Nobody sleeps hungry in Pakistan; so goes an urban legend based on assumptions of heavy amounts of charity doled out at shrines and other such places. Well, there is no way to be sure whether anyone sleeps hungry or not, but it turns out that the quantum of individual philanthropy in Pakistan is indeed significant.
According to a recent report by Pakistan Centre for Philanthropy (PCP), individual philanthropy was estimated at Rs240 billion in 2016, which this column believes is an underestimation on at least two accounts. First, by PCPs own admission, their research has not captured philanthropy by high net worth individuals, of which there is no shortage in this country.
The second reason behind underestimation appears to be the valuation of time. The PCP has valued in-time philanthropy contribution by using the hourly rate of minimum wage. Considering that the time of value of middle or high income individuals will be higher than minimum wage rates, the magnitude of in-time philanthropy, therefore, is underestimated.
Despite these underestimations, however, the significance of individual philanthropy can be gauged by the fact that it equals between 21 percent and 55 percent of development spending in different provinces. Even after subtracting in-time philanthropy, cash/kind philanthropy in each province is (on average) nearly a fifth of provincial development spending.
Philanthropy by giving time to the needy is the biggest form of individual philanthropy. Yet while the report talks about the break-up of in-kind philanthropy, which mostly comprises of food and clothing, it doesnt shed light on the break-up of in-time philanthropy especially how low, middle or high income individuals are spending their time in philanthropic activities. Are they teaching, nursing, raising funds for charity, or any other activity, we dont know.
Regarding the philanthropy of teaching, one disturbing find from the report is that education organisations receive very little donation in any form: time, cash, or kind. Books or other education material does not even feature in the distribution pie of in-kind philanthropy; likewise, school and education receive an insignificant amount of cash philanthropy.
Another disturbing, though not surprising find, is peoples mistrust of the government. According to the report, the majority of households in the survey chose not to use the government-sponsored option of giving their Zakat withdrawn from their bank account. Instead, they preferred to donate contributions themselves.
The government therefore would do well to rethink its role in Zakat collection.
The government, as the report highlighted, also needs to develop an easily accessible database available to the public for those registered societies and organisations in Pakistan that are entitled to receive Zakat. Equally important is the need to incorporate philanthropy in the governments surveys, given its significance in the context of development spending.
The government and the private sector also need to sit down to make this sector more organised without compromising on the fact that many people like to keep charity a very personal affair; they would rather give donations to an individual rather than an organisation. PCPs report also highlights that only one-third of the respondents made donations to organisations.
While one reason behind that may be peoples preferences, another reason could be peoples general mistrust of organisations. Also in some cases, organisations are personality-led rather than being strong institutions, and this presents a problem. For instance, local media reports already suggest that donations to Edhi foundation have dropped after the demise of its founder. This is one of the many concerns this column had raised back then (See BR Research column: After Edhi, published July 11, 2016).
Lastly, there is a need to assess the magnitude of individual and corporate philanthropy by those who evade taxes. In Pakistan, there is no shortage of individuals and corporations who evade taxes at one end, and pay charity at the other end. And they justify it quite openly as well; some on the premise that the state should not collect anything other than Zakat (Usher etc); others on the premise that when the state doesnt provide public goods there is no reason to pay taxes.
Considering that 2016 estimate (which this column thinks is an underestimation) of individual philanthropy (Rs240 billion) is higher than FY15 individual tax collection (Rs205 billion) as per the latest FBR tax directory, there is a clear and visible need to research at the nexus of tax evasion and philanthropy. Hopefully, the PCPs ensuing studies will shed some light on that.
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