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Making a difference: Giving by Indian diaspora can have impact on society

There is a lot of good that British Asians can do in their home countries by better understanding the social impact their philanthropic monies actually have. This would help make their home communities and countries better places to live, including achieving real change in the social goals they care about, including relieving poverty, malnutrition and improving access to primary education to children who are homeless.

There are huge opportunities in this area for the diaspora, and I am personally extremely passionate about helping British Asians donate or invest in worthwhile causes back home that are transparent, have good governance, and produce benefits to society and the economy that can be robustly quantified and independently verified.

Making a difference

Philanthropy as a sector is evolving rapidly – and with it also what Corporate Social Responsibilty (CSR) means. Innovation, sustainability and impact measurement increasing define today’s approach to charitable giving.

Philanthropy can mean straightforward charitable donations through zakat, daswant or any other charitable giving. This tends to be channeled to organisations back home based on personal passions, or community recommendations, or simply intertia, rather than real knowledge about the recipient project. But donors outside the Asian diaspora in Britain are increasingly looking to give only where they are confident that their money will make a real and direct impact, as well as offer long-term sustainable benefits for the recipient community and economy.

Or philanthropy could mean making social investments, which is an emerging area that offers new opportunities for the diaspora. This deals with the concept of “Triple Bottom Line” has emerged, which means making investments in organisations that deliver profit, but also a positive impact on people and the planet.

Priya Shah, author of a new report ‘Frontier Markets: Pakistan’:  says: “although there is a growing interest in social investment from the British Asian diaspora, there is a need to educate these communities on the difference between philanthropy and social investment. The concept of triple bottom line has not been socialised amongst these communities, and investing in smaller enterprises is too often seen as charity. There needs to be wider knowledge-sharing around the gains (both financial and social returns) from impact investment for diaspora investors who have a vested interest in helping their home countries to grow.”

The investors may not understand these issues, but according to Dr Pathik Pathak, lecturer in sociology and social policy and director of undergraduate programmes at the University of Southampton, neither do the potential recipient organisations for this money. He says they “need to become ‘investor-ready’. This means demonstrating, through evaluations of different kinds, that they are both income generating and can deliver a verifiable social return.” In other words, can they quantify their positive effects on the well-being and lives of the people in that community?

In India, there is a growing awareness of the social investment model of philanthropy. Several foundations, consultancies and financial intermediaries are emerging, who help calculate the social impact, and help investors find good projects. According to Sunil Mistry, Associate Director with EPG and with a background in private equity in London, says: “these projects typically aim to invest in a wide portfolio of social enterprises, based on particular social goals, and target capital preservation plus a positive return for investors.”

India is a nascent market for social impact investing. But elsewhere in the Indian subcontinent, the social impact investing is even less well understood. There are few examples of successful – and importantly for real positive impact, scalable – social enterprises elsewhere. Akshaya Patra, an Indian charity that runs the world’s largest schools lunch program, found that the social impact of every £1 donated to the charity was £3 to the society at large through government matched funding, improved health and classroom attendance. Naya Jeevan helps engage the Pakistani diaspora communities to enrol their designated beneficiaries (family, low-income staff, domestic staff etc) into a healthcare plan, and is now expanding into India.

Priya Shah says: “Pakistan is an untapped market for social investment. It has often been the recipient of large-scale bilateral aid and it is also an attractive location for large-cap private equity firms. However, there is much scope for investment in the ‘Missing Middle’ segment of the economy: mid-cap and SME enterprises which have high-growth potential over a longer-term horizon. The venture capital model should encompass young entrepreneurs who are eager to scale their businesses and take advantage of the country’s home-grown resources.”

Social investments made by British Asians back home often includes setting up schools, hospitals and other social provisions in their home towns. But how many can truly say they understand, in a robustly quantified and independently verified manner, whether they are making any real difference? Can they prove they really are the most deserving recipients? This usually requires economic evaluation skills, and experience of the sector. Without having answers to these questions, how does an investor know whether the money they are giving with the best of intentions, truly helps the end recipients, without being lost in bureaucracy, middle-men, inefficiency, or simply displacement of other positive projects elsewhere.

This article was first published by Eastern Eye on 9 November 2012 here.


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