Introduction to the Social Impact Sector

Written by Vincy Hasani

“The world is driven by money”, “Big firms only lookout to make more profits”, “The fast-paced world has lost empathy”, “There is nothing like a work culture but exploitation”.Why do people not care about social issues anymore? Why do people don’t have empathy towards other people or mother earth? Do you feel different about the above questions? Are you someone who wants to make a difference or impact in this world??

The answer probably is in understanding the ‘Social Impact Sector.’ Social Impact organizations are the ones that prioritize doing work that consciously, systemically, and sustainably serves or attempts to solve a local or global community need. These organizations look way beyond making profits, in other words, these are purpose-driven organizations.?

There is an entire universe of NGOs, social enterprises, international development organizations, Corporate Social Responsibility, funding organizations, and others that are considered part of the social impact sector. Organizations like Upaya Social Ventures, TISS, Tech Mahindra Foundation, Goonj, Startup India, and Niti Ayog are some examples of Social Impact organizations and this article will try and paint a picture of what the landscape of the Social Impact sector looks like and what different organizations in the sector do.?

• NGOs

Nonprofit organizations make the largest share in the social sector with over 3.2 million Non-Governmental organizations (NGOs) registered in India. . They usually work with specific issues like education, sanitation, waste management, child nutrition, etc and most NGOs are implementers of programs or interventions that address a challenge or social issue. NGOs meet their expenses through grants or donations from individuals, other foundations, philanthropic and family offices, or corporate CSR funds and are generally to support programs. There can be an irregularity in revenue depending on the size of the NGO. These can be large organizations with over 1000 people (BRAC) or can be small organizations with only 2-5 members. Smile Foundation, Give India Foundation, Nanhi Kali, Goonj, and Helpage India are some of the examples of well know NGOs in India.?

• Social Enterprise (SE)

These are for-profit organizations with a social mission but also work towards financial sustainability by generating revenues through their operations. These business models usually are addressing a social issue by providing a service or a product to meet a market need eg: ERC Eye Care is an integrated eye care solution provider that provides affordable care for people in North East of India.? Social Enterprises are funded by impact investors, grants/donations from individuals, other foundations, philanthropic /family offices, or corporate CSR funds where funds are generally used for expanding their operations. Enterprises like Greenway, Haqdarshak, Lal10, Pollinate energy, etc are some of the social enterprises that have successfully scaled up their operations to impact thousands of lives.

• Social Impact Investors/ Funds

Social Impact Investors can be an individual or philanthropic organizations that are looking for both financial and social return on investment. These investors primarily focus on the areas like Agri, livelihood, healthcare, education, fin-tech, etc, and invest in specific stages - seed stage, pre-series A, Series A, etc. There are both Indian and International investors operating in India and they invest in social enterprises by providing capital for equity or as a debt. Aavishkar, Acumen Fund, Upaya Social Ventures, Caspain, and Yunus Social Business are examples of Impact investors operating in India.?

• International Foundations/ NGOs

An international non-governmental organization (INGO) is an organization that is independent of government involvement, operations in addressing a social issue, and extends its operations to an international scale.??

These organizations can be classified into three types -?

• Advocacy NGOs, which aim to influence policy-making with a specific goal,?
• Implementing NGOs that conduct programs specific to their area of social issue?
• funding foundations that provide funding for various socially relevant activities.

Save the Children, Bill and Melinda Gates Foundation, Mercy Corps, and Michael and Susan Dell Foundation are some of the International foundations that have their operations in India and other countries.?

• Monitoring and Evaluation (M&E)

Organizations that leverage data to help social impact sector organizations make better decisions and improve the efficiency and effectiveness of their programs or projects. These organizations usually work with different sets of stakeholders like government, corporates & CSR, and social organizations - both NGOs & SEs and philanthropic organizations to help monitor, evaluate and assess the outcomes of a program/model or organization. There are both Indian and international organizations in this space such as 180 degrees consulting, AccountAbility, TolaData, 60 Decibels, and Outline India are examples.

• Think Tanks and Academia

A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social & economic policy. These organizations focus on research and guide policymaking. Most think tanks are non-governmental organizations and are funded often by wealthy individuals and government grants, whereas Academia is a college or university which conducts research and publishes research reports that focus on social issues and help drive policymaking. Azim Premji University, Ashoka University, and School for social entrepreneurs are some of the Institutes that promote research into the social sector and have academic courses for students specific to the social impact sector. Some of the popular think tanks are the Centre for Civil Society (CSS), Indian Council for Research on International Economic Relations (ICRIER), Brookings Institution - India, The Energy and Resources Institute (TERI), etc.?

• Consulting and Advisory

They comprise all the management and consulting firms that specialize in providing services to organizations in the Social Impact sector. Bain and Company, Sattva, and IDEO are examples of them. These provide consulting, technical assistance, and training services to public and private aid agencies, non-governmental organizations, and governments. The companies usually have a specific focus area like IDEO in design, Samagara in governance, and Dalberg in strategy.?

• Government and Quasi-Government

Organizations that are part of the government or large organizations that work with governments in funding & implementation of socially driven projects are considered under this category. The main goal of these organizations is to drive policy and or undertake very large projects focused on the sector or specific social issue (NSDC - Skill Development) / (UNHCR - Refugee issues). These organizations usually are bureaucratic given that t largely work with the Government.

• Philanthropic Organizations

Philanthropic organizations are nonprofit entities that utilize donated assets and income to provide socially useful services with community foundations, endowments, and charitable trusts being types of philanthropic organizations. These organizations operate with specific purposes and are usually set up by an individual, family, or corporate. Along with creating impact, philanthropic organizations tend to be set up to help with tax planning. Tata Trusts, Piramal Foundation, Hinduja Foundation, and Deshpande Foundations are examples of philanthropic organizations in India.

• Corporate (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Enactment of Companies Act, 2013 has required companies with a net worth of INR 5 billion (US$70 million) or more, an annual turnover of INR 10 billion (US$140 million) or more, or a net profit of INR 50 million (US$699,125) or more, to spend 2 percent of their average net profits of three years on socially relevant projects. Corporates tend to take up issues that are linked to their area of expertise or issues that are faced by the population in their area of operations ranging from providing education, addressing poverty, providing healthcare, rural development, etc Tech Mahindra Foundation, Cipla Foundation, Yes foundation, and Kotak Education foundation are some of the CSR linked corporate foundations examples.

• Intermediary Organizations

Intermediary organizations provide services within the Social Impact sector and help build and link the entire ecosystem. Intermediary organizations can be Different types of organizations ranging from incubators/accelerators, crowdfunding platforms, media, legal, industry associations, etc. Check out our landscape map for a representative overview.?

The entire landscape of the social impact sector is quite vast with organizations playing a variety of roles and functions. This is also covered in Path-Builder webinar which can be viewed here . Path-Builder aim to provide insights into the social impact sector and educate young people so that they can embark on careers that redefine tomorrow and ‘take action’ towards their purpose.?