers, the employees, the dealers, the suppliers, the State and the community as a whole. Creating a favourable image is clearly the objective of philanthropy for 25 percent of the respondents. Through corporate philanthropy they believe, a positive image can be created in the minds of the different stakeholders, which would give an economic advantage to the company over its rivals in the long run. Seventeen percent of the respondents participate in social development due to political and social compulsions. As revealed by some of the respondents, for favours received from the politicians, the government officials and some times even local organizations, the companies are required to dole out donations in cash and kind. Six percent of the sample companies admit that they were motivated by tax advantages to participate in social development.

Though the respondents have not clearly identified, informal discussions with the company officials revealed that religious faith has been one of the prominent factors motivating Corporate to participate in philanthropy. However, it must be noted that the influence of religious faith on corporate givings is on the decline now. More and more companies are now appreciating the significance of strategic corporate philanthropy, so as to improve the corporate image and acquire distinctive competitive advantage in the market place.

The corporate sector supports several causes to suit its budget, convenience and convictions. The major causes supported by the companies are education, health, poverty alleviation and promotion of art and culture. In addition to this, the sample units have provided assistance in cash and kind during natural calamities such as earthquakes, floods and famines. Among the sample units, the most prominent cause has been education. 47 percent of the respondents have identified education as the major cause they would support. These companies believe that spreading of literacy and supporting quality education is a good social investment. This social investment it is believed would facilitate not only in image building but also in creating a market for the products and services these companies offer.

While 21 percent of the respondents are spending primarily on women empowerment, 17 percent of the companies have rural development as their primary concern. 15 percent of the respondents focus on community development taking up projects like building and maintenance of public parks, libraries etc.

With a view to find out who actually benefit from corporate philanthropy, the respondent companies were asked to identify the most prominent beneficiaries of their philanthropical activities. It was found that despite the claims of the companies that they participate in philanthropy with the genuine concern for the mankind without looking at something in return, for 58 percent of the respondents the major beneficiaries of philanthropy were their employees only. The nature of benefits was in the form of educational facilities, sports facilities and recreational facilities to the employees and the family members. There were also cases of supporting the cooperative societies and other associations of the employees. While from 20 percent of the responding companies women have been the beneficiaries, 15 percent have concentrated on the rural poor. Further, the major beneficiaries from the philanthropy of 7 percent of the sample companies were children. These figures only speak about the major beneficiaries of the philanthropical activities of the responding companies. In fact most of the sample units have been supporting more than one cause, resulting in the distribution of the resources used on philanthropy among different section of the society with whom they interact.

The corporate sector participates in philanthropy either directly or in collaboration with the Non-Governmental Organizations, Government Agencies or other private organizations. Since each partnering organisation has its own organizational strengths and weaknesses, the companies are generally careful in selecting their partners in social development. Therefore an attempt was made in the study to find out whether the companies prefer to go alone in philanthropy or join hands with other organizations or individuals. The field data revealed that Karnataka has a very strong corporate NGO relationship with 56 percent of the responding companies joining hands with the NGOs to effectively implement their social development programs. These companies are primarily working with the NGOs, though occasionally go alone or some other organizations on some projects. Twenty eight percent of the respondents are working directly on their projects without joining hands with any other organizations. Eight percent of the respondents each work with government agencies and other firms.

Since the success of corporate participation in social development is dependent on the effectiveness of the delivery process, the choice of NGOs by the Corporate as partners is expected to be a conscious and strategic decision. In consideration of this a detailed analysis of the reasons for preferring NGOs to other modes of participation in social development was made in this study. The field data revealed that it is the expertise of the NGOs that attracts the corporate sector to work with them. Thirty two percent of the responding companies felt that by joining hands with the NGOs, a professional touch could be given to their philanthropic activities. Twenty two percent of the respondents preferred to work with the NGOs appreciating their clarity of objectives. These companies feel that when an NGO is focussed on a given cause, a company intending to support that cause finds it easy to strike a partnership. 14 percent of the respondents felt that the possible operational synergies of working with NGOs have motivated them to work with NGOs while the fact that the NGOs work at the grass root level and have a complete grip over what they are doing has attracted fourteen percent to work with the NGOs. Another 14 percent of the respondents believed that joining hands with NGOs would enhance the credibility of the company and its social development activities.

The corporate-NGO partnership is considered benevolent to the companies both in image building and ensuring the effective implementation of their social development programs. This is understandable in the light of the fact that most companies have very little time and expertise to work on projects of social development. Since the NGOs work at the grass root level and mostly on professional lines, their ability to work on these projects is much better than the Corporate themselves. In consideration of a reasonably good corporate-NGO partnership among the sample units and the possible advantages of such a partnership, an attempt was made to identify the criteria for selection of NGOs as partners in social development by the sample units.

The field data revealed that while selecting the NGOs, the most prominent consideration is the reputation or credibility of the NGO. 32 percent of the respondents considered this as a single most factor that they would consider in selection of a specific NGO for partnership from among the thousands of NGOs. For 29 percent of the respondents the track record of the NGOs and their proven expertise is the guiding factor. Twenty five percent of the respondents are looking out for good projects worth supporting while selecting the NGOs as their partners. While the size of the NGOs is a consideration for seven percent of the respondents, another seven percent prefers the local NGOs to work with.

There are several reasons for some of the companies not showing faith in the Non-Governmental Organizations despite the possible benefits of collaboration. The corporate sector some times is suspicious, jealous or even scared of using the services of the NGOs. Of course in recent times due to the initiatives of industry organizations like CII, FICCI, ASSOCHAM etc the attitude of Corporate towards social development and partnerships with NGOs is changing. However, the symbiotic relationship between the two is yet to come through. It is in this background that an attempt is made to understand the apprehensions of the companies keeping away from partnerships with NGOs.

Contrary to the general belief that NGOs are known for their professionalism in working for social development projects, 45 percent of the responding companies not working with the NGOs consider lack of professionalism among NGOs as the strongest reason for not doing so. They feel that the NGOs are not properly organized and lack professional management. These companies are of the opinion that NGOs need develop proper administrative, accounting and reporting system that would secure the confidence of the funding agencies. 30 percent of the respondents considered misuse of funds as the major cause of their reservations to work with the NGOs. This is understandable in the light of the numerous scams that are being reported in the voluntary sector in India in general and Karnataka in particular. Several cases of misuse of funds secured from foreign donors and other funding agencies have been identified and reported in Karnataka.

Fifteen percent of the respondents are scared of a goal conflict and hence avoid working with the NGOs. Typically these companies had to face the wrath of the local NGOs who had fought against these companies on issues of environmental and other local concerns. (Of course, some of the NGOs also feel that accepting corporate support in their social development projects may result in the sacrifice of their “voluntary spirit”.) Ten percent of the respondents felt that they find it difficult to coordinate with the NGOs and hence prefer to go alone.

With the objective of knowing what the companies feel is the right combination to attain optimum output from participation in social development projects, all the sample units were asked to identify the organisations with whom they would like to collaborate in an ideal situation. This question assumes significance in consideration of the fact that some times under certain compulsions companies join hands with other individuals or organisations in implementing their philanthropic projects. If the companies were to be happy with their present collaborative attempts, the response to this question would have been at par with the one presented earlier. However, though 56 percent of the responding companies were working with the NGOs, given a fresh thinking, only 38 percent of the sample units felt that they would go with the NGOs. This possibly speaks about the straining relationship between NGOs and the funding Corporate. Perhaps, the NGOs have not been very successful in winning the confidence of the collaborating companies. It is in this background that more and more companies are today thinking of starting their own Trusts to plan and implement their own social development programs. As against 28 percent of the sample units operating through their own Trusts, 33 percent respondents feel that they would prefer to float their Trusts to entrust the social development programs. Another significant revelation of the study is that 25 percent of the respondents still feel that direct donation is the best approach to honour social commitments. Only 4 percent of the respondents felt that it is worth working with the Government agencies.

With the tremendous pressure on the State to reduce its involvement in social development due to its shrinking financial resources and inbuilt limitations in the delivery process, the need for corporate participation in social development is becoming inevitable. Today, it is being believed that, with their vast resource base and professional management, companies are capable of taking up causes like health, hunger, education, equity, justice, environmental protection, human rights and so on, more effectively than others. Even the corporate sector is positively assuming this responsibility and striving to be good corporate citizens. As the scope of corporate governance is being stretched beyond the stockholders interest, the corporate participation in social development is gaining significance with the corporate executives, policy makers, academicians and even the voluntary sector.

The study reveals that though there is a strong trend towards the companies building partnerships with the NGOs in India, the later have not been very successful in winning the confidence of the corporate sector. This coupled with the failure of the in-house specialized departments or committees, to ensure effectiveness of the spending on philanthropy, more and more companies are today looking for forming their own Trusts. Even smaller companies are being motivated by companies like Tatas, Birlas, Singhanias, Godrejs, Bajajs, Infosys, Wipro and so on, to form their own Trusts to work on philanthropic projects. The NGOs must win the confidence of the corporate sector and the Trusts specially formed for the purpose of dealing with the social development projects, so that they would be in a position to strike a symbiotic relationship with the companies for effective implementation of these projects. This calls for professionalisation of the management, transparency of transactions, developing a good reporting system and expertise in fund raising activities among the NGOs. Donor relationship management would be a significant aspect of successful corporate-NGO partnership. In this regard, the voluntary sector may have to develop a reliable credit and credibility rating system. Corporate-NGO partnership would be a mutually rewarding one only when it is built on mutual trust and confidence. As we progressively move towards globalisation, with increasing compulsions both on Corporate and NGOs to work together, the for-profit and not-for-profit sectors need and should develop a sustainable and symbiotic relationship.

* Edited version of the Paper Prepared for presentation at National Seminar held at AIMS, Bangalore on 6&7 Aug. 2004

** Director, Justice K. S. Hegde Institute of Management, Nitte- 574 110, Karnataka, India E-mail: jkshim2@hotmail.com

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YASHAVANTHA DONGRE*

This paper examines the role and significance of Third Sector (Civil Society Initiatives) and the consequent policy imperatives in the process of achieving inclusive development. While a general analysis of the role of Third Sector Organizations (TSOs) constitutes the major issue of this paper, an emphasis is also made towards understanding the process of globalization and its impact on Indian economy, conception of inclusive development and the need for expanding the social capital base
Globalization assumes that all the players are equal. The concessions are too less and compulsions high. The roles of all the players in the market and society got to change. The role of governments all over the world is in transition and for that matter the concept of Nation-State itself is under transition. The business houses too, big and small alike, are redefining their patterns of existence as well. This necessitates that even the individuals (the people at large) too change their mindset and prepare themselves to survive in a new context and play a new role. That people should be prepared to survive in this changed context, brings to the fore the peoples organizations and creates space for the civil society to operate.
Withdrawals (by State), downsizing (by business houses) and consequent displacement (of people) have become a common feature in all the economies under transition. In countries like India, where the social and economic stratification is complex and internal contradictions are plenty, the results of withdrawal and downsizing could be alarming. When the population is not capacitated to understand even the asides and besides of globalization, it is but natural that the economic transition is bound to be painful. It is this situation that calls for equipping people to face the challenge of globalization. This equipping is to be done without loss of time. India already looks much behind many others in the race. In fact, one of the major strength for India is its population – both as consumers and knowledge providers. But the paradox is that this very strength is her weakness too – in terms of the presence of large number of those who cannot simply understand the present economic context. Hence there is a need to equip people to survive and thrive. Hence, the focus should be on inclusive development and the facilitators of inclusive development.

Inclusive growth is the catch phrase used by many multilateral bodies and the 11th plan document in India too emphasizes the same. However, there is a need to broad vase this conception from growth to development, obviously because we need to focus on participatory and beneficiary directed development. Inclusive development also presupposes the inclusiveness in terms of non economic indicators within economic development. As observed by Gandhi, the economics that disregard moral and sentimental considerations are like waxworks that, being lifelike, still lacks the life of the living flesh. It is important to note that development does not spontaneously result from the free interplay of market forces. Markets are one among several institutions participating in the development process. As they are by nature myopic, socially insensitive (most often), guidelines to direct them is the urgent need. Also needed are the dimensions of human rights, social choices and the enhancement of entitlement levels of all groups of citizens. Inclusive development requires, ensuring the exercise of civil, civic and political rights; Democracy as it also guarantees the transparency and accountability necessary for the working of development processes; and equitable opportunities to access to public services, such as education, health protection and housing, with a particular stress on gender justice.
Inclusive development is possible by including in the conception of development, various socio-cultural parameters mentioned above and by providing opportunities to those excluded – such as the rural poor and the agriculturists – to prioritize, decide and implement for themselves, what they seek to achieve. It is in this sense that Amarthya Sen has conceived the idea - Development is Freedom. It is thus natural to presume that the developmental initiatives routed through the institutions of the civil society {Third Sector or Peoples Organizations} promise to make the process more ‘inclusive’ and ‘empowering’.

Third Sector has been generally interpreted, as a broad umbrella concept, encompassing all types of people’s initiatives (Defourny, 1992). They consist of organizations such as Cooperatives, Non Government Organizations (NGOs), Trusts and Foundations, Associations such as Youth Clubs, Self Help Groups (SHGs), Government sponsored independent organizations, various Ethnic/Caste based organizations, Educational Societies and a less institutionalized but very effective ones such as Action Groups (both political and social) and Community Initiatives. In other words the TS in India is made up of registered institutions, informal organizations and the non-registered/non-institutionalized Community Initiatives. It is important to note that even though they are different in their structure and legal format, they have a few very important common features. They do not consider profit as central to their activities, they are democratic (with the exception of Trusts), they are voluntary in nature, they primarily aim at the collective/social well being of target groups/members and they receive financial support from the government and non-government sources.
The TS is defined in different ways across the world. The popular conception in US is that of Non Profit Organizations (NPOs). This has been established through a Structural/Functional definition (Salamon and Aneheir, 1992). Even though many countries in Asia have accepted this framework (e.g. Japan), it falls short of accommodating institutions like Cooperatives and SHGs. Attempts to analyze the Indian Third Sector under this conceptual framework (Sen, 1998) have not met with much success. There have been other umbrella concepts used in the European context, such as the Social Enterprises (Pestoff, 1998) and the French concept of Economic Sociale (Defourny/Develtere, 1999). But these too fall short of encompassing the all too diverse set up in India. Hence the general term Third Sector (ISTR, 1992) seems to be the most acceptable one.

It is also necessary to find a theoretical explanation for the emergence and existence of these institutions/initiatives in Indian context, in order to see their changing role. There has been an attempt to explain the presence of Third Sector as a product of conscious choice of such institutions by people who do not prefer to have a Govt. or Private supplier to meet some of their specific needs (Hansman, 1979/80). In case of the largely illiterate Indian consumers, this hardly holds good. The Subsidy Theory (Fama and Jensen, 1994) while arguing that the TS is supposed to benefit from a variety of implicit and explicit subsidies and incentives and hence emerge in a typical developing country context, partially explains the situation in India. The reasons laid out in the Cultural Heterogeneity theory (James, 1987) that the TS emerges because of the presence of an unmet demand for cultural services which the dominant forms of organizations cannot fulfill, is a more acceptable explanation. There have been attempts in India to explain the phenomena based on the Cultural Heterogeneity theory (Sen, 1998) and also on a combination of many of these theories (Patel, 1998). However, it is significant to note that the Government as a conscious choice largely promoted Indian TS. This is an important dimension, which influenced the role of this sector in the post independent India.
The TS in India is generally known to be playing a pro- poor role. They have been patronized by the government and hence generally acted as the carrier of government programs to people. Rural Development (NGOs), distribution of credit and other essentials (Cooperatives), charitable activities (Trusts and Foundations) and mobilization of savings (SHGs) are some of the common areas of interest for these organizations. However, there has been no common National Policy in this sector till date. Further, though the institutions under TS constitute a big quantitative group, they have not got their due recognition. They have seen to exist because of the existence and support of the mainstream sectors – that of public sector and private sector.
It seems to be proper to conceptualize the Third Sector as a dimension of public space in civil societies. “ It is an area without clear boundaries where different rationales and discourses co-exist and interact.” Hence, more than the structure and legal format, it is the primary objectives of these initiatives that are to be considered as the basis of categorization. While it is important to note that there are opposing views regarding a common Sector treatment and the validity of such categorization, (Kramer, 2000) it should be held that such classification may be necessary to evolve a well directed policy towards these initiatives.

The role of the TS is increasingly seen to be important in the last decade. First, it was the disintegration of centrally planned economies and the need for safeguarding cohesion in democratic market societies, which brought the civic associations to the central stage (Evers, 1995). The crisis in the traditional welfare states has also compelled the policy makers to think of more planned and increased use of the non-state sources to guarantee welfare and to curb the cost of public welfare.
The process of globalization is seen to have eroded the possibilities of socialist and native alternatives in many of the third world countries. This apart from the erosion of the power of nation-states has created a space in civil society, which has been filled by a variety of TS initiatives (Sen, 1999). It is also held that as the state withdraws from some of the service areas, due to the embracing of economic liberalism, the TSOs are looked upon to takeover these areas (Robinson, 1997). While their area of operation increases due to the pressure of globalization, they are also to be more and more accountable and expected to perform more effectively (Edwards and Hulme, 1996).
The pre-globalization era has seen the TS as essentially a delivery agent for the welfare packages offered through the state mechinery. At best they acted as facilitators of development through non-state funding support. While the market orientation has increased this responsibility of TS"(though not through partnership with State9!it has also brougit a need for TS to embrace a few different roles.
The past decade and a half, which saw the markets across the worlds opening up in a big way, has made the countries of the North to think of the TS alternatives in a big way. In countries like Japan the NPOs are attached greater importance in providing public services (Kawaguchi, 1998). In the post welfare states like Belgium the TS is seen to be a key job provider and service provider to the aged (Defourny and Simon, 1998). Switzerland (Stryjan, 1998) and France (Caballero, 1998) have taken up efficiency and professionalization of TS as an important issue of current choice.
Free markets have a chance of doing well only when a larger share of population can directly participate in the process of development. Hence, the TSOs have a role in preserving and cultivating public virtues like participation, solidarity and concern. They have a role as proponents for social change by influencing public policy. They have a role of providing shelters to those displaced in the process of globalization. They have a role as pioneers for innovative ways of service delivery. They have a role of creating awareness through non-formal means to enable larger understanding of the globalization process. TSOs have a role to protest,`intervene and alter policy initiatives to ensure larggr interest. They have a rome to fe the constructive competitors, to set an example and to ensure that the alternatives to private corporate means are not totally extinct.

Third Sector Organizations are in principle, ideally suitable to facilitate inclusive development. The ongoing global economic crisis is an eye opener, for all those who thought that markets have matured enough to take care of all problems of economies. The States have not delivered, markets have proved, once again, that they can do more harm than good, and so the obvious choice is the third sector. But how do we capacitate this sector to deliver. Indeed it is here that is issues of mutual trust, faith, self help, group and collective wellbeing through self help – in other words, social capital, becomes significant. Third sector institutions can perform better with better stock of social capital, and they can create more and more social capital. This seems to be the only way of strengthening third sector organizations and facilitating inclusive development. Third Sector initiatives need to be evolved in specific micro level contexts based on the needs and available capacities of each such region. Such attempts would facilitate creation of cohesive communities and both bonding and bridging relations. A cohesive and integrated community would be the final objective of any developmental process. Therefore, enhancing the social capital base would be a top priority in the process of achieving inclusive development.

Purpose is a goal, intention or value that human collectivity proposes to actualize. It is an agenda or objective in the plan of action. Purpose or telos is a subjective term, and deciphering of its ratio juris from various data is an objective task.¹ In the context of TSOs, it is a normative concept addressing the aim that shapes the activities of the social organizations and foundations. Whether it is the Articles of Association, delineation of charter or statement of objective of trust or aims of endowment, the expression of desired purpose gives direction and guidance to the activities of the TSOs. In this paper an attempt is made to survey the legal theory and socio-economic discourse on purposive character of TSO and its significance in the activities and discourse on TSOs.

The early teleologists have philosophized the aim of achieving perfection as a natural phenomenon and an imperative of human conduct.²Just like a seed, plant or embryo has the potentiality to grow into ultimate size, human enterprises have competence for meaningful growth reflecting the traits attributable to the genetic material. The basic human trait of sociability expresses in the form of purposive behaviour by networking desirable relations.³ St. Thomas Acquinas viewed that the potentiality for perfection was to be tapped by mutual assistance in following certain disciplines for leading virtuous life.⁴ Relevance of association for orderliness in social life is brought out by social contract theorists like Rousseau: “Some form of association must be found as a result of which the whole strength of the community will be enlisted for the protection of the person and property of each constituent member, in such a way that each, when united to his fellows, render obedience to his own will, and remains as free as he was before."⁵

It is well-established that association is born out of deliberate effort of set of people and is a product of collective unilateral actions of individuals in their cultural setting for better world. According to De Tocqueville, “An association unites the efforts of minds which have a tendency to diverge in one single channel, and urges them vigorously towards one single end which it points out….Feelings and opinions are recruited, the heart is enlarged, and the human mind is developed by no other means than by the reciprocal influence of men upon each other."⁶ For attaining social prosperity, minds of all citizens shall be rallied behind predominant ideas. In fact, group conscience of people motivates them to join for a variety of purposes. Shared understandings of individuals within the group form the basis of such unifying force.⁷ Understanding becomes shared when members communicate what they profess to prescribe and others accept and agree to act upon. The prescriptions are supported by sanctions. Hence, becoming a member involves sacrifice of freedom, actual or potential, in exchange for strength of unity and security for better implementation of the choice.⁸ This reflects moral quality of the bonds that keep people together going beyond the interest-centered image of social fabric. Emile Durkheim said, “Men cannot live together without acknowledging, and consequently making mutual sacrifices, without tying themselves to one another with strong durable bonds."⁹ The culturalistic orientation towards trustworthy conduct is emerging from moral community’s spirit of social solidarity and moral density. Francis Fukuyama views that moral community is based on ethical habits and reciprocal moral obligations internalized by the community’s members.¹⁰

While natural law thinkers reiterate that law is a purposive social device, Fuller doubts the factor of purpose on two counts. First, a naïve teleology is a worst enemy that obstructs scientific pursuit of truth about purpose. Objectives of associations might be diverse. “Even those who participate in the creation of institutions may have very different views of the purpose or function of the institutions they bring into being."¹¹ Secondly, the unattractive antecedents of excesses which totalitarianism justified as based on ‘social purpose’ in European history warn us against going beyond modest indulgence in teleology. These point out the need for scrutiny of purpose objectively and from the angle of justice, human rights and welfare and purge to keep off evil schemes.

Concerning purposive character of association, sociological jurists have distinct views. The classic description of the elements of institutions by Hauriou that they involve the idea, the organized power and the manifestation of common activity¹² provides a clearer picture about the genesis and functioning of association. As per this analysis, organized power is put at the service of the idea for its realization through actual execution in a social environment. But Hauriou confined the scope of idea to those that prevail in social environment supported by the Constitution and laws without which no type of group activity would be possible. He sees in institution a synthesis of subjective will and objective reality, and an amalgam of social facts. Through the participation of all its members in the governance of the institution, and the consequent passing of the idea of the institution into consciousness of all its members, moral personality is achieved.¹³ This is the essential factor that gives distinct identity to the institution.

Regarding the genesis of juristic personality, Gierke considers that a plurality of individual wills becomes merged in a collective unit through the joint action directed towards the purpose.¹⁴ This gives rise to corporate personality with a capacity and will to act. Gierke observes, “The life of the corporate body is limited by its purpose.”¹⁵ The link between human purpose and human action is like that of cause and effect relationship. One method of resolving the conflict between egoistic purpose and social purpose is by forming and setting into service, associations.¹⁶ According to Ihering, “Association for a given purpose increases proportionately the strength available for its fulfillment.”¹⁷ Coordination within the association brings some internal restrictions and external protections, some responsibility and autonomy. To quote Ihering again, “Association is only possible to the extent that the individual purposes of the members tend to be harmonious and indeed to coincide.”¹⁸ In the altruistic and collective benefit activities, purpose attains a significant place. It is the purpose, which gives a definite identity, concrete shape and appropriate direction to a charitable entity. Law helps in canalizing charity to valid purpose and ensures that it is effectively attained. This assumed role of law should conform to the values of social justice, humanism and policies of welfare state.

There are scholars, amidst whom Hegel, Marx and Gramsci are prominent, who regard that civil society should be subjected to wise control, proper direction and adequate leadership. Hegel looks to associations and corporations as modes of moral socialization. According to him, they constitute the second significant ethical root after family. They provide moral education; confer identity and sense of belonging; serve as modes of integration of competing interests by imposing discipline on members; and promote the interests of all its members.¹⁹ Thus, they work for harmonization of individual and social interests and build up the civil society. Civil society, according to Hegel, is a necessary stage in the formation of state. Karl Marx held a view that civil society is the source of power of the state. Restoring civility to civil society was possible according to him by insertion of the poor into a discourse of civil society from which they had been kept outside as non-members.²⁰ The organized working class within the civil society has power to liberate both itself and the civil sphere. The disprivileged classes can fight for social and economic emancipation and use the civil society as the terrain of reproduction of dominant relationships. A deep-rooted democratic transformation could empower them. Marx said, “For the ‘protection’ against the serpent of their agonies, the workers have to put their heads together and, as a class, compel the passing of a law, an all-powerful social barrier by which they can be prevented from selling themselves and their families to slavery and death by voluntary contract with capital.”²¹ Antonio Gramsci considers that in a plural and conflictual sphere of civil society, hegemony, as an organizational principle, organizes and provides unity.²² The predominance of one social group over the rest of the population should reflect the moral and intellectual leadership of the dominant class and the social base of consent for the state. Extending this discourse, Foucault regards each site of social action as a site for power relations. He says that relations of power and their analysis extends beyond the limits of the state because, firstly, the state can hardly occupy the whole field of actual power relations, and secondly, the state can act only on the basis of other , already existing power relations.²³ His recognition of ubiquitous character of power and rejection of unification process favour co-existence of tiny power centres at the bottom of civil society.

Associative or communal obligations that reflect special responsibilities of members of biological and social groups have been examined by Ronald Dworkin from moral and social perspective.²⁴ He attributes two reasons for disregarding their importance: first, the factors of emotional bonds of such obligations which confine them to intimate bodies like family or clan; and second, possibilities of suffering and injustice arising from irrational factors such as racism attached to communal obligations. In spite of these inherent limitations, associative obligations are important part of the moral landscape having great significance for happy family life and intimate relations within the association. In order that associative obligations can be sustained among people more effectively, Dworkin suggests the following steps: to regard group’s obligation as special, holding distinctly within the group; to accept the responsibilities as personal, with a sense of reciprocity; to consider the responsibility as flowing from the concern for the well-being of others in the group; and to ensure that the concern expressed is equal concern for all members.²⁵ Dworkin warns against the possibility of associational obligations coming in conflict with justice. First, they may operate unjustly against a member within the group. For example, patriarchic approach within the family may deny gender justice. Second, they may discriminate against people who are not members of the group. Racial or religious prejudices putting others into disadvantage become problematic because of injustice and impediment to perform the associative obligations of larger or different associative communities. Dworkin makes it clear that associative obligations shall be subject to interpretation wherein justice will play its normal interpretative role.²⁶ Supremacy of the values of justice, welfare and human rights over the associative obligations has great practical importance.

Conflict model assumes that law consists of the interests of only ‘specific segments’ of the society. Hills points out, “the exponents of interest-group approach emphasise the ability of particular groups to shape the legal system to serve their needs and safeguard their particular interests…power, coercion and constraint rather than sharing of the common values, are the basic organizing principles in the interest-group perspective.”²⁷ Feminists have argued for group autonomy as an essential feature of women’s organizations for collective empowerment. IM Young viewed that in the context of ensuring gender justice, it enables respective understanding of women’s collective experience and interests; group analysis and group generation of policy proposals; and group veto of policies that adversely affect the group.²⁸

Socio-economic discourse has recently made rich contribution to the understanding of social institutions’ capability for development. The concept of social capital evolved by Robert Putnam has cast powerful influence upon canvassing that citizens’ capacity for mutually beneficial collective action can be enhanced through purposive social action. Social capital is defined to mean “features of social organizations such as networks, norms and social trust that facilitate coordination and cooperation for mutual benefit.”²⁹ It is an asset, a functioning propensity for mutually beneficial collective action. In proportion to the community’s possession of social capital, it is able to involve in a mutually beneficial cooperative effort. It is possible to enhance the level of social capital by a bottom-up dynamic approach regarding social institution and trusts.³⁰ Participation and trusting are seen as mutually dependent; trust emerges from rich associational life, and at the same time facilitates spontaneous recruitment and forming of associations. The more we connect with other people, the more we trust them, and vice versa.³¹ Hence, between associations and trusts there is the common genetic material of social capital. Treatment of these two spheres as dichotomous spheres will not be appropriate because of this reason. In practice also, using them as alternative strategies is resorted to.

The social relevance of trust needs to be properly focused for the following reasons listed by Piotr Sztompka.³² First, the enhanced role of purposeful human efforts and social movements and creative functions of social bodies has made the society to increasingly depend upon mutual trust, cooperation and social solidarity amidst people. Second, the hazards of technology, the risks of environmental degradation, and calamities and diseases have disclosed human community’s vulnerability that needs to be handled through enlarged pool of trust. Third, in the context of numerous options in consumption, education, labour, leisure etc reliance on trust becomes indispensable ingredient of our action. Fourth, the complexity of institutions, technology and globalization has created opaqueness that needs to be dealt by the strategy of trust. Fifth, the growing anonymity and impersonal character of role players and increased number of strangers owing to migration and travel has necessitated reliance on trust. In addition, in the Indian social context, welfare and social security policies against poverty, unemployment, illiteracy, and ill-health; orientation towards social and gender justice; and activist approach towards human rights, environment and security of basic necessities of life supportive, demand social actions through trustful community efforts.

The culturalist bias in favour of trust also hints about its purposive dimension. As a part of civic culture, it has a social base and political outlet. Its cultural meaning is traceable to solidarity of community and brought out in the form of gentleman’s attitude to keep up to the levels of expectations. Promotion of inter-personal harmony strengthens the trust functions. Growing from hope to confidence, and from confidence to trust, people’s attitude concretize through conforming to expectations. Trust is regarded as a simplifying strategy that enables individuals to adapt to complex social environment, and thereby benefit from increased opportunities. In the background of uncertain and uncontrollable conditions, trust operates as a bet against future contingent actions of others, and solves the specific problems of risks.³³ The social foundation of a trust is laid in the reputation of the trust, actual performance of deeds, past conduct, appearance of trustworthiness, accountability of the trustee, efficacy of legal environment in enforcing the trust and trusting impulse.³⁴ In brief, the culture of trust is to be meticulously cultivated by preparing and maintaining requisite mindset. Sztompka regards that the model of ‘social becoming’ of trust should be supported by widespread social activities; holistic perception of the past, present and future; gearing up of the structural conduciveness; and enlightening and preparing people through education for trust.³⁵

The economic dimensions of group power, whether manifested in the form of associations or foundations, has definite link with purpose. The cost-benefit analysis provides justification for organizing. Pareto superiority envisages that whether or not a person is better off in one state or another usually depends on his relative welfare, which he himself judges.³⁶ Because no one is made worse off, there are no losers in Pareto improvements. An optimal development strategy consists in supporting welfare of all. As compared to isolated economic ventures, collective efforts should satisfy the most. This provides intellectual input for founding and running associations and trusts. Ronald Coase’s theory propounds that when transactions are costless and individuals act cooperatively, any assignment of legal rights will be efficient.³⁷ Least governmental interference in case of triviality of transaction cost is emphasized by Richard Posner.³⁸ Mimicking the market, the Third Sector law should strive at greater efficiency through group efforts. The theory relating to property in the context of philanthropy or publicly pooled economic resources indispensably assumes functional character, and its application or use requires to be accounted in terms of the purpose for which it is raised by public sacrifice with distinct expectations. The entitlement rule on the part of beneficiaries and liability rule on the part of managing committees and trustees complement economic efficiency and social good.³⁹ These work as protective hedges of purpose.

Looking to the sociological and juristic aspects of the problem of group power hidden behind various forms of legal devices that try to safeguard from excessive governmental control, W. Friedmann lists the devices as follows: unincorporated associations, traditional trusts, equitable remedies on community property and charitable foundations.⁴⁰ Choice amidst these devices is dependent upon level of socio-economic development and approach of the society. Personalized concept of English trust stands in contrast to collectivized German concept of association. According to Friedmann, the ‘hedge of the trust’ enabled continuity of legal relationship and stability of property rights without going for incorporation.⁴¹ Maitland considers it as an achievement of social importance that the trust has given to the society a liberal substitute for a law about personified institution and supplemented the meager law of corporation.⁴² Regarding foundations, which are the most important and giant bodies in the field of group power especially in America, Friedmann considers that they emerged as both tax saving schemes and means of realizing social responsibility along with projecting their image as philanthropies.⁴³ The social impact of institutional giving has been enormous in the field of education, research and health as the charity objectives have wide coverage. However, he warns against gradual restriction on the freedom of researcher.⁴⁴

Jurists like Duguit have emphasized the factor of purpose in the field of trust so much that they even recognized vestment of property simply in purpose, ignoring the maxim, ‘no person, no property’.⁴⁵ According to B.K.Mukherjea, this approach is problematic because the whole thing is placed at the mercy of the State, which can do whatever it likes with this ownerless right, and there remains no person entitled in law to enforce the intention of the donor.⁴⁶ Hindu law overcame this dichotomy by recognizing deity, mathas and satras as legal entities owning the property, which could be used exclusively for the purpose for which dedication was made. Sir Lawrence Jenkins in Bhupati v. Ramlal observed, “The dedication to deity is nothing but a compendious expression of the pious purpose for which the dedication is designed.”⁴⁷ B.K.Mukherjea comments that it involved embodiment of pious purpose as well, and that the material object’s symbolic representation of purpose gave it a status of legal person.⁴⁸ In fact, Duguit contemplated that groups should pursue purposes that only conform to social solidarity.⁴⁹ Recognition of corporate personality to any group existence or concerted activities is only for promotion of collective purpose, which brings both collective powers and liabilities under the aegis of social solidarity.⁵⁰

From the above discussion of the concept of purpose in the context of TSO, it is clear that sociological foundations, cultural reasons and economic justifications for group activity make it imperative that there ought to be centre-staging of the socially acceptable, valid and relevant purpose in the group functioning. Because of such important position of it, purpose shall be parameter in the application of law and governmental control TSOs.

However, superiority of the values of human rights, welfare and social harmony shall control the contours of purpose.

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*Professor of Law, Department of Studies in Law, University of Mysore

¹Pharon Barak, Purposive Interpretation in Law (Princeton University Press, Princeton 2005) p. 89.

²Aristotle considered that man as part and master of nature was subject to universal law and had rational choices towards good conduct. Stoics, Roman jurists and early Christian philosophers propounded aim of perfection. See W Friedmann, Legal Theory, 5^th Ed (Universal Law Publishing Co, New Delhi, 2003) pp. 10-11; 99; 102 and 104.

³Finnis considers sociability as a basic form of human good, other factors being life, knowledge, play, aesthetic experience and religion. JM Finnis, Natural Law and Natural Rights (1980) extracted in MDA Freeman, Lloyd’s Introduction to Jurisprudence, 7^th Ed (Sweet & Maxwell, London 2001) p. 174.

⁴Thomas Acquinas, Summa Theologica extracted in MDA Freeman, supra n.3 p. 146.

⁵JJ Rousseau, The Social Contract , extracted in MDA Freeman, supra n.3 p.151.

⁶Alex de Tocqueville, Democracy in America Vol. II (tr. H Keene) The Colonial Press, New York 1990 p.8 cited by Rajesh Tandon, The Civil Society-Governance Interface’ in Rajesh tendon and Ranjita Mohanti, Does Civil Society Matter? ( Sage Publications, New Delhi, 2003) p. 61.

⁷AM Honore, ‘Groups, Laws and Obedience’ in AWB Simpson, Oxford Essays in Jurisprudence (Clarendon Press, Oxford, 1973) p.1 at 4.

⁸Ibid p.6.

⁹Emile Durkheim, The Division of Labour in Society, (Free Press, New York, 1863, 1964) p.228.

¹⁰Francis Fukuyama, Trust: The Social Virtues and the Creation of Property (Free Press, New York, 1995) p.7

¹¹LL Fuller, The Morality of Law (1969) extracted in MDA Freeman supra n.3 p.165.

¹²See RWM Dias, Jurisprudence 5^th ed (Butterworths, Aditya Books, New Delhi, 1994) p.442; also see W Friedmann, supra n.2 p. 240

¹³W Friedmann, supra n.2 p.240.

¹⁴Ibid p.237.

¹⁵Ibid

¹⁶Cited in Julius Stone, The Province and Function of Law, Indian Rept. (New Delhi: Universal Publishing Co. 2000), p.307

¹⁷Ibid

¹⁸ibid

¹⁹GWF Hegel, Philosophy of Right, tr. TM Knox (Oxford University Press, Oxford, 1942) para 150 to 185; also see Neera Chandhoke, State and Civil Society (Sage Publications, New Delhi, 1995) pp.116-123.

²⁰Neera Chandhoke, supra n.19 p. 142.

²¹Karl Marx, Capital vol.I extracted in MDA Freeman, Lloyd’s Introduction to Jurisprudence, Seventh Ed (Sweet & Maxwell, London, 2001) p.1012.

²²Neera Chandhoke, supra n. 19 pp. 148-151.

²³Ibid pp 61-62.

²⁴Ronald Dworkin, Law’s Empire (Hart Publishing, Oxford, 1998) 196

²⁵Ibid 199-200.

²⁶Ibid 205.

²⁷Hills J, Crime, Power and Morality (1971) pp. 3-4.

²⁸Iris Marion Young, Justice and The Politics of Difference (1990) p.184

²⁹Robert D Putnam, ‘Bowling Alone: America’s declining Social Capital’ 6 Journal of Democracy 1995 p.65 at 67.

³⁰Anirudh Krishna, Active Social Capital (Oxford University Press, New Delhi, 2002) pp.16-17.

³¹Robert D Putnam, ‘Tuning in and tuning out: the strange disappearance of Social Capital in America’ in Political Science and Politics December 1995 p.664 at 676.

³²Piotr Sztompka, Trust – A Sociological Theory (Cambridge University Press, Cambridge, 1999) pp. 11-14.

³³Ibid p.25

³⁴Ibid 71-91

³⁵Ibid 121-131

³⁶Jeffrie G Murphy and Jules L Coleman, Philosophy of Law (Oxford University Press, New Delhi, 1997, 2004) pp. 182-83.

³⁷Ibid 192.

³⁸Ibid 195.

³⁹Brian Bix, Jurisprudence 4^th ed. (Sweet & Maxwell, 2006) p. 201.

⁴⁰W Friedmann, Law in a Changing Society (Abridged Edition, 3^rd Indian reprint 1964) p. 231.

⁴¹Ibid 232.

⁴²Maitland, ‘Trust and Corporation’ in Selected Legal Essays (1936) pp.182-83.

⁴³W Friedmann, supra n. 40 p.237.

⁴⁴Ibid 238.

⁴⁵Cited in B.K.Mukherjea, Hindu Law of Religious and Charitable Trust, 5^th ed. (Calcutta: Eastern Law House, 1983) p. 37. Jurists like Brintz and Bekker concur with Duguit.

⁴⁶Ibid p.37.

⁴⁷10 CLJ 355,369; ILR 37 Cal 125

⁴⁸Supra n. 45

⁴⁹RWM Dias, supra n. 12 p.n266.

⁵⁰Ibid 270.