NGOs challenged by capacity constraints4 min read . Updated: 23 Jan 2011, 08:51 PM IST
NGOs challenged by capacity constraints
New Delhi: When Sunil and Elizabeth Mehta decided to start a small crèche for children from the Mumbai slums as a retirement project eight years ago, they had no idea how rapidly it would grow. Frustrated with India’s education system, the couple intended the preschool to showcase a child-centric educational model Elizabeth had developed.
The model became wildly popular. Soon, the Mehtas found themselves managing seven schools—with nearly 1,400 children. Initially funded through their own public trust, the Mehtas quickly realized they would need much more to keep their project going.
“I had more sleepless nights than I ever had as a businessman," said Sunil Mehta. “There are so many people counting on us. It’s an enormous responsibility."
In October, the Mehtas received life-changing news. Their Muktangan education programme was selected to receive ₹ 3 crore funding from India’s first philanthropic giving circle, broken up over a period of three years, allowing them to do the unthinkable: they could open a Muktangan teacher training institute, allowing them to train instructors all over India in their methods.
Unfortunately, such sustainable funding opportunities are extremely rare in India: at approximately two million, India has among the most non-governmental organizations (NGOs) per person in the world. Despite the large volume of organizations, fewer than 500 have been able to manage enough scale to be “effective" (more than $100,000 in income), according to a study published last year by Bain and Co. on the status of Indian philanthropy. “If we’re going to reduce poverty in India, we’ll need more—many more—professionally run, large-scale charity organizations," the study found.
The challenges NGOs face in achieving scalability are many. One key issue is that the poverty numbers—40% of the population living on less than $1.25—often influences their intervention strategy.
Addressing the basic problems in local communities dominates the functioning of most NGOs, making model-based organizations quite rare, according to Dhaval Udani, associate director of GiveIndia, a so-called “facilitator" organization that connects philanthropists with worthy social sector organizations. “Very few organizations are working at the model level, like how to solve nourishment on the larger level. They don’t think ‘How can I create a model school and good institutions?’ They simply don’t have the expertise."
A dearth of sustainable funding opportunities is another key issue. Very few individuals or institutions solicit proposals, or are willing to commit to multi-year grants, according to Deval Sanghavi, co-founder of Dasra, another facilitator organization. In an effort to encourage larger donations, Dasra introduced India’s first “giving circle" last October, in which 10 individuals committed ₹ 10 lakh funding per year, to be paid out over three years, to one organization. However, this is the exception rather than the rule.
“A lot of NGOs remain reliant on personal relationships and individual foundations," said Sanghavi. “Very few organizations have fund-raising departments or communication departments; so most of the fundraising that happens is through word of mouth." Although corporations have begun to take more interest, few are interested in developing long-term relationships, he said. “One of the problems with corporate social responsibility in India—especially among the multinational companies—is that the strategies are extremely ad hoc," Sanghavi said, “Today they may decide to fund children; but a year from now, they might want to focus on financial literacy or something else."
As a result, planning for long-term growth is difficult. Further, the Bain study found that NGOs are not well-equipped to guarantee donors that their money is being put to good use. “The vast majority (of NGOs) are run with the best of intentions, but without the transparency, processes and professional staff required to reassure donors and encourage large contributions."
To Udani, this skill gap presents the most critical hurdle. “The skills to know how to efficiently utilize money come from having professional management—so what they should be asking are not how to get more money, but how to get smart people in the sector."
Organizations are only beginning to come up with solutions to address skill shortfalls. For instance, Akansh Khurana, a business consultant for Bain, has, of late, along with his colleagues, begun volunteering their services to non-profits tackling social issues like education and financial inclusion. He is a volunteer mentor with Dasra’s “Social Impact" programme, which aims to professionalize organizations within the social sector by matching them with consultants from business, and bringing leaders together for workshops.
Over a period of nine months, mentors work closely with organizations to develop business and management skills. Organizational leaders also participate in three one-week intensive workshops. Though only three years old, more than 90 organizations have already participated in the programme.
“There is great merit in social mentoring," said Udani. “I find amazing receptivity by social entrepreneurs and NGOs to ideas and thoughts—they are very cognizant of the fact that they lack skills, and will take every, and any, opportunity to be able to harness them."
As a mentor to social-sector organizations, Akansh said, “What we try to do is help them focus on not what to do next month, or the next three months, but the next three-to-five years."
Such mentoring seems to have the additional benefit of reassuring donors that their money will be put to good use. Anoj Viswanathan, co-founder of Milaap, an NGO that facilitates direct donations online for microfinance projects, said it builds credibility. “When you go to an investor and you ask to raise $25,000 for the next one year for marketing expenses alone, and you can say you worked with someone from Bain and Co., they’re much more likely to trust you."
Graphic by Jayachandran/Mint