Can NGOs save India - and can we save the good NGOs? - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
Can NGOs save India - and can we save the good NGOs? A  A  A
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18 DECEMBER 2012


It is that time of the year when the images of hungry children or frail elderly people start finding their way into our mailboxes. The images, sent by NGOs - tug at our heart and encourage us to bring some cheer to the many that have little to cheer about.

Non-government organisations - commonly referred to as NGOs - are trying to step in where governments have failed.

Over the years, I have met many people who work for - or have set up - NGOs. The objective of these NGOs varies from helping the elderly, rescuing children, saving the environment, preserving Indian culture... and many more.

But like many government agencies, NGOs don't always enjoy a good reputation.

Many NGOs are seen as opportunistic or not always doing "good" work. In his book, "Everyone loves a drought" author P. Sainath outlines how NGOs flourish on our emotions and collect large sums of money. And then use the money in ways that may not always deliver what the intended beneficiaries need. Or, worse, are outright frauds.

Some NGOs are, indeed, outright scams - just as managements of many Indian companies are not worthy of the trust of investors.

Despite the bad press and terrible image that many NGOs have, it is important that we don't paint all NGOs with that same brush of mistrust. It is important that we find ways to sift the "good" from the "bad" and facilitate the growth of the "good" NGOs. It may be difficult to name many honest politicians, but it is still easy to list many "good NGOs".

Over the past few decades, we have built databases on Indian equities (www.equitymaster.com) and on Indian mutual funds (www.PersonalFn.com). Hopefully, this has allowed many of you to be more careful and more selective in where you have invested - and to profit without excessive risk.

We take this expertise, this skill set of financial analysis, to the dark world of NGOs with a view to shed some light on it.

It is important to note that we are not rating NGOs - we wish to provide their financial data in an easy-to-use format that allows you to ask the next set of questions, before you make your donation of time or money.

The need for a database of NGOs

Well-run and well-meaning NGOs, in my opinion, are crucial for India's survival as a stable country and a fair society. The NGOs have stepped in where government agencies have failed. But with this "do-good" approach that tugs at our emotion, comes the responsibility to be more transparent and more open.

Many of us wish to donate money or time for certain causes but don't quite know where to start looking for the correct NGO. www.HelpYourNGO.com is our effort to build a database of NGOs that will allow you to make better decisions on who to donate to. For you to see how effectively your emotion-tugged money is being spent.

The database at www.HelpYourNGO.com will cover NGOs of all sizes - the power of the internet is that a small NGO can get as much visibility in a database as a large NGO! A mere advertisement campaign, coupled with masses of direct mails and armies of tele-callers, have allowed some NGOs to reach out for your wallet faster than the smaller, under-resourced ones.

Thankfully, unlike in the mutual fund industry, there is no minimum capital requirement to start an NGO! ☺

And the distribution channels are not incentivised in unknown ways to "sell" you the NGO that pays the highest commission - oops, I may have given mutual fund distributors an idea for a new line of business! ☺ ☺

At www.HelpYourNGO.com a small, but good, NGO has as much chance of getting a donation from you as the large, well-publicised and well-branded NGO. Their long-term "performance" will be their differentiator - just as it is for the low-cost products from Quantum Mutual Funds!

A donation of Rs 5 lakhs from us

To kick-start the season of giving - and to ensure that we host a large database of NGOs - HelpYourNGO is pleased to offer donations of Rupees 5 lakhs to NGOs.

A donation of Rupees 1,000 will be made to every NGO which:

1) Uploads their financial data on http://www.helpyourngo.com/register.

2) Posts the physical copies/original of the two most recent Annual Reports of their NGO to HelpYourNGO (the Annual Reports should contain detailed financial data for any of the following 3 financial years: Year-ending March 2009, March 2010, March 2011, or March 2012);

3) Completes this self-registration process by Monday, January 21, 2013. HelpYourNGO will hold a lucky draw on Thursday, January 24, 2013 for these qualifying NGOs (Publisher's Note: These dates have been revised since the article was first published).

There will be 10 prizes for the winners of the lucky draw:

The 1st NGO selected in the lucky draw will get a donation of Rupees 50,000.

The 2nd NGO will get a donation of Rupees 25,000.

The 3rd NGO will get a donation of Rupees 20,000.

Seven other NGOs will get donations of Rupees 10,000 each.

All prize winners will be announced on the web site www.HelpYourNGO.com

All donation cheques will be disbursed by Monday, January 28, 2013.

I hope you will help this effort in two ways:

  1. Use the www.HelpYourNGO.com web site to make donations, and

  2. Spread the word and tell the NGOs that you know to get their data listed on www.HelpYourNGO.com via the self-registration process by Monday, January 21, 2013,

  3. Send in ideas and comments on how we should make www.HelpYourNGO more useful to you - or to the NGOs. Feel free to write to us on Info@HelpYourNGO.com
This project is a work-in-progress. And will be so for years to come.

There will never be a perfect NGO database because there are social and qualitative factors involved. There will never be a way to measure whether helping a street child in Bombay is more productive than helping a street child in New Delhi: for any street child any money is better than no money. Recent trends of "impact analysis" (imported from the consulting world to the non-profit world) which measure outcomes as if in a private sector world are, in my humble opinion, flawed.

For example, which programme is more successful?
  1. A sports programme which generates 1 Olympic gold medal winner and 99 duds or, at the other extreme,

  2. A sports programme that funds 100 people and generates 100 school-level champions across India?
Which is more beneficial to society - and which "group of 100" is more successful?

One can debate such things endlessly. But one cannot debate the need for more transparency from the NGOs as they sing their emotional tunes to pluck at your purse strings. Diwali, Christmas, and New Year are the time when these powerful images shock us into the act of donation. Just as election time is when the politicians seek our votes and our blessings. But, as donors, we need constant monitoring - we should not be nudged into the act of charity giving from an emotion based on guilt. We should give money to NGOs because they are doing a great job of helping and furthering a cause that we believe in.

Better disclosures and more transparency of the NGOs will increase our trust in them and, consequently, their ability to continue building a better India.

I hope you will take the time to visit www.HelpYourNGO.com and use it to help you decide where to donate your time or your money and to encourage the NGOs you know to place their information on www.HelpYourNGO.com.

And, yes, please tell us how www.HelpYourNGO.com can be more meaningful and useful to you.

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Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site. To write to Ajit, please click here.


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1 Responses to "Can NGOs save India - and can we save the good NGOs?"

SIVARAMAKRISHNAN

Dec 19, 2012

First of all I never knew there is a charity side from the EM desk. Kudos to the team and its initiative but poor marketing of products is their weakness. My suggestion to the team is to have a target on the number of subscribers added in a year or a quarter.

1. All NGO's must be registered with the government.
2. Cancel and seal the NGO's without registration.
3. All NGO's should be periodically inspected for facilities, cleanliness, account worthiness, etc..,
4. All NGO's should also be registered with a credit rating agency to give the rating points on the scrutiny of compliance of all parameters.
5. Funding of NGO's must be made compulsory deduction of 1% from the salaried individuals payslip and lesser from the Business organisations depending on the net profit. Higher the profit lesser the percentage but not exceeding 1%.
6. NGO's must be made available for three classes. The rich, middle class and the unaffordable class.
7. NGO's separately for autism children and adults and ladies and gents.
8. Rating agencies should be credit worthy, honest and non-corrupt organisations.
9. Ratings should be done for environment and cultural protectionists too.
10. NGO's should be clearly decoupled from politicians and bureaucrats.
11. NGO's should be a separate constitutional body and the volunteers paid under payroll system.
12. As far as NGO's are concerned option B group of 100 is more beneficial to the society because the organisation need not win medals or make superstars but a solid rating from the credit rating agencies.
13. Funding should be more from wealthy stock market gurus as their CG Taxes are meagre when compared to IT paid by salaried individuals.
14. A maximum of only three accounts auditing agencies should be selected by the constitutional body to verify the accounts.

I have not suggested anything that the MBA's and PhD's are not aware of or ignorant to get the subscribers views or comments but since the article is written by The Honest Truth editor, I did think of sharing my ideas here.

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