Effective Philanthropy Practices: What the India Philanthropy Alliance Believes
Members of the IPA Board of Directors present at the Indiaspora-Dasra Philanthropy Forum in October, 2024.
The statement below is adapted from an article titled "Seven principles to realize the potential of diaspora philanthropy for India," published in the Philanthropy News Digest on July 14, 2023 and authored by IPA Executive Director Alex Counts. We invite you to use the version below as a tool to use in dialogues about philanthropy in order to maximize its impact and meaningfulness. This statement reflects the consensus view of the India Philanthropy Alliance on effective philanthropy based on our organizational experiences, recent research, and evolving best practices. These guidelines are consistent with recent shifts in philanthropic modalities adopted by major philanthropies during COVID and have since been institutionalized by many of the most respected giving institutions. They have become known as "trust-based philanthropy" and have become more widely known through a popular six-minute satirical video. Our version of this approach has been adapted to the specific realities of American philanthropy to India. These principles can be integrated into board meeting agendas, gala programs, speeches given by organizational leaders, websites, newsletters, and interactions with donors in small groups or individually.
In the years since its establishment in 2018, the India Philanthropy Alliance (IPA) has created a network of some of the leading India-focused charities active in the United States and launched a collective national fundraising campaign, known as India Giving Day. We have also identified six priorities which—if widely adopted by India-focused donors—we believe could make a significant positive impact in addressing the social and environmental issues and challenges India faces and also improve the experience of being a donor. Those giving priorities are:
1. Focus more on institutions than on projects. Many philanthropists initially focus on giving to specific projects of nonprofits that lend themselves to reporting easily understandable and quantifiable outcomes. A growing number of experienced Indian American givers see the advantages of using their donations primarily to strengthen institutions that can tackle today’s problems while also nurturing talent, ideas, and techniques that will allow them to combat next-generation problems and impact opportunities that don’t even exist yet. A project usually lasts a few years at most; an effective mission-driven organization can have a lasting impact over decades while learning at each stage of its development how to work more effectively and efficiently. A critically important way to support institutions is to provide resources over multiple years and without restrictions regarding their use, as this gives nonprofits maximum flexibility to respond to impact opportunities and to generate learnings that can ensure continuous improvement. The philanthropist MacKenzie Scott and the Ford Foundation have been notable practitioners of unrestricted grantmaking, and research indicates that their approach to giving has had an outsized impact.
2. Fund where the need is greatest. Donors often initially restrict their donations to supporting work in relatively easy-to-reach locations; in the case of Indian American philanthropists, this leads to a focus on urban or suburban centers, typically places close to where they may have business to conduct or relatives to visit, or in their ancestral villages. However, many are coming to realize that directing philanthropy to the areas of greatest need often leads to the biggest impact. As corporate donations spurred by India’s world-class law—which requires that 2 percent of profits to be directed to corporate social responsibility (CSR) projects—tend to focus on areas where their customers and investors live and work, better targeting of private philanthropy becomes even more essential.
3. Focus on the metrics that matter most. When comparing charities, most donors wisely seek to go beyond anecdotal evidence of effectiveness and overall brand awareness to focus on objective quantitative measurements. However, reducing evaluation efforts of nonprofits to a single numeric measure such as their “overhead rate” has limitations. While not meaningless, such a crude measure often distorts as much as it clarifies. Indeed, much has been written about how the overemphasis on keeping overhead rates low has led to a “nonprofit starvation cycle” where mission-driven organizations under-invest in their execution, oversight, and compliance capabilities in ways that undermine their long-term effectiveness in order to “appear” efficient to less sophisticated donors and to the public. Indeed, as is true in the business world, investments in core capabilities are crucial to ensuring a nonprofit can have long-term, sustainable impact and be a learning organization that is able to continually improve. So, rather than indirectly encouraging underinvestment in institutional capacity, donors can instead emphasize how their measurements of the positive impact a nonprofit is making and its efficiency in doing so are the most important factors shaping their donation decisions. In other words, they can deemphasize measuring inputs (funds raised and volunteers mobilized) and outputs (the amount of program services delivered) and focus instead on outcomes (beneficiaries’ lives improved) and impact (beneficiaries' lives improved due to the nonprofit's work). Just as we don’t choose airlines to fly based on which ones spend the least on maintenance, donors should avoid choosing charities based on the degree to which they deprive themselves of the kinds of capacity investments needed to grow and improve, a dynamic that business leaders should be able to appreciate.
4. Support collective impact efforts. In their desperate scramble for resources to implement programs and support needed institutional infrastructure, many nonprofits miss opportunities to collaborate with—or even to coordinate or communicate with—other mission-driven organizations. Launching IPA was an effort to reverse this trend, as was the establishment of India Giving Day as a national campaign to grow and improve philanthropy to India. When such collaborative networks emerge organically, philanthropists should consider supporting them quickly and generously. Early support of progressive nonprofit coalitions and networks can reverse the fragmentation of the nonprofit sector and would encourage more integrated service delivery at the field level.
5. Consider supporting nonprofits that partner strategically with government agencies at the federal, state and local levels as a way to efficiently scale positive impact. In India, as in the U.S., government officials at the local and state levels often eschew ideology for pragmatism. After all, whether or not they deliver services to their citizens is often plain for all to see. There are also important opportunities to work with the central government. Increasingly, sophisticated donors see high-impact opportunities inherent in nonprofits co-creating social innovations with government agencies. In such scenarios, successful models can be scaled by public-sector partners far beyond what any individual nonprofit—or even networks of nonprofits—could do. For IPA, this insight led to a year-long exploration of best practices for charities partnering with government. Philanthropists should seek opportunities to encourage and support these types of public-private partnerships.
6. More fully include youth and young professionals. Nonprofits involved with IPA may face "demographic cliffs" leading to drop-offs in donations if they and their donors do not nurture interest in India and its philanthropic possibilities among second- and third-generation Indian Americans. Decisive action for the full inclusion of youth is urgently required. For example, organizing and funding summer visits to India for young people that include spending a week or two with an Indian nonprofit can go a long way. Models such as the internship program of the Sehgal Foundation and the Banyan Impact Fellowship of the American India Foundation, and IPA’s national youth essay competition are positive examples of nonprofits working to creatively engage youth in philanthropy and social change. Including young professionals on the governing bodies of nonprofits is another powerful approach. Donors and especially governing board members can ensure that appropriate levels of resources are devoted to engaging youth in nonprofit work in India.
We believe that if these principles were adopted by Indian Americans and others with resources to deploy in philanthropic pursuits, it could transform both India and America in the years ahead.