NPC in India

By 21 September 2009

Next week NPC publishes the findings of a year-long pilot project carrying out research in to charities in India. One of the things we believe very strongly in is the importance of free public information on urgent social causes and the performance of non profits seeking to tackle them. But donors wanting to make a difference in India have, until now at least, faced an almost total lack of independent analysis. This matters.

NPC chose to work in India because, despite economic progress, disadvantage remains broad and deep. To take just one statistic, malnutrition among under-5s, a condition that causes irreversible brain damage, is worse in India than in sub-Saharan Africa.

The good news is that philanthropy has massive potential on the subcontinent. Spending from overseas donors, non-resident Indians and Indians themselves is likely to run to billions of rupees.

The bad news though is that much of this funding is being wasted.

Over the course of a year, NPC worked on the ground in Delhi, Mumbai and Rajasthan in a joint venture with an Indian-based organisation, Copal Partners. We spoke to dozens of experts and scores of non-governmental organisations (NGOs). What surprised us was that money appears to flow neither to the most urgent causes nor to the most effective organisations.

Lack of data makes it hard to be conclusive, but there is a wealth of anecdotal evidence that many individual donors often give unstrategically. Talk to NGOs on the ground and you hear complaints of palliative giving, with a strong bias for funding visible capital projects in donors’ home villages—be it temples or schools. A narrow set of issues eats up donor attention. More challenging subjects—malnutrition, child trafficking, violence against women—go neglected. The poorer states (often in central and north India) get underfunded relative to the wealthier ones in the south. Trying to get ‘high risk, high return’ options like policy work funded is very difficult indeed.

Looking at individual organisations, the situation is similarly frustrating. Very few Indian NGOs measure their results in robust ways. It was unclear to us how donors could be confident their funding was being used well. In the absence of a better explanation, it seems probable that funding is often being driven by marketing budgets or random personal connections, not by the moral imperative to maximise impact.

All of this means that money is likely to be being wasted. We saw NGOs doing fabulous work and NGOs that were struggling. The latter appeared just as likely to get donor support as the former.

None of this of course is unique to India. But the scale of misallocation of resources may be worse than in the UK—if only because there is hardly any data about India’s 1.2 million NGOs. Moreover, wasted resources matter more in India than in Britain because its social problems are more pressing, and the capacity of the state to address them is more limited.

The reports that NPC is publishing on India offer no magic bullet to fix these challenges. But they do propose some modest steps towards better philanthropy. What India needs is an more effective funding market, where money follows success and failure is identified and learned from.

We at NPC want our reports to be a call to arms for more publicly available, independent information on NGO performance. But more than that, we also want it to be a wake-up call for those donors who wrongly think that ‘doing good is good enough’.

Over the coming days we will preview some of our other findings. We hope you find them interesting, and would love your feedback.