The recent controversy regarding admission to medical and engineering colleges and that seats could be available to the highest bidder raises some doubt about the functioning of charities in general.
Religious charity has been providing relief to the needy and the poor. But it falls within the personal conduct of an individual. The state does not bear any financial cost. Modern secular charity as we know it today stands on a different footing in that the state has a substantial role to play.
Apparently, a secular charitable organisation is perceived to entail no cost to the state and society. An important aspect of regulating charities is contained in the Income Tax Act. This is to encourage charity.
At the same time, it empowers the state to stipulate that money is actually spent on charitable work. As it stands today, any income of an organisation, trust or other body, suffers no tax on its income provided 85 per cent of its income is spent on charity for which such entities are set up.
In case it is necessary to save more for capital expenditure like the augmentation of facilities, intimation is only required to be filed. Thus, the tax foregone on the income of the charitable organisation is what it costs the state and society in general to support a secular charity.
There is another aspect to it and that is the treatment of donation in the hands of the donor. For example, an individual donor, which includes large corporate houses, is allowed a tax concession in that 50 per cent of such donations qualify for tax relief.
Thus, a company that pays Rs 1 crore (Rs 10 million) is allowed to deduct 50 per cent of the value that comes to Rs 50 lakh (Rs 5 million). Translated into tax at 35 per cent, this would work out to Rs 17,50,000. It can now clearly be seen that what appeared to be no one's concern is everyone's concern.
Secular charity calls for sacrifice from the entire population in that the taxes that could have come to the treasury are now foregone and are not available to society at large. In other words, the tax foregone is the indirect expenditure, which is not apparently visible.
In fact, in the UK, the US and Canada, it is mandatory for the revenue department to inform Parliament in its budget of the "tax expenditure" involved in a particular year in respect of industry, health, education and so on.
This issue requires separate attention but has been mentioned here only to highlight the practice and to know and measure the sacrifice made by society at large for supporting the charitable activities of charitable hospitals and educational institutions.
In these countries, charitable organisations are known as "not-for-profit" organisations. This is more direct and clear to understand. A hospital can be run "for profit" as against a "not-for-profit" hospital.
Charitable purpose in India for tax purposes includes relief for the poor, providing medical relief and providing education and any other object of general public utility. It must be mentioned in this context that universities or institutions created by a statute of state or central legislature are exempt from tax under a separate provision.
A charitable hospital is necessarily set up for the needy and poor, who have no choice. It is not for the privileged who have a choice or an alternate mode of treatment. Most of the important charitable hospitals have few permanent consultants. Such consultants are attached to two or more hospitals, which are also charitable.
In substance, many of the charitable hospitals let out their infrastructure for performing surgeries on an hour-to-hour basis. They only provide the management of patients by providing their staff.
One may, in fairness, say that such hospitals provide advanced surgical and medical facilities that cost money. Such hospitals can charge whatever fees they want from whoever they want. The fundamental issue of addressing the needs of the poor and the under-privileged is not fulfilled.
The "not-for-profit hospitals" are welcome to shed the cloak of charity, and come out clean and provide state-of-the-art medical facilities to those who can afford them. To call such hospitals charitable is a terminological inexactitude.
Some charitable hospitals also describe themselves as research centres. Medical research is capital-intensive and requires a dedicated band of scientists from different disciplines.
In this area also, private charities enjoying tax benefits have succeeded only in applying borrowed technology and totally failed to produce any research work. If any research in public health is done, it is in institutions funded by the state through governmental agencies. And looking at government hospitals, it is difficult to think that real charity is rendered by the doctors and nursing staff of such hospitals.
Turning to educational institutions, the malaise started much earlier. In the 1960s, all the states permitted the creation of a large number of private colleges. Degree colleges both in the arts and in science streams were set up. Such institutions were floated and controlled by influential local people (read the political party at the time).
The result was colleges came up offering sub-standard education. Most of them did not have the infrastructure, not even a library, for imparting education to aspiring students. Such colleges attracted only sub- standard teachers.
The small success of private enterprise in education as an easy money-making source grew and the different state governments appeared to have acquiesced in this process. Those that were more influential and had more capital started floating engineering colleges, dental and medical colleges and management institutes.
The standard of higher education, which was set up by the state-run universities and colleges, was all but non-existent in such institutions. They had no infrastructure but charged fabulous fees and, on the side, the management made personal gains by encashing their influence in the admission process.
This art has been perfected in the past three decades by vested interests that control education in the private sector. Today, the same people are entrenched firmly in the government's decision-making process.
Top universities in a country like the US are funded by foundations and trusts supported by the private sector. There is a healthy symbiotic growth between state and industry providing the funds for higher learning and research. Society is richer by knowledge and creates more wealth.
In that context, the narrow vision of Indian industry, which is the largest consumer of all the brilliant products of different institutions, comes through in poor light. Indian industry makes the best use out of the available pool of talent in different fields without contributing to the creation of such talent. It makes enormous profits by exploiting such talent.
The private sector in India should have a vision to see that education is beneficial to industry. There is immense hunger for education in India which has no parallel in the world. If this is to be achieved, the private sector has to widen its vision instead of looking at the ups and downs in the share market.
In this context, the present framework of tax concessions to all charitable organisations should be withdrawn. This may appear to be a harsh measure. But the present framework offers sub-standard education and high cost of medical relief at the cost of society.
In order to qualify for being a charitable organisation, a charitable hospital must provide for treatment of the needy by reserving 90 per cent of their bed strength for the needy and the under-privileged. If they cannot run with this stipulation, then they are welcome to convert themselves into "for-profit hospitals".
Similarly, in the arena of higher education, for the purpose of tax benefits, reservation for the needy and the poor must be fixed at a very high percentage so that they qualify for tax exemptions.
Legend has it that Mother Teresa advised an industrial tycoon to donate till it hurts. If you do not give a part of yourself, your own money, time or skill, there is no element of charity. Please have sympathy for the poor and the needy and do not make a show of charity to be worn as a badge of honour.
Hundreds of committed and compassionate people are silently working for the betterment of society at large. They have no hunger for power or money. These people are rendering true charity, but ironically, it is the managers of modern secular charity who are reaping all the material benefits.Powered by 
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