Two Worlds Collide

Financial Times


December 11, 2007
Financial Times
The Naandi Foundation, based in the southern Indian city of Hyderabad, seems similar to the plethora of local non-governmental organisations in India. Naandi, meaning ”dawn” in Sanskrit, focuses on improving the lives of India’s poor through educating children, providing clean drinking water and sanitation, and introducing new skills to villagers.

But Naandi is unusual. The foundation was established in 1999 by prominent industrialists not just as a receptacle for charity but also as a vehicle to harness their business prowess.

Instead of just giving their money away, they decided to launch their own professionally run social services organisation. ”The idea was, can a not-for-profit managed by industrialists as trustees… look at social sector issues?” says Manoj Kumar, chief executive of Naandi.

In 2001 Naandi made a shift from distributing money to implementing its own programmes. The number of employees at the foundation, including field officers and project managers, jumped from nine in 2003 to 320 this year.

Naandi is one example of the increasingly common intersection of philanthropy and social entrepreneurship in India and south Asia. The foundation strives to run a social services organisation with the same rigour and accountability as a successful corporation. Dr K. Anji Reddy, founder of Dr Reddy’s Laboratories, one of India’s biggest pharmaceutical companies, is chairman of Naandi’s board. Other board members include K.S. Raju, founder of IT outsourcing company Satyam, and Anand Mahindra, vice-chairman of Mahindra, the automotive conglomerate.

Other philanthropic groups taking on commercial business models include the Bangladesh Rural Advancement Committee (see box), and Grameen Bank. The bank, founded by microfinance pioneer Muhammad Yunus and winner of the 2006 Nobel Peace Prize, has spawned several independent but affiliated companies such as Grameen Phone, one of the largest mobile phone companies in Bangladesh.

India and other south Asian countries have a long history of philanthropic work. The region claims strong religious and cultural traditions of giving, says Timothy Ogden, chief knowledge officer Geneva Global, a US philanthropic adviser. ”All of India’s major religions have specific exhortations to give to the poor, and a relatively strong existing civil society.”

That stands in contrast to China, where the traditional focus is on helping family rather than the poor and where the Communist government largely wiped out civil society.

India’s most powerful companies are active in philanthropy. Tata, one of the country’s largest conglomerates, has two principal trusts. The Sir Ratan Tata Trust alone disburses up to Dollars 8.7m a year to support NGOs, individuals and institutions. Mahindra pledges 1 per cent of its profit after tax to social initiatives.

Philanthropy in India is often a proxy for the government, which frequently fails to provide vital basic and social services. Hundreds of millions of poor lack access to healthcare, education, clean water and sanitation. Mr Ogden points out that large disparities of wealth in India’s rapidly developing society are similar to the inequalities that existed in the US during the early 20th century.

Billions from the richest business leaders alone cannot close the yawning gap left by government, but some of India’s wealthy are attempting to bridge it. The eponymous foundation of Azim Premji, chairman of Wipro, the information technology group, focuses on elementary education by building on existing government programmes that on their own are often criticised for inefficiency. Naandi has a similar project where it runs government elementary education schemes in a form of outsourcing.

India’s global diaspora of 20m-25m also plays an important role in philanthropy. The genesis of Naandi began when a group of well-to-do overseas Indians met the head of Andhra Pradesh state, whose capital is Hyderabad, to discuss how they could contribute to their home state.

But the non-resident Indians (NRIs) were uncertain how to ensure their money would be well-used. India has plenty of NGOs but the would-be donors were concerned that these groups were more passionate than professional. ”The NRIs said ‘We want to contribute to making Andhra Pradesh flourish. But we don’t know where and how our money will be used’,” says Alina Sen of Naandi.

This discussion spurred Nara Chandrababu Naidu, then Andhra Pradesh chief minister, to meet the state’s prominent industrialists to seek ideas. They conceived a foundation that they would not only help finance but also oversee using the same governance used to run their businesses.

”One hope was that if corporate leaders come together they could think of doing projects on a large scale,” says Mr Kumar of Naandi.

Better education, healthcare and the alleviation of poverty is not just altruistic but benefits corporations, too, in the long-run.

”If they want the next generation of healthy, educated workers, it makes sense to put in these investments,” says Mr Ogden. He points out that Ford and General Motors in the 1920s launched healthcare, training and education services for US workers. ”The social contract between corporations and workers is the same thing happening in India today,” he says.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s