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Soumik Kar

The World's Greatest Philanthropists

Bridging the giving gap
A former investment banking couple explains why NGOs and philanthropists need to sit down and chat once in a while

Neera Nundy & Deval Sanghavi

At the turn of the century, as it is now, quitting a promising investment banking career at 24 to start an NGO in India was positively unheard of. That the NGO my wife, Neera, and I — then putting in 100-hour weeks at Morgan Stanley — wanted to start was not the stereotypical school or medical clinic but an organisation that would change Indian philanthropy didn’t help matters. Having worked with underprivileged communities in West Bengal and Mumbai, we wanted to use our skills — identifying undervalued, high-potential companies, vetting their management teams’ capability to scale, raising growth capital and providing managerial support to accelerate their growth — in the social sector to help people move out of poverty in India. That led to the creation of Dasra, which means enlightened giving in Sanskrit. 

Beginning a new initiative is always a difficult task. In our case, it was more challenging, thanks to the fact that both of us were born and brought up in North America with limited family or business connections with India and no knowledge of the NGO sector here. I still remember a prominent foundation telling us, soon after we moved here, that as NRIs we would not last more than six months in India. Another prominent NGO told us their night care shelter for the children of sex workers was not a zoo and that they were too busy to deal with volunteers like us. These comments made us realise the need to work harder to demonstrate the salience of our model, learn about the sector’s nuances and prove to these organisations that ours was not a knee-jerk trip to India to ‘find ourselves’.

We need to talk

NGOs communicate infrequently with donors about the impact of their work, be it positive or negative

Our initial impulse was to replicate the rigour and discipline of finding good investment opportunities and providing these social entrepreneurs with funding and managerial support to scale up. But we soon realised that credible information about such enterprises was limited; NGOs focusing on different issues could not be easily compared; and both NGOs and funders alike were not used to sharing information or learning from each other. We then decided that it was imperative to help funders and NGOs have honest conversations about the hurdles and success factors involved in these enterprises (see: We need to talk). We started volunteering with organisations at their offices to understand the challenges they faced, helping funders make smarter decisions. Post funding, we continued to help organisations through challenges of scale. What kept us going were the interactions with the staff at these organisations — these were not individuals of wealth or from well-connected families. Instead, they had a deep sense of obligation to serve communities less fortunate than them. 

Perfect synergy

It was at this time that we also realised that the best interventions work in conjunction with government programmes instead of operating through a parallel system. For instance, while researching the Making the Grade report sponsored by the Godrej Group, we evaluated over 100 organisations participating in public-private partnerships with the Municipal Corporation of Greater Mumbai (MCGM) and realised that investing into an existing programme within the city’s school system would not only leverage taxpayer funding but have a catalytic effect on the entire system (see: Spreading cheer). We highlighted innovative NGOs such as Muktangan, which, with the municipality, was running seven English-medium schools, demonstrating that high-quality education could be delivered through the government system. What made its programme unique was its one-year teacher training programme for women, which provides them with a sustainable livelihood and turns them into role models in their community. Another great programme was the Kaivalya Education Foundation, providing leadership training to school principals. While both these models are funded by philanthropic contributions, the organisations leverage government funding for operating costs and share their innovations across schools.

Spreading cheer

When it comes to deserving causes, education and health-based initiatives get maximum attention from funders

It soon became clear that while funding was an issue, what NGOs really needed was experienced human capital to manage growth effectively. While these entrepreneurs had created innovative solutions to combat poverty, most had never run large organisations and were unable to articulate and implement ambitious growth strategies. Funders were also to blame as they provided one-year commitments focusing on school supplies for children instead of creating a programme to train teachers. This did not allow for scaling up or innovation to continue. On uncovering macro issues plaguing the sector, we realised that we needed to improve the functioning of the sector by  adopting the role of an intermediary.

We initially built our model by working on a one-on-one basis with either the social entrepreneur or funder. We realised that the value addition we brought in was in highlighting examples from our past experiences with their peer group. We formalised this learning by starting Dasra Social Impact to bring groups of entrepreneurs together and the Indian Philanthropy Forum to bring funders together; both platforms aimed at enhancing peer-to-peer learning. Our goal has always been to cut out the middleman, which in both these cases is Dasra, and allow for cross-sharing of best practices and challenges. Till then, information sharing was difficult as NGOs and funders would see each other as competitors, not peers. 

 

Better and brighter 

Over time, much like the corporate sector, the Indian development sector has also changed rapidly to become more professional and impactful.  NGOs such as Akshaya Patra and Magic Bus have emerged and excelled during this time, demonstrating that NGO passion coupled with strong business acumen can impact the lives of millions. Founders of high-impact organisations such as Jeroo Billimoria of Childline India and Shaheen Mistry of Akanksha may have moved on to other things, but have left behind strong systems and decentralised decision-making processes to ensure greater scalability post their exit. While this business sense is common in the for-profit arena, often business leaders who rely on strong management teams to create leading global enterprises, oddly enough, ask NGOs to do the exact opposite. Traditional funders ensure that NGOs remain dependent, providing no funding for management expenses (see: Learning to let go). This is absurd and the reason why hardly any of the 3.3 million NGOs in India have grown beyond a city or state. 

Learning to let go

Despite loss of control, some donors are reluctantly choosing to let third parties handle management roles

Just as NGOs have evolved and professionalised, so has the nature of giving. While established foundations such as the Tata Group, Ford and MacArthur foundations have been giving in India for years, technology entrepreneurs, including Michael Dell and Pierre Omidyar, chose India as the site for their first international offices. The Bill & Melinda Gates Foundation has also expanded its footprint in India, investing over $1 billion in HIV/AIDS prevention, eradication of polio, innovation in toilets, increasing agriculture productivity and targeting multi-faceted programmes in both Bihar and Uttar Pradesh. Yet, they all have realised that this is just a drop in the ocean. In order to be successful, they need partnerships with both Indian philanthropists and the government.

 Indian philanthropists have significantly increased their support over the years as well. Philanthropists are now not only funding their own initiatives but are also realising that owning and operating every initiative is difficult and there is a need to support existing NGOs. This insight is critical in terms of impact since it allows a funder to leverage 10-15 years of expertise of an existing social entrepreneur compared with starting from scratch. Think of it this way: if you had to set up every single company in which you invested, you would significantly limit your options and perhaps not be as successful as you would had you invested in a company such as Apple or TCS. Yet, when it comes to philanthropy, everyone thinks they have the expertise and commitment needed to start their own ventures.

On the funding side, too, it was difficult to get 10 philanthropists together and get them to take a collective decision on which organisation to support. We have had instances where funders have been unhappy with the collective vote and decided to pull their commitment at the last minute. However, we have also had funders who trust the power of the collaborative giving network and participated in the discussion but didn’t vote as they believe that the group will take a much better decision as a whole. When we launched the Dasra Giving Circle five years ago, it took us 12-18 months to convince 10 funders to come together, whereas now we recruit a new group of 10 funders every three to four months.  

Patience pays

Often, the very presence of liaison is difficult for NGOs and funders to understand. It is only after the quality of the programme delivery suffers that both parties realise the need for managerial support. For instance, we helped a family foundation provide a 0% loan to a ragpickers’ association, which would help it create small-scale waste collection centres, thereby cutting out the middleman and helping its women workers earn more. Unfortunately, the funder did not want any additional hand-holding support and a few years later, the money was invested in a fixed deposit since these women were so afraid of not being able to return the money. The organisation and the funder did not educate the women involved about starting businesses or even explain that the foundation did not expect the money back. Funds were returned without having served their purpose as risk capital. We then began to mandate that capacity-building had to be included in new projects.

The same group that once told us it had no time for ‘volunteers’ later sought us out after it realised we were here to stay. Today, we are helping it computerise its reporting systems, raise support to cover managerial support and create a home for rescued girls. Another large foundation that felt our model is unnecessary now sits beside us on panel discussions, participating as speakers at our events and funding organisations that are highlighted in our research reports or graduate through our leadership programme. Like all other ventures, persistence is critical in this field, along with the realisation that we will never have a perfect model but instead need to continually learn and collaborate.

For instance, when the tsunami struck the east coast  of India in late 2004, we were working towards higher education awareness in the area. Though we had dealt with the Gujarat earthquake, this disaster was different as we had to focus not just on rehabilitation but on disaster mitigation for the long term. What made the situation worse was the unprecedented global outpouring of aid, which meant we had to manage nearly $2 million in capital flow but with limited human resources, thus guaranteeing slip-ups in the delivery of aid. Changing dynamics on the field did not help matters either: where fishing families used to share boats, foreign aid ensured the availability of individual vessels, creating unnecessary competition and disharmony among the families.       

There have been just as many rewarding experiences as well, though. In 2002, a group of potential donors, which included Nisa Godrej, visited the Sharanam Centre, a shelter for girls in Dharavi. We struck up a conversation about the centre’s philosophy of helping the girls become confident, well-educated leaders. This initial discussion soon turned into a long-term relationship, with Dasra advising the Godrej Group on its award-winning CSR strategy and the latter sponsoring research in improving the access and quality of education in both rural and urban areas, catalysing over $10 million of funding for the same.  

Future perfect?  

With the CSR law in place, continued growth in high net-worth individual (HNI) giving and more transparency when it comes to NGOs and social businesses, India will lead the way globally in terms of smart, strategic philanthropy. HNIs may also start exploring impact investing alongside their philanthropy; both forms of investment are critical, one just has to realise each of their limitations. 

For instance, for issues such as domestic violence, child marriage or sex trafficking, for-profit business solutions do not exist as yet, but these causes still require funding. On the other hand, certain livelihood programmes, clean drinking water and solar power businesses can charge for their services. Private wealth managers have also been approaching Dasra on a regular basis to train their relationship managers about the nuts and bolts of philanthropy. In the light of the CSR law, we are finally seeing the senior management of companies participate in these conversations and think about how the business’s core competency can be leveraged to create greater impact in the sector. 

For instance, investment banks are now looking at funding scalable organisations, while mobile companies are looking for ways to use their networks to deliver health messages to pregnant women. While we know that this law will not suddenly make unethical companies ethical, many companies and business owners are treating this as an opportunity to think strategically about India’s toughest challenges.

While mergers and acquisitions in the NGO sector may still be quite far away, many more joint ventures are being launched with the realisation that working with a beneficiary group across a continuum makes sense. So, Magic Bus, which focuses on leadership development, partners with organisations focusing on job training and placement that can leverage Magic Bus’ pipeline of 300,000 youth and train them for jobs. Other noteworthy ventures include the Omidyar Network, which has partnered with some of India’s leading philanthropists to raise awareness on governance and the need for local support. Intellecap warrants a mention for providing innovative business solutions to create sustainable enterprises dedicated to social and environmental change. It has provided support to clients such as Hindustan Unilever, Tata Consultancy Services and the Bill & Melinda Gates Foundation and engages over 11,000 stakeholders through the Sankalp Forum, which is the largest social business gathering in the world.

At Dasra, we are confident that in the next 15 years, India will lead the world in philanthropy and development. To be honest, I don’t think we really have a choice: we need to end the 56,000 maternal deaths occurring annually during childbirth, stop 1,600 children under the age of five from dying daily and provide over 550 million Indians access to a toilet. 

It is important to find, fund and scale innovative solutions. While India has all the elements to make this happen, we just need more people to realise their collective responsibility. But we are confident that Indian philanthropy will continue to grow, both in terms of quantum of funds disbursed as well as more impactful funding decisions being made. While India has been recognised as being a global leader in frugal innovation and social entrepreneurship, the time has come for us to also demonstrate leadership in terms of local giving.

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