Difference between RI and TRF

As a Rotarian are you confused about the difference between Rotary International and The Rotary Foundation?

Well, you are not alone, was the reassurance given by PRIP K R Ravindran, now a TRF Trustee, while addressing Qalb, the district conference of RID 3202 at Wayanad, Kerala. “Many people don’t know the difference between RI and TRF. For many Rotary is Rotary, so it seems quite confusing,” he said, before demystifying both the entities.

Very simply put, said Ravindran, “we created these two separate entities to get tax benefits from the Income Tax departments in our respective countries.” While TRF has 15 Trustees including four past RI Presidents, RI has on its Board a President, President-elect and 17 Directors. “The two come under different sections of the US tax code. One allows you to make contributions to the Foundation tax-free, the other one allows you to become a member and pay your subscriptions tax-free.”

But Indian Rotarians might well ask that this was for the Americans; how does it benefit us. “Hence we created regional offices all around the world — India, Australia, Brazil, Japan, Canada and UK, so members in these regions can also get some tax benefits under the laws of each of these countries.”

Till 1983, TRF operated as a charitable trust. As it continued to grow, its legal status was reviewed and “we felt we must address some risks if we continued to run it as a charitable trust. For example, as a Trust, the personal assets of the Trustees were subject to be included in lawsuits against TRF. And so TRF evolved into a corporation.”

Rotary International, in layman’s terms, said Ravindran, is the owner of TRF. In other words, TRF is an independent entity with just one corporate member and that member is RI.

To deal with tax structures, an “arm’s length distance” has been created between the two entities. This means that TRF pays RI for its portion of all the services shared, including information systems, communication and public relations, finance and investment services, and international offices. It even pays for the floor space it occupies in the RI headquarters building in Evanston.

Going down memory lane, he said that thanks to some senior Rotarians (who subsequently became RI Presidents), who were walking down Sherman Avenue in Evanston and saw a building up for sale, and then brought a proposal before the RI Board to purchase it. RI had acquired One Rotary Centre, its present headquarters, at a cost of about $25 million, with borrowed funds. Its present worth is over $100 million or INR 700 crore. “Today it is our biggest and best asset. By Nov 30, 2018, when I last checked, 580 staff are located in this building at our headquarters, 140 at the seven international offices; 151 at our own software development centre in Pune; and 137 directly support the Foundation.”

RI’s income comes from Rotarians’ subscription dues, investment income, licensing fees and building rental — of the 18 floors, 11 are used by Rotary and the rest are let out.

But the Foundation, on the other hand, relies only on the contributions from Rotarians “which we invest for three years and give the money back to you for service projects. Part of the income is used to run the Foundation,” he said.

But while Rotary had these two structures, “the reality is that this whole organisation was built to support the purpose of our existence — to do good in the world. Only doing this will enhance our image, secure for us the funding we need and bring into our fold the members we require,” he added.

Ravindran said in the last five years, Asian Rotarians have contributed over $330 million, roughly equivalent to 35 per cent of the total TRF funding of worldwide humanitarian projects. Asia accounts for $230 million, 36 per cent of all-time annual giving to TRF, second only to the US/Canada (nearly $246 million), and almost three times that of third-ranked Europe/Africa ($85 million).

Also, in the last five years alone, Asian districts make up about 50 per cent of the list of top 50 giving districts. Asia is the fastest growing area in the world of Rotary in terms of membership too and currently accounts for 10,795 clubs with 382,883 members, forming nearly 32 per cent of the total Rotary membership.

“But all of what I am telling you is just statistics, it means nothing. At the end of the day, what really matters is are we making a serious impact in the communities we live in, and through high quality projects?”

A bit of a paradox about Rotarians from Asia giving generously to TRF was that “we come from a region of the world which is not so rich and yet we give generously.” But then this habit of sharing whatever we have with others is common in Asia. “Also, too often we are prone to judge people by their wealth or the cars they drive, and RIPR Vinod Bansal put it aptly when he made a clear difference between charity and philanthropy.” Charity is “emotional reacting to a situation, whereas philanthropy is long-term. You come from a part of the world where you do charity at the highest level; in the last one year, the top 10 philanthropists in India have given ₹17,500 crore as charity. This tells you that giving and charity are part of our ethos, whether small or big amounts, and we also believe in this philosophy of sacrifice. People give because they believe somebody out there needs it more than they do.”

Ravindran also spelt out his “fundamental philosophy: When I give to temple, church or mosque, I am never sure if the money reaches Him above. But when I give to the needy through Rotary projects — imaginative, sustainable and big — I am certain that the money reaches Him.”

The TRF Trustee gave an example of the recent project Rotarians in Sri Lanka have taken up. “In my country, 2,500 children are born with congenital heart defects every year. Some of them may last one, two, five or 10 years, but all of them are destined to have a short lifespan.” Many congenital heart diseases are related to faulty valves, “and to replace a heart valve costs $2,500–3,000. Animal valves also cost about ₹2 to 3 lakh. So Rotarians in our country got together to start a human valve bank which was inaugurated last year by Past RI President Ian Riseley. Because ours is a Buddhist country, citizens generously donate their eyes, kidneys and other organs and now we are well-stocked with human heart valves to help children born with defective valves. This is a complete Rotary project — designed and delivered by Rotarians.”

Another Rotary project coming up in Sri Lanka is a large complex to help the training and skilling of children with mental disabilities. This is being done in partnership with two corporates with the objective of taking care of these children and equipping them with employable skills. “So Rotary is doing very well in Sri Lanka and I can confidently tell you that Sri Lanka would be poorer if Rotary did not exist there,” added Ravindran, urging RID 3202’s Rotarians to “do mega projects, but also show compassion to deal with a single individual to give her relief. You have shown that you were not intimidated by the recent floods and came forward to help the affected people in time. That is the true spirit of Rotary and exemplary service done by your district.”