Friday, May 07, 2010

Where are the philanthropists who can fund real Scaling Up

Last two decades have been decades of scaling up businesses all across the globe. The social sector across the world began to realise the need to scale up in the last decade or so. In India, social sector scaling up is still at very nascent stage. We did see some examples recently - CRY, Give India, CAF India, Concern India, Srijan, Prison Ministry India, HRLN and a few others. But real scaling up is yet to be seen in India.

We have new age NGOs from India and the world over who are trying to scale-up nationally or globally. The challenge is immense and the biggest challenge is finance required to scale up. Each of these NGOs are operating in business-like manner, working on financial sustainability from the beginning, using volunteer or in-kind mechanisms to reduce the costs, clocking a growth rate of 100% to 1000% every year making software industry look like a dwarf.

Isha Foundation's Project Green Hands have reached a scale of planting 4 million trees a year in a short span of 5 years and they will double this every year till 2020. Their target is to plant 114 million trees in Tamil Nadu in a short span of 15 years taking its green cover to mandated 33% of the available land area. Expected cost $1.2/tree, a total of $140 million. They are ready to scale up across India where they will require to plant 3.42 billion trees across India taking India's green cover to 33% and it will cost them $4 billion.

Ahmedabad, Gujarat based Mahiti Adhikar Gujarath Pahel currently has 1 mobile RTI van. It is ready to scale up across Gujarat in 1st phase with 1 mobile RTI van per district and finally across India where it will need a total of 625 mobile vans and it will expand its services from RTI to include all central and state govt schemes. The funds required is $45 million, $60,000 per district per year.

John Wood's Room To Read has plans to reach 20 million children by 2020 and is on track to achieve that. But if I would ask John whether he will be willing to reach 1 billion children by 2025, he will say yes too. Problem is the staggering $250 billion required to achieve that. His cost per child is quite higher at $275 per child per year. But am sure, he will reduce it by half once he achieves the economies of scale as soon as he crosses the 10 million children mark by 2015. That's a straight away reduction of $125 billion.

When we have minds and business acumen like John's in the social sector today, what we are lacking is the serious philanthropic capital commitment of the likes of Warren Buffett and William Gates II. We need every individual on Forbes 100 Richest People in the World list to seriously look at their wealth and their commitment to the world. Can they open up their purse strings to funds these social sector scale ups? Similarly, Boards of Fortune 500 list of companies need to have a serious board meeting asking themselves if they are really fulfilling their commitment to their stakeholders by hoarding away billions of dollar of profits in banks.

I hope Carlos Slim, Mukesh Ambani, L N Mittal et al are listening. I request Exxon Mobil, Wal Mart, ING, Toyota are to think.

Surya Prakash Loonker