New-age forms of philanthropy!

There are many ways in which you can donate to charitable organisations. Most donors prefer to write out a cheque, drop cash into a box or personally hand over money to NGOs with which they are familiar. Other donors are rocking that boat a little. These philanthropists engage establish sophisticated instruments to generate funds for their pet causes. We introduce new-age forms of philanthropy!

More popular:

  • Shares, stocks, and interest: Azim Premji donated shares worth Rs12,300 crore[2] to a trust that will fund the Azim Premji Foundation and his other philanthropic entities. Bill Gates, meanwhile, funds the Bill and Melinda Gates Foundation with the sale of Microsoft shares[3]. He and his wife have signed a pledge to eventually give away 95% of their wealth to charity[4]. Rakesh Jhunjhunwala currently gives away 25% of his dividend income from investments to philanthropy[5]. These gifts are a way of creating assets for non-profits that they could not otherwise have amassed.
  • Donor-advised funds: Community Foundations work as grant-making bodies that pool donor funds to create a multiplier effect. Donors can choose sectors to which they can give their money, set up donor advised funds or have the money go into a common pool. The money is then directed to organisations working for beneficiaries in the area. The Silicon Valley Community Foundation is best known for the donations it has received from Facebook co-founder Mark Zuckerberg, Go Pro founders and other internet giants. It now houses 1650 philanthropic funds and manages $4.7 billion in assets.[1]

Lesser known:

  • ‘1% equity’: Tech companies are known to make millionaires of founders overnight. Several young co-founders are starting to pledge 1% of equity. The 1% will be donated to the charity of their choice when the business is sold, so it works as a future investment for founders who desire to give to charity but don’t have the money. The plus point: 1% can turn into a huge amount depending on how much the company got acquired for. Australian startup Atlassian ended up donating $35 million to the Atlassian Foundation they established on being acquired[6]. Imagine what 1% of equity of a Flipkart or Amazon would be, and what it would mean for the organisation it goes to!
  • Mutual funds: Can mutual funds be a philanthropic instrument? HDFC Mutual Fund shows us how. In 2011, it launched a close-ended debt fund called the HDFC Debt Fund for Cancer Cure. Investors had to invest a minimum of Rs1 lakh with a lock-in period of three years. The total principal was then invested in debt/money market instruments or government securities. Investors could then choose to donate 50% or 100% of all dividend earned to the Indian Cancer Society, an organisation that sponsors treatment and therapy for patients in need. Investors could claim a tax deduction under Section 80G on any dividend amount they donated. HDFC reports that the total donations received under the scheme totaled Rs10.87 crores till December 2013[7]. A second series was launched in February 2014, with HDFC offering to match any donations made through the fund.

The world is changing at a rapid pace and philanthropy is evolving with it. We’re sure there are more innovative instruments and donation options coming in the future.

[5] ‘Rakesh Jhunjhunwala’s next target: Shed 20 kilos, give away Rs5000 crore to philanthropy’,, accessed on 4th December 2014

Khadi 2.0: Can ‘Make-in-India’ change the fortunes of traditional Indian textiles?

January 6th is celebrated as ‘veshti’ day in Tamil Nadu every year! With pride, Tamil men step out of their homes dressed in traditional veshtis or lungis. While ‘veshti’ day is encouraged in the name of culture, the Tamil Nadu Handloom Weavers’ Co-operative Society has stated that it supports the “interests of cotton weavers”. Prime Minister Narendra Modi has emphasized ‘make-in-India’. Remember too, Gandhiji’s successful strategy to promote spinning one’s own yarn as a mark of independence from the British and their machine-manufactured cotton. While these choices appear to be political statements they have significant economic impact. With Republic Day around the corner, we thought we’d examine how ‘Make-In-India’ can transform the fortunes of traditional Indian textile workers.

John Bissell is not a household name. Yet the company he founded is unique in many ways. Their brand is associated with making ‘ethnic’ fabrics cool, and moving them away from the government khadi bhandar aesthetic. They simplified, contemporized and commercialized traditional Indian designs and motifs, and brought them to the urban shopper who has rewarded them handsomely. They’ve grown bigger and bigger over the years, attracting funding from Premji Invest, Azim Premji’s investment fund and turning a profit of Rs54 crore in FY14.

If you haven’t guessed by now, we’re talking about Fabindia. Few people follow the make-in-India model as well as Fabindia does. Fabindia sources its products from community-owned supplier companies. The company’s presence has given the artisans an identity of their own as professionals, removing their dependence on government handouts. Business comes into the hands of people who make the products, wedding the interests of industry and culture.

Ultimately, the success story of Fabindia is not just in their success in bringing traditional Indian designs back in vogue. It’s that they managed to convert the concept of working in textiles to a profitable option for weavers. In an era of mass production, weavers are challenged in competing with machine and power looms that churn out hundreds of identical pieces in minutes. (Readymade synthetic fabrics are also cheaper to purchase and maintain for those with limited incomes.) Fabrics that are intricate and take hours to produce, sell for large amounts of money, making them unaffordable to many. Weavers aren’t adequately compensated for skills which have been handed down to them over the centuries.

A Dasra report on the crafts sector in India estimated that while there were around 7 million artisans practicing in the country, India’s share of the global handicrafts market was below 2%. ‘Make-in-India’ in the textile sector reaps benefits for the weaver communities while keeping India’s traditional art forms alive. We’re eager to find out if NGOs and social entrepreneurs working with weavers, artisans and other groups can replicate Fabindia’s success.

For the moment, impact investors see some potential in the sector. Last year, Aavishkar Venture Management invested Rs18 crore into Mela Artisans, a company that directly procures and retails products made by Indian artisans. While revenue figures are not available, Mela has “placed orders with more than 50 artisan groups across 10 states in India” since 2012. “..these groups employ 4,500 full-time artisans, of which 77 percent are women, and more than 6,000 part-time artisans.[1]

There doesn’t have to be only one winner in the debate on tradition and livelihoods. With a little bit of support we can make in India and support the livelihoods of Indians as well.

A piggy-bank no NGO should break!

Human beings are biased towards action. When we are approached by a hungry child or a request to leave our change in a charity box, we (naturally) assume that our contribution will make a difference to the beneficiary’s situation in life. When faced with uncertainty, we prefer to act with the belief that we made an impact.

This bias towards action happens with decisions related to financial investments, impulse purchases, food and even giving to charity! Most of us give one-off donations to NGOs and don’t reflect about it later. Yet most would be surprised to know how minimal the impact our money has had. More importantly, we do not release that if given strategically, the same sum could create a larger impact.

Donating to an organisation’s corpus fund is a great way to help an NGO sustain itself in the future. A corpus fund is like a permanent fund that an organisation cannot dip into except in emergencies. The corpus fund and the interest on it act as an internal source of funds, as opposed to grants or donations that are one-offs received by an organisation. Additionally, a corpus fund can be created out of internal accruals and surpluses as well.

A healthy corpus fund can be a good indicator of an organisation’s sustainability. In 2013, The Akshaya Patra FoundationThe Leprosy Mission Trust IndiaHelpAge IndiaSri Chaitanya Seva TrustISKCON Food Relief Foundation had the largest corpuses of all 550 NGOs on our site. These organisations are well known, have been running impactful programmes for at least five years, and have among the highest spend on programme expenses in the latest available year.

Large Corpus = Long Term Sustainability
NGO Age Corpus Int to Corpus to Investment Int to
(All data pertains to FY13)   Rs mn Tot Inc (%) Tot Liab (%) to Tot Assets (%) Cash + Inv (%)
Akshaya Patra Foundation, The 15 756 1 55 10 4.9
Leprosy Mission Trust, The 146 346 1 62 5 4.3
HelpAge India 37 339 2 55 68 2.8
Sri Chaitanya Mission Trust 17 339 25 98 28 10.3
ISKCON Food Relief Foundation 11 303 1 79 14 5.5

You would be surprised to know that a number of ‘known’ NGOs are living a hand-to-mouth existence, overly reliant on the goodness of strangers to continue the work they are doing. Dependency on external donors makes it difficult for them to plan their activities in advance. A day-to-day existence also makes it hard for an NGO to innovate or scale programmes to benefit more people. Would Akshaya Patra be able to feed 1.3 million children if they were trying to cut corners at every step? HelpAge India provided 1.23 million free treatments through their mobile vans in 2013, the kind of scale that requires large investments.

NGOs tend to run their programmes as per the funding they receive. However, programme funding only covers the expenses of running that particular time-bound programme. An organisation with a healthy corpus fund is able to prioritise spending. As an example, interest income earned from the corpus could be a guaranteed source to finance the annual rent paid by an education NGO for the space they use to educate their beneficiaries.

A corpus fund in a legitimate organisation can go a long way towards supporting beneficiaries and programmes. Therefore, if you’re considering donating to an organisation you like, we’d urge you to reserve a part of your donation for the organisation’s corpus fund. What’s more, you’ll know your money won’t be misused. Here’s why:

  • A corpus fund is strongly regulated: Under the Indian Income Tax Act, an NGO cannot transfer more than 15% of a year’s voluntary donations towards the corpus fund. At least 85% is to be used for programme expenses which ensures that an NGO doesn’t forego programme activities to build up its own corpus[1].
  • Donations to a corpus fund are regulated: A donor has to include an explicit, written statement specifying that the donation is for the purposes of the corpus fund.

Watch out for:

  • NGOs that have built up large corpus funds and high interest income without corresponding spends on programme expenses, staff costs, overhead expenses or earmarked funds over two or three years. A donor should explore why an NGO is building up a corpus when no charitable work is evident.


Continue reading A piggy-bank no NGO should break!

The best kept secret in town!

The Bombay Community Public Trust (BCPT) and HelpYourNGO organised a talk on Community Foundations (CFs) in association with Ms Bibi Patel, Vice President of the Community Foundation of Ottawa, Canada. The talk introduced the concept of Community Foundations to an Indian audience. While CFs are not unknown abroad, we have to agree with Ms. Patel when she said they have often been called ‘the best-kept secret in town’!

Philanthropy through CFs was conceptualized in 1914 when Frederick Goff set up what is now the Cleveland Foundation in the USA. They represent an organised form of philanthropy that pools funds provided by donors and grants them to organisations working to support communities in that region. They have been growing in numbers and reach ever since, and are particularly popular in developed economies. There are over 1,700 CFs worldwide. In the United States, for example, CFs form 1% of all registered foundations and have an asset size of $64.9 billion.[1] They were estimated to give $5.5 billion in 2014. The Community Foundation of Ottawa itself manages over 700 individual funds set up by a variety of individuals, and gave out almost $66 million dollars in 2013. The Bombay Community Public Trust (BCPT) in Mumbai remains one of the few CFs in India. Set up in 1992, BCPT has assisted 342 projects run by 142 NGOs in the past 15 years.

A sustainable and democratic structure

Mr. Richard Bale, Consul General of Canada in Mumbai with Ms. Bibi Patel at the event

CFs typically work within a geographically defined community, though they can support initiatives elsewhere depending on donors’ preferences.

They offer donors the option of pooling funds with other donations, thereby increasing the total value of grants being awarded. The CF route presents an ideal option for donors looking to direct funds to causes of their preference without starting an organisation of their own. Other funding agencies often may not be able to accommodate a donor’s interest, while NGOs working in a single core area may not appeal to donors who want to have a wider impact on the community. In 2013, The Community Foundation of Ottawa’s grants went out to education camps for children from low-income groups, purchasing an MRI machine for a hospital, and supporting a school in India.

On occasion CFs manage and invest donations by turning them into endowments. Interest earned on the endowment is distributed as a grant to organisations working for the benefit of the community. This route ensures that funds are available over a long period. CFs can decide what percent of the endowment fund will be spent each year, with figures ranging from 1.5 – 4%. Alternately, if donors choose to have their funds reach the community directly, CF’s will honour that request as well. CFs’ funds are professionally managed, as are the grant-making and donor advisory processes, making them an ideal option for someone who wants to organize their philanthropic activities.

The model is a donor-friendly structure, as it offers donors the flexibility of choosing a cause or sector of their choice. Donations can take the form of donor-advised funds, designated funds, scholarship funds and other options. A CF allows donors to stipulate the sector or organisation they would like to fund, or leaves it up to the discretion of the Foundation itself. Individuals looking to give smaller amounts also find place under the CF umbrella.

Drawbacks of the model

The lack of awareness about philanthropy through a CF can be said to be its Achilles Heel.

Given the large funds they marshal, CFs are ideally poised to support NGOs for several years in their lifecycle and help them sustain themselves. On occasion CFs provide gap-funding to meet small-ticket local, community-specific needs, which can be a drawback.

NGO capacity-building also emerges as another area in which CFs could do more.

[1] Preview of Key Facts on U.S. Foundations, 2014 edition,, accessed on 20th October 2014.

Impact Investing

Impact investing is the process of investing in people or organisations that solve social and economic issues affecting those in need. At the same time, unlike charities or NGOs, some of these organisations also look to generate financial profits. Impact investments, in addition to social benefits provide a potential financial return to the investor.

Impact investors are generally divided into “impact first” investors and “financial first” investors[1]. “Impact first” investors are driven by the aim to create change, and are willing to overlook financial gain in the process. “Financial first” investors expect returns on their investments while also working for social or environmental gain.

‘Financial First’ Investments

Vishal Mehta, co-founder and Managing Director of Lok Capital, a prominent Indian venture capital fund that invests in bottom-of-pyramid businesses stated that, in India, “Impact investors have primarily focused on investing in early stage companies that have a strong low income focus.[2]

A Capital Logic study of 50 fund management firms and 120 funds found that financial services, renewable energy, affordable healthcare and housing were the areas to which a majority of funds were directed[3]. Financial first investors like mutual funds and corporate pension funds were found to invest in funds that focuses (sic) purely on financial returns’, and expect a return of above 25% per annum.[4]

Vishal quoted the Unitus Capital India Impact Equity Investment Report 2013, saying that “over half of the impact investments last year have invested under $2 million, across seed to series A rounds.[5]

The financial services sector sees the largest number of investments. Intellecap’s report on the impact investing space in India found that “over 50% of all impact investments have been in the microfinance sector, with the top 15 MFI (Micro Finance Institutions) accounting for 87% of all investments in the sector.[6]”This bias is understandable when one considers the professional background of the investors, the chance of generating profits, and the large market for these services. Tapping this market can mean a huge payoff for first movers.

Other unusual sectors receive attention as well. India has long been the world’s largest producer of milk, and a series C raise of around Rs80 crore in Milk Mantra Dairy Pvt Ltd drew eyeballs in June 2014. Aavishkar India Micro Venture Capital Fund, a reputed early-stage investment company focused on rural enterprises had earlier invested in this company, and this marked their exit.

‘Impact first’

Another category of investors chooses to aim for social impact ahead of financial returns. The Omidyar Network, for example, invests in for-profit and non-profit companies. In the past, they’ve supported organizations like Teach for India, Akshara Foundation, Association for Democratic Reforms and Janaagraha. Jayant Sinha, then partner and managing director of Omidyar Network Advisors India said that “Like a series A investor or an early-stage VC firm, our stake in for-profit companies varies between 10-15% and 25-40%. For non-profit, we will not support any organization for more than 25-33% of its funding. We want to make sure that there is a robust donor base supporting them.[7]

Funders like Acumen believe in ‘patient capital’, “a debt or equity investment in an early-stage enterprise.[8]” This money is raised through charitable donations and other funding sources, and benefits enterprises with a social impact. Acumen believes in exiting in seven to ten years; so far they have invested $31 million in the Indian social sector. Their investees include Edubridge, Hippocampus Learning Centres and Labournet.


Impact investment seems poised to transform capital and put it to work for the benefit of society and investors. For those who believe in the transformative power of capitalism, the successes of impact investing provide a new way to engage with social change and perhaps get rewarded for it as well!

[1] Impact Investing,, April 4, 2014, accessed on 30th July 2014


[3] Impact Investments in India, study by Capital Logic, Artha Platform,…, accessed on 30th July 2014

[4] Impact Investments in India, study by Capital Logic, Artha Platform,…, accessed on 30th July 2014


[6] Highlights of the Study, Invest. Catalyse. Mainstream. The Indian Impact Investing Story, Pg 2,