The publication discusses an overview of the development sector in India based on the discussion with Anu Prasad. The focus of the read is on leadership development and fundraising programs of India Leaders for the Social Sector. The extensive read discusses positive initiatives like Pay What It Takes Philanthropy in India based on research publications by The Bridgespan Group and features policy initiatives recommended by The middle Road to enable social change and impact within the social sector. One of the most critical themes emerging within the international development sector is leadership development. The pandemic has accelerated the digitalization and transformation within the corporate world, and the social and development sector is no different. As many facets within the development sector converge for advanced and emerging economies, it’s imperative to understand the future of the rapidly evolving social impact sector. Nishant Malhotra, Sole Founder of The middle Road, interviewed Anu Prasad, Founder & CEO of India Leaders for Social Sector (ILSS), a leading nonprofit in India that builds and nurtures capacity and talent in India’s social sector. The nonprofit is backed by a visionary advisory council of thought leaders – Amit Chandra, Debasish Mitter, Luis Miranda, Ashish Dhawan, and Safeena Husain. Before setting up ILSS in 2017, Anu was the founding Deputy Dean of the prestigious Young India Fellowship (YIF) and a founding member of Ashoka University, India’s first liberal arts university. Anu held leadership roles at multinational companies such as American Express and TNT. She led Amex’s global financial re-engineering to launch Amex Financial Resource Centre in India at Amex. At TNT, she was head of finance for the company’s North India region.
An entrepreneur at heart, Anu has also co-founded and managed a successful travel company. She has also been a consultant for Dell Foundation on its education projects. Read the note posted under the Podcast section for the complete list of questions here. Anu Prasad, a thought leader within the development sector and a much-needed role model for the younger generation, talks about her entrepreneurial and mentorship mindset as essential pillars for her successful career. Mentoring for women in India is essential especially given the pie of the women working participation is at a dismissal ~20% of the total labor force participation in India and lessening. While discussing her transformative journey, Anu mentioned the difficulties people face who take career breaks. In this aspect, India is changing for the better as many companies are implementing policies that facilitate a smooth career transition, especially for women. Anu discusses the example of Genpact, one of the businesses spearheading this initiative, and vehemently encourages women to come back to careers even if they have to start at a level lower than what they deserve. One key question is how the proliferation of social awareness within the global arena translates into actionable metrics given the parlance of the Indian social ecosystem. There is a measurable shift with people of all ages pursuing careers within the social sector, backed by a decisive thrust from the Corporate Social Responsibility arm to catalyze the development sector through a holistic approach. However, the nonprofit sector in India is in its nascent stage of development, lacking the depth and scale of large nonprofits globally. Anu quotes the example of BRAC in Bangladesh, the world’s largest nonprofit in the world to enunciate the comparison between India and foreign organizations.
BRAC, follows the motto, small is beautiful, scale is necessary, employees more than 90,000 employees with 70 percent women with a pan-national wide and international offices
Anu talks about the importance of leadership development in scaling nonprofits through a multi-dimensional approach by attracting talent from diverse sectors through a curated structured selection process. The India Leaders for Social Sector Leadership Program follows the thoughtful process of giving importance to unlearning and relearning attributes to invigorate both its participants’ inward and outward aspects to make them more effective and empathic leaders. Anu articulates her thoughts, emphasizing that ending poverty is a long-drawn process. Still, in the end, the effort is gratifying. ILSS leadership program aspires to be the brand ambassador of the social sector, a platform to connect the best talent within this space. ILSS leadership cohorts are inclusive, despite including people with experience from multiple industries and seniority levels, all working towards a common social good. A pivotal insight is the lack of a fundraising bandwidth and sponsored training for people in India viz-a-viz advanced countries example, the US. Anu mentions a new movement among philanthropists in India led by A.T.E. Chandra Foundation, Children’s Investment Fund Foundation, EdelGive Foundation, the Ford Foundation, and Omidyar Network India. These foundations are collaborating with The Bridgespan Group to foster the Pay What It Takes Philanthropy. 1 Pay What It Takes The Bridgespan Group first suggested philanthropy through its research on the development sector in the US, the findings initially published on the Stanford Social Innovation Review. Pay What It Takes funds tangible outcomes, i.e., programs and overheads, a refreshing amplifier for the Indian social sector that is already reeling from a scarcity of funding for value-added measures like organizational development for their employees. Today, the global development sector is more transparent with accountability and an evidence-based approach driving outcomes. The overlapping confluence between the national and international arenas makes on-the-job learning programs hygiene factors for the longevity of actors within the welfare ecosystem.
# Fundraising — Are Nonprofits Underfunded? Nonprofit Neglect
Authors Thomas Tierney and Joel Fleishman of the book, Give Smart Philanthropy that Gets Result, called Philanthropists widespread resistance to overhead expenses as nonprofit neglect, the fourth trap in a series of unintentional insidious traps within the giving ecosystem.
The Bridgespan Group Pay What It Takes Philanthropy thought leadership initiative is an insightful and detailed analysis to understand the cost of overheads within the development sector. Worldwide, nonprofits face a starvation cycle with a limitation on the overhead reimbursement that is capped at 15 percent of the direct costs by many funders in the US. Overhead expenses a nonstandard term usually implies administrative expenses within this sector.
Team Bridgespan focuses on indirect costs rather than overheads, dividing indirect costs into Administrative Costs, Network & Field, Physical Assets, and Knowledge Management. These terms correlate with the work within the development sector. For example, research-focused organization like J-Pal and IDinsight conduct randomized controlled trials and other impact evaluation exercises that requires data collection from the sample population, implementation of interventions, etc. would be part of Network & Field based on the interpretation of The middle Road.
SG&A” (selling, general, and administrative expenses), a term used in financial statements, covers all non-production costs. Look out for Valuation tutorials posted under the Online Courses section; there are three kinds of financial statements: Balance Sheet, Income Statement, and Cash Flow Statement. In a simplified manner, the Balance Sheet discusses the assets and liabilities of the firm; Income Statement highlights revenues and expenses of firms over some time, and the Cash Flow Statement includes sources of cash in a firm from operating, investing, and financing activities. The Cash Flow Statement shares an overview of how an organization makes money. Many of these aspects are irrelevant to nonprofit foundations and mentioned only to share an overview of financial statements to better understand the term indirect costs. Indirect costs are part of the income statement; refer to the diagram that shares corporates’ type of income statement.
The Bridgespan Group covered 20 US and Global organizations with annual budgets from $2 million to $650 million divided into four industry segments – US-based direct service organizations, policy and advocacy organizations, international networks, and research organizations to get an in-depth numerical understanding of indirect costs required for delivering impact.
Pay What It Takes Philanthropy funds programs by calculating indirect costs to fund impact-driven projects or interventions. The framework developed by The Bridgespan Group is more in-depth and concrete in describing indirect expenses removing the existing opacity for reporting indirect costs by nonprofits. The report clearly states that more extensive grants do not guarantee intended results but give breathing space to nonprofits to focus more clearly on their mission, goals, and outcomes. Read the Pay What It Takes Philanthropy report to know more about the exercise. The indirect costs as a percent of direct costs range from 21 percent to 89 percent, with the median as 40 percent clearly explaining that the nonprofit sector in the US is underfunded, more likely a widespread phenomenon in many countries, including India. On the positive side, the report mentions the rising awareness of this shortcoming among philanthropic organizations. For example, Ford Foundation President Darren Walker is a vocal proponent of adaptive change in Grantmaking methodology.
A similar exercise was done recently in India to highlight the “systemic deprivation” or underfunding among Indian nonprofits. (“Systemic Deprivation,” a term used in The Bridgespan Group publication Building Strong, Resilient NGOs in India: Time for New Funding Practices, for Indian nonprofits). Five leading philanthropies—A.T.E. Chandra Foundation, Children’s Investment Fund Foundation, EdelGive Foundation, the Ford Foundation, and Omidyar Network India joined the Bridgespan Group to establish the Pay What It Takes Philanthropy initiative in India. The study reconfirms the worst fears that the social sector remains grossly underfunded with apathy towards programs that encourage organizational development through capacity building and other non-program-related expenses. The study includes 380 NGOs (non-governmental organizations, term used for nonprofits) in India for a more comprehensive representation of the social sector and financial analysis of 40 leading and relatively well-funded NGOs. The results for the 40 NGOs show a wide disparity for indirect costs; these costs range from 5 percent to 51 percent of total NGO costs. Out of 40 nonprofits covered, 28 had a shortfall in indirect cost allocations with a 13-percentage point gap between the actual indirect cost expenditure as a percent of total costs allocated by key program funders. The fact that 83 percent of the 380 NGOs struggled to cover indirect expenses cements India’s systemic problem of funding outcomes. Notes from The Bridgespan Group report: Months of operating reserves is estimated as number of months that expenses can be covered using unrestricted reserves and other liquid assets. Small NGOs have less than INR 1 crore annual expenditure; medium NGOs have INR 1-10 crore annual expenditure; large NGOs have more than INR 10 crore annual expenditure. Reserve levels are as of September 2020. Due to rounding, percentages may not always add up to 100 percent.
The Bridgespan Group, along with Ford Foundation (refer to the fig), developed the Grantmaking Pyramid for nonprofits, a hierarchical system to understand the evolution of nonprofits from the initial phase of foundational capabilities to financial resilience to the final stage of increasing impact. To scale operations effectively, organizations need to foster leadership development & strategic guidance implement capacity building and organization development programs using technology seamlessly for effects. Further, organizations must develop expertise in their mission to succeed at a much larger scale. These steps lead to sound financials by building up reserves to tide along with the vicissitudes of economic cycles, a lever for increasing impact. Half of the 380 NGOs reported no operating surplus for the last three years, and 80 percent of them mentioned limited funding to impede innovation and improve programs. The pandemic has further exacerbated the problem. In the said research analysis, the 380 NGOs fork into small, medium, and large segments based on their annual expenditure – small (less than INR 1 crore or $135,000 of yearly spending), medium (INR 1–10 crores), and extensive (more than INR 10 crore or $1.4 million). About two-thirds of the small nonprofits and more than one-third of large organizations are financially stressed. This is a troubling statistic, a cul de sac for nonprofit organizations in India if no radical measures are taken soon.
This adaptability and responsiveness makes the ILSS Fundraising Program more than just another online course. Be part of this transformative learning experience: https://t.co/evEVvyxlKX
— India Leaders for Social Sector – ILSS (@ILSS_Official) July 15, 2021
Last year, ILSS launched its fundraising program. Anu shares her extensive experience in this area significantly the crowdfunding fundraising effort at the Ashoka University citing the efforts of stalwarts like Ashish Dhawan and Venkatesam Eshwara. India Leaders for Social Sector (ILSS) fundraising program, a thought leadership platform, showcases leading social change-makers and leaders to talk about their experience in raising capital example Safeena Husain (Educate Girls), Atul Satija (The Nudge Foundation).
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The fundraising program lays down the best practices for organizations, coalesces these practices within a framework that range from database management, research tools, and stakeholder kits to reinforcing community building among various cohorts, accelerating interactions with domain/subject matter experts for strategic guidance etc. This approach builds on the Give till it Hurts philosophy shared by Atul Satija to enhance giving among actors within the development sector. The development sector in India is becoming vibrant kickstarting more business models – hybrid, social entrepreneurs as the pie of seed funding grows. Over the next decade, the development sector will register exponential growth in the number of mission-driven founders solving complex problems as the Indian development sector keeps in step with that of the international development sector. The next decade is crucial, as more collaborative and multi-stakeholder platforms breed the paradigm of the emerging ecosystem.
Some global initiatives and policy measures that enable social change and impact within the international development sector can be implemented in India — Thoughts from The middle Road
Policy Enabler ======>> One way to enable innovation is to increase capital availability through seed funding and fundraising know-how facilitated through specialized programs. ILSS’s fundraising program is one of them. Example Villgro, Social Alpha in India. Global impact investor powerhouses like Accion Labs, Omidyar Network, Acumen, Caspian, etc. are present in India and though there is an availability of seed funding from the government, a lot of work can be done within this area in India. Donor management is one of the most critical relationships that nonprofits have to understand for long term social impact. ===> The middle Road
# List of Policy Enablers from The middle Road
- Structure international programs so participants in India can be exposed to the best international practices develop rotation programs within organizations supported by best-in-class training programs for employees. Implement skill development through qualitative and quantitative programs in impact evaluation, financial and cost analysis, brand management, etc. These learning programs will develop perspective, awareness, and expertise for an evidence-based approach, stepping forward in scaling ventures and building future leaders.
- Governments must create an ecosystem for impact investors through policy enablers like tax incentives and improve regulation within the impact investing sector to remove greenwashing. Establish both general and specific accelerator programs to mentor organizations that work on the intersection of financial and social returns. Drive more transparency and accountability within the corporate social responsibility sector.
- One of the biggest drivers of ESG globally are institutions like pension funds and insurance companies. A key policy initiative would be to make it mandatory for asset managers to allocate a portion of corpus to organizations that fall within the ESG category or encourage including ESG themes within investment decisions.
ESG Environmental, Social, Corporate Governance
# Incentivize innovation through awards and substantial grants
Incentivize innovation through awards, huge grants with substantial award money for founders to focus on their mission. Yidan prize is one such bell whether thought leadership movement from China. Grants from Echoing Green, Draper Richards Kaplan Foundation are excellent examples of driving impactful change among all actors within sustainable development. These grants are open to nonprofits, hybrid and social impact-driven organizations based on selected criteria to encourage sustainable impact models for long-lasting social change and impact within the global arena.
Draper Richards Kaplan Foundation bets on leaders, “outstanding people create wide-reaching social change.” 4
John Wood, Founder of Room to Read is one entrepreneur that Draper Richards Kaplan Foundation-backed. From its earliest inception of building schools and libraries for underprivileged children in Nepal, today the nonprofit has spread globally with offices in multiple countries. It offers scholarships to underserved girls to pursue quality education, trains teachers to lessen the gap in inequitable education as one-third of the world’s children are still cut off from learning. To date, 14.3 million children have benefited from its literacy program, the nonprofit has distributed 26 million books, trained 15,000 teachers with more than 85,000 girls enrolled in the Girl’s Education Program. 5
# Leverage Technology and Outreach Channels
China effectively uses disruptive technology like blockchain to radically change charity by increasing retail participation. Crowdfunding remains popular in the US, Canada, Europe and China to bridge capital requirements for all actors within the international development sector. There are mission-driven crowdfunding platforms that do not take equity for crowdfunding shouts for social impact projects or ventures.
Back to the discussion with Anu Prasad
Anu shares an impactful quote by Margaret Mead, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.” The message is unmistakable, for those working on ventures ahead of time and not yet an express need can still make a quantifiable difference within society. Even individuals or small groups of people can make a difference. Anu emphasizes the importance of learnability, modesty, curiosity, flexible mindset, and active listening skills for careers within this sector. Anu shares three mantras for success and one of them is “If you do not ask, the answer is no” – reinforcing people to reach out for any help that enhances their ventures or projects/interventions. The path ahead is long and challenging, with a growing digital divide in India marginalizing low-income communities as resilience to virtual media increases. Yet Anu is optimistic about the future. Anu finds Anshu Gupta’s (Founder of Goonj) work deeply inspiring. Goonj is enabling a measurable social change and impact for the underserved and less privileged strata. Listen to Anu as she speaks about her Aha moment.
Anu leaves a deeply philosophical message that in India there are so many opportunities to do good. This two-faced truth shares the sad underlying pinning’s of India, and in many ways resonates with many regions worldwide. It’s time to take notice of this shortcoming and start taking progressive steps that enable social change and impact. The podcast of Anu Prasad is across multiple platforms. Give a hear. The middle Road is an affiliate partner of the Podbean podcast directory. The link to The middle road’s Podbean page is here.
References
- Pay-What-It-Takes Philanthropy by Jeri Eckhart-Queenan, Michael Etzel, Sridhar Prasad
- Building Strong, Resilient NGOs in India: Time for New Funding Practices By Pritha Venkatachalam, Donald Yeh, Shashank Rastogi, Anushka Siddiqui, Umang Manchanda, Kanika Gupta, and Roger Thompson
- https://ec.europa.eu/info/publications/sustainable-finance-renewed-strategy_en
- Give Smart Philanthropy That Gets Results by Thomas Tierney and Joel L Fleishman
- Room to Read website
- https://indialeadersforsocialsector.com/
https://www.brac.net/
Government Pension Investment Fund Investment Results
Contact nishant@themiddleroad.org for any queries or corrections