Diaspora Philanthropy: Giving Back Across Oceans

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Money has flowed from Indians abroad to India for as long as Indians have gone abroad, but only a fraction of it is philanthropy in any strict sense. The largest stream by far is remittance: private transfers from a migrant worker to their own household. India has been the world's largest recipient of remittances for many years, and in 2022 the World Bank recorded it as the first country ever to receive more than one hundred billion United States dollars in a single year. That money buys food, school fees, medicine, land and houses, and it is spent by families for families. Diaspora philanthropy is the smaller, harder to measure flow that goes to strangers: to a village school, a hospital ward, a disaster appeal, a university endowment or a campaigning organisation. Confusing the two produces wildly inflated estimates of how much charitable capital the diaspora actually deploys.

The population involved is large. United Nations estimates place the number of people born in India and living outside it at around eighteen million, the largest such population from any country, and the Indian government's own count of overseas Indians, which includes people of Indian origin who hold foreign citizenship, is close to double that. It is also sharply segmented. A construction worker on a two year contract in Abu Dhabi, a software engineer on a skilled visa in Sydney, a third generation Gujarati shopkeeper in Leicester and a Tamil family in Malaysia whose ancestors arrived under indenture in the nineteenth century all belong to the diaspora and have almost nothing in common in their giving. Broadly, temporary labour migrants in the Gulf give to their own villages, districts and religious institutions; professionals settled in the anglophone West give to formal organisations, often ones connected to their own education; and older, long settled communities give locally in the country where they live rather than to India at all.

The institutions that carry the money

The professional diaspora built a distinctive set of vehicles from the 1990s onward, and they share a common design: a charity registered in the donor's country, so that the donor receives a local tax deduction, which then grants funds to Indian implementing partners. Asha for Education began among graduate students at the University of California, Berkeley in 1991 and funds education projects through volunteer run chapters. The Association for India's Development started at the University of Maryland in the same year with a similar structure. The American India Foundation was created in 2001 in the aftermath of the Gujarat earthquake, with public backing from prominent Indian American business figures and from former United States president Bill Clinton, and became one of the larger institutional channels. Pratham's overseas support networks fund one of India's biggest education non profits. In Britain, Australia and Canada the equivalents are smaller but follow the same template, frequently organised around a state of origin, a language or a caste or religious association.

Two other channels matter as much and attract far less attention. The first is the hometown association: an informal or lightly formalised group of migrants from one village, taluk or district who pool money for a specific object, most often a school building, a temple or gurdwara, a water supply, an ambulance or a cremation ground. Kerala, Gujarat, Punjab, Andhra Pradesh and Tamil Nadu all have dense networks of this kind, and in some districts the visible public infrastructure is substantially Gulf financed. The second is the university endowment. Alumni of the Indian Institutes of Technology, of medical colleges and of a handful of private universities have built genuine endowment funds through overseas alumni bodies, and this has become the largest single category of high value diaspora gifts, partly because donors trust institutions they know from the inside and partly because such gifts confer recognition.

Regulation, friction and unresolved arguments

The legal channel is narrow and has been narrowing. Foreign money given to an Indian association is governed by the Foreign Contribution (Regulation) Act of 2010, which requires a recipient organisation to hold a valid registration or a case by case prior permission, and to report its foreign receipts. Amendments passed in 2020 tightened the regime considerably: they required all foreign contributions to be received into a designated account at a specified branch of the State Bank of India in New Delhi, prohibited the onward transfer of foreign funds from one registered organisation to another, and lowered the proportion of such funds that may be spent on administration. The ban on sub granting was especially disruptive, because the intermediary model on which much diaspora giving relied depended on a large registered body passing money to small local groups that could never obtain registration themselves. Thousands of organisations have lost or failed to renew registration since, some of them well known international charities.

Whether this regime is prudent regulation or political control is genuinely disputed and the dispute does not resolve neatly. The government's stated rationale is national security and the prevention of foreign influence over domestic policy, and it points to organisations that mixed charitable and campaigning work. Critics, including United Nations human rights officials, have argued that enforcement has fallen disproportionately on groups working on the environment, on religious minorities and on civil liberties, and that the effect is to make Indian civil society dependent on domestic corporate and state funding. Donors abroad experience the argument as friction: a project that took a wire transfer five years ago may now require months of compliance work, and some have redirected giving to Indian organisations funded from within India, or to Indian causes in their own country of residence.

Beyond the legal question sit older ones. Village level giving is generous but rarely evaluated, and a diaspora funded school building with no teachers is a common outcome. Giving concentrated on the donor's own community can widen rather than narrow local inequality, because the villages with migrants are usually not the poorest villages. Some scholars argue that diaspora money substitutes for state provision and lets local government off the hook; others argue the opposite, that it demonstrates demand and pulls public investment behind it. There is also the question of what the giving buys the giver: recognition, standing at home, a seat on a trust board, or a continuing claim to belong. None of this makes the money less useful. It does mean that the sentimental framing of giving back deserves the same scrutiny as any other flow of capital across a border.

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