The fundamentals of strategic philanthropy

Historically, charitable giving has been an integral part of the Indian culture. Even during the toughest times, Indians have stepped up to help and contribute to be able to make a positive impact on the community. This was particularly evident when the modern world was faced with Covid, an unprecedented era which brought the world together with a wish to save and survive. Even as a country, India made an impact on the international stage by reaching out to help the affected countries around the world. Beyond crisis situations, wealthy Indians have historically made meaningful contributions to important areas like Health and Education by funding the basic needs for the poor in these critical areas. 

While the traditional focus of philanthropy on solving the immediate and pressing needs of the underprivileged is essential and commendable, the time has come for it to evolve to the next level. As the society becomes more prosperous and aspirational and the philanthropic pie grows larger with increasing wealth creation, philanthropists would do well to start approaching their philanthropy in a more strategic manner which can deliver much higher social returns. One way strategic philanthropy makes outsized impact is by improving effectiveness of existing spend and effort. For example, the Indian governments spend over 5Lakh crore on school education. A philanthropic project that improves the effectiveness of government education system by even 10% has an estimated benefit of over Rs 50,000 Cr. Which is likely to have a far higher benefit than directly running a few schools.

The good news is, many more philanthropists are beginning to follow a structured decision-making process and explore innovative solutions for long term transformational impact. As we go through this transition it would be useful to understand the fundamentals of strategic philanthropy. 

Targeted: The strategic funder should examine their philanthropic goals and set a clear intention for specific areas of focus. It is useful to narrow down broad areas to prioritize and address causes that could have the maximum impact. This approach involves gathering data to assess the needs of particular communities and considering optimal resource allocation. Additionally, strategic philanthropy is clear about its form of engagement, whether through building of institutions, grassroots intervention, R&D, or promoting systemic change. For instance, Pratham have also made strides in the intangible education space by focusing on improving the quality of teaching techniques through government collaboration and innovative digital solutions.

Proactive: Unlike traditional philanthropy where the donor’s participation ends once the recipient receives the pay check, strategic philanthropists are proactive and interested in building lasting relationships with their beneficiaries. These relationships are essential for exchanging ideas, building trust with NPO partners, and formulating solutions based on regular evaluations. This principle also ensures a flexible and open approach throughout the planning, execution, and assessment stages, which could mitigate risk aversion and highlight learning outcomes. Edelgive Foundation’s Vidya Shah, for example, is a proponent of collaborative giving that mitigates risk aversion and builds trust amongst stakeholders. Edelgive’s knowledge sharing platform, At the Same Table, brings together donors and non-profits for exchanging ideas on effective grant making.

Sustained: Although strategic philanthropy advocates proactiveness in giving, its ultimate goal is to minimize the philanthropist’s role to empower beneficiaries to become self-sufficient. This requires impact investing measures that ensure long term impact, whether through the offering of training programs, vocational workshops, or organizational support. By strengthening existing human resources instead of relying on accumulating additional capital, social initiatives can have a multiplier effect. Gururaj Deshpande, for instance, aims to promote social entrepreneurship through the Deshpande Foundation to make small businesses self-sufficient. His approach moves beyond conventional skilling efforts to prompt beneficiaries to build problem-solving and systems thinking capabilities.

The Challenges: It is worth noting that despite the promising nature of strategic philanthropy, the practice is not immune to structural barriers. Strategic giving involves the constructing relatively simple logic chains for effective giving within a complex social sector. Breaking down the vast philanthropic web into simpler processes is necessary for focused impact; but it makes the fair selection of organizations and focus areas complicated. Moreover, this web hosts visible as well as invisible outcomes that are often overlooked while measuring tangible results. 

There is also a high risk of failure, not only due to the nature of the sector, but also because of external factors beyond control like the larger economic and political landscape and policies. Funders would have to pursue lasting social impact without any guarantee of success. Additionally, taking risks means navigating unfamiliar networks, which can be challenging because of trust-deficit between funders and non-profits. It’s not easy to build lasting relationships with other stakeholders, but maintaining open channels of communication can establish a mutually-agreed-upon framework for operations. 

Way Forward: Despite these challenges, strategic giving presents an opportunity to reimagine philanthropy as an inclusive, dynamic process for sustained impact. Leading philanthropists like Rohini Nilekani and Ashish Dhawan have adopted a flexible strategic giving model to tackle pressing issues across a range of focus areas to promote systemic change. While Rohini Nilekani Philanthropies offers support in areas of gender, climate, and citizenship, The Convergence Foundation expands upon Ashish’s initiatives in education to include economic growth, air pollution, and more. 

Collaborative philanthropic initiatives is an example of the impact of building lasting institutions over a shared vision. These successes are few amongst many examples of the effects of targeted, impactful giving. As more individuals and foundations adopt such principles, they are not only facilitating continuous impact and dialogue, but also fostering a culture of social responsibility and equity.

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