Wednesday, March 30, 2011

A Business Model for NGOs

My family had a visit from an unusual broker yesterday. An NGO broker.

My mother has been running two charitable ventures for a couple of decades now, and as she is inceasingly conscious of her mortality, is trying to shore them up with more funds, to see them through a leadership transition. For a couple of months now, she has been in telephonic conversation with the lady who came to see her yesterday.

This lady has a neat little business model going:
- she will procure a 35 C exemption certification for your charity. This entitles donors to a 100% tax exemption on donations to the NGO, as against the more common 80 C, which only provids a 50% exemption.
- she will 'arrange' funds - large chunks of it - from corporations with hefty CSR commitments, and no real way to spend it. She named names, but this could be a sales pitch, so I won't document them.
- she will channel 'buybacks' to the company executives who sign off on the donations. What she really meant, I guess, was 'kickbacks'.

My sister, who has also worked in the world of NGOs for 3 decades, asked how the NGOs account for the funds being kicked back. "Uska to raasta sab nikaal letey hain. Badey paise chahiyen, to thodi mahnat karni hi padegi."

When my sister told her that members of our family have run NGOs for decades without any such 'business practices', she said, "Small work you can do. But if you want big money, then you have to do all this". My sister persisted, "Not so small - projects worth 1 or 2 crores."

"May be, but only 1 or 2% are like that." Her business model, she believes, is the norm.

I don't know that is, and I certainly hope it isn't, but it boasts cheerful practitioners like her, who see enough of it around them to believe that it defines the world of NGOS. Scary.

1 comment:

  1. This reminds me of the broker who visited our language training business with a proposal some three years ago. The principal of a college in Palwal wanted English training for his students from us. The numbers were huge, but there was this small matter of a kickback (in the 25% to 35% range), which would need to go to the governing body through the broker. This, he said, was the norm for every penny spent by the college - from computer labs to stationery! And this was true not just for the college in question. He said he was the broker for all the big technical and professional colleges in that region of Haryana!

    On being politely told that we can only pay a small official commission, that too by check, he changed colors. He said he had not been in favor of hiring us in the first place as he already had a good deal in place with another training establishment, but the Principal had been adamant - "pata nahin unku kya dikhta hai aap mein?!"