A Change Engine report states India needs USD 750 million in flexible funding over five years to create 100 non-profit unicorns. It highlights that a lack of unrestricted capital is a major bottleneck for non-profits to scale their social impact.
India will need USD 750 million in flexible funding over the next five years to build 100 non-profit unicorns, according to the Change Engine's report, The Flexible Funding Gap for Non-Profit Unicorns. This equates to USD 150 million a year, just one per cent of India's philanthropic giving. Non-profit unicorns are organisations capable of reaching one million people or 5 per cent of their target user base.
The Flexible Funding Gap
The report finds that nearly 80 per cent of the surveyed organisations struggle to scale due to the lack of flexible capital (non-programmatic capital that organisations can use to build teams, invest in systems, experiment with new models, and plan for the long term).
Key Constraints and Funding Sources
The report also stated that "55 pe cent cite regulation as the primary constraint for raising unrestricted (i.e. not tied to a program) funds, followed by a poor understanding of non-profit cost structures and benchmarks amongst funders."
Furthermore, 55 per cent of organisations raised flexible funding from High Net Worth Individuals (HNIs) and only 33 per cent from domestic foundations. Also, domestic foundation funding is skewed in favour of large organisations (with budgets more than Rs 5 crore), leaving very few sources of capital for early-stage organisations.
The report further revealed that 60 per cent of organisations reported that typical cheque sizes are less than Rs 10 lakhs, and most of these grants are one-time. Only 4 in 10 domestically funded organisations have ever received a multi-year grant. Just 2 in 10 surveyed organisations secured more than Rs 50 lakh in multi-year support.
Envisioning Impact with Flexible Capital
If teams had more flexible funding, 75 per cent would invest in hiring talent, 32 per cent in bolder experiments, and 27 per cent in technology and data, the survey highlights.
A New Philanthropic Approach
Varun Aggarwal, Co-founder, Change Engine, said, "Beyond doing good to society, non-profits are also economic enablers. Funders must fund non-profits like startups, providing flexible funding to nurture innovative solutions to have a population-size impact on the deepest problems of India. Unrestricted capital gives non-profits the freedom to experiment, adapt, and innovate, enabling solutions rooted in the realities and evolving needs of the communities they serve."
Shubham Bansal, Co-founder of Change Engine, added, "India has produced more than 100 startup unicorns through patient, risk-tolerant capital. If India is to meet its social development goals (SDGs), it needs a comparable number of non-profit unicorns to drive impact at India's scale. Lack of flexible funding is one of the biggest bottlenecks for non-profits to scale. The capital exists; what's needed now is the willingness of funders to deploy it differently and support of policymakers to ease regulatory constraints."
This funding rigidity forces organisations to spend disproportionate time on fundraising, rather than focusing on innovation and impact. The issue is not the absence of capital but how it is designed and deployed. Respondents indicated that with greater flexibility, they would invest in strengthening core teams, prioritising innovation, pilots, and evidence generation. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)