September 30, 2009

Social Economy 101 – India

Filed under: social economy 101 — benmetz @ 4:23 pm

Here’s part three of my social economy 101 series, this time looking at India.  It’s fascinating stuff!

The social economy in India…

The social economy in India has its roots in the Ghandian civil rights movement.  Historically, for this reason, it has been focused around areas of advocacy for policy change as well as land rights and human rights.  It is largely grant funded and not for profit based, in part due to this legacy and in part due to current legal structures preventing blended value / social enterprise models from coming to the fore.

In the late 1980’s the sector started to become more professionalised.  Much of these early efforts were led by Pradan, an organisation established in 1983 by a group of Indian professionals who realised that leveraging their knowledge and skills in the charitable sector could powerfully enhance the lives of the poor.  Throughout the 1980’s and 1990’s Pradan became a huge receptacle of people from the best universities coming into the sector.  With this influx of high level talent people started to hypothesise that you needed to work with a wider array of approaches than the traditional grant funded not for profit organisations.

While there are no statistics on the size and scope of the social economy in India there exist estimations for the whole of the charitable sector which, if anything, allude to the potential for social economy development should the right incentives be put in place and a positive legislative environment develop.  It is estimated that there are between 1.2 and 4 million charities in India, with up to 50% of these being unincorporated.  Turnover is estimated at $4.7 billion with only around 500 charities having turnovers of above $100,000 per annum.  Around two million people are employed in the sector.

A key issue identified in India, as in many other parts of the world, is the need for missing middle financing for existing and emerging social economy organisations.

As is the case with South Africa the social economy in India is fundamentally constrained by regulatory and legislative structures that prevent equity or equity type investments being made into organisations incorporated for public benefit. Thus the social economy appears to be adopting for-profit structures that run in parallel to, but legally cannot be linked with, charities.

As with South Africa Ashoka is the longest established social economy support organisation having been founded in India in 1981 and having elected 262 individuals into the Ashoka Fellowship.  Vineet Rai, a longstanding Indian social entrepreneur and Ashoka Fellow, has been instrumental in establishing one of the most important clusters of social economy support organisations in the country including: Aavishakaar, Intellecap and Sankalp.


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