Beyond binaries: The coming together of Indian non-profit and for-profit organisations

The civil society/non-profit organisation (CSO/NPO) space in India has undergone major changes during the last decade, and more so over the last five years. Some of these changes have happened as a consequence of broader social-political-economic shifts. Others have been triggered by the entry of corporates in the development space after the Indian government introduced Section 135 in the Companies Act, mandating that 2% of average net profits made during the three immediately preceding fiscal years must be spent on Corporate Social Responsibility (CSR) activities. The amendment, passed in 2013, brought together for-profit and not-for-profit organisations that were traditionally not used to working together. In this changed context, conversations around measurement and impact, and governance have taken on a new dimension. A new study from the Centre for Social and Economic Progress attempts to explore these shifts and understand how these two vastly different sectors are trying to find the unique synergy to work together.

The year 2020 brought along its own set of challenges – first the pandemic and then the sudden changes announced by the government in the FCRA Act.[1] It may be too early to predict the long-term effects of these events, but they will certainly have implications for the state of CSOs/NPOs. Consequences in the short term are already being felt. While the CSO sector mobilised and responded to the challenges thrown up by COVID-19, it also saw a sudden cut-back or shift in CSR funding. The money has been moving to the PM CARES Fund or directly to COVID-19 relief efforts. Availability of funds for COVID-19 related activities increased, but many organisations, especially smaller ones, are reported to have seen a sudden drop in overall funding for the year. Many of these changes are likely to not be temporary and could provoke deeper structural shifts.

At CSEP, our researchers will study the evolving dynamics of the CSO/NPO sector and examine factors that influence positive outcomes. There are many types of governance structures in this space. Each organisation has some level of flexibility to create its own unique governance model. We will look at how different organisations define good governance and which factors ensure that an organisation is well-governed.

There are several other important questions: What constitutes impact? How do you measure it? Would it include factors that are easily measurable, such as number of toilets built or people provided skill trainings, or is it the long term, at times intangible, changes (such as increase in household incomes or reduction in violence against women) that define the success of projects? We will look at the relationship between organisational governance and impact, whether the two are linked. According to preliminary conversations with experts, there is adequate recognition of the need to track both. However, that which is tangible and is easily measured garners more favour.

Achieving targets and approaching a project with a set goal in mind could be leading to a devaluation of the immeasurable changes that take place when you serve the community.

We also want to assess how funding patterns have changed over the years and how organisations have adapted accordingly. Funding trends have changed radically over the last five-ten years. Money flows in from various sources like individual donors, corporations and philanthropies – both Indian and foreign.  Each kind of donor comes with their own preferences, approach to work and ideas of governance. How have changes in funding led to changes in the NGO sector’s strategies, processes and cultures is another area of enquiry for us.  

Through in-depth interviews with experts in this space, we aim to get the leaders’ insights into the changes and how they think of the future trends. We will supplement the qualitative enquiry with quantitative analysis using targeted surveys of CSOs/NPOs in India. We will analyse the survey responses to understand the shifts occurring within the sector (with a focus on funding, impact and governance), including the changes caused by COVID-19 and the recent FCRA amendments. Our study attempts to make a thorough assessment of these shifts, identify the best practices and offer a framework for understanding impact and good governance. 

The rapid churning in the social sector over the last decade has been most significant, and we hope that our research advances the conversation in terms of making the most of these changes – building for the future, without giving up the strong foundations and rich legacy of voluntary work in the country.

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