How technology integration and data-driven impact measurement can help the social sector target higher funding and on-ground impact?

The social sector, broadly represented by the all-encompassing term non-governmental organization (NGO), refers to a collection of independent entities working towards socio-economic development-oriented activities. There are approximately 10 million NGOs across the globe, of which more than 3 million in India alone. These NGOs are involved in diverse areas such as healthcare, education, sanitation, gender equality, and various humanitarian causes, but what binds them together is a commitment to solving major issues facing the less privileged sections of society. However, the social sector continues to suffer from various financial and organizational challenges that end up diminishing the real impact that they can create in the society. The primary reason behind this is a huge resource-gap that is further widened due to a lack of funding opportunities available for social development organisations.

Over the last several years, the social sector has been struggling in the face of stagnant or declining budgets. For several NGOs in the country, it is often an either/or situation – either they can try to address social issues by spending money on specific programs and projects, or exercise fiscal prudence to stay afloat, and thus, compromise on scale and depth of impact.

Typically, there are four major sources through which social organizations can acquire funding. The first is the government, which plays a critical role as it allocates a substantial percentage of the annual national budget for the social sector and development initiatives. The second source includes donations from individuals and HNIs. The third source of funding is international aid, channeled through unilateral or bilateral agencies. However, funding from international agencies has declined following the enactment of the Foreign Contribution (Regulation) Act, 2010, which regulates foreign funds being received by NGOs and how they are used. The quantum of funding received by the Indian social sector from international agencies fell to INR 6,499 crore in 2016-17, from the INR 15,299 crore it received in 2014-15. Fortunately though, the CSR mandate has helped offset the declining international aid with the help of corporate sponsorships, emerging as the fourth source of funding for NGOs. That said, it is still far from bridging the massive funding gap for the social sector.

CSR in India and its impact on the social sector

In 2013, the government amended the Companies Act, mandating firms with a net profit of INR 5 crore and upwards to spend 2% of their three-year average annual net profit on corporate social responsibility (CSR). The government, instead of levying an additional cess on companies – which has been a common practice so far – decided to introduce the CSR framework to get large companies and the corporate sector involved in the development sector. A large number of NGOs have since been working directly with the corporate sector on target-based development initiatives and programs with adequate funds as well as organizational support. Over the past four years, companies and investors are directly and increasingly engaging in development issues, most commonly through CSR and philanthropic initiatives. In FY2016-17, the total CSR spends by 19,933 eligible Indian companies reached INR 13,465 crore across 21,117 projects.

The CSR mandate has undoubtedly been providing a great deal of support to the social sector in the last few years, enabling it to overcome various challenges, be it pertaining to finances or outreach. However, the gaps in the managerial and organizational capabilities of the social sector continue to be a barrier. Particularly when interacting with corporates, NGOs need new skills to perform certain tasks and fulfill specific requirements laid down by CSR partners for both the pre- and post-funding stages of projects. Corporates need social organizations to provide a strong ‘business case’, or in other words, a well-rounded and appropriately formatted proposal. After funding a particular project, corporates have high expectations when it comes to execution, which includes quality of data reporting and impact analysis mechanisms adopted by the social organization. This is where the real challenge lies.

How technology integration in the social sector can enable robust CSR and social development initiatives

Among the key challenges for the social sector and various NGOs is the accurate measurement of impact from various projects and programs as well as replicating the same impact at scale. Moreover, with the absence of organized data or reliable sources to gather insights from, measuring the impact of programs can get tricky as multiple, disparate data points often create an inaccurate picture of the reality. When combined with the powerful capabilities of modern tools such as automation and data analytics, information technology can potentially transform the way social organizations function by providing them access to deeper insights unlike ever before. Furthermore, besides providing social sector organisations with technological capabilities for information management, new for-profit social ventures are emerging to help these enterprises with one of the most crucial requirements – creating project proposals to receive funds/grants, and managing delivery, reporting and impact assessment. These ventures assist them with key steps of the process, such as:

Identifying opportunities: NGOs require assistance in finding the right grant and funder with the ability to provide support on specific objective-driven projects.

Drafting a concept note: NGOs are required to provide pertinent details on all essential criteria for being eligible for funding or sponsorship and providing them to the sponsor organization.

Creating a proposal: After the concept note has been approved by the potential sponsors/donors, they need to draft a proposal that details all the aims and objectives, metrics, and methods of undertaking a project. But most importantly, the proposal must provide a detailed plan for the program, along with the team members and resources that will be committed for the same. New age social ventures are leveraging technology to provide solutions that help NGOs compile a large amount of data and create a compelling proposal that meets the requirements of corporate sponsors and companies.

Project Management: IT infrastructures to digitize and automate workflows also proves extremely helpful by providing a real-time view of each process within the organization through minute-by-minute updates. At the same time, it allows NGO managers to monitor live projects remotely, track progress and impact, and finally, collate all the data collected to develop detailed reports. In addition, these technology-powered management tools help NGOs build long-term organizational capabilities, systems and processes that create the foundation for growth and even greater impact.

Monitoring and reporting: Monitoring and reporting capabilities of technology-driven solutions play a particularly significant role in the post-funding stage, enabling project managers and teams to present the data in a form which the CSR partners and sponsors can share with their board/investors, and report to the government. In addition to collecting and compiling data from various sources, digitized monitoring solutions can also help gather useful insights from projects, and present it in the form of detailed reports – all with the help of automation and analytics. Hence, the free flow of data and information creates credibility and trust in each other, while easing the administrative burden on both sides. In addition, this also reduces the time taken in post-implementation reporting and monitoring by as much as 10 to 20 times. More importantly, such capabilities also help position the NGO as a professionally managed organization, thus significantly increasing the chances of being funded again for future projects or subsequent phases of ongoing programs.

The next frontier of growth for the social sector

For-profit social ventures like Impactify for instance, are well-positioned to help social development organizations by providing them access to data-driven management tools built for the social sector. These tools can not only enable social enterprises and NGOs to create detailed plans for projects and budget them, but also measure and evaluate their impact, efficiently. When focused at the right projects and outcomes, such ventures can help the social sector in achieving both long and short-term development aims, such as the UN’s Sustainable Development Goals. At the same time, it can enable sponsors and CSR partners to access new opportunities to create a significant impact on the society and reap social dividends.

There is not only a need for more organizations that can assist the social sector with technology and capacity building, but to do this through cost-effective models and end-to-end digitization. This can give a massive boost to long-term development initiatives in a country like India, where the social sector is currently dealing with a huge lack of efficient organizational and managerial capabilities. Technology, therefore, along with specialized solutions provider could be a key force in helping the social sector organizations become more robust, evidence-based enterprises, and finally overcome a never-ending cycle of funding crises.

Joy Sharma and Sudeep Gupta
Founding Partners, Impactify