NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The number of millionaires in India is growing. The increasing number of high net worth individuals interested in philanthropy along with the growth of corporate foundations in India means that the social sector will receive an infusion of capital to test new ideas and expand existing programs. Born from an era of private sector growth these new funders will likely bring high expectations for scale and impact to the table when assessing social initiatives. Dasra’s Philanthropy Week, which recently took place in Mumbai, is a unique forum in India to compare a number of social enterprises to the standards of these high impact philanthropists.

The ideas behind social entrepreneurship and how social entrepreneurs define success are evolving. The forum reminded me that social entrepreneurship is a term applied to a wide range of for- and non-profit innovators and entrepreneurs.

Some are coming up with new products and services, others are adapting products to better suit low-income populations, and a few are incorporating socially responsible practices into how they produce consumer goods. Creativity and entrepreneurship are at the heart of their endeavors along with differing commitments to social impact and profits. One exciting part of the event was a chance to get a taste of the next generation of social entrepreneurs. The week provided a platform for Dasra’s latest cohort of entrepreneurs to pitch their business/program ideas, vet their ideas with expert panelists, and seek feedback from the audience, which was peppered with funders and investors. Dasra had divided the pitches into separate streams — for- and nonprofit. I attended parts of both and noticed several key differences between the two groups.

Most noticeably, those directly delivering health services were overwhelmingly non-profit. Only two for-profit health service enterprises, Sevamob and iKure Techsoft, were in attendance. This could just be a quirk of the cohort—perhaps the health enterprises didn’t apply in big waves this past year. But it might also reflect a broader trend that’s found in the Center for Health Market Innovations’ (CHMI) online database. Of the 247 programs that CHMI tracks in India, only 46 are for-profit organizations and 121 take a purely non-profit approach. It seems that in India non-profits are still the main vehicle for delivering healthcare to the poor through a social lens.

Another difference is how the two groups measure social impact. Most of the non-profits consistently defined their impact up-front and cited results where they could. Some of the for-profits did a good job of this too, but the pattern varied. Although all were addressing important issues such as expanding health care to rural areas or providing useful health products, some businesses did not directly measure social outcomes such as changes in health status.

When I asked one entrepreneur whether his firm measures health impact, he noted that poor patients’ willingness to pay for the service is a proxy indicator of quality and impact. Although I was impressed with the company’s growth curve and reach in rural areas, policy studies have shown that the poor, like the rest of us, are often willing to pay for goods and services on the perception of (rather than actual) quality. Unregulated private education and health markets are good examples of this in India. An important factor in how organizations conceptualize impact may be that many non-profits receive dedicated funding for monitoring and evaluation. Having resources to deploy for measurement and being rewarded for results through new grants is a major incentive to track outcomes. It’s possible that holding for-profit health enterprises to a similar standard would encourage better monitoring. For example, the panelists’ and audience’s expectations differed between the two groups. For-profits were often probed about how to better differentiate their model, whether scale could drive down costs, and their true growth potential. A lot of this came up in non-profit sessions too, but participants were also keen to discuss the breadth and depth of the social impact achieved and its potential to be more accurately measured. While one welcome benefit of social entrepreneurship is to hold non-profits to rigorous operational standards based in business practice, an equally important expectation is to hold for-profit social enterprises accountable for rigorous impact measurement. It’s not enough to simply operate in a socially important sector.

In a similar vein, there appeared to be a slight difference in how programs approached scale. Without a doubt each presenter had high hopes for scale and a tangible plan to expand, but a few of the non-profits made an interesting caveat. They noted that before planning for significant expansion, they first wanted to achieve all that they could in their present locations. They emphasized the need to ensure the quality of existing programs before pursing growth. For example, Jo Chopra, executive director of the nonprofit Latika Roy Foundation, noted that although they were invested in growth, the organization’s focus would remain in Uttarakhand given the vast need for their services and advocacy for disabled children in the state – the organization’s main focus.

Despite these differences, some of the non-profit organizations were gravitating toward hybrid models. Several representatives who presented said their organization is already charging for a selection of their services, and others are considering it. The I Hear Foundation, which champions early screening and intervention for hearing impaired children, receives payments from a major producer of cochlear implants in exchange for providing informational material about raising deaf children. Since the materials equip the company’s client families to better address their children’s impairment, it is willing to pay for them. Another non-profit, Armman, runs a helpline called Project HERO that gives patients real time information about the local blood supply and availability of beds in ICU units. Although the organization has no immediate plans to charge for the service, the presenter acknowledged that tiered pricing could help the project self-finance in the future without sacrificing poor users’ access to the service.

Deepa Bajaj from Child Survival India (CSI) noted that a balance must be maintained when working with the poor. CSI provides health information to the urban poor, facilitates care for pregnant women, organizes community groups, and advocates for a continuum of care approach. Bajaj explained that there is potential to charge mothers for pre- and post-natal services during their informational visits, but their core work of delivering information cannot come with a fee. She explained that clients are unwilling to pay for information, but it could be coupled with other activities. The trick is ensuring that new services don’t shift the organization’s focus away from its original high impact work.

Despite these nuances, I was happy to see that the conversation about social enterprise included for-profits, non-profits, and the evolving hybrids in between. Dasra’s cohort shows that there is room for all of these models to achieve social impact and different challenges call for different responses. It was heartening that funders and organizations offering technical support were present at every pitch and not choosing one approach over the other. All entrepreneurs working in the social arena need strong models, support and guidance from stakeholders, growth strategies, top notch teams, and systems to measure and track social impact. By holding all social enterprises to these standards, entrepreneurs can continue to innovate and expand the definition of social enterprise without compromising social goals.