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Like minded donors taking ownership of social projects

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July 05, 2011
The Economic Times
Ahona Ghosh

et-ceteraFor years, it was Pandurang Mahadu Gond's routine in the months from April to June, when the four leaking wells in his village in Maharashtra would run dry and await a refill from the rains. Gond would rise early, and walk a 10 km rocky stretch from his village, Dongarpada, located on a hillock, to Ramkhind, the nearest village. On his way back, the 45-year-old farm labourer would carry a 35-litre plastic can filled with water for daily use. He and his family would make the 20 km haul for water five to six times a day, logging about 12 hours between them. This year, in those dry months, they had to walk just 200 metres-—to the nearest well. As did others in Dongarpapda village, after 40 years.

No, the rains didn't come early. What came was a grant of Rs 5.2 lakh from five upper middleclass corporate executives to an NGO, as well as their personal involvement, to build concrete platforms at the base of the wells to stop water from leaking out. The grant was the outcome of a process of match-making that allows like-minded donors-who may or may not know each other--to come together on a project being executed by an NGO. The donors don't just give their money to the project. They also give it their commitment, time, contacts and expertise.

It's a win-win : donors feel a greater sense of attachment and purpose in their giving, the NGO gets funding stability for the project. Vikas Tandon, one of the five donors to NARAD (National Rural Research and Development Association ), the NGO fixing the Dongarpada wells, says he can see the impact first-hand . "Our circle of donors has visited the project a couple of times, says the 40-year-old who owns a consulting firm in Mumbai. "This type of giving connects us with the NGO directly, as opposed to donating online, where one is a few degrees removed." Bringing donors together, and linking them up with NGOs, is done by facilitators like GiveIndia and Dasra; Samhita, another NGO, is expected to start in a few weeks. They call it a 'giving circle'.

These giving circles or donor circles are like social investment clubs in that they attract people who want to give. Since they enable pooling of resources, they are tailored for every level of income or wealth. "These are working professionals who have time, and participating in a giving circle gives them the opportunity to engage directly with the NGO," says Deepa Varadarajan, head of projects, GiveIndia. At a time when Indian philanthropy is picking pace, concepts like these can deliver greater impact.


Today, a host of giving options aligned to projects and NGOs are available. GiveIndia, for example, targets a large donor base. Its minimum donation requirement is Rs 50,000 a year. By comparison, Dasra targets high net-worth individuals (HNIs). Its minimum annual donation is Rs 10 lakh, with a minimum engagement period of three years. While GiveIndia and Dasra only do grants, Intellecap follows a social-investing model. This social sector advisory firm recently launched Intellecap Impact Investor Network, a platform for HNIs and companies to invest in social enterprises. The minimum commitment is $1-2 million for five to seven years; in return, the investor receives an equity stake in a social enterprise screened by Intellecap. Anurag Agrawal of Intellecap believes there is "both interest and appetite" among HNIs and companies to invest in sociallyrelevant businesses. "This platform will enable them to evaluate high-quality , pre-screened , earlystage companies for investments," says Agrawal, who is the firm's cofounder and also senior vicepresident-investment banking. Intellecap, he says, is currently signing MoUs with 10-15 HNIs like Nandan Maluste. "From an investment perspective, one can expect an IRR (internal rate of return ) of 25%," says Maluste. "And it will make India better."

Members of a giving circle tend to give more strategically. They are more likely to give to advance a vision for change, research which organisations to support and encourage impact studies. For example, Dasra spends six to nine months researching a sector. Publishing it costs Rs 10 lakh. It then sends out this research to members of its Indian Philanthropy Forum, a network of 120 HNIs who give regularly to NGOs and social enterprises. The report divides a sector into several segments. For example, in education, there could be teacher training, educating the girl child or improving the state of public schools. "Once they (donors) decide where to give, they call us and ask to engage at a group level ," says Deval Sanghavi, cofounder and CEO, Dasra. Dasra then creates giving circles of like-minded donors and present them pre-screened NGOs working in the field. Each circle picks a beneficiary NGO. Each Dasra giving circle usually has 10 members. Each member commits Rs 30 lakh over three years, which makes Rs 3 crore available to a project. GiveIndia offered four projects to the five Dongarpada wellproject donors. Tandon says they chose NARAD because, as a grassroots NGO located in the hinterland of Maharashtra, raising funds would have been a challenge for it. "There were other savvier NGOs," he says. "This was an opportunity to bridge, in a small way, the huge divide between urban and rural development."


After 15 years of working on grassroots projects in Ecuador, Mexico, Bolivia and South Africa, Safeena Husain returned to India to drive the agenda closest to her heart: educating the girl child. In 2007, she started Educate Girls, an NGO that aims to make government schools more girl-friendly . The NGO has signed an MoU with the Rajasthan government to work in 4,500 state schools. "These schools have high gender gaps, high dropout rates and low literacy levels," says Husain. What helped Husain translate a thought into action was the funding she received from three donors , whom she found through Dasra, three years ago before the latter's giving-circle strategy was formally established. Two USbased individuals and one Indian business family have given a total of . 90 lakh every year to Educate Girls for the last three years. Her NGO has used the funds to train the management committees of schools, and to set up a 13-member 'sarpanch' (a parent--teacher body) and a balsabha (which appoints girls in leadership roles to highlight the benefits of attending school). It has scaled up the project from 500 schools, when it started out, to 4,500 schools now. Having a core group of donors means financial stability and fewer operational hassles. "We don't have to do a due diligence for every grant-maker , which becomes a drain on an organisation ," says Husain. One of the three donors is Michael Pollack, who runs Pollack Holdings, his family-office investment firm in New York. When he isn't making big investment decisions, he teaches ethics and philosophy at the New York University. Pollack was a hostage at the Taj Mahal Palace hotel in Mumbai during the 26/11 attacks on Mumbai. "I barely survived and that motivated me to engage in philanthropic work in India," he says. Pollack credits Dasra with "finding" Educate Girls and making an investment. "Dasra has helped us in capacity building and technical support," adds Husain. "It watches over us to make sure we don't make any big mistakes." Dasra spends 250 days during the three-year funding period to help the NGO scale up. "We help them restructure the management team and we act as a sounding board," says Sanghavi of Dasra. For this, it charges a commission of Rs 10 lakh a year or 10% of the grant funding.


Pollack's engagement with Educate Girls is not just financial. He has had two US universities, Harvard and Michigan, evaluate the NGO's results. He has also introduced Husain to new donors, helped in board recruitment and contributed to the NGO's business plan. "I meet Safeena three times a year and speak to her twice a month on phone," he says. Pollack also exchanges notes with the other US donor, a friend, on the progress Educate Girls is making. Of the three donors, Pollack is the most active as his work schedule is flexible and it lets him engage with Husain often. Intimate donor involvement has allowed effective corrective action to be taken in the Dongarpada well project. Wanting to provide technical support to NARAD, the NGO implementing the project, the five donors enlisted an engineering firm in Mumbai , instead of using local engineers . The firm estimated the project cost at Rs 5.2 lakh. But there was a problem. "They (the firm) has visited the site just twice in eight months since the work started," says Sunil Bhat, founder of NARAD. "I had predicted that it would not be feasible to hire them, but the donors insisted ." The project was delayed, during which time cement prices and labour costs rose. NARAD revised the project cost to Rs 6.5 lakh. "The donors have agreed to fund the difference," says GiveIndia's Varadarajan. Close involvement made such a call possible. "I am not one of the more active members, but this is the advantage of a giving circle," says Tandon. "If one of us is short on time, others can step in and help the NGO sort out issues." Maluste agrees. "A collaborative investment model helps spread the risk of a project over 8-10 people," he says. The satisfaction comes from seeing the impact of projects like Dongarpada. "I used to spend five hours walking up and down everyday for water," says Gond, a dark, wiry man. He now puts that time in paddy fields. "I used to earn Rs 40 a day. Now, it's . 50," he says. Priya Dinkar Bhave, the 23-yearold housewife of a paddy farmer, used to ration water between April and June. "I have enough for all household activities as well as for the cattle," she says. "With greater access to water, their (people of Dongarpada) hygiene standards have improved," says Bhat of NARAD.


The impact that giving circles can deliver is typified by what happened at the Ananya Trust in Bangalore after it opened a funding association with GiveIndia in 2004. Ananya Trust runs a school for first-generation learners, children of migrant labourers and economically backward groups. "Children of migrant labourers drop out of school as they move from one place to another," says Dr Shashi Rao, founder and managing trustee of the Trust. "Or, they need to stay home to look after their siblings, as both parents work. Some have never been to school." A classroom in Ananya can have children of different age groups. That's because, say, a 10-year-old could have been to school only for a couple of years and would still be in first grade. "Ours is not a traditional school," says Rao. "We use kinesthetic to teach logic and use what children are good at to build their other intelligence faculties." There's even a boarding facility. It costs Ananya Rs 2,000 per child per month to cover transport, food, medical and school supplies. In its 13 years, Ananya has helped 250 kids. Before GiveIndia, it was educating 20-25 children a year. For the past six years, this number has been 50-60 . This April, 20 donors from GiveIndia came together to sponsor 20 girls for a year. "They have committed Rs 4.8 lakh for a year," says Rao. Ananya received 80% of the money in April and the remaining 20% will come in December. Rao prefers this mode of funding to institutional grants, which comes monthly and with a lingering uncertainty. "We feel more secure this way," says Rao. Bhat of NARAD agrees. "I had a grant from a foundation once, but they decided not to work in this area," he recounts. "So, I had to go chasing funds again." Rajeev Goswami, CEO of Viastay, a travel portal, is one of the members of GiveIndia's giving circle for Ananya. "This is the first experience for all of us," he says. "We are discovering how to leverage our businessbuilding skills and networks to help the NGO." Goswami says that by bringing a sense of ownership, the givingcircle approach makes it "more sustainable" . "The idea is to get the donors actively engaged so that they feel responsible for the progress being made," adds Pollack . When individuals join forces and use their resources collectively , they can do more.

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