India's last-mile change agents deserve philanthropy built on trust

This article is authored by Trisha Varma, director, Global Knowledge Hub, ISDM and Ripple Mirchandani, chairperson, Pune Chapter, SVP India.

India’s social sector has a grassroots development problem. Not a capacity problem, not an intent problem, but a visibility problem. When we think of the social sector, we often flatten its complexity into a few ready-cut roles: Government sets policy, funders write cheques, and NGOs deliver. But the reality is far more textured. NGO is an umbrella term that covers everything from large, institutionalised organisations with hundred-crore budgets and multinational donor relationships, to mid-sized city-based nonprofits with professional teams, to small grassroots outfits run by a founder and three staff in districts still awaiting to see the fruits of development.

Philanthropy

These last ones–Small and Medium Non-profits (SMNs)–typically operating on annual budgets between ₹50 lakh and 3 crore– are the ones closest to the problem statement. They work in the geographies that large organisations find too remote, on causes too niche for institutional mandates, with communities too marginalised to show up in anyone's impact metrics. They are, in a real sense, where the sector ends, and the community begins.

And yet the current philanthropic funding model rarely reaches them with what they actually need. Philanthropy in India rewards visibility, compliance readiness, and institutional heft, none of which necessarily correlate with development effectiveness. The system sustains itself: Restricted grants and high compliance burdens create friction that large organisations absorb easily, and that smaller ones simply cannot.

Trust-based philanthropy closes this gap. Research by ISDM’s Centre for Innovative Finance (CIFSI) in collaboration with Social Venture Partners (SVP), into how individual philanthropists successfully engage with SMNs, reveals something striking about funder behaviour.

Funders consistently described cause selection as personal and emotional, driven by lived experience, private conviction, and a sense of alignment that no sector-priority document can manufacture. What they are looking for is specific: A founder with a clear vision that exists independent of donor agendas, the openness to surface problems early, and the credibility that comes from being willing to stand their ground.

Funders who successfully back SMNs didn’t start with due diligence frameworks, sector priorities or even scale narratives. They started with the founder and invested relationally. They provided mentorship, introductions, and networks alongside money. As one funder put it, non-financial support was the first, foundational step.

The research also found that funders who work closely with SMNs are actively put off by polished reports that read like marketing brochures, presenting only successes and framing every setback as a learning. What builds genuine confidence is the opposite: a founder who brings the funder into a challenge early, treating them as a partner in solving it rather than an auditor to be managed. Transparency about failure, counterintuitively, is the fastest route to trust.

This inverts the entire logic of how most donor-reporting architecture is designed. Reporting systems built to manage risk through information control may, in practice, be destroying the very trust they are meant to create.

Funders are not passive actors waiting for the right SMN to present itself. They are active drivers of the dynamic they claim to want to change. When funders default to large organisations because they are familiar, when they impose restricted project grants because flexibility feels risky, when they evaluate SMNs against reporting standards designed for institutions ten times their size– they are making choices that reproduce the funding gap, not redress it.

The funders who break this pattern share a common practice: they invest time before they invest money; they focus on capacity building support for the organisation rather than just transaction-based funding. But they also make a more fundamental shift in how they see their own role. The instinct, especially among funders with professional expertise, is to walk into an SMN and start fixing things: The accounts, the reporting systems, the strategy. But what the NGO actually needs must take precedence over what the funder wants to give.

This requires a different kind of humility and a different understanding of power. Framing the relationship as a partnership, rather than a hierarchy with money at the top, changes everything about how the engagement unfolds. Founders feel safe raising problems. Funders become genuine stakeholders rather than compliance monitors. And over time, the funder's role organically shifts from grant-maker to sounding board, from transactional partner to champion, and this shift is what has the capacity to bring about the monumental change required in today’s world.

This is philanthropy as co-investment, and it produces something no compliance framework can replicate: a funded organisation that is honest about what is working, adaptive in the face of what isn't, and oriented toward impact rather than optics. India's grassroots non-profits do not need to be fixed. They need funders willing to show up differently. Philanthropy's shift from transactional giving to ecosystem-building will be defined by its ability to strengthen the capability, trust, and long-term resilience of small and medium non-profits.

(The views expressed are personal)

This article is authored by Trisha Varma, director, Global Knowledge Hub, ISDM and Ripple Mirchandani, chairperson, Pune Chapter, SVP India.