Catalytic capital: The role of philanthropy in India's development
Even before the pandemic, India was one of the most unequal countries in the world. On one hand, we have steadily risen in GDP rankings from 13 in 2020 to 5 in 2020. On the other, the country’s record in social development and poverty reduction leaves much to be desired. Our poor performance at human development (Rank 131), hunger (Rank 102) or gender parity (Rank 112) puts us in the bottom quartile in the world. The distress of the past year inspired sincere efforts of government, businesses and civil society organizations in containing the crisis, but the fact remains - our recovery and subsequent growth will remain unequal unless the design includes India’s bottom 250 million.India’s war on poverty has benefited greatly from globalization and liberal economic policy. The creation of jobs and livelihood opportunities resulting from these policy shifts has created upward mobility for 300 million Indians who crossed over the poverty line into the growing middle class. However, a close look at data on extreme poverty indicators shows that markets and government can only reach communities that have the minimum health, education and access baselines required to participate in this economic activity. For instance, the country witnessed a rapid decline in malnutrition through its period of economic growth, but this has stagnated at the point where trickle-down economics and welfare hit a wall. Today 33% of Indian children are stunted, and 33% are underweight, in communities where malnutrition has been multigenerational. Neither markets nor welfare have solved food security for India’s bottom 250 million. This is just one of the several spaces for nonprofits, and civil society organizations to be the agents of change.A strong civil society requires a vibrant philanthropy ecosystem. Philanthropy in India, although lagging global benchmarks, has evolved in the last decade. As the Bain & Co India Philanthropy Report 2020 states - “India’s accelerated economic growth, combined with a growing awareness of inequitable development and the abundant opportunity to give back through development organizations, built a philanthropic movement in the country.” A big part of this shift is the recognition of the role that philanthropic capital plays in bridging the shortfall of markets and state and catalyzing solutions that are eventually adopted and scaled up through mainstream capital or public funding.Strong emerging evidence on philanthropy’s catalytic role in facilitating the participation of underprivileged communities in the mainstream economy is in the livelihoods and entrepreneurship sector. Over the years, India’s largest philanthropic institutions like Tata Trusts and Azim Premji Philanthropic initiatives have taken an integrated community-based approach to increase the income of agrarian communities through improved farming practices, livestock and animal husbandry, market linkages, crafts, etc. In recent years, the focus on skills development through the combined efforts of government programs and the social sector has bridged the deficit of employable skills among underprivileged youth. Philanthropy towards skill building, entrepreneurship and livelihoods can restore agency in youth, bring India’s poorest into the fold of economic development and address gender inequality in workforce participation. Beyond grants, a continuum of affordable capital through impact funding will be key to address this critical market failure of our times.Innovations from the nonprofit sector seeded through philanthropic risk capital are also driving systems change and extending the reach of government programs. Nonprofit startups in education like Leadership for Equity, Peepul and Transform Trust have co-created government programs to deliver quality education at scale. Khushi Baby, a health-tech nonprofit has leapfrogged the reach of state-driven immunization programs in Rajasthan. Several government policies and programs have reached target populations through the efforts of social organizations like RightWalk, Indus Action and Haqdarshak who have translated entitlement on paper into true access in the real world. Fellowships like the Indian Administrative Fellowship, CM Good Governance Fellowship etc. have immense potential to deliver outsized value for government spending on education, health, sanitation and welfare programs. The multiplier impact of such philanthropic initiatives is in several orders of magnitude.As India looks at the decade ahead, it is very evident that neither government, nor industry or civil society, by themselves, can cover the deficit of funding and human resources required to achieve the Sustainable Development Goals by 2030. However, a concerted effort leveraging philanthropy as a catalyst for innovation and action and markets and governments as drivers of scale can get us within striking distance of these audacious goals. 2020 was the year inequality spiraled even beyond historic levels, but the 20s can be the decade where prosperous India embraces its opportunity for purposeful philanthropy and makes our journey towards development more inclusive.Sudha Srinivasan is a guest contributor. Views expressed are personal.