What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Giving Compass' Take:
• Stanford Social Innovation Review explores the challenges nonprofits in India must face: doing a lot with a little. What can we learn from their frugality and effectiveness?
• One major takeaways is that cutting overhead costs isn't useful if you're cutting back on the very things that create impact. Be smart and look to partnerships for scale.
For any nonprofit to make noteworthy progress toward breaking the grinding cycle of intergenerational poverty in India, it’s not enough to impact thousands or even tens of thousands of constituents — not when more than 260 million people on the subcontinent live on less than $2 a day. In India, effective nonprofits think in terms of reaching hundreds of thousands and often millions of people in need. An additional challenge: Most Indian nonprofits must strive to grow while stretched for resources.
Even though total funding for India’s development sector grew by 9 percent from 2011 to 2016, nonprofits still struggle to raise sufficient resources to fuel critical growth drivers such as leadership development. A recent Bridgespan Group study revealed that more than 50 percent of surveyed NGOs in India report that they did not receive any funding for developing homegrown leaders over the past two years. At the same time, the Indian government could do more to help nonprofits scale their social impact efforts. The government spends just 1.4 percent of the nation’s gross domestic product on health care — less than half the amount China and Brazil spend. Government spending on schools similarly trails the spending rates in other emerging economies.
Nonprofits that manage the tension between scarcity and scale in India must not only squeeze costs but also exalt frugality. They streamline administrative and other internal processes to optimize operational expenses. To avoid capital expenditures, they often partner with other entities or create internal networks that share the cost of maintaining fixed assets.
India’s thrifty nonprofits understand that even the most rigorous frugality will never result in zero overhead costs. That said, they’ve learned how to navigate around the radical frugality mind-set’s chief pitfall: The tendency to cut back on the wrong things. They keep their focus on reducing unit costs, and avoid any cut that might starve innovation and thereby diminish their overall impact.
Read the full article about scaling social change in India by Soumitra Pandey, Rohit Menezes, and Swati Ganeti from Stanford Social Innovation Review