Areas of Service
GENERAL INDUSTRY BACKGROUND
Social sector is an important sector for India’s economy and includes several important component such as education, health and medical care, water supply and sanitation, poverty alleviation, housing conditions etc. that play a vital contribution in human development. Social sector may also refer to the value system of an economy which fosters values such as philanthropy, social business, social entrepreneurship etc. The elements of liberalization and economic reforms have played a key role in the areas of social infrastructure and development. Important aspects of human development are now governed within economic sphere where market and private philanthropy play a vital role. Due to the rapidly globalizing competitive marketplace coupled with the increasing need to expand quality of life at the grassroots level and to spur innovative thought, policy makers in India are slowly but surely setting the social sector on the reform track. The private sector too is not left behind either. Several well-known impact funds and venture philanthropy funds have also shown interest in this unique and emerging business opportunity, which balances investor returns with social responsibilities and aims to uplift communities.
With the new CSR regime firmly in place, India’s social sector space is likely to witness newer forms of corporate philanthropy, and a governance template for institutional philanthropy would be urgently required in order to enable structural and process-related outcomes grounded in legal determinants. The recent passage of the Companies (Corporate Social Responsibility) Rules, 2014 (“CSR Rules”) has brought a sharp focus on the social participation and accountability of corporates. The CSR Rules articulate the policy and regulations to provide legal and organizational governance to CSR regime. With this, there is a need to develop a mechanism to measure philanthropic impact, and improve the transparency and governance of non-government organizations (“NGOs”) receiving contributions and CSR funds.
In the broader context of impact investing, Program-related Investments (PRIs) have also begun to be utilized as a means to achieve development outcomes in India. There is a growing consensus among domestic not-for-profit and social enterprises that PRIs hold great potential to significantly augment and impact the social sector landscape in India. Recognizing this, many domestic entities in India have started to raise funds through the PRI route.
India’s GDP is estimated to be USD 2.1 trillion in 2014-151 with close to 1.68% of GDP2 this year. Taking a conservative estimate considering 1.68% of GDP, market for the social sector in India could be no less than 35-40 billion USD.
LEGISLATIONS THAT REGULATE SOCIAL SECTOR
The Companies Act vide Section 135 has, for the first time, introduced the concept of ‘corporate social responsibility’ into the legal lexicon. The existing legislations governing the not-for-profit/social sector mainly relies on six important statutes. They are:
MAJOR TRENDS IN THE INDUSTRY
The major industries/sectors include education, healthcare, financial inclusion, agricultural, sanitation and rural development.
Bill & Melinda Gates Foundation, David and Lucile Packard Foundation, Acumen Venture Fund, Aavishkar Fund, Aga Khan Foundation, Incube Ventures, Unilazer Venture Funds, Sir Dorabji Tata Trust, OXFAM India, Ford Foundation, The Rockefeller Foundation, PRATHAM, PRADAN, PRAXIS India, S M Sehgal Foundation, Ashoka Foundation, Village Capital, ACCION Venture Lab, First Light Accelerator, Grassroots Business Fund, Omidyar Network, Michael & Susan Dell Foundation, Shell Foundation etc.
1 http://www.livemint.com/Politics/xziKtmtOxBJntZb41p2hDL/India-GDP-seen-surging-74-in-data-that-has-puzzled-economi.html. Website last visited on November 20, 2015
3 http://www.livemint.com/Industry/Tgybd0OVnCoCZnt1abLhLJ/Impact-investing-likely-to-grow-at-30-annually.html. Website last accessed on October 13, 2014.
4 Bain Philanthropy Report, 2013