When you have money and someone else needs it, power enters the room. This is the nature of the relationship between donors and not-for-profit organizations (NPOs). Donors come in many forms: philanthropic foundations, international development agencies, CSR arms of businesses, wealthy individuals and governments. We are one of them.
The Azim Premji Foundation is a philanthropic entity that is among the largest Indian donors to NPOs in India. In 2025-26, we disbursed grants to over 1,600 NPOs and approved over 800 new ones, ranging from a few lakh rupees to tens of crores. This grant-making is in addition to our own direct work: on school education, health and nutrition, livelihoods and more; and through our universities.
We have been at this for 25 years. All of which gives us an entrenched insider’s view of how this world actually functions.
A few weeks ago, I wrote about some of its dysfunctions. Several friends told me that donors and even some NPOs felt attacked. The intention was not to attack anyone. But when you write about the flaws of certain approaches to social sector work, those who have built their identities around these may take it personally. That is understandable.
So I thought it worth turning the lens inward. Here, then, are our own key flaws, the ones we are conscious of. Some we have not yet been able to address. Some we have addressed partially. A few have largely been tackled.
One: We give too much money to those who already have it. This is not to say that well-funded NPOs don’t need further support; they often do. But this tendency leads us to pay inadequate attention to a much larger set of NPOs that need money even more urgently. As these are smaller and harder to reach, they are harder for us to assess from a distance. Yet, it is often these that do the most important work with the most vulnerable communities.
We have partially addressed this by building distributed teams across many states, thus taking grant-making as close to the ground as possible. Proximity changes what you can see and who you can hear.
A related problem, we have nearly eliminated: some well-resourced NPOs are fluent in what might be called donorspeak—the language of impact, outcomes and change theory that donors like us have taught them and often masks thin or flaky work. We have developed a good ear for this. Also, we have learnt to take seriously NPOs that cannot speak a word of donorspeak.
Two: We make NPOs run around far more than we should. Due diligence is legitimate. NPOs understand and accept this. But we ask for too much information, across too many iterations, and extract disproportionate effort from organizations that have better uses for their time.
We have improved on this, but not enough. A particularly wasteful variant: we sometimes know quite early that a grant will not come through, or that it will, and we continue to put NPOs through multiple rounds of process. We must communicate clearly and quickly. We are working on this.
Three: We think we know more than NPOs. Intellectually, we have largely rejected this belief within our organisation. In our behaviour, however, it persists. We tell NPOs what to do or what not to do, sometimes under the guise of advice.
We ought to know better. Given our own extensive work in education and health, we know how hard it is to get anything done on the ground, how path-dependent and context-specific everything is. Each NPO meets the world on its own terms.
Given the asymmetry of the donor-grantee relationship, we must be especially careful about what we say and how. We can advise them on matters that NPOs find hard to invest in independently (say, financial systems or IT infrastructure). But on their substantive work, we should restrain ourselves.
Four: We want strong organizations, but resist paying for them. We want NPOs to build robust internal capacity while keeping non-programme costs—or overheads—to around 10-12% of the total. But when many other donors insist on 5% or less, even 10% is often too little to let an NPO create real organizational quality.
We have been reluctant to raise this to 15-17%, for reasons that are not entirely unjustified—such as the concern that many NPOs would struggle to absorb higher overhead funding effectively. But we are short of the ability to discern what is actually needed for each NPO. We are beginning to try.
Five: We are no longer in the grip of what I call the three great donor delusions—scale, sustainability and systems change. These have done considerable damage to the sector.
Briefly: nothing NPOs do can be truly ‘sustainable’ in a rapid-churn society; what matters calls for continuous work and nurturing; the quest for scale is, in most contexts, a misalignment and form of dishonesty; and neither NPOs nor donors can drive systems change. If any of this still leaks into our behaviour or grant conditions, we should be called out for it.
NPOs span a wide range from the genuinely committed and fly-by-night to the rigorously grounded and simply delusional. We donors must be clear-eyed about how our choices shape the not-for-profit ecosystem. And on that count, our lot has not served the sector well over the past two decades.
The author is CEO of Azim Premji Foundation.