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Challenge grant strengthens community philanthropy in India

Posted By WINGS, Thursday, August 30, 2012

By Pradeepta Kumar Nayak

One of the factors that contribute significantly to community development is community philanthropy. Challenge grants with a ‘people to give first’ approach by the donors have emerged as an effective tool to strengthen this. Sampradaan Indian Centre for Philanthropy (SICP) has successfully experienced this while coordinating a challenge grant to its community foundation (CF) partner, Valley Dew Community Forum (VDCF) from Mr. Jyoti Sagar. Mr. Jyoti Sagar is a noted philanthropist by thought and action, and is the first known donor in India to have offered challenge grants to promote community philanthropy.

SICP, being supported by the Ford Foundation, has been facilitating community foundations and growth of community philanthropy. While SICP continues its search for ‘challenge grant makers’, Mr. Sagar has happily agreed to support its cause. SICP has requested him to encourage an opportunity where the ‘beneficiaries become the first donors’.

VDCF is SICP’S first partner to meet the condition: ‘community gives first’. VDCF has been able to mobilize their share of Rs 200, 000, for a community piggery project, in response to the offer by Mr. Sagar for a matching amount. The total cost of the project for construction of a piggery shed was estimated as Rs.400, 000 and Mr. Sagar had said that if the community would collect Rs.200, 000, the balance Rs. 200,000 would be contributed by him.

This ‘community first’ approach is in conformity with the recent strategy of the Aga Khan Foundation USA (AKF USA) to strengthen community philanthropy. The AKF USA had convened a meeting of 18 practitioners from different parts of the world to a meeting in Washington DC in September 2010. Some participants felt that without local people contributing their own money to solve their problems, external aid agencies are wasting their time. The group identified a large number of principles implied by this approach. Of these, one particularly important one was that local people should contribute their own money from the start. Unless this money is on the table, there should be no external funding (Richard Holloway and Barry Knight, Alliance Volume 15, Number 4 December 2010,

VDCF is a small community foundation of the Mukodlu village in Karnataka. It is being facilitated, including handholding support, by Kodagu Model Forest Trust, (KMFT), another partner of SICP. VDCF was started with an organizational development grant to KMFT from the Global Fund for Community Foundations (GFCF). This has been a great platform of partnership contributing to a unique model. This project is innovative in terms of its pool of supporters, facilitators and donors.

Out of the total amount of Rs. 200,000 collected by VDCF, with the help of KMFT, Rs. 117,000/- were donated by the individuals who belong to the locality, but not to the specific village of Mukodlu. Most of these donors are coffee planters. Col. C. P. Muthanna, a coffee planter himself and the secretary of KMFT contributed Rs. 70,000 and mobilized six other planters who came forward willingly and contributed to this effort. While there have been enough examples of unorganized and individualized contributions to local efforts, it was an opportunity for the local people to contribute to a community enterprise through a local institution.

Mukodlu villagers are too poor and could mobilize Rs.83, 000 by borrowing the amount from VDCF. The fund was initiated by the GFCF with a contribution of Rs 50,000 and has been built up to more than Rs.100, 000/- through a system of internal loans that are repaid with interest. The villagers have also made donations of Rs.23, 000 to this fund from their earnings by conducting local cultural activities. The site for the piggery shed has been identified. The construction is on progress. The piglets will be matured in about a year and will be initially used for breeding. Sale of meat will be taken up in the second year.

SICP’s Roles

SICP linked the community with the donor and played an intermediary role. SICP also helped VDCF in taking some important decisions. Initially, the Mukodlu leaders wanted to use the money from the VDCF main account not as a loan, but as their contribution to the piggery project.

SICP has been working to develop VDCF as a model and an inspiring source of future replications. SICP felt that VDCF main account should retain its distinct characteristics as a permanent, philanthropic and revolving community fund not only for the growth of community philanthropy, but also for giving grants and loans in the locality. However, it felt that time had not come for VDCF to spend the small fund as a grant to its community.

SICP worked on a strategy so that the local foundation continues to exist and grow. SICP also felt that VDCF and KMFT could use the funds from the main account as a loan for the community business and repay it with an interest. The other aspect which Mr. Sagar and SICP thought about was: how could the community use this project to become a perennial source of community funding—for example, would the community put in place a plan that certain amount of profit from the project goes into the Community Foundation (CF), which could be used for other activities for common benefit of the community?

As the Support Organization of KMFT and VDCF, SICP had a discussion with them. The local partners immediately appreciated the inputs and SICP got an assurance from them. The local partners agreed that SICP’s ideas would be the overall plan. As per the plan:

  1. VDCF will continue as a permanent fund.
  2. The amount taken from VDCF will be regarded as a loan, with an interest.
  3. A part of the profits from the project would be donated to the VDCF main fund and other CFs for other activities of public benefit.

The planning process has resulted in progressive decisions and also helped them with many benefits. This community is now not only donors themselves but also have an ownership and high self-esteem. With a goal of community self-reliance, Mukodlu experience is a transition from dependence to interdependence. The understanding and partnership have improved the organizational systems. Mukodlu is maturing more with structural differentiation and functional specialization, important features of organizational development.

An important outcome is that the challenge grant has energized other CSOs. This is expected to lead to multi-dimensional organizational development as the CSOs work on community philanthropy for a challenge grant. However, community philanthropy should not be taken as a means to an end of challenge grant. It should be taken as an end in itself. Of course, at a later stage, this end becomes a different means to a higher end of peace, progress and prosperity.

Pradeepta Kumar Nayak is the Executive Director of SICP. He can be reached at sicp.pradeepta

Tags:  SICP 

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