India
2007-04-10
Sridhar Parthasarathy (Bangalore) on Community Foundations
Filed Under:
Q: I am fascinated by the contribution of Community Foundations, in the U.S. and Europe. However, I wonder if there is a universal model for replicating their success especially in the developing and under-developed countries. My apprehensions arise mainly from the following:
Responses provided by Patrick O'Heffernan
• Who will provide the seed capital for start ups and under what terms and conditions?
Community foundations by nature begin with the community. Often one or a few wealthy individuals provide the seed capital as investments, requiring that the funds be invested in stocks or bank instruments and the interest be used to grow the foundation and to funds its programs. After the seed investment, the foundation markets itself to more modest-income people who see that their smaller amounts, when combined with the seed funds, can make a difference.
• Do these Foundations necessarily require the backing and patronage of the rich and thriving philanthropists/foundations?
No. Many have no connections to other foundations.
• Are there foundations/funding organizations which help with grants and seed capital and may be, fund the start-up costs of community foundations in the developing/under-developed countries?
Yes. The Ford Foundation, the Aga Kahn Foundation (for the Asmali people) are two that come to mind. A better strategy is to go to international funding foundations with a proposal to underwrite a community foundation. Have some other donors ready to match the foundations funds when you go.
• Is there an ideal percentage-figure for operational costs in the annual finance statement, say in the initial years and for subsequent years? Should there be one at all?
That varies with the country. I have seen a range of 5% to 20%. I would try to stay at 10% or under.
• Should there be an ideal cost of funding and what should not be included in its computing?
No, it depends on your country and what you want to do. Determine what you want to accomplish, and how much investment that will require. If the interest rate in your country (paid on savings or investments ) is 10% and you would like to distribute $1000 in micro grants and your overhead is 5%, you will need $15,000 to begin.
• How should the aspects of inflation, erosion of interest incomes and rising staff-costs be overcome?
That question needs to go to a local economist because it varies so much from one country to another - there is no rule that fits every one.
• In my view, unless the staff-costs are near what they are in developed world, the long-term sustainability of Community Foundations as professionally run and managed entities will be in doubt?
Why? It is not the cost of the staff that is important, it is their effectiveness. Running a community foundation in India will be much different than running it in California or New York. Look at the staffing of community foundations in the developed world as rough guides, but don't assume their model is best for you. You might need more staff because you have less access to technology (not likely in Bangalore!!)
Incidently, you may want to approach the economics department at ITT to work with you on this. You might find some allies there.
Responses provided by Patrick O'Heffernan
• Who will provide the seed capital for start ups and under what terms and conditions?
Community foundations by nature begin with the community. Often one or a few wealthy individuals provide the seed capital as investments, requiring that the funds be invested in stocks or bank instruments and the interest be used to grow the foundation and to funds its programs. After the seed investment, the foundation markets itself to more modest-income people who see that their smaller amounts, when combined with the seed funds, can make a difference.
• Do these Foundations necessarily require the backing and patronage of the rich and thriving philanthropists/foundations?
No. Many have no connections to other foundations.
• Are there foundations/funding organizations which help with grants and seed capital and may be, fund the start-up costs of community foundations in the developing/under-developed countries?
Yes. The Ford Foundation, the Aga Kahn Foundation (for the Asmali people) are two that come to mind. A better strategy is to go to international funding foundations with a proposal to underwrite a community foundation. Have some other donors ready to match the foundations funds when you go.
• Is there an ideal percentage-figure for operational costs in the annual finance statement, say in the initial years and for subsequent years? Should there be one at all?
That varies with the country. I have seen a range of 5% to 20%. I would try to stay at 10% or under.
• Should there be an ideal cost of funding and what should not be included in its computing?
No, it depends on your country and what you want to do. Determine what you want to accomplish, and how much investment that will require. If the interest rate in your country (paid on savings or investments ) is 10% and you would like to distribute $1000 in micro grants and your overhead is 5%, you will need $15,000 to begin.
• How should the aspects of inflation, erosion of interest incomes and rising staff-costs be overcome?
That question needs to go to a local economist because it varies so much from one country to another - there is no rule that fits every one.
• In my view, unless the staff-costs are near what they are in developed world, the long-term sustainability of Community Foundations as professionally run and managed entities will be in doubt?
Why? It is not the cost of the staff that is important, it is their effectiveness. Running a community foundation in India will be much different than running it in California or New York. Look at the staffing of community foundations in the developed world as rough guides, but don't assume their model is best for you. You might need more staff because you have less access to technology (not likely in Bangalore!!)
Incidently, you may want to approach the economics department at ITT to work with you on this. You might find some allies there.
2007-03-27
Sridhar Parthasarathy (Bangalore) is seeking funding
Q: I am a consultant with a not-for-profit organisation -Institute of Leadership & Institutional Development (ILID), Bangalore, India. For the past three years we have been rendering probono world class consulting and advisory services to over 50 NGOs in the country of all hues and sizes. We bring to the development sector the benefits of management principles and practices employed by business corporations world-wide and help them build on the networking and collaborations as strategic planning processes.
Is there any funding agency/donor agency that we can approach for seeking funding for continuing this service to the development sector that works exclusively for the welfare of the poor and disadvantaged in the country? All our funding so far is from within and from the personal fortunes of theTrustees.
Patrick O'Heffernan responds:
This sounds like a wonderful Social Enterprise ready to be born. It sounds like you have built the beginnings of a strong business in providing valuable services. Congratulations. This is no easy accomplishment and you should be proud of what you have done -created a world class consulting organization in a very tough environment. That is a valuable asset. Now to grow it and make it self-supporting, maybe the best route is not looking for a funder, but for an opportunity, an opportunity to monetize your asset.
Let me suggest that you sound like you are ready to move from Dependency - depending on grants and charity, to Sustainability - relying on revenue streams that you generate and control. My suggestion therefore is to make the move. Here is how:
1. Institute a small fee schedule. That's right, charge for your services.
Not a lot, but enough to cover at least your direct costs since your "customers" are NGOs. But, if your services are as good and as valuable as you describe - and I am sure they are, the people you help should pay something for them. I would suggest a sliding scale based on the size of the organization you consult to. Once you have developed a revenue stream from fees, I would explore three pathways:
2. Approach foundations that underwrite these kinds of training and management services.
You might try the Rockefeller Foundation in New York, or the Levi Strauss Foundation or the Asia Foundation in San Francisco. (I don't have to direct you to the Asia Development Bank and the development fund of the British government, because those are so well known. ). Don't ask for a grant for operating funds; as for an investment in your growth. Ask for a grant to upgrade what you and market it to regional development banks, the Indian government and other governments that work with development NGOs, foundations that work in India.
3. Set up a for-profit branch and approach an international management consulting firm that works in India to invest and partner with you.
Pitch them for investment and a partnership in which their staff work with your staff in consulting to NGOs and development organizations. You have a developed a market that could be valuable to larger firms; by partnering with a firm, you keep control of your market, gain access to cash and marketing, and possibly upgrade your own knowledge base.
4. Develop new markets.
Same as #1, but do it whether or not you get a grant. If you are good enough and successful, the new markets will generate a revenue stream that you can use to subsidize your work with NGOs who can't pay full fees.
Is there any funding agency/donor agency that we can approach for seeking funding for continuing this service to the development sector that works exclusively for the welfare of the poor and disadvantaged in the country? All our funding so far is from within and from the personal fortunes of theTrustees.
Patrick O'Heffernan responds:
This sounds like a wonderful Social Enterprise ready to be born. It sounds like you have built the beginnings of a strong business in providing valuable services. Congratulations. This is no easy accomplishment and you should be proud of what you have done -created a world class consulting organization in a very tough environment. That is a valuable asset. Now to grow it and make it self-supporting, maybe the best route is not looking for a funder, but for an opportunity, an opportunity to monetize your asset.
Let me suggest that you sound like you are ready to move from Dependency - depending on grants and charity, to Sustainability - relying on revenue streams that you generate and control. My suggestion therefore is to make the move. Here is how:
1. Institute a small fee schedule. That's right, charge for your services.
Not a lot, but enough to cover at least your direct costs since your "customers" are NGOs. But, if your services are as good and as valuable as you describe - and I am sure they are, the people you help should pay something for them. I would suggest a sliding scale based on the size of the organization you consult to. Once you have developed a revenue stream from fees, I would explore three pathways:
2. Approach foundations that underwrite these kinds of training and management services.
You might try the Rockefeller Foundation in New York, or the Levi Strauss Foundation or the Asia Foundation in San Francisco. (I don't have to direct you to the Asia Development Bank and the development fund of the British government, because those are so well known. ). Don't ask for a grant for operating funds; as for an investment in your growth. Ask for a grant to upgrade what you and market it to regional development banks, the Indian government and other governments that work with development NGOs, foundations that work in India.
3. Set up a for-profit branch and approach an international management consulting firm that works in India to invest and partner with you.
Pitch them for investment and a partnership in which their staff work with your staff in consulting to NGOs and development organizations. You have a developed a market that could be valuable to larger firms; by partnering with a firm, you keep control of your market, gain access to cash and marketing, and possibly upgrade your own knowledge base.
4. Develop new markets.
Same as #1, but do it whether or not you get a grant. If you are good enough and successful, the new markets will generate a revenue stream that you can use to subsidize your work with NGOs who can't pay full fees.
