Investing for charity

Insurance and investing should not be mixed, and the same logic applies to investing and charity. The recently concluded new fund offering from HDFC AMC – HDFC Charity Fund for Cancer Cure would go down as a case study in the years to come on marrying charity with investments. This scheme is a closed-end scheme which invests your money in underlying instruments and generates dividends, which are meant to go towards charity. It has a tie-up with the Indian Cancer Society, one of India’s oldest NGO working in the field of cancer care.

This is not the first time that the AMC has taken up the cause of cancer patients and HDFC is not the only AMC providing opportunity to mix investing with charity. Quantum Asset Management has also launched a facility whereby you could donate a part of your annual earnings from its existing schemes to charities. Quantum has earmarked six charities that cover causes like skills and job creation, cancer treatment, education, child malnutrition, social services for the poor and Make-A-Wish Foundation of India.

The aim is to donate the dividends declared with a predefined limit to the NGO of choice. As a concept it is a good mix of karma with capitalism and both the AMCs have put in place mechanisms to ensure that the money earmarked for charity goes to the right charity and funds are used in the correct manner. In fact, the earlier such offerings by HDFC AMC garnered Rs 12 crore and about twice that in the second scheme which points to the success of such ventures.

As investors, depending on how much from your investment goes to the charity will be acknowledged with a Section 80G certificate for the entire amount you donate. However, for a small investor, investing is to grow money and build wealth, not charity. Such options when investing in mutual funds is more suited for corporate and HNIs, who are more likely to have a target, a sum to contribute towards charities and social causes. The emotional draw towards investing in such funds should be put on check and it will be in your interest to keep investing and donating to charity separate.

Moreover, by staying away from such investments, you have the chance to contribute independently into charities and causes that are close to you and not a charity chosen by someone else.

olmdesk@outlookindia.com