Tata Trusts—India’s largest and oldest charity—currently finds itself all at sea. In October 2019, India’s income tax (I-T) department cancelled the tax-exempt charitable trust registrations of the six trusts it houses. The taxmen argued that the organisation functioned more like a business than a charity, and should thus be taxed as such. Today, the taxman’s sword hangs ominously overhead—Tata Trusts could face a tax liability of up to Rs 12,000 crore ($1.7 billion), over 10X the grants it disbursed in the year ended March 2018.
Should Tata Trusts’ protestations of innocence fall on deaf ears, the resultant fine could deal a body blow to the organisation but would stop shy of being fatal, said an Indian philanthropist, who did not want to publicly comment on the matter. Multinational conglomerate Tata Sons, in which Tata Trusts is a majority stakeholder, after all, saw annual revenues of $111 billion in the year ended March 2018.
Regardless, for a charity that predates Indian independence and has largely been at the receiving end of plaudits, the current scenario is the stuff of nightmares. Especially considering the reason for its plight—a 2014 pivot from a simple charity to an implementation-focused organisation—was supposed to carry it into the future.
Like the world’s largest charity—the Bill and Melinda Gates Foundation (BMGF)—Tata Trusts also applied the lens of business to its philanthropy. Cheque writing, said one of the former senior executives with the organisation, was not working. He added that the aim was to be more like BMGF, which rigorously measures the outcome, defines beneficiary gains, and is expertly managed as compared to traditional charities.
Here’s how Ratan Tata, chairman of Tata Trusts, described the change: “No longer are we merely the funders of initiatives; we have widened our view on the nature of our philanthropic interventions to become enablers. The redefining of our approach and our purpose — an exercise that began in 2014 — has resulted in Tata Trusts shifting from only grant-giving to also include direct implementation,” he wrote in Tata Trusts’ 2016-17 annual report.
On the face of it, a hardly surprising change of tracks. However, after Ramachandran Venkataramanan, the managing trustee of Tata Trusts during this transition, left in February 2019, the wheels seemed to come off.
