Endowments and endowment building in South Asia

Mark Sidel

South Asia has a long history of organizational endowments – or corpus funds, as they are often termed in the region. Both Hindu and Muslim cultures of giving have strong notions of endowment. There is also a certain ambivalence towards the idea. Despite this, interest in endowment building is increasing rapidly throughout India and South Asia as non-profits and grantmaking institutions face increased concern about financial resources and organizational sustainability.

Both the interest in and the ambivalence towards endowments are deep rooted. In India, for example, there has long been a certain mistrust of organizations that seek funds to solidify and perpetuate their existence, as well as many examples of well-endowed educational, medical and charitable institutions. While the security and permanence of an endowment can, as Tushaar Shah puts it, ‘lift a mission-surcharged organisation to a higher plane of performance and impacts’,[1] there is also a danger that it will ossify an organization and its leadership and lead to stultification in innovation and programming.

In a country and region still gripped by poverty, there is a strong commitment to service rather than institutional growth and a feeling that direct service to the poor and destitute will be given a lower priority as organizational efforts are devoted to endowment growth – and that the gains from such growth will not soon be felt in grounded programming and service. This ambivalence can lead to very real difficulties in endowment fundraising and resource matching, with many donors preferring to give for direct service and social action.

An upsurge in endowment grantmaking

Endowment grantmaking nevertheless appears to be on the rise in India and South Asia. Discussions on endowment building have occurred throughout the region: at a meeting convened by the Ford Foundation in New Delhi in May 2000; during the major conference on Pakistani indigenous philanthropy convened by the Aga Khan Development Network in October 2000; in Bangladesh and Nepal in the process of forming the Bangladesh Freedom Foundation and the Nepal Development Trust Fund.[2]

Key actors include the Sir Ratan Tata Trust, which makes a number of endowment grants to Indian NGOs each year, and the Ford Foundation, which has provided endowment grants to several dozen Indian and other South Asian organizations over the last 30 years.

These endowments take different forms. Some have been general institutional endowments (for use across an organization’s entire mission); others have been special purpose endowments (to support one specific programme or activity). A small number of ‘endowment-like’ grants have also been made, to provide working capital over time and to reduce the insecurities of ebbs and flows of income during a year. Grants to support endowment building are also increasing.[3]

There is also an growing focus on building the endowments of indigenous philanthropic institutions. Endowment building has been an integral part of organizational development at the National Foundation for India, India Foundation for the Arts, Bangladesh Freedom Foundation and other new, private foundations across South Asia. It has been a topic of significant discussion with the Tata Trusts, leaders in the Indian philanthropic community, and among the philanthropists associated with India’s high-tech companies in Bangalore and Hyderabad, several of whom have established corporate or family foundations.[4]

Challenges to be faced

Whatever form an endowment takes, one key concern is whether donors and recipient organizations can use the endowment process as a catalyst for organizational change and resource mobilization. There is a strong risk that endowments may begin to be viewed as a panacea, a blanket solution for organizational and social issues.

Another problem is growing an endowment in economies where capital markets are in early stages of development. In South Asia, where stock markets are new, interest rates are often low, and organizations cannot afford to take any significant risk in growing endowment funds to the point that endowment income can make a significant impact on programmes – a conundrum of endowment growth that is sometimes termed the ‘tyranny of the numbers’.

One thing is clear: endowment as a tool of grantmaking, as a means for organizational development, and as a strategy for the growth of indigenous grantmaking institutions is now a permanent feature of the Indian and South Asian philanthropic environment.

Mark Sidel served as program officer for philanthropy and the nonprofit sector, Ford Foundation (New Delhi), 1999–2000. He is now associate professor of law, University of Iowa College of Law and Obermann Center for Advanced Studies.  He can be contacted by email at mark-sidel@uiowa.edu.

1  Tushaah Shah (1999) The Art of Giving: Supporting creative initiatives through endowments The Policy School and Sir Ratan Tata Trust.

2  For information on the Pakistan conference and the new Pakistan Centre for Philanthropy, contact Ahmed Shaikh at AKF Pakistan at ahmed.shaikh@akfp.org; on the Bangladesh Freedom Foundation, contact Executive Director Iftekhar Zaman at edbff@bdcom.com

3  For further discussion of these models, including case studies, see Innovative Endowment Building and Investment: Strategies towards building and investing endowment funds (2000) APPC,  Philippine Business for Social Progress, Synergos Institute.

4  These include the Infosys Foundation, the Azim Premji Foundation and other Bangalore entities, and the Reddy Foundation for Human and Social Development, Naandi Foundation and other Hyderabad institutions. For further information, see Mark Sidel (2001) New Economy Philanthropy in the High Technology Communities of Bangalore and Hyderabad, India: Partnership with the state and the ambiguous search for social innovation (manuscript).

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