Charitable trusts-why controlled by big corporate houses


I do not understand why government allows big business houses to control charitable trusts.

Charitable trusts are meant for specific purpose mainly to help humanity in one or another way.

Charitable trusts should not be allowed to hold more than 1% of shares of for profit organization or Rs 5 crores, which ever is more. Otherwise purpose of giving tax benefit to trusts will be defeated as they will be inclined to deviate from their core purpose and will serve interests of for profit organization.

Indian government has allowed new trusts to hold not more than 1% of shares of for profit organization or Rs5 crores whichever is more. However this is not applicable for old trusts.  Examples of old trusts are Tatas and Birlas where they are allowed to continue to hold shares.

If today Azim Premji or Nandan Nilekani have to create trusts they will not be allowed to hold more than 1% of shares of for profit organization.

Why there is discrimination between old and new trusts?

The government should amend laws so that old and new trusts come at par.

The trusts currently invest in interest earning bonds which do not earn much in long term thereby eroding net worth of trusts. They should be allowed to invest in equity market where return in long term is more.

Tatas and Birlas can be given 5 years time to gradually decrease their stake in big business houses to less than 1% in for profit organizations.

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2 thoughts on “Charitable trusts-why controlled by big corporate houses

  1. Soumya Ranjan Gachhayat

    I agree with you sir government should take some initiative in these matter for which charitable trust and business can work in there respective way and if govt is doing some initiatives then it should applicable for everyone then there will be a value of law

    1. Thanks Soumya for your valuable feedback. We should work together to make it happen.

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