Editor's Note: This blog post originally appeared here.


After a career with McKinsey, I’ve spent the last 15 years working in public health. This second career in the social sector has given me two vantage points from which to look at the related issue of smart philanthropy. One has been from the viewpoint of a large giver leading the Gates Foundation in India, and the other as a small receiver with my non-profit start-up, The Antara Foundation. As we create programmes to address societal issues, be it public health or education, the most important executor becomes what I call smart philanthropy.

A file photo. By putting our minds where our money is going, Indian philanthropy could be more effective and satisfying. Photo: Hemant Mishra/Mint

This has been a personal education in effective philanthropy. I have taken a close look at philanthropic investments of several corporate entities, foundations and individuals. It is striking how Indian philanthropy is charitable but, often, not strategic. The razor-sharp focus applied to business decisions in earning returns is often missing in giving. I call this passive philanthropy.

According to a report by Bain & Co., charitable spending has been going up since 2011 at a compound annual growth rate of 8%. So the good news is that spending is increasing; the question is if the money is being spent well. Strategic philanthropy is about maximizing the impact of every rupee given away. No giver would argue with that. The key is in asking six questions that any business, large or small, would by instinct ask of itself.

What is the purpose?

A philanthropist told me he had visualized a technology solution to meet a basic need of the poorest rural populations. His goal, he said, is to go national within two years and make a huge dent in rural poverty. Beyond that, he can’t say how he will know whether his technology product is relevant and how it would be rolled out at scale. His statement of purpose is nothing more than a confusing statement of aspiration. A stated purpose must always go together with a statement of why and how.

On the other hand, a manufacturing company told me, “We are not sure about having big social purpose, or scale. What I do know is that to have a great organization, we must focus on the welfare of our poorest employees, especially their physical and mental health, in our townships.” No tall claims here—just a clear, honest statement of purpose, in which was embedded a why and how. The large commitment made by the Azim Premji Foundation to rural education and creating a sustainable talent pipeline through their university is a good example of purpose.

Who is the consumer?

Corporate entities pay large amounts to bright minds, to determine exact target segments for their product or service. Even an ice-cream vendor near India Gate evaluates the demographic likely to yield the best payoff and chooses his price, positioning and pitch accordingly.

This question is more difficult to resolve in the social sector, because data required for the answer is frequently scarce. Implementing the Gates Foundation’s Avahan HIV programme, we found that prevention programmes were often, in effect, just throwing condoms at sex workers without data or differentiation. We categorized sex workers by typology, and concluded that very often our target segment was the street-based sex worker, facing chronic, intimate partner violence.

The closer a programme gets to the consumer, the higher is its likelihood of being effective.

What is the delivery model?

Scalable, successful models orchestrate three aspects: supply, demand and enabling environment. The extent of focus on one or the other aspect, may of course vary by situation.

The Akshaya Patra Foundation runs a remarkably effective programme, predominantly from the supply side. They operate the world’s largest private mid-day meal programme, serving 1.6 million students across 12 states in India. Their high-tech, world-class kitchens are completely automated with customized, sophisticated equipment.

The community-led demand side can be even more important at times than the supply side. The Shiv Nadar Foundation’s Samuday programme works through community on their highly innovative open-defecation free (ODF) programme in Hardoi, UP. Community members are appointed as watchdogs, with regular community-led programme reviews.

Supply-strengthening and demand-generation need an enabling environment. In health delivery, there are often many barriers that get in the way such as product access, social and cultural norms, gender inequity, and stigma. Too often, programmes to address such barriers are full of emotional appeal and dire warnings, constrained by rigid ideological stances, and devoid of facts. The key is in backing clear messages with irrefutable data. We call it ‘data to voice’, and it is the most positive way to trigger social change.

If delivery at scale is important, virtuous partnership with the government is crucial. The government’s ability to amplify impact is unparalleled. It makes policy, goes where the private sector won’t or can’t go, controls budgets, manages infrastructure and employs a large workforce. And yet, many philanthropists who aspire to solve problems ‘at scale’ assert that they would never work through the government.

How well do you measure impact?

Some of the biggest philanthropic spenders don’t budget for programme evaluation. As in business, there must be short-, medium- and long-term indicators for success with regular monitoring and measurement. This information allows philanthropic organizations to reflect and course-correct as required. This is an aspect that business leaders consider second nature but often neglect in their giving.

Impact measurement in the development sector can be more complicated than in business. Simple metrics such as return on capital, or earnings per share won’t cut it. Often, the counterfactual must be estimated—what would have happened if we didn’t supply this service?

The Avahan programme invested about 20% of its budget in rigorous monitoring and evaluation. The estimation that Avahan had averted over 600,000 infections, cited in scientific circles, was one reason why the programme had credibility.

Ensuring impact quantitatively may not be ideal in every situation. In the Antara Foundation’s Akshada programme in Rajasthan, success is measured in terms of contribution to health systems’ strengthening. The extent to which interventions get hardwired within the government system is an indication of their efficacy and sustainability.

Is there a great team?

A few years ago, a well-known Indian business leader asked for my counsel in maximizing the impact of his considerable corporate social responsibility (CSR) giving. My advice was: “Find the manager you just cannot spare from your most important business function to lead the CSR division”. He laughed it off and indeed, CSR divisions continue to be treated as ancillary units. It is not clear why a corporate entity would do that if it is giving away as much as 2% of its post-tax profit, aiming to have huge impact. Peter Drucker wrote over 25 years ago: “Non-profits need management even more than business does, precisely because they lack the discipline of the bottom line.”

Movements like Teach for India are creating a pipeline of future leaders for the sector. At the Antara Foundation, we have assembled a team of seasoned public health professionals, doctors, researchers, and strategy consultants. An overwhelming sense of mission has convinced them to make sacrifices and bring their talent to rural Rajasthan. Putting such a diverse and dedicated team together can be tricky and time-consuming, but is essential.

I am told ever so often by well-meaning people something like: “I’ve retired now, and have enough time to volunteer. How can you use me?” I question them: “How can you become part of a high-performing team? What would you bring to the table that the team lacks?”

Is it sustainable?

Many philanthropies would like to believe their programmes will sustain forever. The fallacy is in the expectation that sustainability will happen because others will take up their model and run with it. This may be referred to as the ‘Hope Model’ because this expectation hardly ever comes true.

As in business, it is useful to ask who the ‘natural owner’ of a product is. The Ashodaya programme in Mysuru is run by the community of sex workers themselves. It is thereby assured of long-term funding from smart donors convinced that these natural owners will bring quality, and will always be there.

Smart businesses regularly review their strategic plans. Philanthropy can be thought of as ‘business unusual’. Businesses could well ask themselves these six questions, looking at impact as the overall goal. By putting our minds where our money is going, Indian philanthropy could be more effective and satisfying.