Understanding India’s social sector funding landscape

The funding landscape in India remains rather enigmatic for non-profit organizations. The limitations of accessing first-hand information on giving behaviours often deter Indian non-profits from undertaking targeted outreach.

And unlike in the USA and Europe, research in the field of philanthropy within India is still developing. The India Philanthropy Report 2023, published by Bain & Company and Dasra, provides insights on the baseline for funding, the role different cohorts of funders play, and emerging trends. Understanding the funding landscape can help non-profits develop targeted relationship management and fund-raising strategies.

Get to know the baseline for funding in India

The social sector in India is funded by a diverse range of stakeholders including the public sector, foreign funders, and domestic philanthropy. Retail givers, Indian corporations (via CSR), and family philanthropy (comprising UHNIs, HNIs, and affluent givers) are key cohorts shaping India’s domestic philanthropy.

• Public sector: India’s social sector spending has risen to 9.6 per cent of GDP in FY 2022 from 8.6 per cent in FY 2021 due to a 35 per cent increase in public spending. While the public sector has been responsible for 95 per cent of social sector spending in India, an expanding budget deficit, higher debt burden, and increased crude oil prices indicate that government finances are likely to be limited in the future.






• Foreign funding: Owing to the FCRA amendments and their implications, private foreign giving dipped by about 3 per cent from FY 2021 to FY 2022. Contribution from this segment to overall giving remains restrained at 14 per cent.






• Domestic philanthropy: CSR is promising with spending growing 5 per cent in FY 2022 but needs to be more need-based. For the same year, UHNI giving declined by 5 per cent and has not kept pace with wealth creation. On the other hand, HNIs and affluent individuals’ giving grew 11 per cent due to rising wealth and population in this segment. Retail giving also increased by 18 per cent but continues to remain largely unorganized. 

Find the right Indian funder for your need

• Tell a compelling story to secure retail funding: Retail giving continues to be largely unorganised (peer-to-peer/community-based), with only 22 per cent of giving directed through non-governmental organisations (NGOs). These givers are driven by narratives, ideally positioned to address urgent and critical community needs or direct costs for service delivery. Using storytelling to describe interventions through campaigns, organized giving opportunities through crowdfunding websites, and subscription-based initiatives, can be effective methods to unlock giving from this untapped cohort of givers.






• Use proof of concept to win big with corporates: Showing promising growth trends can unlock funding from CSR and help expand on-ground reach. Companies have started considering philanthropy as an extension of corporate responsibility in environmental, social and governance (ESG) and diversity, equity, and inclusion (DEI) initiatives. Given the stringency in the compliance framework, NGOs can leverage CSR funding to pitch developing programs with existing proof of concept. Laying emphasis on scale, replicability, and monitoring, evaluation, and learning can help NGOs get traction from this group. Offering opportunities for employee engagement initiatives can be a bonus.






• Leverage networks, collaboratives, and innovations with HNIs & affluent givers: HNIs and affluent givers are motivated by new wealth creation and have an interest in ‘giving back’. Directly responding to opportunities arising from donation requests, narrative-based campaigns, and peer-learning are enablers in their giving journeys. Exposure to networks, collaborative funding opportunities and innovative finance platforms providing greater visibility on impact can rouse their interest. Apart from program costs, this cohort can also be interested in supporting NGOs to strengthen systems, processes, and data and technology platforms. NGOs can maintain an emphasis on evidence and documentation while approaching this cohort.






• Harness the power of relationships to reach UHNIs: UHNIs may give through their own trusts and foundations. They can play a strategic role by providing more flexible and patient capital. As institutional givers, UHNIs are making long-term commitments to provide consistent funding for building philanthropic infrastructure.To tap into the funding available through UHNIs – NGOs can approach these funders through the support of trusted advisors, intermediaries, or foundations, as they are well-placed to support with relationship-building. While approaching this cohort, long-term institution-building needs can be part of the proposal mix. 

Find synergies with ‘where’ family funders are keen to invest to plan your future

Family philanthropy (including UHNIs, HNIs and affluent givers) holds the potential to provide nimble, strategic, and catalytic funding across the ecosystem. The future of philanthropy will be shaped by the aspiration of families in going beyond historical funding preferences by integrating an intersectional lens (through a focus on gender, equity, diversity, and inclusion), inter-sectoral focus (in themes such as climate action), and ecosystem strengthening (for example, institution building). Some of the ways in which non-profits can explore synergies with funder focus areas are:

• Create ground-up knowledge on community needs: Funders are keen to deepen the impact of their giving for the most vulnerable and marginalized communities. To do so, they are increasingly educating themselves towards embedding an intersectional lens and making areas such as disability, mental health, and a focus on underserved communities (across castes, tribes, and minority groups) a part of their future giving goals.






• Embed a climate lens in your interventions: Funders are increasingly interested in supporting climate solutions and incorporating an environmental and climate lens into their existing portfolios to strengthen the narrative for adaptation and community resilience. Waste management, water treatment, and biodiversity conservation are areas within climate action that have garnered their attention. There is also greater acknowledgment from funders that to respond effectively to the climate crisis, it is crucial to support and listen to grassroots and community-based organizations.






• Invest in strengthening institutional capabilities: Funders are recognizing that a robust ecosystem can enable better outcomes towards achieving development priorities. There is a large shift in aspirations towards investing in ecosystem strengthening through innovation, research, and institution building. This includes capacity building of nonprofits, collaborative platforms, specialized systems and processes, and insightful narratives that can influence social change.

Ami Misra is a Manager at Dasra, where she anchors research and insights on the social sector and India’s philanthropy ecosystem, and Prachi Pal is an Associate at Dasra, where she drives thought leadership on India’s philanthropy ecosystem.