NGO Insights: Sadbhav Foundation

Dated : 12 Nov 2014
  1. Sector and Positioning:

Sadbhav Foundation (SF) was started in 1996 as the philanthropic commitment of the Late Shri S.M. Sheth. The activities of SF are concentrated in Karjat Taluka of Raigad district, Maharashtra. SF assumes the role of a NGO as well as a donor agency. Though its activities are focused on holistic development of people in Karjat Taluka, it also donates more than 50% of its total income to deserving organisations and individuals.  The initiatives undertaken include: Self Help Groups (SHGs) formed to obtain loans and grants from banks under NABARD schemes to start income generating activities. a women’s cooperative credit society to make available sources of finance independent of SF to women engaged in SHGs; and a medical training project’ Arogyasakhi’. In addition, SF also runs a medical clinic and eye camp at Karjat to provide the needy with medical check-ups and medicines at an affordable cost. SF provides vocational training such as sewing, computer literacy and beauty parlour classes. 

The Seth family runs two independent charity projects: Sadbhav Kidney Foundation and Sadbhav Sujatan School which are supported by SF to a considerable extent. SF funds these units by lending them loans and paying their payment deficits. For all legal purposes, Sadbhav Kidney Foundation forms part of SF. Sujatan School which earlier formed part of SF, has been registered as a separate trust from FY12-13. 

  1. Impact:
  • SF formed a cooperative society with 150 women across 60 villages of Karjat Taluka. Of these, currently 50 women are engaged in activities such as papad making, selling tea and delivering electricity bills in nearby villages to earn an income.
  • Through its Arogyasakhi initiative, SF offered 13 weeks medical training to 17 ladies to enable them to treat common ailments and identify emergencies. SF believes that these initiatives would inculcate a sense of confidence in women and bring about development of the community as a whole. 
  • In association with NABARD, SF has successfully formed 380 SHGs to avail benefits of bank finance and government schemes.
  1. Financial Parameters:
  • Total income in FY13 was Rs2.8mn, 27% YoY. The year FY13 witnessed an upsurge in corporate funding with Rs2mn or 73% of total income raised through Meso Pvt Ltd as against Rs1mn in FY12. Meso Pvt Ltd is a group company of Seth family who are promoters of SF. Hence, the funds are expected to continue in future.
  • Donations decreased from Rs1mn in FY12 to Rs0.2mn in FY13 (10% of total income). Donations mainly include funds raised through individuals though it also includes marginal sums raised through corporates and institutions.
  • Interest income and service charges each accounted for 6% of total income in FY13. Service charges include fees received towards charity clinic, beauty parlour and sewing classes. The service charges dropped by 50% from Rs0.3mn in FY12 to Rs0.1mn in FY13. This can be attributed to fewer programmes conducted during the year. Similarly, interest income declined by more than 50% in FY13 on account of drop in interest rates. (Refer Fig. 1)
  • SF expended about 83% of its total outflows in FY13 on program activities. These include costs incidental to vocational activities such as charity clinic, beauty parlour and sewing classes undertaken by SF. Program expenses ranged from 75% to 83% of total expenses during FY10-FY13 and were slightly below the sector average of 87% in FY13.
  • Program expenses, in addition to vocational activities, also include funds donated by SF to needy organisations and deserving individuals for their educational, medical and community welfare needs. In FY13, Rs1.4mn (almost equal to two-thirds of total program expenses) was disbursed as donations. Donations have been significant component of programme expenses for the past four years. The financial data indicates that SF distributes more than 50% of its total income as donations. (Refer Fig. 2)
  • The current assets comprise of loans and advances given by SF. The main component of the current assets during FY10-FY13 has been advances to Sujatan Schools. In FY13, Rs2.4mn or 41% of total assets were tied up in current assets with Rs2mn being advances to Sujatan Education Trust. These advances were for repairs to school buildings and infrastructure improvement. Sujatan repays these loans at an instalment of Rs10,000 per month.
  • SF includes deficits payable for Sadbhav Kidney Foundation and Sujatan School in trust funds or corpus. From FY12-13, the deficits of Sujatan School are not borne by SF. In order to standardise the financials, we have classified these as current liabilities. Hence, the current liabilities actually are deficits payable of both the other units. These deficits payable accounted for Rs2.1mn or 36% of total funds in FY13.                                                                                                  
  1. Sustainability Parameters:
  • SF recorded an inconsistent YoY income growth rate during FY10-FY13. The hike in general donations and corporate funding led to an exorbitant income growth of 170% in FY12. The income growth plunged in FY13, because of sharp decline in donations, interest income and service charges leading to negative growth of 27%. The average income CAGR during FY10-FY13 was low at 8%.
  • Self Sufficiency Ratio (SSR) measures ability of an organisation to meet expenses out of its own funds. Own funds include donations, interest income and service charges. The ratio for SF dropped from 53% in FY12 to 20% in FY13. This is owing to inconsistent income trend as mentioned above.
  • Despite the SSR being relatively low, SF is a self-sufficient organisation. The historical data reveals that SF has been donating funds to the needy organisations and individuals. These funds account for almost two thirds of total programme expenses. 
  1. Major Challenges:
  • Though SF disburses a substantial portion of its income as donations, there is dearth of funds to undertake activities at the grassroots level. Of the total funds received, limited funds are available with SF for its Karjat activities.
  • At present, the team mainly includes locals from Karjat. There is a need for dedicated and qualified resources to assist in activities at grassroots level.
  • At present, SF is largely funded by the trustees. . These funds are mostly given away as general donations or advances to other units: Sadbhav Kidney Foundation and Sujatan School.
  • As mentioned above, if the trustees choose to withdraw the financial backing in future, the operations of SF may be at risk. To avoid such a situation, SF should seek external funding.
  1. Governance & Reporting Standards:
  • The Board includes four trustees, all of whom are related to each other by blood and are engaged in the family business of perfumery.
  • There is another committee formed, which includes five members. Four of the five members are trustees themselves and the fifth individual is Mr. Anil Kamdar, a chartered accountant by profession, and Project Director with SF. Mr. Kamdar is actively involved in the operations of the organisation.
  • The committee meets every fortnight. However, attendance is not mandatory for the meeting.
  • SF is not listed with any accreditation agencies.

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