Non-profit organizations play a significant role in serving marginalized groups and engaging in critical societal issues. These organizations need steady funding to provide services and support to underprivileged populations. Inadequate funding can hinder their ability to operate efficiently and sustainably, making it challenging to deliver quality services and achieve their goals. Capital infusions are crucial to maintain their viability and ensure they can continue making a positive impact in the communities they serve.
In India, the Corporate Social Responsibility law, as per the Companies Act 2013, has had a significant impact on funding for the social sector, leading to increased funding for non-profits in education, health, poverty reduction, and other social issues. High net-worth individuals (HNWIs) and family foundations have also become key stakeholders in philanthropy, contributing significantly to social causes globally. Grants from these entities are major contributors to the non-profit sector, along with funding from government schemes and departments and individual donations.
Philanthropic contributions to the social sector have increased significantly, but it's important to evaluate their allocation and utilization. According to the India Philanthropy Report 2022 by Bain & Company, CSR has experienced a 15% annual growth rate over the past seven years, resulting in an increase in its share of total private giving from 12% in FY 2015 to 23% in FY 2021. With continued economic growth, formalization, and more companies adopting CSR, contributions are projected to grow at 19% annually, reaching a 32% share of total private giving by FY 2026. According to Hurun India Philanthropy List 2022, 15 individuals in India made an annual donation of more than INR 100 crore, 20 donated over INR 50 crore, and 43 donated over INR 20 crore. According to the report, donations to social causes by HNWIs are on the rise exponentially
Project/Programmatic funding has become the dominant mode of funding, providing financial support for designated programs or activities that align with the non-profit's objectives.
Apart from Funding Programs
Programmatic funding helps non-profits create a direct impact in their stakeholder communities, while institutional/organization funding helps them be agile and adaptive to changing circumstances. Institutional funding covers overhead expenses, which can enable non-profits to meaningfully engage with their stakeholder constituents without having to compromise on assets, employee compensation, capacity building and investing in tools and technology. This is significant for several reasons:
1.Talent & Team
The social sector needs experienced and efficient personnel. Grooming and nurturing this talent has a cost, which is seldom covered by programmatic funding. Beyond retaining talent, team development is another critical aspect of non-profit operations. At the Sauramandala Foundation, an institutional grant by the Rainmatter Foundation allowed us to attract and retain top-tier personnel, as well as establish our organizational structures and processes, providing us with the latitude to create roles not typically supported by programmatic funding.
Operational funding defines the financial support required to cover the costs of day-to-day operations, such as rent, utilities, and staff salaries. These expenses are pivotal in maintaining the viability and functionality of the organization. The institutional grant enabled us to establish our first office space. This was a crucial step in bringing our team together, fostering collaboration and innovation, and facilitating cross-functional learning. As a young NGO, this was especially significant as it equipped our team with the necessary resources to execute effectively and deliver meaningful impact at the grassroots level
3. Creating opportunities
We have been able to foster community engagement and have a presence on the ground. This, in turn, has offered us insights into previously untapped challenges and the ability to co-create solutions with stakeholders through collaboration and partnership building. In the absence of unrestricted institutional funding, it would’ve been impossible to allocate resources towards learning, knowledge sharing, team-building and operational costs, all of which has to lead to the proliferation of innovative solutions for our communities.
4. Collaboration and Networking
Every new problem statement we came up with demanded a solution that was innovative and effective. As an organization that believes in co-designing solutions, we utilized the available resources to create a platform for conversations and idea sharing for the solutions to be created. We had the space to test these solutions and take the learnings to organizations ready to fund these initiatives. This process has led us to develop new partnerships with individuals and organizations.
Specifically, in Meghalaya, this led to us being able to bridge partnerships between CSRs and the State government. With the tested solution ideas, learning from the ground and partnership, we leverage additional funding for scale. This approach enabled us to reach out to organizations pursuing funding for transformative change at scale.
5. Second Line of Leadership
The second line of leaders is the one that emerges or is developed from within the team. The importance of a second line of leadership for non-profits is even greater than for for-profit organizations due to the unique challenges and complexities of non-profit operations. Creating the positions and providing the space for team members to grow, experiment, innovate and lead can contribute to building not only their technical skills but also their social and leadership skills.
The ability to access adequate funding has empowered us to embrace innovation and take calculated risks that have resulted in groundbreaking outcomes. By taking advantage of this, we have been able to grow and reach our goals with greater efficiency.
We believe it is valuable to invest and nurture grassroots organizations in the long-term as opposed to looking at short-term interventions. This is why institutional support becomes necessary in enabling non-profits to be effective as equal partners and vehicles in social change.
says Mr. Sameer Shisodia, CEO of the Rainmatter Foundation.
By: Nagakarthik MP & Parij Borgohain with support from Rainmatter Foundation