India’s philanthropic capital is growing steadily, yet much of the social sector remains bound to traditional approaches to funding. Most grants continue to be restrictive and project-based, constraining non-profits from building institutional strength or driving long-term, systemic change.
What the data says
According to a Bridgespan report (2023), 75% of Indian funders say they invest in strengthening NGOs' institutional growth, but 70% of NGOs report that most funders don't actually support these needs.
About 83% of NGOs find it hard to get flexible funding for support functions outside core programs, though 68% of funders say their policies allow it. The variance reveals a clear disconnect between funder policies and on-ground NGO realities.
Globally too, this was evident until recently. Before 2020, less than 20 per cent of all foundation giving came in the form of unrestricted grants, despite decades of advocacy from non-profits for more flexible support. Then came a defining moment in modern philanthropy: Mackenzie Scott’s $12.8 billion in largely unrestricted donations to over 1,600 organisations by 2022. These investments reshaped how organisations built resilience, freedom, and capacity for lasting impact.
Why trust-based giving works
A three-year study by the Centre for Effective Philanthropy found that organisations funded through Mackenzie Scott’s unrestricted giving reported stronger financial stability, deeper programmatic success, and healthier organisational cultures. Nearly 88 per cent said their capacity to achieve their mission had grown, and over 70 per cent used these funds to strengthen long-term financial stability because they were able to invest in leadership, governance, and systems - areas often overlooked in conventional grant models.
Furthermore, social sector leaders vouch that when organisations feel trusted, their ambition grows, confidence strengthens, and the willingness to take on systemic challenges deepens.
Partnering with funders to co-create lasting change
Trust in philanthropy is not merely a moral stance - it is also a strategic imperative that unlocks the full potential of capital and delivers lasting impact. Strengthening NGOs by investing in their leadership, systems, and financial capacity builds institutions that are resilient, capable, and ready to drive meaningful change.
Yet, perceived risk often holds funders back from embracing trust-based approaches. Shifting toward long-term, collaborative partnerships can change this dynamic - transforming funders from transactional grant makers into genuine co-creators of impact. This shift calls for moving beyond compliance-heavy frameworks, particularly within CSR, to focus on long-term transformation rather than short-term outputs.
Examples such as EdelGive Foundation’s flexible funding partnerships and ISDM’s Philanthropy for Inclusive Development Initiative demonstrate how trust nurtures resilience, empowers communities, and redistributes decision-making power.
Flexible funding drives sustainability
Flexible funding allows to strengthen local leadership and build resilient systems that last beyond any single intervention. By trusting communities with adaptable resources, organisations like Swades Foundation have nurtured thousands of volunteers who drive on-ground problem-solving.
This approach has helped transform over 250 villages in rural Maharashtra into Dream Villages - evidence of how flexible support fosters independent, self-sustaining progress.
The SEWA example
Long before this global shift, the Self-Employed Women’s Association (SEWA) demonstrated how patient, trust-based investment in grassroots leadership can create enduring change. Its community-led model continues to empower women across generations, proving that true transformation requires both time and flexibility.
Donor fears around fund misuse, limited short-term results, and loss of control have shaped a funding mindset that remains largely ROI-driven (return on investment), short-term, and project-based, often with little focus on sustainability. This approach ultimately weakens the true potential of philanthropic capital.
For philanthropy to create lasting impact, funders - whether family foundations, corporates, or institutions, must embrace vulnerability, transparency, and patience. Sustainable change is built not through cost-cutting or control, but through mutual respect and long-term partnership. The future of India’s social sector, and the vision of a developed and equitable nation, will depend less on how much capital is deployed and more on how much trust is placed in those driving change at the grassroots.
(Kakul Misra is Director of Strategic Capacity Building at ISDM and Mangesh Wange is CEO and Board Member at Swades Foundation.)
Views are personal and do not represent the stand of this publication.
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