Tata Trusts announces organizational restructuring; will eliminate COO and CFO roles as cost-cutting measures

To save managerial and operational costs, Tata Trusts is undergoing an internal reorganization. The transformation includes reducing reliance on outside consultants and eliminating the positions of chief operating officer (COO) and chief financial officer (CFO).

According to sources, the cost-cutting measures were initiated well before Noel Tata, the new chairman of the Trusts, was appointed.

The decision follows an internal audit and financial assessment by the trustees, which revealed a sharp increase in staffing expenses, estimated at over ₹180 crore.

The sources claimed that in the years prior to 2022, the total labor cost had risen to ₹400 crore due to additional expenses associated with so-called direct implementation projects.

They also mentioned that direct implementation projects, which are carried out by the Trust directly through contractors as donations, will be minimized and used primarily to fulfill commitments.

Chief Executive Siddharth Sharma is ensuring that checks and balances are in place for efficient governance and that the process is regularly monitored.

Tata Trusts hopes to reduce administrative overhead and reallocate resources to its core philanthropic activities by cutting back on top-heavy managerial positions. A smaller executive committee will likely be used more for governance and decision-making.

“A trust is supposed to operate like a servant of the public. We have to be true custodians of the money and property within the trusts. The charity is for the public at large and not for its own staff. We don’t need ceremonial posts at high costs, and hence, proper checks and controls are being put in place,” a source said.

“Tata Trusts has senior finance experts and internal talent to ensure smooth operations and efficient handling of accounts,” the source added.

According to Anand Desai, managing partner at the legal firm DSK Legal, cost consciousness is crucial for philanthropic organizations, even though the size and scope of activities will determine the need for operational costs, including senior staff.

“Organizations that benefit from such philanthropy can be held accountable through documentation, with appropriate oversight by the board and employees of the trust. Cost pooling is also a commonly used method, and domain experts can selectively contribute to efficiencies,” said Desai.

India's education, health, rural development, and other sectors have long benefited from the work of Tata Trusts, the umbrella organization for the Tata group's numerous philanthropic initiatives.

However, as philanthropic models around the world shift toward more flexible and economical frameworks, operational expenditures have come under scrutiny.

Members of the Tata family have endowed philanthropic trusts that own roughly 66% of the share capital of Tata Sons, the group holding company.

On Oct 11, Noel Tata was appointed chairman by Tata Trusts to lead the charitable organizations that govern the organization.

Noel Tata has also served as a trustee for the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust, the two principal organizations.

The late Ratan Tata established an executive committee that has been closely monitoring expenses and will continue to do so.

The committee was formed to ensure that the trusts are managed by a group rather than a single individual. At present, it comprises four trustees: Vijay Singh, Venu Srinivasan, Mehli Mistry, and Noel Tata.

According to Uday Ved, a partner at the international tax practice group KNAV, managing a charity trust typically involves a mix of governance, financial supervision, and operational effectiveness.

“Such trusts implement cost-management strategies while maintaining effective project execution by focusing on operational efficiency and proper resource allocation,” Ved said.

This involves the use of technology, innovation, and collaborative approaches by partnering with local organizations and leveraging community resources.

According to Shafaq Uraizee Sapre, managing partner in Mumbai for the legal firm Chandhiok and Mahajan, "While the costs of the trusts are typically managed from their income, they may also include payments based on certain employee benefit schemes to reduce the cash component.”

“A fresh look at the management structure typically takes place before the start of the new calendar year to ensure the changes are implemented by the next financial year,” she added.