Why do business-owning families engage in philanthropic activities, and why do such activities take on such importance? When the Murugappa family accepted the IMD Distinguished Family Business Award at the gala dinner celebration in Rome in October 2001, fourth generation Mr Murugu explained:
"For four generations now we have been together. We believe that the world will know of us through the institutions we have nurtured rather than the wealth that we have created. From the village hospital started over 75 years ago, our commitment to society through our Foundation touches the lives of thousands of people largely through education and healthcare.
The women of the Murugappa family oversee this to ensure that there is a high standard of quality and service at virtually no cost to the citizens. The humility we derive from this reminds us of our own beginnings and makes our lives more meaningful. "
The allocation of time and financial resources to philanthropic activities is a feature of many businesses, but the scale and scope of philanthropic activity is higher in business-owning families than in firms owned by multiple shareholders. Business-owning families often go to the same church as their employees, and their children grow up with and sometimes go to school with children from families whose living depends on the local family business. It is important, therefore, to protect the family's good name in the neighbourhood, and establish goodwill that will stand the family in good stead during the rough periods, when they may be lay-offs, or if the family business is sold to an owner who is likely to do things differently.
Philanthropy can be motivated by altruism and by pragmatism, or a blend of the two. Some wealthy entrepreneurs and their inheritors want to 'give something back' and to ensure a physical legacy is created that will endure after the founders'time. Others see philanthropy as means of blending a financial strategy for the efficient allocation of capital alongside the provision of benefits to a segment of society in whom they have a certain interest. Whatever the motivation, the hallmark of diligent philanthropy is a clear family mission for the use of human and financial resources, and a system of governance that ensures that each successive family generation continues to energise and enhance the family's commitment to, and returns from their efforts.
The Murugappa family's approach to philanthropy demonstrates the enormous commitment made by the family and its core business to Indian society. It takes the form of local hospitals, schools and polytechnics. By providing and overseeing the services that lead to free health, education and enhanced life opportunities for Indian society around and beyond Madras, their approach to philanthropy helps to bridge the gap between the obviously wealthy and those in dire poverty, which so epitomises life in India today. It also has a system of governance that links to the core business through the family's charitable foundation.
In tune with the cultural gender norms that prevail in India, the Murugappa men concentrate their energies on professionalising their core business activities and implementing the right governance framework for their future as a family enterprise. The focus of the Murugappa women, however, is on the efficient running of their many institutions and the incorporation of the next generation of wives into the ethos of Murugappa philanthropy, initiating them into the governance structures and processes that deliver the family's philanthropic mission.
Origins of giving
The Murugappa Group in Chennai (Madras), and family continue to build on the philanthropy initiated by the Group's founder, Dewan Bahadur Arunachalam Murugappa Murugappa Chettiar (known as Dewan Bahadur), the youngest of three sons, born in 1884.
Dewan Bahadur set aside a major portion of his wealth for charitable causes. In 1924 he built a hospital in his home village, Pallathur, so that from the earliest of times, the Murugappa Group generously contributed to the welfare of the people close to the family's ancestral place. The Murugappa Family follows the essence of Mahamai (an ancient Nagarathar tradition, whereby every family sets apart a portion of its profits annually for the upkeep of its village and clan temples). In addition to this, the family has also adopted an ancient Tamil adage, meaning 'we belong to the universe and we believe in universal brotherhood'.
Giving and the economics of the family business
The impact of the family's generosity has been recognised and celebrated closer to home, too.
In 1992, when accepting an award in Ambattur on behalf of the family, Mr AMM Arunachalam described some of the important family values that drive their business:
"The Murugappa Group believes not only in value added business, but also believes in discharging its social responsibilities to various sections of society and in providing opportunities to learn, contribute, advance: recognise and reward initiative, innovativeness and creativity. We believe in not only making our customers delighted but the community around us also delighted by establishing service-oriented philanthropic institutions in the field of education and medicare. "
For many decades now, the Group has been actively involved in contributing to society by promoting education, health and environment related projects. Schools and hospitals have been opened in areas of Tamil Nadu catering to people who find good education or affordable medical care hard to come by.
To date, the Foundation has build and nurtured four high schools of approximately 8, 000 students, a Polytechnic Institute of about 1, 000 students, three subsidised and one no-fee hospitals and a rural research centre.
The AMM Foundation
The AMM Foundation exists to fulfil the Group's commitment to society. The members of the Murugappa Family not only donate part of their annual profits, but also are actively involved in administering the Foundation. Established as a trust, the AMM Foundation is sustained by a fixed percentage of annual business profits and family contribution. The Foundation provides the capital expenditure needed for the schools and hospitals.
Structure and the role of the Murugappa women
The Foundation is run by a group of Trustees from the Murugappa Family, headed by a Managing Trustee and a full time Secretary, Mr Ramkumar. The Chairman of the Foundation is Mr MV Murugappan. Below the chairman, the involvement of the women is extensive: Valli Murugappan (Mrs MV Murugappan) and Meiyammai Murugappan (Mrs MA Murugappan) are involved with the Stedeford Hospital. AMM's daughter, Valli Alagappan, plays a major role in the Nursing College. Meena Arunachalam (Mrs MV Arunachalam) and Alagammai Alagappan (Mrs MA Alagappan) oversee the running of the Sir Ramaswami Mudaliar High School. Seetha Muthiah (Mrs MM Muthiah) oversees the Vellayan Chettiar School. Seetha Subbiah (Mrs MV Subbiah) oversees the AMM and TI Schools.
The actual supervision of each institution is carried out by Co-ordination Committees, comprising of the concerned women from the family, the head of the institution and the secretary of the AMM Foundation. The women play a major role in shaping the future growth and success of the philanthropic concerns. At the Foundation board meetings, the women present their suggestions and findings to the men, as the Chairman does not discriminate between male and female members of the Foundation; he feels everyone has an equal say. In fact, the women's suggestions are valued so highly that historically the only time they have not followed them was due to funding not being available.
Since women in India are not traditionally involved in the management or ownership of family business activities, the Foundation and its mission has proved an excellent way of channelling their talents.
Education and healthcare
The Murugappas have chosen to focus on education and healthcare because these are two areas in India where they feel they can do the most good. These services are often lacking in many areas and are truly needed by the people. However, the Foundation's aim is to provide its students and patients with more than just the basics.
Mr AMM Arunachalam, the previous Chairman of the Foundation said, "In a good school, children are exposed to the world, they understand what they learn and their knowledge is useful to them when they go out. Today parents are keen to see that their children are well educated. But the management must also see that they turn out to be responsible citizens. "
The same ethos is at work in the Foundation's hospitals. There, it is not enough to just have good doctors. Rather, aftercare for patients by nurses is just as important. To fulfil this goal, a nursing college was started by a sister trust.
Plans are presently under way to evolve several new philanthropic schemes and for effective management of the services at the Foundation. The women are very keen for their daughters and daughters-in-law to become active in the Foundation. They are currently 'intraining', learning how the Foundation functions and what is happening in the schools and hospitals; they also participate in the Co-ordination Committee meetings. This next generation plans to be ready to take over in two years time.
The family members of Murugappa, have been able to see values and profits in proper perspective as partners and not opponents. As Mr AMM Arunachalam stated:
"To give back to society a little of what you earn and to share it with the deprived sections and to render service to them are to my mind objectives, which strengthen the positive side of one's personality. At the same time, this also makes the person socially conscious and responsible." Words to live by.