By Nayantara Nath, IIC- Social Alpha Team
With the world’s highest number of registered non-profit organizations—3.1 million[1]—and burgeoning amount of for-profit social enterprises—2 million[2]—the philanthropy sector in India has been on the upswing for the past 5 years[3]. Yet, the UN Human Development Index (HDI) Report 2016 ranked India as 131 out of 188, with the HDI falling by 27% due to rising regional disparities in education, health parameters and living standards across the country. Experts agree there is a greater need for philanthropic funding and resources directed towards both non-profit & for-profit organizations to address India’s immense development challenges.
Traditional grant-centric funding models are slowly giving way to atypical investment approaches; the philanthropic ecosystem is evolving significantly, owing to the combined efforts of the public and private sector to promote social entrepreneurship, start-ups, and innovation-based interventions. Increasing government impetus and political will, coupled with the rise of incubation centers, accelerators, and impact investors have contributed to the rapid evolution of the sector.
Enter Social Alpha
Social Alpha, a joint initiative of the Tata Trusts and the Department of Science & Technology, is a three-tier ecosystem architecture designed to nurture non-profits and for-profit social enterprises throughout their journey from lab-to-market. These tiers comprise innovation support, incubation of enterprises, and investment in enterprises looking to scale. This architecture is designed to address the gaps left by the state and private sector in terms of provision of strategic guidance, seed capital and execution to social entrepreneurs and innovators.
With a deep focus on impact, Social Alpha has identified that science and technology innovations have the potential to bring about non-linear leapfrogging change in the life of the bottom-of-the-pyramid, by creating high quality yet affordable solutions. However, currently in India, it is difficult for such enterprises to find resources due to high early-stage risk, complex product-development journey, long gestation period, and low returns. Further, it has been documented that tech-entrepreneurs themselves may require capacity building, handholding, and guidance from mentors to take their products to market, and build scalable and sustainable enterprises.
With a lean team dedicated to addressing these needs and a portfolio of 20+ high-risk high-impact enterprises, Social Alpha has entered its second year of operation, and is looking to scale rapidly.
Incubating the Incubator
The IIC-Social Alpha team is working with Social Alpha, across functions and tiers, to develop and strengthen the identification, selection, incubation, and monitoring and evaluation of ‘incubatee’ organizations. Instituting processes that are adaptable at scale is the key implementation challenge that the team has taken into consideration. Adopting a research-based approach, the team has conducted over 60 in-depth exploratory interviews with incubators, accelerators, social entrepreneurs, impact investors, academic experts, mentors and social enterprise consultants, as well as team members of Social Alpha to understand the points of distinction between the functioning of these organizations. Post conclusion of this phase, the team has matched the findings from the external discussions to the key priority areas identified from the internal conversations.
It has emerged from our research the key challenges that most social incubation, acceleration and impact investment programs in India face include: effective scouting of high-impact enterprises, systematically assessing their needs, providing of capacity building, knowledge services & handholding support to advance them on their journey, and evaluating their performance (both in terms of impact and returns) in a timely manner.
Building on insights from external interviews and secondary research, our team has now formulated preliminary recommendations that seek to set a new industry standard in social incubation for efficiency at scale.
Looking ahead
The social entrepreneurship and innovation sector in India is still at a nascent stage, with many new entrants in the market testing out experimental structures. In this dynamic environment, there is ample opportunity to pilot new processes and strategies. Our team is looking to design and implement inventive grand challenges and fellowships for scouting of social entrepreneurs, and sector-focused mentorship and capacity building programs in the upcoming months. The team is also looking to adopt an end-to-end digital tool for managing the functions of the incubator, and to formalize the partnerships and associations between organizations in the sector.
The need of the hour is to promote a culture of collaboration in both the social entrepreneurship and philanthropic sector due to a large number of organizations working on overlapping fields. To ensure that expertise, resources, and skill percolate to those who require it, it is necessary that there is increased coordination and knowledge-sharing efforts between players. There is also potential for awareness building to inform and educate the next generation of innovators regarding social entrepreneurship as a viable career option. Levying equal focus on empathy and efficiency at every step in the process, will lead to the creation of a new cadre of problem-solvers who can confidently undertake the mammoth task of countering India’s social challenges.
[1] ‘India has 31 lakh NGOs more than double the number of schools’, The Indian Express: http://indianexpress.com/article/india/india-others/india-has-31-lakh-ngos-twice-the-number-of-schools-almost-twice-number-of-policemen/
[2] The State of Social Enterprise in Bangladesh, Ghana, India & Pakistan, British Council: https://www.britishcouncil.org/sites/default/files/bc-report-ch4-india-digital_0.pdf
[3] India Philanthropy Report 2017, Bain & Company: http://www.bain.com/publications/articles/india-philanthropy-report-2017.aspx