Imagine this. You established your organisation in 2016 to contribute to the field of education. You are almost ready to launch a fellowship program for children, after two years of hard work designing it; 2018 also saw funding for a pilot secured from a donor. You have even hired staff and promised them a certain remuneration. Then, in 2020, COVID-19 strikes, and the donor, unfortunately, pulls back their promised funds.
This was the harsh reality for Uttar Pradesh-based Anubhuti, an organisation founded in 2016 with a vision to empower stakeholders to create an egalitarian society. Anubhuti works with talented young rural women to bridge the gap between their communities and schooling by offering a Bridge Fellowship. It is founded by a group of enthusiastic Gandhi fellows, Chief Minister Good Governance Associates (CMGGA), consultants, and legal experts. Anubhuti’s aim is to ensure that all children have equal access to opportunities and quality education. Their fellows work towards mainstreaming out-of-school and drop-out children into the formal education system as well as retaining them in government schools.
Anubhuti’s team found themselves in a fix when they realised that they had already hired fellows but the funding was not going to come in. Not only was it a big hit emotionally, but it also led to cutting back salaries of staff and teachers who were pushed to operate on 30% of what they had been promised for four months. It is hard to think about the newly-inducted fellows’ motivation levels and how it would impact children who were the end beneficiaries. Children suddenly found themselves out of school due to the pandemic, some in hostile home environments. Now, even their only support system, their teachers, were demotivated and struggling to lift them up.
This silhouette was not unique to Anubhuti during the pandemic; in fact, countless non-profits in India’s education sector suffered the same fate just a few weeks into it. As we emerge on the other side of the pandemic, how can such organisations prepare themselves better?
Edu Nonprofits are Adapting to Reduced Funding and Shifting Realities
33% of India’s philanthropic contributions are directed towards education and related causes, according to Dasra’s India Philanthropy Report, 2020. It makes education the single-largest beneficiary sector, receiving donations amounting to ₹18,000 crores. Yet, it is the non-profits in their nascent years and tall dreams that struggle to raise funding. Most CEOs of these young educational nonprofits have found fundraising to remain one of their biggest challenges.
Not only has this situation worsened with the onset of COVID-19 and the ensuing lockdowns, but businesses were also hit during time; by 2021, their Corporate Social Responsibility (CSR) spends had reduced by 64%. Keep in mind the simultaneous and untimely changes to the Foreign Contribution (Regulation) Act (FCRA)—reducing administration spending to 20%, mandating a designated FCRA bank account, and increasing the number of days for suspending FCRA certificates—all of which affected nonprofits, and in turn their beneficiaries.
Due to the impact of COVID-19 globally, our organization has decided to redirect funds from all projects towards revamping and expanding hospitals.
—A Senior Leadership Team Member of a Corporate Donor
The last couple of years have undoubtedly been the most difficult years for nonprofits to sustain themselves and the communities dependent on them. However, there have been learnings and lessons from this experience to take into the future.
Launched in 2017, TFIx is Teach For India’s incubation program aimed at helping education entrepreneurs launch contextualised teaching fellowships in their regions, similar to what Anubhuti is doing in Uttar Pradesh. Despite the last two years presenting precarity in different shapes and forms, TFIx currently works with over 44 partner educational nonprofits across India.
TFIx’s biggest worry was that their partners would not make it to the other side of the pandemic. However, all the nonprofit partners have survived thus far, and have been nimble in adapting to the ever-changing realities around the education industry. A major part of being able to adapt in such a way comes down to the incubator’s close work with its partners to understand their funding models and how to make the most of it during rough times. Understanding some of the fundraising models of the incubatees at TFIx could assist new entrepreneurs and nonprofits in the education sector to sustain and scale their meaningful work.
The Hybrid Model of Fundraising
In a hybrid model, the nonprofit generates a revenue stream wherein the client is charged for a service provided. In some cases, these services are provided at no cost to those who need them, known as cross-subsidising.
Aavishkaar is a nonprofit that specialises in making maths and science fun for their learners through workshops called Humaari PiCycle and Humaari Kakshaa. These workshops are offered to students and teachers, where they charge their attendees on a sliding scale—some pay in full, some partial, and some none at all. For all of the offerings, private schools and bigger nonprofits pay what it costs. In the case where some students and teachers cannot pay, they try to find funding together. With these funds, Avishkaar supports the programs for those who cannot pay at all along with the fellowship and organisation costs.
While considering this option, it is important for nonprofits to sharpen their area of expertise and have confidence that the product and services are of good quality. Ideally, the organisation needs to have an experienced finance team who can assist with managing the accounts and preparing Memorandum of Understandings (MOUs). The hybrid model requires an early start to fundraising as it takes time to build credibility within the sector for services on offer. Experience so far suggests that it is difficult to transition from a donation-based model to a hybrid model.
Raising Funds from the Government
The central and state governments have budgets to support nonprofits that are aligned with their policies and goals.
Anubhuti is one such nonprofit that receives funding through government schemes. At present, 32 BRIDGE Fellows and 70 government teachers are working with about 3,000 students in Haryana to bridge gaps between the schools and community to bring educational equity. Close to 30% of Anubhuti’s funding comes from the state government’s out-of-school and drop-out policy budgets under the Right to Education (RTE) Act.
“If only someone would pick up the RTE and read it in detail!” exclaims Sakshi Shrivastav, founder of Anubhuti, referring to the nuances of securing funds from the State. Be it from the Union or state governments, nonprofits need to have a deep understanding of government policies to raise money. Navigating government departments to request and secure funding is not an easy task. Building connections and developing trust are key, which require patience and persistence.
Extending Support through Institutional Giving
Institutional giving is one of the most common fundraising strategies across nonprofits. As part of institutional giving, corporates and foundations give large grants to nonprofits for various causes.
The TFIx incubation program mostly works with such corporate donors and foundational grants to support its own functioning and services. They have found funding partners who truly understand their vision and mission for incubating educational entrepreneurship in India. Not only does institutional giving support TFIx financially, but it has also directly extended support to some of TFIx’s education entrepreneurs to launch their fellowships. This is the unique advantage that CSR funds and foundational grants allow for.
To receive institutional giving, the nonprofits need to have a well-equipped team that can manage professional corporate partners. Even simple things such as generating reports with graphs and insights, and sharing them with donors on time can make a huge difference. The projects should have a strong monitoring and evaluation framework that enables quick access to accurate quantitative and qualitative data in one place.
Some corporates and foundations may also require the nonprofit organisation to make mention of its donation on the website and in reports along with the logo and other details. At times, as part of the agreement, nonprofits need to invite leaders or representatives from donors for events and ceremonies. Such engagements need to be carefully planned and agreed upon to ensure that both, the nonprofit and the donor, are satisfied. The 80G and 12A certificates under the Income Tax Act are applicable to NGOs and charitable organizations and are a prerequisite for receiving institutional support. Of course, delivering the outcomes committed to in the grant proposal is vital, as recipient nonprofits are directly accountable to their donors.
Creating Personal Connections that Convert into Donations
This is one of the oldest yet simplest forms of receiving—directly from individuals. In Uttar Pradesh’s Unnao district, The Good Harvest School works with rural girls to train them in agriculture, thereby making them financially independent in the future. The school has found the secret to their successful donor engagement, in that almost all of its donors have actually been volunteers at some point. By giving their time, whether towards teaching or mentoring children, the person gets so invested in the cause that they eventually begin to support the organisation financially. “Thankfully, we have never experienced a dearth of money and so far, never felt the need to reach institutional donors,” says Ashita Nath, the Good Harvest School’s co-founder.
The Good Harvest School’s experience shows that engaging people in various capacities before the funds come in could eventually convert them into potential donors. These engagements could range from offering volunteering opportunities to inviting them for virtual or physical gatherings. Another way to continue such engagement is to personalise communication with the donors by sending them ‘thank you’ notes written by beneficiaries, like children, themselves. Such a level of engagement requires a natural flair for building relationships since these donors could open doors of opportunities for more funding through their like-minded networks.
Bringing Funds in from Abroad: T&Cs Apply
While several nonprofits supported by TFIx work with international donors, over time, these nonprofit organizations have learnt not to depend solely on them. Two decades ago, overseas funding was one of the easiest and most effective ways because they could support nearly every requirement of a nonprofit’s activities. International donors were also more likely to stay with beneficiary nonprofits for longer. Today, with ever-changing government compliances, nonprofits are increasingly finding it difficult to maintain international donors. TFIx’s partners also find themselves stuck in this limbo, struggling to keep their operations running because of the FCRA renewal process by which donations have not been received.
A nonprofit that TFIx works with has had to resort to showing their work as a project under a sister organisation, rather than as its own. Re-routing FCRA funds is illegal in India, and thus, such an option had to be explored to continue their work. So far, the nonprofit has survived and recently secured funding for the current year. However, they faced a challenge to receive this funding given its books of account were blank for the last two years since COVID-19.
To receive international funding, nonprofits require a finance team that understands international funding regulations. An FCRA certificate, which is a prerequisite, is not an easy document to obtain, especially for new organisations. Providing insightful reports on time is key to maintaining a good relationship with the donors, and this will require a team that can deliver the required information. As a word of caution, nonprofits will do well to tread carefully with international funding.
Need of the Hour: A Lasting Support System for Education Entrepreneurship
While each of the five fundraising models has its own pros and cons, possessing a good understanding of one’s nonprofit is important in choosing a model of fundraising. Education entrepreneurs need to be aware of their strengths to be able to identify avenues to receive funding that best fits their needs. TFIx’s experience in the last five years has shown that most nonprofits choose a mixed approach across the different fundraising models available to them.
It then becomes important for nonprofits to begin working on creating their own unique fundraising strategies with targets. The targets could be to secure 50% of their funds from individual donors, 30% from institutional donors, and 20% from hybrid revenue streams, for example. Such a strategy will allow nonprofits to weigh the risks and advantages associated with different fundraising models.
As education nonprofits continue to engage with potential donors for funding, over a period of time, they learn how to attract funding by improving their proposals, projects and other components of the strategy. Zarine Commissariat, CSR Head at Shapoorji Pallonji & Co. Ltd says, “Your ability to deliver at scale is essential, although not primary. The passion and sincerity that the founder and the managing team bring to the table make a difference. To me, it is the single most important thing.”
Yet, the biggest support that can be extended to nonprofits, even the most passionate ones, is to structure their programs and think strategically about interventions that can help achieve their respective long-term visions. Education entrepreneurs also need to build transferable skills such as raising funds, staff development, need-based training, and fostering collaborations across different organisations, which they can’t do alone. Incubators, a term which is otherwise associated with technology startups, can help address the varied needs of nonprofits in the education sector and sustain their impact.
This article is the third instalment of our series with TFIx. Read Part 1: How the I’MPossible Fellowship is Reimagining Education for India’s Youth Living with HIV and Part 2: The Beacon Educator Fellowship: Driving Change for 3,000 Government Teachers from Uttar Pradesh to know more.
Featured image by Teach for India (TFI) is of children gathered in their school classroom to engage in activity-based learning prepared by their teachers.