Reimagining Education NGOs in India: A Success Playbook
1. NGOs in Education
Non-profit institutions play a significant role in improving and uplifting those at the grassroots level. This consulting style white paper will be exploring the challenges that NGOs face in addressing the problems of the education system in India. Moreover, the paper will also be developing on those challenges to find solutions and interventions which could enable these NGOs to perform on a larger scale.
How Does the Current NGO Landscape in India Look?
India comprises a diverse demographic where NGOs play a key role at the grassroot level to work towards the common goal of upliftment, education, and sustainability. There are around four NGOs for every 1,000 people in urban areas and 2.3 NGOs for every 1,000 population in rural areas. NGOs have come to be a critical tool in solving some of the biggest challenges India faces ranging from primary education, sanitation, child rights, housing, poverty and women’s empowerment.
NGOs in India are divided into the following categories :
From 2014 to 2018, private funding grew at a rate of 15% whereas public funding grew at a rate of 10% . Overall, total social sector funds have grown at a rate of 11% over the past five years.
While the government continues to be the largest contributor to social sector funding in India, hovering at about 6% of GDP, private philanthropy is expanding and has outpaced public funding growth (2019). This data hints at an underlying problem where NGOs are still struggling to raise funds and have a consistent revenue stream.
According to the Sector-Wise NGO Directory registered with NGO Darpan (Niti Ayog):
61,064 are focused on Education (8.02 percent of the total)
Total Number of NGOs: 7,68,839
There are 42 subcategories of NGOs in India. Although education comprises the most concentrated category (in terms of the number of NGOs in any field), India still lags in achieving its accessibility to all goals and quality benchmarks for primary and secondary schools. According to the ASER Report (2020) we have made significant progress in enrollment rates yet the retention rates and dropout numbers negate the impact. The average annual drop rate (2016) has been at a high of 17.06%. To be able to implement any changes it is necessary to understand the overall progress NGOs in India have been able to make and identify gaps in the parameters to enable them to perform better.
How Education-Focused NGOs are Categorized?
In this paper we have categorized NGOs according to the education service they provide, size of funding, gender focus and size of impact. The segmentation of NGOs will help in understanding where NGOs have been concentrating their efforts so far and where further interventions are required.
Size of Impact
Below listed are some of the largest education focused NGOs in India. These are the top 8 of the 32 NGOs identified by the whitepaper. These NGOs were selected qualitatively and through secondary reports by Give India. This gives an overview of the scale of impact of NGOs that currently exists in the education sector in India.
1. Make A Difference (MAD)
Make a Difference (MAD)’s growth has been quite impressive. The current data states that 89% of the youth enrolled with MAD are usually enrolled for higher education in universities or have been able to secure jobs. Moreover, an estimated 78% of their students have been able to acquire scholarships for tuition fees and living costs.
2. Teach for India
Teach for India, is currently operating in 7 cities and employs fellows and young leaders to transform the lives of young students. They have 1100 fellows who are directly in touch with 38,000 students. TFI’s goal is to ensure these kids receive quality education as well as shaping young leaders who will be redefining the education system in the future.
Pratham has been one of the biggest players in altering the quality of education and addressing the drawbacks in the education system. Since their inception they have concentrated their efforts into improving learning levels, enhancing teacher training, reducing dropout rates and child rights. They achieve these goals through numerous ways such as vocation training, implementing the use of technology, identifying vulnerable kids, research and advocacy. One of their most flagship programs is it’s research and assessment unit, which publishes the Annual Status of Education Report (ASER) - the sole source primary data on the learning outcomes in India.
4. Akanksha Foundation
In the last 16 years, the Akanksha Foundation has managed to set up 60 afterschool centers which has enabled teachers and volunteers to help 3000 kids. They have also fostered partnerships with municipal corporations in Mumbai and Pune to run 21 schools in both the cities. Their schools and centers have outperformed other schools in the SSC and HSC examinations in Maharashtra. Moreover, they have successfully brought significant changes in student retention, attendance, parent involvement and teacher retention.
Child Rights & You (CRY) was formed on the basis of providing children basic rights and providing them with justice, equity and dignity. They work by providing direct interventions, channeling communities, and conducting evaluations. Moreover, CRY plays a pivotal role in government advocacy for child policies.
6. Bachpan Bachao Andolan
The Bachpan Bachao Andolan has focused its efforts into integrating kids who have been exploited back into society and aids them in their psychological recovery. It works with the government and actively advocates for securing the fundamental rights of children through laws and amendments.
With more than 35 ongoing projects in various states spanning North India, Deepalaya is definitely one of the most impactful NGOs. They have been focused not only on education but health, institutional care, vocational training and women empowerment as well. Deepalaya has positively influenced 3,15,859 students at its 13 learning centers and 2 schools.
At Bhumi, volunteers work on mentoring and educating kids from economically backwards classes including slums, village communities, and orphanages. Their goal is to build a more equitable society. The NGO’s supplementary education program, Ignite, educates underprivileged children in Science, Mathematics, English, Robotics, Computers, Life Skills, Sports and Arts. There have been around 10,000 children which have been able to uplift themselves due to Ignite.
Size of Funding
The graph below categorizes NGOs on the basis of their income or funding they received annually, taking the timeline of years from 2018-20. Majority of the NGOs are concentrated between the $1 million to $5 million range. Although a sizable amount of these NGOs seem to receive a moderate to high amount of funding, the inconsistency of the revenue stream each year and the inefficiency in allocation of resources leads to poor learning outcomes. Moreover, from the graph we can also conclude that the current level of funding isn’t sufficient for tackling problems in the education system and for an NGO to scale, it needs to target a level of funding greater $5 million.
Based on Gender
The most prominent challenges that our education system faces is eradicating social biases. Social biases against the girl child are prevalent and yet from the top 32 NGOs surveyed, only 6 of them have concentrated their efforts towards empowering the girl child. Majority of the NGOs in the education sector have equally divided their efforts focusing on both the girl and boy child.
Based on Education Services
NGOs over the years have been able to carve out their own niche in the education space. There are 2 main categories which are system enablers (includes infrastructure, government advocacy, and human capital development) and those that provide primary teaching services.
From the graph below it is evident that currently the majority of NGOs are involved in teaching. Government advocacy and Virtual Infrastructure comprises the least concentrated categories. There is a dearth in NGOs intervening in the infrastructure and government advocacy space.
What are the Challenges Faced by NGOs in the Education Sector?
1. Quality of Education
The quality of education is the most critical roadblock that NGOs face. Despite the high enrollment rates, the Indian education system is not at par with the current global standards and the job market. The current data reflects that Indian children specifically in the public education system and from rural regions are performing below their grade level when it comes to basic arithmetic and reading. To tackle quality challenges, it will require periodic assessments and monitoring the progress. Moreover, teacher quality also impacts the learning outcomes. Due to overpaid, under-qualified teachers and an outdated curriculum, the children’s learning curve becomes stagnated if not declining. Data from the Teacher’s Eligibility Test (TET) also shows that the pass percentages have been as low as between 1% to 15%. Such low results, has led to the conclusion that the teacher training capacity is not adequate neither are the assessments executed successfully.
2. Infrastructure Challenges
There are two types of infrastructure problems that plague the education system which are virtual and physical. Currently, the focus has been on installing hardware but it should not be limited to that. The Indian education system requires ed-tech tools that will enable students to learn virtually and help teachers create quality digital content in various Indian languages. ICT based programmes need to be implemented and a mandatory part of the curriculum. Although NGOs and governments would face challenges in providing internet connections to schools in rural areas and village communities. With the Covid pandemic, the sudden switch to online learning hasn’t been an equitable one for all students. According to the ASER report 2020, there are still 43.6% children in government schools without a smartphone and in private schools 25.8%. The disparity has worsened with the pandemic and lockdown , negatively impacting the development of kids without proper access to technology. NGOs will need to tackle these challenges to make sure the digital age encompasses all students in the ecosystem.
3. Social Biases
NGOs need to tackle the mindset of various groups across the country. The economically challenged classes and under-privileged are not fully aware of the benefits of education and at times have certain long-standing biases against particular religion groups and castes which tends to translate to the children and negatively impact their schooling. These biases are intensified for the female child who is comparatively less likely to finish their schooling. Such social biases pose a challenge for NGOs and create barriers to change in the schooling system. 4. Systematic and Institutional Challenges
NGOs also face challenges in partnering with different stakeholders in the system from the governments to other NGOs. The government bodies that regulate the education system comprises of multiple layers and structures overseeing curriculum, infrastructure and teacher training. Such layers create a bottle-neck situation that causes delays in administrative tasks, funding, and bureaucracy.
Lastly, fundraising and crowdfunding methods pose a serious challenge for NGOs looking to scale. In the Indian education system, NGOs still do not operate at a national level due to the lack of funding required to expand to a diverse demographic. One of the most common problems is an inconsistent revenue stream which causes NGOs to fall behind in financial planning and hence overshooting their budget. Government grants are more than often delayed, CSR is not sufficient to cover overheads and individual funding sources are significant only from a select few.
What is the Need for NGOs in the Education Sector to Reinvent?
India is a diverse country, demographically and geographically, the government by itself is not far reaching enough to ensure each and every student gets a good school education. Despite the progress, 17.7 million children in India are not in school. Moreover, for those who are in school, the retention rates are low and a significant amount of students drop out before class 8. According to the Legatum Prosperity Index 2020, India ranks in education at 115 India and spends only 4.6 per cent of its total GDP on education.
The government alone cannot contain these problems and to improve the education system the responsibility needs to be shared with civil society organizations. Such problems need to be tackled by involving social enterprises, not for profit and corporations. NGOs have a unique advantage of executing change from the grassroots level and are the only institutions besides the government with a direct impact. NGOs need to implement sustainable scaling methods to improve education quality and ramp up resources as we progress in the digital age. NGOs need to be aligned for the whole system to work.  Scaling up involves implementing interventions that are a result of a pilot and then replicating them on scale. This approach at times is not successful as there are various hindrances involved. Since coordinating these efforts on a scale involves multiple actors operating with human limitations and political influences, NGOs take longer and at times even fail to succeed. NGOs need to utilize data, metrics, form coalitions, and innovate themselves to scale sustainably. This paper is designed to come up with detailed and precise interventions for NGOs to be more equipped to tackle an obstinate and rigid system.
What is the Problem Being Addressed by the White Paper?
NGOs in India have faced certain challenges in scaling up and operational difficulties. There have been certain barriers ranging from fundraising to partnerships. Moreover these challenges have been intensified when coupled with the problems that are there in the education sector in India. The government, civil society and non profit institutions have successfully managed to increase the enrollment ratio. Yet there are various roadblocks ahead for India to achieve an education system at par with the developed world. NGOs play a pivotal role in driving this transformation, yet they are also struggling to be expansive and exhaustive in a country with such a diverse demographic. This whitepaper attempts to identify and resolve the challenges that NGOs in education face to grow and increase their impact.
2. Interventions and Impact Evaluation
The presence of several lacunae in the formal education system in India has led to NGOs operating in these white spaces and finding innovative solutions to fix them. A major fraction of the nearly 60,000 NGOs working in the education sector focus on teaching. This section will first take a look at the existing interventions being carried out by NGOs to get a better understanding of the role played by them in the education sector. It will then take a brief look at the quantitative frameworks used to estimate the impact of these interventions on the beneficiaries. Using the findings generated by these impact evaluation frameworks, the whitepaper will then recommend interventions that have the potential of having a large-scale impact in the education sector.
What are the Existing Areas of Intervention?
The availability of adequate school infrastructure plays an important role in making the learning process seamless for a student. This includes basic infrastructure like access to toilet facilities, drinking water, benches, and books, as well as facilities like electricity, libraries, and computers. However, a significant portion of India’s educational institutions, particularly primary schools, face the issue of insufficient infrastructure. The District Information System for Education (DISE) statistics on the availability of school infrastructure between 2013 and 2016 reveals that only 60% of schools have access to electricity while only 27% have access to computers. This is often a result of lack of funds, insufficient human resources to maintain infrastructure, or neglect from superiors. , NGOs in India address this issue by setting up infrastructure that complements the pre-existing one or substitutes it. For example, NGO Deepalaya has set up eight learning centres/schools, including a mobile bus, which provide education to 100,000 children from socio-economically disadvantaged backgrounds in Delhi. Agastya International Foundation provides 750 rural children and teachers in Kuppam with access to state-of-the-art science labs. It has also set up 74 subsidiary science centres in 13 states and 175 mobile science labs.
2. Government advocacy
Working with the government and advising it on matters of policy making allows NGOs to bring about a system-wide impact and positively benefit stakeholders across the country. NGOs like Central Square Foundation and Pratham work closely with the government in areas of drafting the New Education Policy, curriculum development, and developing innovative learning programs. The expertise brought to the table by these NGOs positively contributes to the process of policy formulation and implementation.
3. Primary teaching services
It is known that the process of learning and understanding is seriously hampered in Indian classrooms as a result of its high student-teacher ratio, low teacher attendance, insufficient teacher training, etc. Non-governmental organisations provide a solution to this issue by hiring volunteer teachers who teach students in underprivileged schools. The Teach for India Fellowship (TFI) is a fine example of an NGO solving the issues afflicting primary teaching services in this manner. The Fellows of TFI are students or working professionals who serve as full-time teachers in under-resourced schools. The NGOs are able to fill these gaps more efficiently as they are free of bureaucratic red tape and during hiring of teachers.
4. Human Capital Development
The NEP identifies the necessity of human capital development and highlights the need to train teachers in their field of study as well as pedagogy. NGOs like Central Square Foundation and Parikrma Humanity Foundation invest in developing human capital by training teachers of government schools in pedagogy and encouraging innovative teaching practices.
What is the Impact evaluation of these Interventions?
The Government of India spent 4.6% of its total GDP on education last year. By all estimates, this is a sizable share of our government expenditure being allocated to the matter of education. Hence, it is not an issue of inputs that the country faces but an issue of output and the impact that these inputs have. An NGO in India faces considerable limits in the resources that it has at its disposal and hence the projects that it can undertake. In such a situation, it is vital that these limited resources are allocated to their most productive use. “In a world of limited resources, cost-effectiveness is not just an economic issue but a moral necessity” - Karthik Muralidharan This stresses the need for NGOs to adopt rigorous quantitative methods to evaluate the impact of their interventions on the target population. Following are few of the modern econometric frameworks widely used by researchers of development economics:
The difference-in-differences method compares the changes in outcomes over time between a population that is enrolled in a program (the treatment group) and a population that is not (the comparison group).
2. Instrumental Variable Design
The Instrumental Variable Design is useful when the variable of interest itself is non-quantifiable. This design uses another variable as a proxy for our variable of our choice and studies the change in this instrumental variable as a result of the impact of our treatment. The instrumental variable is chosen such that it is closely correlated with the performance of the variable of interest and remains largely unaffected by changes in other variables.
3. Randomized Controlled Trials
The Randomized Controlled Trials framework is considered the gold standard in the field of impact evaluation and has been propagated by the winners of the Nobel Prize in Economics 2019, Abhijeet Banerjee and Esther Duflo. This framework makes use of the principle that the randomized assignment process of a large enough number of units will produce groups that have statistically equivalent averages for all their characteristics (that is, statistically equivalent groups). On classifying these groups as treatment and control groups, the changes in outcome are studied over time to get a fairly accurate estimate of the impact of the treatment. An effective, robust evaluation of the impact of an intervention requires the use of the cutting-edge research methodologies mentioned above. An efficient and mutually beneficial process of carrying out these impact evaluation studies is through the collaboration between NGOs and research universities.
Singapore’s National Institute of Education is an autonomous, sole teacher education institute in Singapore. Not only does it provide teacher training programs for all levels of teacher education but also houses a Centre for Research in Pedagogy and Practice in its Office of Educational Research. This Centre facilitates research on innovative ways of teaching and learning by bringing together teachers, administrators and academic researchers.
Policy makers in India should draw inspirations from similar best practices around the world to set up a research ecosystem that not only brings together educators and researchers but also NGOs operating in the field of education. This ecosystem will significantly improve the quality of research coming out of India. The NGOs will get easier access to researchers who will ensure a more accurate analysis of the impact the NGO’s interventions has while the researchers will get to use the rich primary data made available by the NGOs.
What are Some of the High-impact interventions?
Over the past three decades, India has seen an unprecedented expansion in its schooling system. Our performance in primary schooling enrollment is encouraging: over 95% of children between ages 6 and 14 attend school. However, the education system is facing a ‘learning crisis’. These vast gains in schooling are not resulting in comparable improvements in learning outcomes. About half of the students in grade 5 in rural areas are unable to read at a grade 2 level, and less than one-third are able to do basic division.
The above given graph plots the estimated level of student achievement in public middle schools in Delhi against the grade in which students are actually enrolled. Most students are below curricular standards (line of equality), average progress in learning is flatter than curricular standards, and there is substantial variation in achievements A review of the results presented by Glewwe and Muralidharan, shows us that an increase in “business as usual” expenditure on education results in insignificant improvements in learning. Hence, the education system needs reforms that will translate these vast resources being invested to significant learning outcomes. The key constraints that hamper this are: weaknesses in governance and pedagogy. Deriving lessons from the results generated by numerous quantitative impact evaluations carried out by researchers in developing countries, the whitepaper recommends three main interventions that can have a significant large-scale impact in the Indian education sector:
1. Remedial classes
A serious implication of the high student-teacher ratio in Indian classrooms is that the teacher is often forced to go through a standardized syllabus for a large class without being able to track the progress of students. Even highly motivated teachers primarily focus on completing the curriculum-prescribed textbook, without recognizing the mismatch between the academic standards of the textbook and student learning levels. This results in wide disparities in the learning outcomes of students within a classroom (as seen in the graph). Students who fall behind in their initial years of schooling (often first generation learners) end up significantly lagging behind in basic literacy and numeracy proficiency or drop out of school. Hence, it is vital that this is stemmed early on. In their 2007 seminal paper titled ‘Remedying Education: Evidence from Two Randomized Experiments in India’, Abhijeet Banerjee, Shawn Cole, et al. found that a remedial education program implemented in schools of Mumbai and Gujarat had a significant impact (0.28 standard deviations) on the average test scores of the students. The remedial education program in the study was Pratham’s ‘Balsakhi’ program, which provides government schools with a teacher (‘balsakhi’) to work with students in third and fourth grade who are lagging behind. The balsakhi typically met with a group of 15-20 children for two hours a day and taught them basic numeracy and literacy skills. This setup allows the balsakhi to curate the syllabus as per the student’s competencies and ensure that they don’t lag behind. Hence, the system of remedial classes ensures that students do not fall behind or drop out of the education system. Since the balsakhi is someone who has completed secondary education, this is a scalable model that can be implemented by NGOs across the country; hence resulting in significant gains in learning outcomes and reduction in dropout rates.
2. Personalized adaptive learning curriculum
The vast advancements in technology and its affordability in the past decade has seen it being used increasingly in classrooms. The Covid-19 pandemic further accelerated the use of education technology in households as well as government. Keeping this in mind, the implementation of personalised adaptive learning has the potential of causing significant improvements in the learning outcomes of students. This technology-based pedagogy ensures that it adaptively adjusts teaching strategies regularly based on real-time monitoring of the student’s “differences and changes in individual characteristics, individual performance, and personal development”. A 2007 paper also found that the use of a computer-assisted learning (CAL) program focussing on math led to a significant positive impact (0.47 standard deviation) on math scores of the class. By exposing children to 2 hours of CAL per week, the math test scores of these children were found to be higher than the students who were not exposed. The visual, interactive nature of CAL ensured that the students understood and scored better in their math test. Hence, the implementation of this personalized adaptive learning curriculum has immense potential in the Indian education system. A push in this direction by NGOs can yield significant improvements in learning outcomes.
3. Improving teacher effectiveness
Frequent teacher absenteeism is often recognised to be one of the most important issues plaguing the Indian education system. During field visits conducted by researchers in 2010, nearly one in four teachers were found to be absent from the class at the time of the unannounced visits. However, even when the teachers are present in school, their instructional time was found to be low due to them being forced to carry out copious amounts of administrative paperwork. Lesser number of effective learning hours contributes to the poor learning outcomes seen in students. In a 2012 paper by Duflo, Hanna and Ryan, the authors establish that introduction of performance-linked pay and the improvement in monitoring of teacher attendance through installation of cameras and had a significant impact on teacher absenteeism (decrease by 21%) and resulted in an improvement in the students’ test scores (0.17 standard deviations). Hence, the introduction of better monitoring mechanisms and performance-linked bonus pays can yield significant dividends in a cost-effective manner. In this direction, the NEP recognises the need for “a robust merit-based structure of tenure, promotion, and salary structure.” and highlights the importance of upskilling teachers and reducing the out-of-class administrative commitments. If NGOs are able to implement these initiatives of skill development and performance-based salary structure well, it will multiply the effectiveness of teacher efforts and government spending
3. Operating Models
When starting an NGO, one seems to be fighting against all odds, whether it is arranging funds for the operation, getting structural support, getting people on board or simply determining your target. Unfortunately, a considerable number of NGOs fail to sustain and fail to scale due to their inability to chart these choppy waters. An obvious reason why not for profit initiatives are not able to sustain themselves is lack of funds, however failing to set clear goals, understanding limitations and therefore not being able to plan accordingly is not surprisingly a common reason for failure as well. Which is why it is imperative to have a dedicated plan of action when starting out or scaling up your NGO operations, an operating model.
What is the Need for Operating Models and Organizational Structures?
A non-profit’s operating model is the blueprint for how to organize and deploy people and resources. It serves as a bridge between strategy into results. Forging this bridge well requires tailoring a non-profit’s model to support “must-get-right” decisions and capabilities. It delivers a framework of how all the entities and stakeholders within it must behave to achieve optimum results. It also offers a clarity for prioritization, goal setting and effective decision making. A well-formed organization structure allows for cohesive workflow, targeted work, better networking, increased accountability and efficient decision making. Another key area which leads to inefficiencies and inability to reach full potential in NGO is its human resource. The key findings from a report done by Confederation of Indian Industry indicated the glaring void of skilled workforce in the Indian education NGO space. It was found that Indian NGOs face huge hurdles when it comes to recruiting, training and retaining quality teachers. The extensive training required for teachers is attributed to the low barrier of entry offerings in this sector and high levels of unemployment which cause high numbers of under qualified job seekers to venture into the NGO space. Recruitment is majorly affected by low salary offerings; lack of competitive salaries offered are a deterrent to entry for more qualified professionals which further increases the overhead of such organizations. Retention of highly skilled workers and top performers is also a challenge as such professionals choose to switch to corporate roles and other international organizations.
What is the FSTS Model?
In this section of the paper we will discuss how to overcome these challenges by building operating models and organizational structures which are right for your organization. We have organized our discussion on operating models and organization structure around four main pillars, Funding, Scale, Training and System Compatibility. We believe these four parameters together help in defining the bounds and potential impact of an NGO.
Funding - The amount of funding available to an NGO and the consistency of inflow of funds significantly determine how well the programs can be implemented. Funding available also affects the composition of employees in the organisation, whether they are full time employees, fellows or volunteers. This can impact the consistency of the programs outcomes and the ease at which they can be replicated. Scale – The number of students an organization wants to reach through its efforts must be pre-determined to set clear goals and expectations which are attainable. Understanding the scale of operation is also essential when determining the need of funds and their allocation. Training – The level of training required for program implementers to ensure they are able to carry out the objectives of the project successfully. This also depends on the man-power that is going to be involved; Full time employees are highly skilled mid career professionals, who know the ins and outs of the industry and seek higher compensation, Fellows can be university students or recent graduates who might require training to understand the program and methodologies to implement it they typically seek lesser compensation than full time employees, finally volunteers which are the go-to of most NGOs may or may not need training, depending upon the skills required by the NGO. System Compatibility – This is how cohesive the curriculum, teaching plans and other services offered by the NGOs are with existing government setups, how well they can be integrated with them to achieve scale. This can also correlate to a smaller NGOs cohesion with the operations of other NGOs within its area, whether they can collaborate to generate better results or not.
How are Operating Models Categorized?
The operating models of NGOs in the education sphere can be categorised into three broad categories: 1) A Full-time employee operational model consists of a set team of permanent employees whose functions can range from project building, policy design, curriculum building, counselling, teaching, etc. Full time employees recruited for policy building and program management are typically highly qualified, mid career professionals.
2) A Fellowship operational model typically has “Fellows” which are a group of individuals selected through a screening process for a fixed period of time, Their job functions include teaching, program management, mentorship etc. Fellows are typically college students, recent graduates and early career professionals.
3) A Volunteer operational model consists of motivated and driven individuals who dedicate their time to contribute to an NGOs various activities, this can include, community building and penetration, teaching, program organizing and management, etc. Volunteers can come from a wide array of backgrounds, they can be professionals, students, good Samaritans and members of local communities.
An operational model can also have some permutation of these models, depending upon the goals and program elements of the organization structure.
What are the Common Themes in Operating Models and Organizational Structures of NGOs?
How to Decide if an NGO Needs Changes in their Operating Model?
The idea of an NGO is to give back to the community, as much as it can while minimizing its use of resources. Deciding whether an operational model needs amendments depends on factors which are inherent to its identity - the operational models (OM) for which there are a few fundamentals it needs to clear out. These are -
1) Alignment: Does your OM differentially focus and invest in areas that will drive the most impact?
2) Capability: Is your NGO capable of implementing the designated model which has been chosen? Also, is it critical to your strategy?
3) Decisiveness: Is your team decisive and timely in its decisions?
4) Feedback and Responsiveness: Can your organization consistently listen and modify according to received feedback?
5) Efficiency: Does your organization allocate and use resources efficiently? Or can there be improvements made?
6) Inspired: Is your team and organization capable of attracting talent and leaders which your strategy may demand?
7) Financial sustainability: Do you generate/attract enough revenue to properly implement your stratagem and be effective?
4. Partnership Models
The old paradigm – where NGOs do the service delivery, private donors fund it and governments regulate – is withering away. Every sector right now is exploring new roles, working relationships and ways of doing business. And partnerships are fast becoming the preferred mechanism for delivering sustainable development. The world is increasingly becoming complex, crowded, unpredictable, unstable and vulnerable. These challenges have put single sector solutions at a loss and there is an urgent and immediate requirement for more collaborative and integrated solutions.
What are Partnership Models?
These are relationships that establish a non-statutory collaboration between organisations from different sectors (business, government and civil society) and generally these partnerships are typically put in place to achieve sustainable development goals at strategic and/or operational levels.
1) NGO-Business Partnerships
Various leading businesses are looking towards cross-sector partnerships and joining hands with NGOs. Multiple real-life cases of business-NGO partnerships show that there are 3 stages that businesses and NGOs go through as they move towards a formalised collaboration:
Stage 1: When companies and NGOs have quite different attitudes as to how they can contribute in developing the society
Stage 2: When companies and NGOs begin to realise, they coexist and some even agree to joint social responsibility projects
Stage 3: When businesses and NGOs begin to realise that they can work with and learn from each other, they enter into co-created business-to-business relationships that entail companies and NGOs becoming a key part of each other’s capacity to deliver value and vice versa. A good example of Stage 3 can be co-development of base-of-the-pyramid (BoP) products alongside businesses in those same segments and niche markets where NGOs are operating.
Various kinds of NGO–Corporate partnerships and the level of complexity with which they can be implemented are given below:
2) NGO-NGO Partnerships
The constant competition between NGOs for a limited pot of resources is most easily seen in applications for grant money from the major donors. Explicitly competitive tenders attract bids from dozens of NGOs, only one or two of which will get anything. Those that win the money will employ more people; those that don't might have to lay off employees.
NGOs already work together effectively on a range of issues, both campaigns and programmatic, but not enough when it comes to joint applications for funds, or joint fundraising.
3) NGO-Government Partnerships
The governments’ many-a-times fail to deliver more effectively on human development which calls for the need to look for new models and replicate them, thereby taking advantage of NGO initiatives and their ability to provide services in an efficient and effective manner.
What is the Government’s Role in Empowering NGOs?
Factors affecting NGO-Govt. Dynamics:
Nature and quality of governance (pluralism, accountability, etc.)
The legal framework (registration, reporting requirements, etc.)
Taxation policies (on imported goods, local philanthropy, etc.)
Collaboration with NGOs (When? Which sector? What will be the nature of partnership?)
Public consultation and information (Policy impact of NGOs)
Coordination (Role of Governments in coordinating NGO activities)
Official support (government funding, official contracts)
How NGO Darpan (set up by Niti Ayog) is helping the NGOs?
Background: NGO Darpan is an online portal that enables VOs/NGOs to enrol centrally and thus facilitates creation of a repository of information about VOs/NGOs, Sector/State wise.
● Getting details of existing VOs / NGOs across India has become easier
● NGO grants can now be applied for online
● Applications status for grants can be easily tracked
Challenges faced by NGOs that need to be addressed:
What is the Foreign Contribution (Regulation) Amendment Bill, 2020?
Recent amendments in the FCRA have created challenges for NGOs
1) Opening a compulsory pass-through bank account in a specified branch in New Delhi.
Challenge: 93% of FCRA NGOs are registered outside Delhi, and will now have to open a bank account in the capital. Of the 21,490 NGOs that filed FCRA returns for 2018-19, only 1,488 were registered in Delhi. That’s only 7% of NGOs. This has hampered the number of Foreign Grants received by NGOs.
2) Stopping NGOs from transferring foreign grants to other registered NGOs
Challenge: NGOs cite such re-transfers as mutually beneficial. It leverages the spirit of collaboration that is typical of civil society. Large NGOs can also work with smaller NGOs, who work on the ground but can’t raise foreign funds on scale by themselves. This has made raising international money very cumbersome for NGOs.
3) Lowering the cap on administrative expenses from 50% of foreign funds received to 20%
Challenge: Cost structures for NGOs vary from project to project, and in 2018-19, there were 1,328 NGOs whose administrative expenses exceeded 20% of their total foreign funds. Huge amounts of expenditures are done to successfully run NGOs and this amendment makes the organisational existence unviable.
What are Networking and Support Centres for NGOs (An NGO for NGOs)?
Recognizing these dilemmas, and of the importance of NGOs themselves, donor agencies and governments have begun to set up networking and support centres in order to assist NGOs overcome their shortcomings and provide better services to the communities they work in. Such centres are being set up in both OECD and developing countries to assist NGOs working in the respective countries.
This is majorly prevalent in Japan where the national and local governments have set up NGO networking and support centres to increase the range and types of services provided by NGOs to local communities. In some cases, such support centres may be an NGO itself, helping other NGOs or a business consultancy that, for example, helps NGOs in the legal registration process or obtain tax-exempt status.
How NGO Support Systems Can Benefit the Entire Ecosystem?
Recommendations for the Partnerships Model
● Setting up a strong network of support centres, to help with them the cumbersome processes and also act as an aid for professional services.
● Amendments in FCRA have increased the burden on NGOs in terms of paperwork and funding. Collaborations among the NGOs have become difficult which will negatively affect the smaller NGOs. Policy changes are needed.
Even though there are a plethora of sources available for funding NGOs, the second most pressing concern for NGOs is to sustain themselves financially from year to year and project to project. According to a survey conducted by the Confederation of Indian Industry, 82% of surveyed NGOs have the highest need for teaching and training staff, followed closely by fund-raising (76%).
Why do NGOs Struggle with Funding?
While more than 70% of NGOs surveyed have a corpus of some significance, only a little over half of them are able to meet 75-100% of their annual budget requirements. The main issue is the unpredictability around the quantum of donations from corporates and individuals, especially in recessionary conditions. Further, the preferred commitment by most donors is for specific projects and not for discretionary spending. This vastly reduces the NGO’s flexibility to absorb unforeseen overheads or recruit essential staff to roll out projects.
What Can be Done to Solve the Funding Dilemma?
1. NGOs need to determine their actual indirect costs and convey those costs to funders with a clear explanation as to how those expenditures underpin the impact funders want to achieve. Clarity around actual costs would undercut reliance on fixed indirect-cost rates by clearly showing that costs vary with different types of NGOs and their stage of maturity. This shared knowledge would lead to discussions about paying what it takes to deliver and scale effective programs.
2. NGOs must pursue partnerships with funders that closely align with their mission and goals, and therefore they can build relationships supported by three-to-five-year strategic plans and financial projections. As a result, this long term funding will help achieve meaningful long term change, rather than short term activities.
3. NGOs can share an assessment of their organizational development needs and what those needs will cost in the short term and the long term. Those assessments should make clear that failure to fund organizational capabilities, such as leadership development, fundraising capacity, and technology, among others, will constrain growth and ability to meet impact goals. NGOs can also make the case for unrestricted, multi-year grants in order to invest in organizational capability improvements.
How can NGOs Attract the Private Sector Using Innovative Finance Mechanisms?
Innovative Finance encompasses a broad range of financial instruments and assets including securities and derivatives, results-based financing, and voluntary or compulsory contributions. Established financial instruments, such as guarantees constitute 38.6% of the innovative financing market in the world. Guarantees are designed to encourage banks to expand their lending to new sectors and regions or to offer better loan terms. They can be used in any sector including energy, education, democratic governance, infrastructure, health, and business development. A typical credit guarantee is a guarantee on a portfolio of loans that the partner financial institution (bank) makes within an identified sector. The structure enables the lender to extend credit to borrowers that are currently underserved by financial institutions.
Most resources mobilized through innovative financing use existing products in new markets, or involve new investors. Therefore, innovative financing includes the introduction of new products, the extension of existing products to new markets, and the presence of new types of investors.
Many innovative financing initiatives seek to effect change in various sectors, which indicates a desire by initiative sponsors to diversify exposure and highlights the need for cross-cutting solutions to address financial challenges shared by many sectors. Nearly all innovative financing mechanisms combine public sector resources with private sector resources and expertise.
How do these mechanisms create value?
Successful innovative financing mechanisms remove barriers to entry and enable commercial investments in new products and markets. Typical barriers include business models that are below scale to be sustainably viable, market failures (such as lack of information) that prevent the cost-effective delivery of services, lack of facilities to manage and reallocate risk, and inefficient markets that create high transaction costs. Innovative financing mechanisms address these problems through resource mobilization, financial intermediation, and improved resource delivery. Some of the examples are as follows:
Example 1- Quality Education India Development Impact Bond (QEI-DIB)
The Quality Education India DIB was set up in 2018 to support education providers in India to improve learning outcomes for primary school children aged 5-11 across 600 schools in Delhi and Gujarat.
i. The Problem
Despite evidence of improving enrolment, children in India perform lower than expected in literacy and numeracy due to low-quality primary school education.
ii. The solution
The QEI DIB aims to achieve this goal by funding three high performing service providers to improve grade-appropriate learning outcomes for more than 300,000 primary school-aged children aged 5-11 years old. The three service providers are Kaivalya Education Foundation (KEF), GyanShala, and Society for All Round Development (SARD).
In a straight payment-by-results contract, service providers would be expected to cover upfront costs before payments linked to outcomes are made. In DIBs though, this upfront working capital is covered by a private investor. The UBS Optimus Foundation (UBS-OF) is the investor and manages the payments to the service providers. UBS-OF has raised almost $2.5 million of client donations to the QEI DIB. Outcome funders will then make a payment to UBS-OF at the end of each year, which enables the working capital to be recycled once an independent assessment has been made about whether the outcomes have been met.
iii. The Impact
Based on the education outcomes of the first cohort, the first results were released in July 2019. The figures from year one of the project showed mixed results: 40% of participating schools either met or exceeded their targets for literacy and numeracy skills, but 60% of schools failed to outperform non participating schools, and a teacher training program in north Delhi that underperformed has since been discontinued.
Example 2- The Educate Girls Program in Rajasthan
Educate Girls along with UBS Optimus Foundation (UBSOF) and Children's Investment Fund Foundation (CIFF) launched the World's first Development Impact Bond (DIB) in education. This 3-year (2015-2018) project tied funds to pure outcomes and was intended to be a proof-of-concept.
i. The Problem
Gender inequality was a result of several complex social issues, which limited life opportunities for millions of girls in India. Many female children end up as child brides and adolescent mothers, viewed as an economic burden, destined to a life of domesticity.
ii. The Solution
In this payment-by-results model, CIFF (as an outcome payer) promises to pay back the investor, UBSOF, the original investment amount plus extra returns as long as the agreed targets are delivered by Educate Girls (the service provider). The Educate Girls’ DIB targeted increased enrolment of marginalized girls and children's progress in literacy and numeracy outcomes, assessed by an independent evaluator, IDinsight, over the course of the 3 years’ tenure. Results-based financing consultancy, Instiglio, designed the DIB and provides performance management support to Educate Girls.
iii. The Impact
Educate Girls’ DIB had a project budget of US$ 270,000. It reached 7,300 children, covering 166 schools across 140 villages in Bhilwara, Rajasthan and had an 80% focus on achieving learning gains and a 20% focus on achieving enrollment of girl. In the final year, learning levels for students in program schools grew 79% more than their peers in other schools – almost the difference of an entire additional year of instruction. 768 eligible out-of-school girls identified in the program area were enrolled in school (against a target of 662).
What roles can NGOs play in innovative financing?
Many NGOs are inclined to think that the most natural role for them to play in innovative finance is to be the recipient of someone else’s funds. However, that is far from the truth. In reality, NGOs can play a variety of different roles. Some of these include:
What are the Measures For NGOs that are Willing to Take Risks?
NGOs using the Microfinance instrument can invest in a Microfinance Investment Fund and generate a financial return, provided that doing so does not violate/affect the NGO’s nonprofit status. Similarly, NGOs using Impact investing can invest in an Impact Investment fund. NGO’s can also make direct equity investments in for-profit companies or buy/invest in bonds, provided they can meet the conditions to maintain their nonprofit status.
NGOs can put up capital with no expectation of repayment or a financial return. For example, NGOs can provide catalytic grants to reduce the risk for more commercially oriented investors as a way of crowding them in. For performance-based contracts, NGOs can sub-contract other organizations to implement projects and pay or partially pay them on results.
What Can Small NGOs that Prefer a More Conservative Role Do?
i. Service Provider
Another approach adopted by some is to identify new service provision roles in the budding impact investing ecosystem. Funding parties like governments, multilateral banks and foundations often work with deal advisory partners to structure the pay-for-results models. While NGOs can provide the key implementation know-how, local knowledge is needed to deliver successfully.
This refers to facilitating or managing flows of capital between two or more parties (but not the direct investor, donor, or recipient). NGOs can be fund managers or general partners of a MIF which would require setting up the fund and raising the necessary capital to make investments. With respect to Development Impact Bonds, NGOs can also structure the transactions.
iii. Technical assistance provider
NGO’s can provide specialized services or expertise, sometimes under contract (e.g., data sourcing/verification). They can help delivery organizations become SIB/DIB ready, provide data, implement performance management systems, etc. With respect to Bonds, NGOs can work with any number of stakeholders to build their capacity to participate in such a scheme. They can serve as an adviser, incubator, or accelerator for social enterprises with respect to catalytic grants.
How Is the Funding Landscape for Education Focused NGOs?
Funding is integral as it permits for the existence of NGO’s as well as sustain their operations. Without adequate funds NGO’s would be unable to meet their objectives and realize their vision.
Education is one of the most funded causes among private social funders in India with 36 percent of corporate social responsibility funding in 2016, 54 percent of wealthy individuals funding in 2015 and about $45 million in impact investment per annum over 2014-2017. This has translated into near-universal access to education of 96.9 percent at primary school level, but not in other education segments; nor has it affected an improvement in learning outcomes, such as literacy and numeracy. India is home to one of the largest and most complex education systems in the world and has made significant progress in terms of providing access to education. The Gross enrollment ratio in 2015-16 had approximately increased by 30 points since 2000 for all levels from Primary to Senior Secondary Education.
Contribution towards the Education sector is increasing every year. Governments, Individuals and Organizations are committing huge amounts towards development in education at all levels. Effectively funding education with impact is key to progress in future. There are various traditional sources of funding that can be accessed to fund the initiatives of NGO’s which includes:
Government remains the prime contributor towards Education in India. In the Budget 2021-22, 3.2% of GDP has been allocated towards education(Rs 93,224 crores out of which Rs 54873.66 crore is for school education and Rs 38,350.65 crore for higher education). This is the 8th highest allocation among all ministries. While spending on education has increased in absolute terms since 2014-15, it has remained stagnant at around 10.5% of the total government Budget and has only increased from 2.8% of GDP in 2014-15 to 3.1% in 2019-20, as per the government’s 2019-20 Economic Survey.
However, the funds allocated this year have been reduced by Rs. 6068 crores than last year. According to experts, ideally, India should spend 6% of GDP towards education which is almost double the allocated amount in Budget 2021-22.
NGOs can apply for funds under schemes developed by the government to create an impact on the ground. Ex-Ministry of Women and Child development under the public-private partnership model is implementing the Integrated Child Development Scheme in India. The only key issue with such partnerships is the implementation and bureaucratic challenges, delayed cash inflow which prevents NGO’s from realising their full potential and eventually scale up their operation.
The CSR rules of India states that all Indian companies with a net worth of Rs 500 crore or more, a turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more, are required to spend 2 percent of their average profits of the previous three years on CSR activities every year.
As per India CSR Outlook Report 2020,
● Education & Skills and Poverty Alleviation, Healthcare WASH and Rural Development emerge as the focused thematic areas which jointly cover 70% of India’s total CSR fund.
● SDG 4 (Quality Education), SDG 3 (Good Health and Well-being) and SDG 8 (Decent Work and Economic Growth) emerge as the focused SDGs which together received 55% of India’s total CSR fund.
Education and skills was the priority area for CSR in 2020, attracting 32% of total funding towards CSR. There were 1485 projects being implemented in education by 238 companies in FY 2019-2020. An amount of Rs. 3631.82 Crore was spent on education space through CSR.
The focus area of CSR funds have been mainly on infrastructure provision, capacity building and programmatic interventions.
Examples of companies :