Philanthropy in times of Covid

The role of philanthropy in enabling the nonprofit sector to address the spiralling demand for its solutions and services is evolving rapidly. A large number of philanthropists, both individual and institutional, shared their words of support and learnings Covid has pushed us as society and as individuals, to get our priorities straight and focus on what really matters. Frontline healthcare workers and nonprofits have mitigated the adverse health and humanitarian impact for the country – yet, how does society reward their contributions? Philanthropists are motivated by the need to ensure that contributions towards public good get the support of the society it serves. Institutional philanthropy – particularly foundations, have prioritized agility and have acted fast, lead with their strengths and collaborating with other partners in areas that are not a strength. Collective action has enabled complementary capabilities to come together and respond in a timely manner.

Innovative financial models

Blended finance that uses relatively small amounts of concessional donor funds to mitigate specific investment risks will also gain salience over this period.Such models help to rebalance high-impact investments so that they can become commercially viable over time.

In a climate of urgent needs and constrained resources, funding models for the social sector will undergo great refinement for effective use, and shared risk taking among various stakeholders for developmental outcomes. The predominant framework for the emerging face of social sector funding is ‘paying for performance’ which includes developmental impact bonds, social impact bonds and performance-linked debt. These instruments have the potential to raise the bar on innovation and impact and improving collaboration across social enterprises and nonprofits, foundations, multilateral funding agencies and governments. Sectors like livelihoods and education, that have a more evolved measurement of outcomes and impact will be among the early adopters of these models.

CSR in the new normal

Covid-19 has put an intense pressure on corporate social responsibility, and funding for developmental work under CSR law. The sudden spike of the crisis has elicited a timely and substantial response from corporates, who contributed significant portions of their FY21 outlay towards direct relief, healthcare and pandemic containment, support for nonprofits in their portfolios and towards the PrimeMinister’s PMCares fund. Large corporate donors on the panel shared their strategies to be mindful about where to deploy the rest, and how they would prioritize funding areas for FY 22.

Notable strategies include acting as bridge funders to enable nonprofits to avail of government schemes that are likely to come up in rebuilding livelihoods, skill development, education and healthcare, utilizing the available downtime to build the capacity of nonprofits in their portfolio, helping nonprofits to pivot to digital models for distribution, etc. Relationships between CSR donors and nonprofits are also expected to strengthen, with more skin in the game from both sides.

Scaling impact with government

Nonprofits as well as donors across multiple sessions acknowledged that the most sustainable pathway to scale is through government. An innovation or a proven model developed by a nonprofit achieves its intended purpose of systemic change when it is adopted by, and baked into government programs. There is more than one way to achieve this – models range from joint ventures with shared ownership, co-developing programs, providing solutions funded through alternate sources asa free resource, to unlocking public funding for a program by providing implementation support. Whatever be the model, the most successful initiatives are those that are built on a bedrock of trust, and have the support of the bureaucracy and administration at all levels.

Challenges and the way ahead

Nonprofits will face tough times for the next few years. Agility in adopting innovative financial models and striking government partnerships will be key to survive.Donors have the challenge of prioritizing, and giving mindfully towards critical needs.  There is a tough balance to be achieved in funding urgent basic needs of a distressed population, and ingoing where the puck will be by building capacity of critical systems.

‍

Download the full Insight report on Charcha 2020, covering 16 events and 150+ hours of discussion.