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Give Like An Investor

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November 26, 2011
Outlook Business
Deepa Varadarajan

Give Like InvestorGetting started on personal philanthropy is like setting out to sea. It is exciting to explore different causes, to deliberate theories of change and to learn from organisations and experts. The journey can be overwhelming-social and environmental needs are great. But history is replete with examples of how one person changed the world. So, fear not. In the early stages of your philanthropy, you are likely to have a wide variety of causes that you care about. That's okay, many donors start by writing cheques to different types of causes and organisations. These donors are usually experimenting to see which people and models can provide the best impact for their money. After a while they start focusing their giving on organisations that have the best impact. It's much like investing in the stock market or like an investment made by a venture capital firm. A lot depends on how much time and energy you invest in research before donating.

Here are a few things that might give you an insight into effective and structured giving:

Identify The Target

The key is to identify your philanthropic anchors. You can decide on the people you want to give to, the problems you want addressed or the geographic location or place you want to address. This is called the three Ps of philanthropy. These three are the most common alternatives for a budding philanthropist. Once you identify which of the three Ps suits your style, the next step is to identify a programme. This is primarily dependent on the resources-time and money-that you wish to commit and how patient you are about seeing a tangible impact.

There are many ways in which NGOs work to effect change. If you are keen on seeing an immediate impact, perhaps a grassroots organisation will work best. If you are ready to make an investment of at least two years and would like to offer your skills, you could consider capacity-building organisations providing training or research programmes. If you are willing to wait longer (more than five years), then you can fund advocacy groups or NGOs with an interesting theory of change that could become scalable, or you could help fund projects requiring large capital expenditure.

Pick The NGO

deepa varadarajan

This is tedious. There are around 4 million non-profits in India. You have a few important facts to evaluate before you jump in. The organisation you intend to fund must have a clear vision. Organisations that have a clearly defined mission, for example, "Providing quality education to all children in India" or "Ensuring every family in Guntur district has access to healthcare within two hours of need" are likely to stay more focused and develop an expertise as opposed to those who say they want to "Establish a progressive, peaceful, dynamic and just society". The latter is bound to have little impact on any part of society." You must also consider if the programmes fit in with the larger purpose of the organisation.

Be warned, there are several bogus NGOs waiting to grab your money. Opt only for those that have a clearly defined budget and have a monitoring system in place. Ensure that the organisation is transparent and accountable; check if it is accredited by agencies such as GiveIndia or Credibility Alliance that conduct thorough due-diligence of NGOs. You might want to ask them to first get themselves accredited with one of these organisations before you give them a substantial sum of money. If this doesn't work, try enlisting consultants to help you with the selection process.

How Much?

The first step is to decide on your overall philanthropic budget. Start small and set aside 2% of your income annually. Gradually, you may extend this to 10-20% of your income, depending on your comfort level. The rule of thumb ideally is not to let your funding be more than 20% of the total annual budget of an organisation. If you want to give more to any cause, you should get involved at least at the strategic level. That can be done by getting on its board. Remember, this is for those who are starting with a Rs 50,000 base figure.

Reducing The Risk

It is important to have a starting point and not fall into the trap of getting so wrapped up in all of the above that you don't start giving at all. Give it a trial run by experimenting with a handful of structured pilot projects that can help you decide your future philanthropic focus. In 12 to 18 months, you 'll have a good sense of where you 've been able to make a difference and where you haven't, and how you can continue to learn, and make better and bigger decisions. Such pilots also allow you to learn about what you personally enjoy funding-this is a critical step in developing your philanthropic interests.

Another way to reduce some of the risk of philanthropic investments is to co-invest with other donors in a Giving Circle. A Giving Circle is made up of a group of donors who invest at the same time, in the same project, using the same reporting metrics, and sharing credit for the joint impact. This makes it much safer.

Always remember that every philanthropic journey is not the same. Begin your journey today!

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