News: 74% of non-profits prioritise impact despite financial struggles

Funding & Investment

74% of non-profits prioritise impact despite financial struggles

According to a report by Accelerate Indian Philanthropy (AIP), a staggering 61% of non-profits receive less than 25% of their funding without restrictions.
74% of non-profits prioritise impact despite financial struggles

A recent study reveals that 74% of non-profit organisations view "scaling their impact" as a top priority, as they face a significant fund crunch due to lack of funding.

The Accelerate Indian Philanthropy (AIP) conducted a survey of 65 non-profit organisations of various sizes and sectors to assess their scaling strategies, identifying key drivers and barriers.

The study exposes the daunting challenges that non-profits encounter, with many struggling to simply sustain themselves, let alone expand their impact.

The findings further reveal there are more than three million non-profits in India, and more than 2/3rd of them operate at suboptimal levels with an annual budget of less than one crore. 

Within this, philanthropic grants from HNIs and UHNIs make up less than 20% of total grants for the majority of NPOs. AIP’s report identifies four systemic problems that NPOs in India face in scaling their impact and the role that philanthropists can play in helping them overcome these challenges.

As many as 61% of non-profits receive less than a quarter of their funding in an unrestricted manner, the report says.

As per estimates, India can unlock an additional funding corpus of INR 60k- 100k crores if UHNIs start giving in proportion to their global peers. The question then is, how can the Indian state achieve optimal equilibrium? Here is where NPOs and civil society have a critical role to play.

Aditi Ray, Director, Accelerate Indian Philanthropy, says “Scaling impact is complex and marred with challenges. However, successful initiatives have proved that with the right intent and by leveraging the power of partnerships, change at scale is possible. Indian philanthropy needs to take a leap of faith by betting on innovative and bold individuals and their vision to do the maximum good.”

According to the findings, there is a mismatch between the expectations of funders and non-profits. Weak communication and poor feedback loops result in funders having unrealistic expectations about the actual cost of running a non-profit.

In a bid to meet these unrealistic expectations and secure future funding, they misrepresent their costs by lowering them. These further fuel funders’ unrealistic expectations about costs, especially overhead, capacity building, and other non-programme costs. 

A 54% of non-profits find meeting funders; reporting and compliance requirements burdensome. 

The report highlights that 75% of NPOs expect their funders to connect them to other donors, but fewer than half of them receive this support.

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Topics: Funding & Investment, Entrepreneurship

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