Business, Finance & Economics

Why Indians give to US universities


NEW DELHI — Indians are in a giving mood. And that's a good thing for higher education in the U.S.

This past year, Indians and Indian-Americans have offered several multimillion-dollar donations to U.S. universities. The giving trend has been viewed, at least by the media here, as  yet more evidence that India has become a philanthropist nation, rather than a poor supplicant looking for handouts.

Among the big spenders in 2008 were Ratan Tata, an industrialist and chairman of Tata Sons Ltd., who donated $50 million to Cornell University; Nandan M. Nilekani, a founder of Infosys Ltd., a software-services provider, who gave $5 million to Yale University; and John N. Kapoor, a pharmaceutical entrepreneur, who gave $11 million to the State University of New York at Buffalo.

But as the dollar value of these donations mounted, a few dissident voices have begun to ask why so much Indian money was being pumped into the U.S. higher education system when India's own is in far more desperate need of cash. "It is strange that they are not doing it in India," said Sam Pitroda, chairman of the National Knowledge Commission, an advisory body that is looking into higher education reform here.

To be fair, the Tata family has contributed a lot to Indian higher education. Several higher education institutions were started with the help of the Sir Dorabji Tata Trust that was established in 1932. The private, top-ranked Indian School of Business in southern India has also received generous contributions from Indians here and abroad. And the renowned Indian Institutes of Technology — the biggest beneficiaries — have received millions of dollars from their graduates living here and in the U.S., including from Nilekani.

But the impact of this philanthropy has been limited because it has directed funds to institutions that already operate at an elite level. Graduates like giving to the technology institutes because they have more autonomy than other public institutions in India, and therefore have more control — with more openness — over how donations are spent. Fundraising experts and some Indian donors who give to their American alma maters say prospective donors here believe that any money given to a typical public university in India would be frittered away — because the entire higher education system in India is poorly managed — or siphoned off by corrupt officials.

"The quality of the education is terrible," said Ramanan Raghavendran, a founder of Kubera Partners, a New York equity firm that invests in India. "It might be simpler for them to just set fire to a fistful of rupees than to give to a university."

Raghavendran, who grew up in New Delhi, chose to attend an American university, to which he regularly contributes.

Making fund-raising even more challenging is the government's practice of cutting the amount of money it provides to a university by the amount it has raised privately. "If we raise one lakh rupees (about $2000), the government will cut one lakh rupees from the money it gives us," said Deepak Pental, head of the University of Delhi.

Universities also need government approval to spend money on fundraising, a process that can take years of getting past bureaucratic hurdles.

And without fundraising budgets, universities aren't likely to get very far. "As I've seen at Stanford, to raise a dollar of funds you have to spend 15 cents," said Arogyaswami Paulraj, an engineering professor there who studied at one of the elite Indian engineering institutes.

The growing number of Indians who are donating to universities they attended abroad could be a sign that domestic philanthropy will eventually take root in India. But, say many academics, that will take a long time.

Pitroda believes it will take as long as 20-25 years.


Read more dispatches by Shailaja Neelakantan:

Fewer Indians look to US universities

An education in terror