India needs more non-profit unicorns

Nextbillion.net, one of my go-to resources in the early years of this blog, has an informative article highlighting the fact that India is woefully short in yet another area — the number of non-profit unicorns, especially compared to developing economies like Bangladesh and Kenya. The paradox of “non-profit” and “unicorn” notwithstanding, the authors bring to focus some important points from Bain’s India Philanthropy Report 2019

• While Akshaya Patra is arguably India’s most respected and best funded large scale non-profit, its annual revenue (including donations) is a mere $75 million; the comparative numbers for Kenya’s One Acre Fund and Bangladesh’s BRAC are $135 million and $943 million respectively
• India’s non-profit sector only received private funding of $9.3 billion in FY2018 - this figure is inclusive of funding from individual philanthropists (63%), domestic corporations (16%), and foreign sources (19%)
• Between 2014 and 2018, private funding grew at a rate of 15% per year, compared to 10% for public funding
• Individual contributions account for 60% of private funding - an estimated annual figure of INR 43,000 crores
• Double-clicking into this 43,000 crore number: 55% comes from UHNI (Ultra High Networth Individuals) donating >10 Cr and the 45% bucket (<10 Cr contributors) is further segmented into UHNI, HNI, mass affluents, affluents, and retail givers
• A whopping 80% of the 55% (>10 Cr) bucket comes from the philanthropist grandmaster Azim Premji

Untapped potential of UHNI segment

• Most large UHNI contributions have decreased by 4% since 2014
• This is problematic because the number of UHNI households have grown at a rate of 5% in these five years and are expected to double in volume and wealthfrom 1.6 lakh households (combined net worth of INR 1.53 lakh crores) to 3.3 lakh households (combined net worth of INR 3.52 lakh crores).
• Benchmarking against the US suggests that a significant number of UHNIs have a combined giving potntial of INR 40,000-60,000 crores

Could disclosure standards drive transparency and build trust?

Pande & Bhide (authors of the nextbillion article) believe that the main factor holding back UHNIs from greater giving is insufficient transparency from the non-profits. Their solution to address this is to standardize a three-pronged scorecard that non-profits would report along following dimensions:

• Strategic intent: succint vision (What) + approach (How) + Target segment (Who)
• Governance & transparency: in operation for x years, minimum board size, audted financial results, etc
• Impact measurement: Reach (lives touched), depth (segmented view of lives touched)

Quick look at Akshaya Patra

Against the backdrop of above recommendations, a quick perusal of Akshaya Patra’s website yielded the following relevant details:

• 20 year old organization with a vision “No child in India shall be deprived of education because of hunger” and mission “to feed 5 million children by 2025”
• Board of Trustees comprises of 7 members, of which 4 are from the industry
• Experienced professional management team
• 92% of the total funds used towards meeting program cost. Check out their Cost per meal calculation
• Impressive long list of partners

Back in 2011, I had written about Akshaya Patra here and here.