A
New Voice to Boost India’s Social Ventures
National
Association for Social Enterprises India (NASE) is looking to take the momentum
forward as the country’s first advocacy and lobbying platform for social
enterprises.
Dogged by claims of poor governance, financial mismanagement and the absence of corporate best practices, social enterprises in India have often been given a short shrift by private capital, a situation that had led to liquidity deficiencies and an absence of supportive ecosystem. But with social entrepreneurship becoming more mainstream, as more entrepreneurs seek to combine social welfare with profits, the newly formed National Association for Social Enterprises India (NASE) is looking to take the momentum forward as the country’s first advocacy and lobbying platform for impact businesses “Social enterprises in India have been a fragmented lot so far. A lot of good has been done, but the same hasn’t been really re-stitched. NASE is a platform where we want to ensure that the collective impact is far more than the sum of its parts,” Raju Bhatnagar, president of NASE, said. Social enterprises cater to the base of the pyramid—a significant section of the country’s populace that lives on less than $2 a day—and have a mandate to ensure greater social and financial inclusion of the disenfranchised. The prime objectives of the organisation includes reaching out to potential stakeholders - private capital and government - setting standards for social enterprises in India and educating entrepreneurs in running ventures that can be scaled quickly, and can hence provide returns. “All this while, visibility has been an issue for social enterprises in India. NASE has been formed to shape the development of the industry,” Bhatnagar said.
REACHING OUT TO STAKEHOLDERS
Founded in April earlier in the year, NASE, whose founding members include healthcare service provider Vaatsalya, renewable energy company Husk Power Services and education company EnglishHelper, also plans on positioning itself as a lobbying body for the industry, aimed at government as well as risk capital. “It is a key focus area for the organisation: to lobby as a collective and work with government, multilateral agencies and private entities. We feel this will create massive opportunities for social enterprises in the country,” explains Ashwin Naik, co-founder and chief executive, Vaatsalya. And it is a move that has received guarded approval from potential investors. “Social enterprises in India need a more professional mindset. They have to scale and generate decent returns. People can have noble intentions, but there has to be more accountability,” says Anurag Agrawal, co-founder and chief operating officer of social investment advisory firm Intellecap. While impact investing in India is once again expected to be on the up in 2012 after a dismal 2011, a common gripe among investors has been the business models of a large number of social enterprises, which, they feel, are impediments to scale. What is quite significant is that the governing council member comprise of ventures that have raised substantial amounts of funding over the last 12 to 18 months from risk capital. Governing council member Vaatsalya raised $10 million from Aquarius in June last year, while Future Ventures invested 14 crore in Mother Earth. Waterlife, another founding member of NASE, has also raised 22 crore from Matrix Partners India. Preliminary talks have also been held with funding agencies such as the World Bank, Asian Development Bank and the International Finance Corp, the private equity arm of the World Bank, in order to participate in programmes such as World Bank’s Direct Market initiative. “The talks have been quite encouraging, but our participation is predicated on us reaching certain scale,” says Bhatnagar, who was previously with IT industry body Nasscom.
ENSURING ETHICS
While other platforms—such as Sankalp, Ashoka Foundation and Dasra—do exist with the mandate of catalysing impact investments into sustainable and scalable social enterprises, NASE is the first organised attempt by the enterprises themselves to create globally recognised standards, and act as a sector-agnostic industry body. “We are all part of the various forums, but NASE has been set up to effect a certain amount of self-regulation and set benchmarks for social enterprises in India,” Dr Naik said. Mindful of the deficiencies plaguing social enterprises in the country, NASE is currently setting up a code of ethics for members to follow. Lessons have been learned from the microfinance crisis that almost brought the Indian microlending sector to its knees in late-2010. “One of our major objectives is to establish and maintain standards in the best interests of key stakeholders, and develop metrics to assess the social impact of the work undertaken by them,” Bhatnagar said. In that regard, certain amount of inspiration has been taken from the UK-based Social Enterprise Mark, the only certification authority in the world that guarantees when an organisation is a social enterprise. “All social enterprises have a common cause, and equally importantly, we have to ensure that we build ethically acceptable businesses,” says Sanjay Gupta, global chief executive, EnglishHelper.
EDUCATING ENTREPRENEURS
According to a recent study conducted by Ernst & Young, on social enterprises in India, there is a definite lack of transparency in the disclosure of organisations that receive investments as well as reporting of impact. Unless industry reporting standards are laid out, impact measurement will not become a transparent process, according to the report. “Data relating to inclusive growth is quite limited in India. We are looking to collaborate with institutes of higher learning to evaluate existing Social Impact metrics and evolve a model that is suitable for the Indian context,” Bhatnagar said. While still a fledgling organisation, NASE plans to induct about 50 members by the end of the current financial year. Its founding members say this will allow them to participate in global initiatives, give them greater leverage with the government and be acknowledged as the primary industry body for social enterprises in India. “The goal is to set benchmarks, have all forms of capital interacting with us and be seen as a knowledge centre,” EnglishHelper’s Gupta points out.
Biswarup Gooptu ET120921
United They Stand
National Association for Social Enterprises India
Formation: April 2012
Founding members include Vaatsalya, Rural Shores, EnglishHelper and Husk Power Services
Objectives:
Establish a networking platform for members, and lobbying with various government and international bodies
Create a code of conduct for its members, and develop metrics to assess the social impact of the work undertaken by them
Current activity:
In talks with multilateral funding agencies such as the World Bank, Asian Development Bank and the International Finance Corp to bring them on board and participate in their global programmes
Why Social Ventures:
Over the last 8 years, close to $600 million has been invested in India’s social enterprises, says JP Morgan & Global Impact Investment Network
Over the next 5-10 years, social investments will grow to 1% of global assets under management, emerging as a new asset class, estimates The Monitor Institute
National Association for Social Enterprises India
Formation: April 2012
Founding members include Vaatsalya, Rural Shores, EnglishHelper and Husk Power Services
Objectives:
Establish a networking platform for members, and lobbying with various government and international bodies
Create a code of conduct for its members, and develop metrics to assess the social impact of the work undertaken by them
Current activity:
In talks with multilateral funding agencies such as the World Bank, Asian Development Bank and the International Finance Corp to bring them on board and participate in their global programmes
Why Social Ventures:
Over the last 8 years, close to $600 million has been invested in India’s social enterprises, says JP Morgan & Global Impact Investment Network
Over the next 5-10 years, social investments will grow to 1% of global assets under management, emerging as a new asset class, estimates The Monitor Institute
ET120921
Social Investments: Nascent but
Growing
Social enterprises could see investments of about $4 billion globally in 2012, with investors continuing to see the market ‘in its infancy and growing’, according to a report released by JP Morgan and the Global Impact Investment Network. In India, investors have already pumped in $600 million in the country’s fragmented social enterprise sector, with more expected to follow. “By running activities such as awareness campaigns and capacity building workshops, we want to encourage the integration of environment, social and governance criteria into investment decision making,” says Stefanie Bauer, Advisor on Sustainable Economic Development for German development agency, Gesellschaft fur Internationale Zusammenarbeit (GIZ ). GIZ is in the process of setting up a new € 3 million Indo-German bilateral programme, starting 2013, to promote small and medium enterprises with a social impact. However, the development agency is planning to go down a different route when it comes to disbursements. Instead of providing grants, GIZ plans on utilising the money through the program to help SMEs with technical assistance spread over three core areas-responsible banking, responsible investments and development of an ecosystem. According to a recent report published by global consultancy, Ernst & Young, impact investments in India have been largely concentrated in sectors such as healthcare, energy and education, which have been, traditionally, heavily dependent on foreign sources of capital. However, the global slowdown in financial markets offer a significant opportunity for domestic trusts and foundations to invest in the country’s social enterprises, the report points out. But there is a lacunae here as well. According to the E&Y report, investors have largely chosen to operate out of Delhi and Mumbai, with the central and eastern part of India clearly not a preferred base. Bigger causes of concern include the actual amounts invested so far. Of the 33 impact investors surveyed for the same report, the majority stated their investment range as $100,000 - $1 million. Survey results however show differently. Respondents estimated their actual investment range to be lower, at a range between $30,000 and $70,000.
Ahona Ghosh ET120921
Social enterprises could see investments of about $4 billion globally in 2012, with investors continuing to see the market ‘in its infancy and growing’, according to a report released by JP Morgan and the Global Impact Investment Network. In India, investors have already pumped in $600 million in the country’s fragmented social enterprise sector, with more expected to follow. “By running activities such as awareness campaigns and capacity building workshops, we want to encourage the integration of environment, social and governance criteria into investment decision making,” says Stefanie Bauer, Advisor on Sustainable Economic Development for German development agency, Gesellschaft fur Internationale Zusammenarbeit (GIZ ). GIZ is in the process of setting up a new € 3 million Indo-German bilateral programme, starting 2013, to promote small and medium enterprises with a social impact. However, the development agency is planning to go down a different route when it comes to disbursements. Instead of providing grants, GIZ plans on utilising the money through the program to help SMEs with technical assistance spread over three core areas-responsible banking, responsible investments and development of an ecosystem. According to a recent report published by global consultancy, Ernst & Young, impact investments in India have been largely concentrated in sectors such as healthcare, energy and education, which have been, traditionally, heavily dependent on foreign sources of capital. However, the global slowdown in financial markets offer a significant opportunity for domestic trusts and foundations to invest in the country’s social enterprises, the report points out. But there is a lacunae here as well. According to the E&Y report, investors have largely chosen to operate out of Delhi and Mumbai, with the central and eastern part of India clearly not a preferred base. Bigger causes of concern include the actual amounts invested so far. Of the 33 impact investors surveyed for the same report, the majority stated their investment range as $100,000 - $1 million. Survey results however show differently. Respondents estimated their actual investment range to be lower, at a range between $30,000 and $70,000.
Ahona Ghosh ET120921
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