Over the years, the non-profit sector in India has based its strategies on innovativeness in processes primarily driven by the principles of individual entrepreneur-founders or by business family members as part of a philanthropic trust, and with the distinct effort to adopt a non-corporate approach as a means to distinguish itself from the “for profit” corporate sector.
Today, the sector is experiencing winds of change. India now has at least 1.2 million registered NGOs and the fastest growing segments within this space are microfinance, public health and environment. According to Venture Intelligence, in 2007, venture capitalists invested $50 million (about Rs229 crore) in microfinance activities, compared with virtually nothing the year before.
Thus, as funding and the scale of programmes have grown, there has emerged a focus by boards and donors of non-profits to adopt more systematic, “corporate style” management with well-defined systems and processes.
Drivers of change
A primary driver of change in this sector has been the globalization of fund-raising by Indian non-profits supported by the need for scale and sustainability. This has been seen across non-profit categories, from institutions such as SKS Microfinance that work towards economic self-reliance and Technoserve’s rural initiatives to Acumen Fund’s focus on access to affordable health care to the urban and rural poor.
Another major development, in my experience, is a healthy focus on real double bottom line, which includes development impact and commercial sustainability. We see this specifically with the emergence of social venture funds such as Acumen, Unitus, Bellwether, Blue Orchard, which tap into a socially aware investor base and provide capital for activities to achieve impact while generating cost of capital plus real returns.
Illustration: Malay Karmakar / Mint
The changing nature of donors that are funding non-profits has also been a catalyst of change. Non-resident Indians returning to India are keen to make a difference through the development of their villages, cities, infrastructure and a host of development initiatives.
As a result, development projects are seeing a greater involvement of the general population, in addition to the government, funding agencies and non-profit organizations. The American India Foundation (AIF) is an example of such a partnership, with a focus on elementary education, women’s empowerment and maternal and child health.
The current generation of successful entrepreneur-turned-philanthropists is also looking to invest hard-earned money and is increasingly looking for rigorous standards of professionalism and accountability in the charities it funds.