February 16, 2017

Why Indian Nonprofits Are Experts at Scaling Up

There might be no better laboratory than India for studying the challenges that nonprofits face in trying to scale up when resources are scarce. And there might be no better guide than Indian nonprofits for how to overcome those challenges and become effective agents of social change.

By: Rohit Menezes, Swati Ganeti

Pitched between a forested ridge and the boundless sprawl of Mumbai, the village of Kokanipada is home to 2,000 people, most of whom work as day laborers in India’s financial capital. Their children attend the Thane Municipal School No. 50, a cement building consisting of a dozen classrooms. Many of the primary schoolers appear to be undernourished, but on a steamy July day they lifted their voices with joy as a 20- something man named Kartik led them through a balgeet—a children’s song about a wedding attended by a lizard, a horse, and a cow.

Kartik is one of the Kaivalya Education Foundation’s Gandhi Fellows, recruited from India’s top universities to spend two years working with the principals of five government schools to help them become more effective leaders and, as a result, improve each school’s all-around performance. Many principals have minimal job-specific training and administrative experience before starting their positions. The Gandhi Fellowship program seeks to fill that gap. Last year, fellows such as Kartik worked with the principals at more than 1,200 schools, potentially impacting the lives of 250,000 children.

It’s an impressive number. But in the next five years, Kaivalya, the brainchild of Aditya Natraj, a former finance consultant for KPMG, wants to reach 10,000 schools serving approximately two million children. To do so, its fellowship program will have to get far bigger, while working with far fewer resources than many of its counterparts in the United States and Europe.

In this respect, Kaivalya is like most Indian nonprofits seeking to extend their reach. Every Indian organization that seeks to grow beyond its immediate community must grapple with the twin challenges of scale and scarcity.

More than 250 million of India’s 1.3 billion people live on a daily income of less than $2. For any nonprofit to make a dent in lifting people out of poverty, it needs to reach many millions of people in need. At the same time, the Indian government spends just 1.4 percent of the nation’s GDP on health care, less than half of what China (3.1 percent) and Brazil (3.8 percent) spend. Government spending on schools similarly trails spending rates in other fast-emerging economies. Add to that mix India’s swirling diversity of 150 languages, more than 2,000 ethnic groups, and every major religion, all of which multiply the challenges of reaching marginalized people. There might be no better lab than India for studying the challenges that nonprofits face in trying to grow while stretched for resources.

The good news is that Kaivalya’s track record, current practices, and approach to growth suggest that it is poised to succeed. What’s more, its experiences hold lessons for other nonprofits in India and beyond. Over the past year, The Bridgespan Group has studied 20 Indian nonprofit organizations, including Kaivalya, that have deftly managed the tension between scale and scarcity and delivered their services to hundreds of thousands and even millions of people. (See “Twenty Nonprofits, Millions Served” on page 21 for more details on each organization.) Our research surfaced five recurring mind-sets for reaching many more people in need:1

  • The Denominator Mind-Set. Stay focused on the size of the need, while remaining flexible in confronting it.
  • The Dignity Mind-Set. To serve many, elevate the humanity of each participant.
  • The Radical Frugality Mind-Set. When scarcity abounds, reduce costs while stretching impact.
  • The Innovative Hiring Mind-Set. Tap hidden talent from unexpected sources.
  • The Collaborative Mind-Set. Make government a partner, not an adversary.

We’ll examine them in order and highlight imperatives for success.

The Denominator Mind-Set

If you think of a social change effort as a fraction, the denominator would represent the size of the need, and the numerator would represent what the organization is currently accomplishing. India’s social innovators put much of their focus on the size of the need. In a country where, for example, more than 25 million children suffer from acute malnutrition and 750 million people lack access to “improved” sanitation facilities, denominator thinkers believe that untangling even one more part of a large, knotty problem creates a lot more value than perfecting a solution that serves relatively few. And if a growth strategy has run its course, they are quick to let it go and search for one that will better suit their needs.

One such denominator thinker is Ramji Raghavan, founder and chairman of Agastya International Foundation, an organization that delivers demonstration- and activity-based science programs to more than 1.5 million rural schoolchildren each year. Thirty-some years ago, while on a promising career track at Citibank, Raghavan was held up at gunpoint. The experience afforded him a “deathbed view of life.” In other words, he began to imagine himself on the verge of death, looking back. What would he remember? He certainly wouldn’t revel in memories of his corporate life. He came to believe that his life’s last moments would surface a secret dream: to build a rural school that would produce curious, driven students who had the skills and creativity to confront India’s most vexing challenges.

Soon thereafter, Raghavan vowed to build his dream school. Never mind that he lacked teaching experience. In 1998, he walked away from his banking career. He got to work and worried later about where the work might take him. And in doing so, he bypassed some of the steps one might associate with the successful founding of a nonprofit: He jumped into the nonprofit sector with no strategic plan and no dedicated donors. He was not an outlier in this regard. Out of the 20 nonprofits that we studied, two-thirds of the founders said they started without full-blown plans and funding commitments. Driven to solve a chronic social problem at scale, denominator thinkers are biased toward action.

Acting before fully planning has worked for Raghavan in times when others might have folded up shop. Consider: With funding support in their sights in late 1999, Raghavan and his team procured a site for their school—170 acres of “wasteland” near the town of Kuppam in the southeastern state of Andhra Pradesh. But soon after that, the dot-com bubble burst. Public companies lost $5 trillion of market value over the next two years, and any chance of raising private capital turned to vapor. “It was a crushing defeat,” recalls Raghavan. “But there was no question of going back to my job.”

Instead, after many rounds of brainstorming, Raghavan and his team flipped their model: Rather than attract rural kids to a Taj Mahal-like campus, Agastya would bring the campus to the kids. They outfitted a borrowed van with scientific models and instruments—a science lab on wheels—and drove it to rural government schools in villages surrounding Kuppam. Concepts like gravity, solar and lunar eclipses, and planetary orbits were brought to life from the back of the van. This low-cost, high-reach strategy turned out to be strikingly replicable. In the 17 years since Agastya began its life with one mobile lab, the organization has expanded its fleet to 175 mobile labs operating in 18 states.

Denominator thinkers are so driven that few obstacles deter them. So in addition to having a bias for action, they are also restless, serial innovators. Even as Agastya’s lab-on-wheels innovation was reaching thousands of schools, the organization was coming up with Lab-in-a-Box, a science kit that equips government teachers to develop their own approaches to hands-on learning. Next came Lab-on-a-Bike, which cuts costs and extends Agastya’s reach to remote schools via a fleet of instructors on motorcycles. Raghavan has also fulfilled his original vision: Agastya’s Creativity Lab campus, a center for teaching and learning that includes 13 laboratories, a planetarium, an art and culture facility, and a media lab, spreads across the now-reforested land he bought years ago. The campus takes in 600 visiting schoolchildren every day.

As Agastya’s example demonstrates, being a restless, serial innovator also means that India’s denominator thinkers are not wedded to a single growth model. When one model hits a wall, India’s denominator thinkers are quick to throw it over and devise a strategy that’s a better fit for the future. Agastya’s Raghavan says he’s glad that he failed to win sufficient funding for his original plan. Had he embarked on building an Indian version of England’s Eton, he never would have been compelled to discover a far more novel approach to learning: science on wheels, either in its initial form or in today’s still-evolving approaches.

Denominator thinkers, of course, can’t completely disregard the numerator. Raghavan could never have risen through the management ranks at Citibank if he didn’t understand the benefits of careful analysis and thorough planning. He is acutely aware that if an organization doesn’t track quarterly outcomes and continually reset the balance between a bias for action and prudent planning, it risks diluting its impact. Other denominator thinkers understand this as well. And so they are careful to set realistic expectations, lest they overextend their capabilities. They also pressure-test audacious ideas. They know that if they go too far with a half-baked plan, they are at great risk of letting down the people they seek to support.

The Dignity Mind-Set

When confronted with the daily challenge of serving the masses, it’s easy to reduce and compartmentalize the human experience into numbers on a spreadsheet. Organizations such as Aravind Eye Care System, Akshaya Patra, BAIF, Goonj, and NM Sadguru Water and Development Foundation counteract this threat by thinking and acting “small.” That is, they organize around a unit of one: the individual participant. They exhibit a “people over program” philosophy by prioritizing each individual’s dignity.

The downside of maintaining a dignity mind-set is that it can slip into do-goodism—that is, a naïve desire to take on every humanitarian crisis, an approach that can lead nonprofit organizations to spread themselves too thin.

For example, Aravind Eye Care System, which annually performs more than 300,000 cataract and other eye surgeries, maintains its nonpaying patients’ dignity by viewing each patient as a customer with a choice—those who cannot afford to pay can choose a price point of zero.

Similar is Goonj, which undertakes disaster relief and community building by annually delivering more than 3,000 tons of secondhand clothes and other used household materials to hundreds of thousands of India’s poorest citizens. From its base in New Delhi, Goonj has expanded to 22 states, where it partners with more than 250 grassroots organizations.

Two principles help Goonj and other like-minded nonprofits maintain a real-world connection with the people they serve: First, they imagine the hundreds of thousands of participants as one person. Nearly two decades ago, Goonj’s founder, Anshu Gupta, journeyed to the earthquake-devastated village of Jamak in the state of Uttarakhand. He noticed an elderly woman whose home had been flattened. She and some neighbors were boiling water over an open fire when Gupta walked by. Recognizing a stranger who’d come to help, the woman offered him a cup of tea. The implicit message: I have lost everything, but I still have my humanity. When Gupta launched Goonj in 1998, he vowed to treat every participant with the same dignity.

Second, Goonj’s staff members, volunteers, and other stakeholders act on the firm, shared belief that people in need don’t want charity, they want respect. Gupta remembers that in Jamak, when a truck from an aid agency brought a load of used clothing from India’s cities, the relief workers tossed the bales off the back. He was struck by the workers’ lack of empathy. And he determined then that instead of debasing the material by giving it away, he would infuse it with real value. He realized that he could accomplish his goal if he treated urban discards as a form of currency.

Goonj’s Cloth for Work program goes into rural villages, asks people to identify the community’s own “pain points,” organizes work projects like repairing roads and digging wells, and pays villagers for their labor with used clothing and other much needed secondhand wares. In this way, villagers earn a valuable commodity, and they also directly improve their day-to-day lives. Case in point: In the Sukhasan village of Bihar, tragedy struck when the Sursar River, swollen by monsoon rains, took the lives of 13 children when they tried to swim to their school on the other side. Soon after that horrific event, Goonj gathered 50 villagers, who in six days built a bamboo bridge that now connects eight villages and hundreds of people.

The downside of maintaining a dignity mind-set is that it can slip into do-goodism—that is, a naïve desire to take on every humanitarian crisis, an approach that can lead nonprofit organizations to spread themselves too thin. Goonj’s response is to never stray beyond its core mission, whose logic can be found in what Gupta calls his “theory of meager resources.” When bottom-of-the-pyramid people earn clothing or other materials for their hard work, they free up scant income for food, health, or other expenses. “We’re not in the business of collecting and distributing cloth … but it is the genesis of a parallel economy, which is not cash based but trash based,” he says. “In doing that, we replenish people’s resources.”

The Radical Frugality Mind-Set

Given the country’s scant resources, most Indian nonprofits put a lot of focus not just on reducing costs but also on using frugality as a way to scale up. By innovating internal systems and processes, they optimize operational expenses. At the same time, they rein in capital expenditures by utilizing existing infrastructure: Education nonprofits such as Kaivalya partner with government schools; health-care nonprofits such as Karuna Trust ally with Primary Health Centers, India’s state-owned, rural health-care facilities.

Akshaya Patra provides another example. Every school day, Akshaya Patra prepares and delivers hot, fresh lunches to 1.6 million children, at a cost of 13 cents per meal. The Indian government pays 60 percent of that cost. By 2020, Akshaya Patra aims to serve 5 million children, while dramatically reducing or even eliminating its share of the cost. “Here’s my end game,” says Shridhar Venkat, Akshaya Patra’s CEO. “Can we run this program with just the government subsidy, so we can feed as many children as we want? It’s very, very difficult. But we love impossible challenges.”

Venkat is a former vice president of sales at Cisco’s WebEx Communications, and his management team cumulatively has more than a century’s worth of experience working for multinational corporations. Like his peers, he incites his organization to use frugality in productive ways. Specifically, Akshaya Patra seeks to do three things very well:

Optimize capital expenditures. In 2000, Akshaya Patra began its work with one centralized kitchen in Bengaluru, providing midday meals to 1,500 children in five schools. Staff members prepared the meals, then packed them in stainless steel containers and trucked them to schools within a 50-kilometer radius. Today, by standardizing design and using smart technologies, Venkat’s team has increased a single centralized kitchen’s output to 100,000 meals. But it costs $3 million to build one of those mechanized marvels.

For Akshaya Patra to even approach its near-term goal of reaching five million children, Venkat needed to cut costs while producing more food faster. He believes he’s found a way: treat the centralized kitchen as a “mother hub” and surround it with four “spoke kitchens.” The hub processes the food, and the smaller satellites do the final preparation, packaging, and delivery. The model has doubled the capacity of a centralized kitchen while reducing the average capital cost that’s deployed per child by about 30 percent. Rather than spend $6 million to build two centralized kitchens and double the output, Venkat can achieve the same results while spending just $4.2 million to build a hub-and-spoke.

In India, one of the biggest impediments to growth is the scarcity of people who have the right skills to fill certain types of jobs. Some nonprofits have responded by searching for people in overlooked but promising corners of the talent pool.

Improve, relentlessly, using tangible goals. All Akshaya Patra employees know the critical number: one cent. If they can knock a penny off of the unit cost of producing meals, they can feed an additional 300,000 children per year. By organizing everyone from front-line workers to C-level executives around that simple metric, Akshya Patra sets a tangible goal for continuous improvement. One recent example: Each month, one centralized kitchen consumes approximately 2,500 kilograms of potatoes. Since the price of potatoes can soar by more than 50 percent in a fortnight due to blight or speculators, Akshaya Patra has begun buying massive numbers of them when prices are low and keeping them in cold storage units to use as needed. The result: reduced costs of nearly 15 percent. That’s another 10,000 children fed.

Invest to build capabilities and stretch resources. Most of the organizations in our study understand that frugal doesn’t mean free. They have learned how to navigate around radical frugality’s chief liability: the tendency to cut back on the wrong things. They keep their focus on reducing unit costs. And they avoid—at all costs—any cut that might starve innovation and thereby dilute their overall impact. For example, in addition to recruiting blue-chip executive talent from the for-profit world, Akshaya Patra has invested aggressively in techniques, such as Kaizen and Six Sigma, that squeeze out waste and defects, as well as software systems for managing inventory and other logistical activities. The total return on these (and other) investments is clear: In August 2016, the organization delivered its two billionth school meal.

The Innovative Hiring Mind-Set

In India, one of the biggest impediments to growth is the scarcity of people who have the right skills to fill certain types of jobs. Some nonprofits have responded by searching for people in overlooked but promising corners of the talent pool. To make this approach work, these organizations create win-win value propositions.

For example, Aravind recruits most of its female nurses, also known as mid-level ophthalmic personnel (MLOP), from rural communities, where many would otherwise work as day laborers, and trains them. Aravind thus brings the women into the formal economy with all of its benefits, not least of which is a fixed salary. The MLOP, who do everything in the hospitals except diagnose and operate, are a key reason why Aravind has become an unparalleled provider of eye care.

The Self Employed Women’s Association (SEWA), a trade union of more than 1.5 million women workers, has dug even deeper to find the right people. When it launched its own financial institution, SEWA sourced the bank’s talent from its members—women who labor in India’s informal economy. SEWA believes that some of its most promising job candidates can be found among its customers.

Executives at Aravind, SEWA, and other like-minded organizations know that at the outset of their hunt for talent, they won’t often find people with the proper credentials. So they look for other, more durable attributes, such as attitude and aptitude. Aravind hires MLOP largely on their character and demeanor— that is, their ability to empathize with patients and their joy in serving others. Similarly, SEWA employees lack any sort of formal training in their future fields. These leaders know that with good coaching, people who possess the values and mind-sets that best fit the organization’s culture can excel.

SEWA’s approach echoes that of other innovative hirers in its conviction that engaging customers and community members is a critical element of successful growth. In 1974, when SEWA sought to open a bank, its leaders asked potential members—women who typically hawk food, roll bidis (cheap cigarettes), pick garbage, and ply construction sites as “head loaders”—to put up a day’s wages (INR 10 back then) in capital to get the bank going. Though they were underpaid, roughly 4,000 members responded. To staff the bank, SEWA’s leaders determined to tap the same pool, even though many union members to this day are illiterate.

Today, the Shri Mahila Sewa Sahakari Bank Ltd. is a full-service financial institution, regulated by the Reserve Bank of India and the Cooperative Department, with more than half a million accounts and INR 2.5 billion in deposits. Both the bank and SEWA’s headquarters include a sprinkling of professional women with corporate experience, including the union’s Harvard University-educated director of social security, Mirai Chatterjee. But the majority are poor women, says Chatterjee. “We often say that SEWA is a laboratory for democracy, because the women themselves run the show.”

For SEWA, one of the advantages in recruiting talent from its membership is that it breeds trust. Women laborers, frequently cheated by unscrupulous employers and moneylenders, are far more likely to put their life’s savings in the hands of women who have experienced the same. But making the commitment to source talent from customers and other nontraditional talent pools raises a basic question: How do you know you’re hiring the best people for the job? Short answer: SEWA takes the measure of how the candidate behaves and what she values.

SEWA is inspired by the Gandhian principles of satya (truth), ahimsa (nonviolence), sarva dharma samabhava (religious equality), and khadi (self-reliance). In other words, the union believes that who its employees are matters more than what they know. In that spirit, SEWA’s grassroots leaders often recommend women who they believe best reflect those values in their day-to-day lives as potential students at the SEWA Academy, which was founded in 1991. The academy offers classes in leadership, computer literacy, and communication. From there, students go on to work for SEWA’s bank or its insurance program, or they return to their villages to work, say, as barefoot doctors or to take on leadership roles in their local cooperatives.

When an organization hires based on values, it summons a sense of common cause throughout its workforce. SEWA seeks to promote women as leaders in a patriarchal society that often keeps them in the shadows. Because its members and employees share a mission and even a fate, the organization captures not only their diligence but also their initiative and passion.

The challenge in prioritizing soft skills such as values and mind-set is that other staffers must have sharply honed skill sets to oversee the work while new hires get up to speed. It’s vital to get an optimal mix of people who have the right attitude (but require training) along with those who have deep subject-matter expertise. SEWA’s ratio is 80:20—80 percent of the bank’s board of directors, for example, are women who labor in the informal economy while 20 percent are professionals. The 20 percent help support the 80 percent.

There’s one other pitfall: It takes time to train new hires and get them into a position where they can help build out the organization. Although SEWA now has cooperatives in 14 states, it’s taken 45 years to register the organization’s 1.5 million members. But that’s okay with Chatterjee. “Our symbol is the banyan tree, which sends out aerial roots that form autonomous trees,” she says. “The roots spread slowly. But the trunk of the tree is very strong.”

The Collaborative Mind-Set

In Western countries, would-be innovators are exhorted to “disrupt the system” and “think outside the box.” Many of India’s larger nonprofits, however, seek to innovate within it. Almost every organization in our study has made the system a vital ally. In their view, the government is the most powerful lever they can pull to extend their reach. The government can provide critical funding, as well as the infrastructure and the heft needed to overcome even the biggest obstacles to growth.

Rajesh Singh, chief operating officer of the MAMTA Health Institute for Mother and Child, which seeks to protect the reproductive health of marginalized adolescent girls and women in 19 Indian states (as well as Nepal, Bangladesh, and Burundi), maintains that with every new project, it’s “in our DNA to involve the government, right from the inception.” That said, every nonprofit organization must coldly calculate the trade-offs of partnering: Is government clout worth the glacial pace of decision making, the tangled layers of bureaucratic guidelines and policies, and the constant threat of graft? For organizations that take the plunge, working effectively with the government requires its own unique set of strategies.

For example, these organizations work with policymakers while their programs are still in their formative stage. In 2005, when the Indian government decided to launch a sweeping program to address the health needs of the country’s 253 million adolescents, MAMTA seized an opportunity to develop a training module that educates teenage girls on sexually transmitted diseases. MAMTA’s evidence-based, field-tested module went on to become an integral part of India’s National Adolescent Health Programme, which seeks to break the country’s intergenerational cycle of poor health. The module’s success earned MAMTA the opportunity to build on the effort, by conducting a master training module for senior medical officers from their respective states.

Getting in on the ground floor of a new policy initiative increases the likelihood of holding on to the government’s support as the program scales. But to make the strategy work, nonprofits should remain politically neutral, even as they align with policymakers.

More often than not, the leaders of nonprofit organizations that work closely with government institutions also ensure that their organizations’ roles and functions map closely to the government’s roles and functions. Their logic: The more they mirror the government’s organizational structure, the easier it will be to build productive and collaborative partnerships with the government.

If the world can learn from how India’s nonprofits extend their reach to millions, Indian nonprofits can learn from other parts of the world how to better define what success looks like and measure whether it has been achieved.

When Safeena Husain, a London School of Economics graduate, launched a nonprofit to raise the quality of girls’ education by increasing enrollment and improving outcomes, she specifically sought out the worst-performing school districts by asking the government to identify those with the greatest gender disparities. More than a few were in the northwestern state of Rajasthan, where more than 350,000 girls are out of school and roughly 50 percent are married before the legal age of 18. Having aligned with the government on where the need was greatest, Husain then designed her organization, Educate Girls, so that it had a partner for every government office, from the state level down to coordinators in Rajasthan’s individual villages.

“We can’t have transactional conversations with the government, where we’re communicating at just one point and leaving everything else alone,” says Husain. “Nothing moves. We have to work at every level, where everyone has a counterpart. Government relations work best when the conversations are continuous.”

The big hazard in partnering with any government, in any country, is that all too often, corruption is part of the bargain. Several nonprofit leaders say the most effective way to deal with graft is to never, ever submit to it. “We decided that we will not pay even a single penny as a bribe,” says one founder of a nonprofit that relies on a fleet of trucks to deliver its products. “We suffered for that. Many times, we had trucks that were stuck for 20 days. But the next time our truck went on the same route, nobody stopped it. They knew we wouldn’t pay, so they left us alone. Before an organization decides what it’s going to do, it first has to choose what it’s not going to do,” he says. “Paying even a single bribe was one of our non-negotiables.”

Shooting for the Stars

If the world can learn from how India’s nonprofits extend their reach to millions, Indian nonprofits can learn from other parts of the world how to better define what success looks like and measure whether it has been achieved. Although each of the nonprofit organizations in our study tracked the number of people it has served, we would all benefit if they could achieve a more robust measurement of their total impact. That said, the denominator thinkers’ ability to refresh and renew is inspiring, and their approach to growth is worth others’ consideration.

Which brings us back to the Kaivalya Education Foundation. Recall that over the past eight years, Kaivalya has reached some 1,000 schools. To reach 10 times that number over the next five years, Natraj is moving his lens up the org chart, from school principals to district administrators. His theory is that since efforts to bolster leadership skills at the school level have been well received, helping district administrators become more effective will help make a difference, on a larger scale.

It’s far from certain whether Natraj’s theory will lead to on-the-ground change. As of this writing, the foundation is running pilot programs in three school districts to test this new model; it won’t have a good handle on the results for two or three more years.

But here’s what is certain: Just as every rocket follows an arc as it hurtles skyward and then begins its descent, Kaivalya and the other 19 organizations will follow the same pattern. When gravity pulls one high-flying growth model past its peak, they won’t hesitate to fire up a different rocket and aim for the stars once again.

“I am sick and tired of nonprofit leaders getting turned on by the fact that they are growing by 45 percent, when all that means is they’ve extended their reach from 22 schools to 32 schools,” says Natraj. “Compared to the need, 32 schools is irrelevant. Even 10,000 schools is ultimately irrelevant. What’s relevant is all 600,000 schools.” 


1Research Methodology: Scaling India’s NPOs


Soumitra Pandey is a partner in The Bridgespan Group’s Mumbai office.

Rohit Menezes is a partner in the same office.

Swati Ganeti, who externed at Bridgespan Mumbai during the first half of 2016, is a consultant at Bain & Company’s New Delhi office.

The authors thank Bridgespan Ideas Editor Bill Breen for his support in drafting this article and independent consultant Salone Mithal Ghosh.

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