Enabling philanthropy to achieve its potential, effect social change
While Covid-19 revealed the woeful inadequacies of India’s public health and social protection systems, philanthropy and civil society filled critical gaps. Yet, it also became clear that philanthropy’s usual playbook was hindering a more effective response.
One common practice has been to restrict funding to programme expenses. But that often constrains the sustainability of organisations. As it turned out, those better able to respond to the pandemic’s evolving needs were those with flexibility and multi-year funding. In addition, not all social needs received funds. Funding gravitated toward areas that made the headlines, such as the absence of food and basic services in urban poor settlements, lack of medical supplies and oxygen, and the plight of migrant workers.
What will it take to disrupt entrenched norms so that Indian philanthropy can reach its full potential? One way to transform the sector is for philanthropists to “pay what it takes” to cover the true costs of non-governmental organisations (NGOs) for shared administrative or support functions, capacity-building, and organisational growth. In a recent survey of 388 NGOs, conducted by The Bridgespan Group, 83% reported that they were struggling to cover these costs, and more than half indicated having fewer than three months of financial reserves. The research also describes four practices that can put funders and NGOs on a new path — developing multi-year funderNGO partnerships, closing the indirect-cost funding gap, investing in organisational development, and building their financial reserves.
Another pathway for change emerges from a study by the Centre for Social Impact and Philanthropy, which found that NGOs with deep roots in their communities could rapidly identify and respond to their needs when Covid-19 spread. Yet organisations led by people from marginalised groups — women, the rural poor, and LGBTQ people — are underrepresented as recipients.
The Bridgespan survey, conducted after the first wave of Covid-19, revealed that 70% of NGOs led by members of Dalit, Bahujan, or Adivasi (DBA) communities haven’t reported any operating surplus in the past three years, compared to 45% of non-DBA-led NGOs. Similarly, 61% of non-metro and rural NGOs reported fewer than three months of financial reserves, compared to 51% of NGOs based in eight major cities. To serve those communities better, funders need to increase their outreach to such organisations.
Then there is the dearth of reliable data, even though transparency is essential to search for collaborators and partners. There is an initiative to build a first-of-its-kind “Philanthropy in India” portal, although additional sector data would make the portal more useful.
Even as the pandemic seems to abate in India, other systemic issues loom. For example, funders in other countries seem more willing than Indian philanthropists to confront deep, structural inequities at their root causes. The most recent report from the United Nations Intergovernmental Panel on Climate Change also makes abundantly clear the terrifying reality that the climate crisis is upon us — with India among the most vulnerable nations. Will philanthropists in India continue largely to be spectators to these unfolding existential crises or will they seize this moment to be a part of big, systemic change?
To contribute to large-scale social change, philanthropists in India will have to examine themselves more closely — including issues of the diversity of foundation boards and staff, the ways that endowments are invested, the composition of grant-making portfolios, and the explicit and implicit biases in grant-making. Is Indian philanthropy ready to turn a critical lens on itself and, in so doing, multiply its potential for impact? Or will it fall back on old habits and squander the present opportunity? Now is the time to make a choice.