Tata Trusts tightens monitoring, shifts focus to grant-making

Tata Trusts, the single-largest shareholder of Tata Sons, has tightened project monitoring processes, shifting from quarterly to monthly reviews to better manage operational expenses and enhance the on-ground impact of its funds, people familiar with the matter said. The organisation may also prioritise grant-making over direct implementation (DI) projects to further minimise expenses, the people said.

An inflated cost structure had led trustees to do an internal audit several months ago, the people said. This revealed many discrepancies, leading the trustees to tighten the monitoring system. Additionally, the Trusts' audit system has been strengthened and it now reports directly to the chief executive, who is responsible for updating the executive committee and board of trustees, people said.

Several DI Projects

An executive committee set up under the late Ratan Tata has been closely monitoring costs and will continue to do so, officials said. It was created to widen the decision-making process and ensure that a collective, rather than an individual, manages the trusts. It currently has four trustees: Noel Tata, Mehli Mistry, Venu Srinivasan, and Vijay Singh. About 66% of the equity capital of holding company Tata Sons is held by philanthropic trusts. These trusts generate funds through dividend receipts from Tata Sons.

Tata Trusts in recent years also got involved in several DI projects, swelling its manpower cost. These were implemented directly by the trust via contractors as part of their donations. The trusts are required to spend a small percentage of their funds on DI projects for tax purposes. “There has been a thinking within the Trusts that it has to contain operating costs so funds are maximised for philanthropy and not bloated wages and operational costs,” said an official close to the matter. Tata Trusts did not comment.

Tata Trusts, the umbrella organisation of various philanthropic entities of the group, has traditionally given grants in areas such as education, health, rural development, and other sectors. However, operational costs have come under scrutiny, especially as philanthropic models globally shift toward more agile and cost-effective structures.

Tata Trusts appointed Noel Tata as chairman on October 11 to head the philanthropic entities that control the group. He was already a trustee of the two main bodies, Sir Dorabji Tata Trust and the Sir Ratan Tata Trust.