Loading ...Every once in a while, the question about giving back to the society pops up in my mind and in my friend’s circle, but we end up dropping it and continuing to do what we have been doing: earn more money.
Howver, so many things have been happening around about me on this topic recently that I am inclined to believe this is a signal to do something now.
Sample this:
1. 2 weeks ago, we (friends from IITD) started talking about PM’s speech to CII and the fact that while we didn’t agree with such a socialist tone of the address, there is some merit to it that we should explore, and then the discussion went on to “what have we done so far for this, and what can we do?”.
2. 1 week back, someone forwarded me Harvard Commencement speech by Bill Gates, which posed the same question, and gave amazing insight into why people do not give so much to society and what can be done to change it.
3. Around the same time, I picked a book “Leaving Microsoft to Change the World” to read during my India trip and have been reading it since. This again talks about how a real zeal to do something for society triggers thousand others to join and support such a cause. In this case, it helped create “Room to Read”
The area that I think requires significant support is providing quality and pertinent education to children and adults alike. However, this is a huge task; according to a survey by govt of India, there are 19.4 crore children in age 6-13, out of which about 80% study in govt schools and 7% are not in any school. This requires substantial investment of money, technology and manpower.
Typically (as near as I can tell), non-profit organizations in India (as elesewhere) have been generating money from donations and grants. However, I feel that this is not a sustainable model for creating a big impact. Instead, I am thinking of models where non-profit company can be a shareholder in a for-profit organization that generates enough money to support this non-profit, and also exerting enough influence in the way the work is done so that the technology can be leveraged both ways. So for example, the for-profit org can create technologies to help teach students on web and apply it to give certificates to engineers (and earn money), and then turn around and license this technology to non-profit to help it use it in rural setup where resources are scarce.
I would like to hear your thoughts on the feasibility of such business models, conflict of interest issues, and other issues that you think will be pertinent when someone goes about doing this. If you are interested in the actual idea, do drop me a note and we can talk about in more detail.
“…models where non-profit company can be a shareholder in a for-profit organization that generates enough money to support this non-profit…”
Not directly connected with your idea, Tata’s are actually an interesting case-study of a Trust deciding that their primary method for raising funds to put back into society would be business. Sample this text I found on Tata.com - http://www.tata.com/0_our_commitment/community_initiatives/overview.htm
“J. J. Irani recounts the story with a fair bit of relish. The time was some 10 years back and the occasion was a gathering of industrialists called by then prime minister P. V. Narasimha Rao. Representing the Tata Group were chairman Ratan Tata and Dr Irani, the managing director of Tata Steel at that point. “The prime minister proposed that we business people set aside 1 per cent of our net profit for community development projects totally unconnected to the workers and industry any of us was involved with,” recalls Dr Irani. “Mr Tata and me looked at each other; we didn’t make any comment. Later, we drew up a chart that quantified Tata Steel’s contribution on Mr Rao’s scale. We discovered that, over a 10-year period, the company had been dedicating between 3 and 20 per cent of its profits to social development causes. In the years since, depending on profit margins, the figure has continued to vacillate within this band.”
This is a subject of interest to me and I would be happy to exchange more over email/s.
Cheers.
R
Very interesting, thanks for sharing the link. http://www.tata.com/0_our_commitment/community_initiatives/tata_trusts/overview.htm talks in detail about how the trust works, this seems to be an interesting mode of funding, I am not sure how many other charitable institutions use this model. However, as the article notes, it doesn’t do the work itself, it only funds the right NGOs.
I will get in touch with you sometime later and we can discuss this, possibly meet sometime too.
This is one topic (esp. schools) that has really interested me for some time now. However, I was deterred by the not-for-profit assumption that is required by the rules today.
In fact I passionately believe that I a lot can be achieved in providing the much needed quality of education in the schools segment and get a sense of achievement of giving back something to the society while still making money in the process.
The business model is feasible and I think legally tenable but am not sure of the ethical side.
We can discuss more over emails…
Mritunjay: Sure. It is a very sustainable model for any business and the beauty of it is that CSR doesn’t necessary involve money at all, many times. As a communication professional, this is a subject that fascinates me a lot.
Cheers.
R
Fellow IITian myself, there is a book about this topic by CK Prahlad: Bottom of the Pyramid. Coincidently I finished reading this book “Leaving Microsoft..” as well but after reading CK Prahlad, I realized that “Room to read” is a good idea but can help a few million kids at best. In terms of for profit organizations, NIIT, Aptech and to some extent companies like Infy do a good job by bringing in young undergrad and making them highly skilled IT professionals. The problem is with primary schools. There are some places in India for example Jamshedpur, where corporates have taken ownership and are driving education. But reality in this case is that government has to step up and form policies and divert funding to this.
Even in US, which can be thought of as closest to fully capitalistic society, government has to play a big role in education with acts like “no child left behind”. I have yet to see an analysis of how much investment is needed in order to achieve best case scenario of the state of Kerela, where the literacy is almost 100%. Imagine 1.2 B people in India, and assuming uniform distribution, there would be about 80 million children of schoolgoing age 5-15. Of these 75% or so are in rural area where this problem is the worst and even if we assume 50% of these children get proper education, we are talking about educating 30 million children every year in various stages of school system. Lets say with expenses of 500 Rs per child (based on fees charged by some schools), we need about Rs 15 Billion for funding this or Rs 1500 crore per year or roughly USD 370 million. This is almost the size of a major civil project undertaken by govt except that the results may not be in near future. Almost the turnover of a medium size corporation like Asian Paints. How do we bridge this gap. One idea is to levy education tax on corporations and rich individuals maybe not too far fetched.
Besides money, there are socio economic issues like child labor, poverty, spread of these children in remote area. Seems to me that a lot of social thinkers have come up with great ideas in this area but I cannot imagine this big transformation to take place without government help.
So my proposal would be to force government to make education a national priority and take action. Any thoughts?
http://gupta77.blogspot.com/
Having worked with a non-profit myself , I have always felt that the initial zeal doesn’t last and the best folks often leave for greener pastures. A good non-profit is as good as the people it hires full time and unfortunately these salaries are not enough for good talent who can really make a difference. Creating a categorty of companies which work in the social space and have a sustainable business model will do much more for our society than the umpteen philanthropic funds floated by large corporates.
Mrtunjay,
Mr. Rajesh Jain of Netcore ( and ofcourse of Indiaworld fame) has written a lot on similar topics on his blog www.emergic.org
I guess (from his writings) that he is working with a few people on some of his ideas. You may want to check it out.
Thanks for lots of comments, interesting to see so much interest and so many perspectives.
Shashank: You echo my thoughts, almost word-for-word, thanks! I tried to think of the ways, and finally I have figured out that it is easier to seperate money-making and giving-back for now into two different orgs and instead connect them at a very high level (say, ownership of for-profit by non-profit). I do not see too much of ethical issue as long as resources flow from for-profit to non-profit, but yes, a sustainable model also requires to have the resource flow in the reverse direction so that there is a business incentive to give, and that can pose some ethical problem if not handled properly.
Anuj: Good analysis and good data. I did read “Forture at..”, and I definitely think that is another way to go solve some of these problems, just like Room to Read is a good way too. what I am trying to explore is the possibility of using a business (that caters to top/middle of the pyramid) to support a non-profit organization, creating a BOP business takes lots of effort in my opinion, and again, I don’t think we should wait. In addition, I look at your calculations in a different way: there are almost a million IT professional alone in India, and if you can get them to volunteer 1500 a year (cost of 2 movies a month),
you fund 10% right there, and I am sure there are other non-IT professionals who can do so. Trick is to not rely on the government, but distributed efforts where if everyone can tap X% around them (bottoms up), the results will be there for all to see, centralized solutions for such mammoth problems are unlikely to work.
Bipin: I agree completely with your analysis, a non-profit has to work exactly like a business (even more so because monetary benefit may not be a incentive for retention), and that is one reason why I feel ’sustainable’ is the key, and I am trying to see what can be a sustainable model that will make it happen (other than fund-raising and corporate sponsorship).
For improving condition of third world countries like India, only resources is not problem. Teachers/doctors appointed in villages do not stay in villages ,i.e., there are paucity of sincere & dedicated persons at such large scale.how to find and from where to find Qualified person as teacher to serve lower starta of society. Moreover , majority of Indian are not honest about their work ,i.e., work culture is not there. Not doing work is appreciated in soceity. Easy money ( Bribery and Dahej ) is not condemned in society. Corrupt leaders are elected again and again. Current Finance Minister - not arranging money - Rs 60 K corore of loans, oil bond money, arranging money for New pay commission — is not being prosecuted. SO morality in general and public life is foremost for development of India. One Tata or Birla school or Infy etc will not help Masses. A good dictator may improve India in 10 years