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Why social development funding needs a new playbook
This article is authored by Anantvijay Singh, associate director and Isha Maniar, manager, Dasra.
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India is spending more on social development than ever before. Public spending on the social sector has grown at 13% annually, reaching about ₹27 lakh crore in FY25 and projected to hit ₹50 lakh crore by FY30. Alongside, philanthropy and CSR have grown into significant pools of capital for civil society, with private philanthropy reaching an estimated ₹1.43 lakh crore and CSR exceeding ₹40,000 crore annually.
Even as much of India’s development progress is still driven by public systems, civil society has long played a complementary role: Reaching communities that formal systems struggle to reach, helping people access public services and entitlements, testing new approaches, and helping communities directly participate in their own development. They are often where national policy and public programs converge with the everyday realities of the community. The question now is whether the capital available to these organisations is structured around these realities they are operating within. As many of India’s remaining development challenges become more interconnected, the mismatch between how communities experience them and how funding is traditionally organised — per the priorities of the funder into sectors like education, climate, and health — becomes harder to ignore.
The truth is, people and communities do not experience life in sectors. We don’t ring-fence Monday for health and Tuesday for education. Our commute, our parents’ medical bills, our children’s school fees, a rough week at work, all intersect with and impact each other.
Take a woman farmer in a remote, forested district, for instance. Living in this geography, she has limited connectivity and access to essential services. She farms rainfed land on soil that is slowly degrading. The nearest market is a long walk away. Gender norms may mean that she doesn’t have access to a formal land title, or a place in decision-making forums, and is unable to access schemes that are available to her. Her children may have a long walk to school, when they go at all. Shocks to any of these will impact the others. A drought may push the family into debt, and consequently, migration. Migration may lead to school dropouts, which may trigger a cycle of increasingly narrow future opportunities.
The organisations working closest to communities like hers, often led by members of the community themselves, also don’t exclusively work in sectors. India’s non-profit sector, with 515,000+ registered organisations and an estimated 16 million employees, is one of the largest organised civil societies in the world. Many of the organisations working closest to communities are micro or small, but their defining characteristic is their proximity to the communities they serve: sustained presence and trust within the community. Together, they form a layer of India’s development architecture that is structurally essential to transfer solutions at the hyperlocal levels.
For these organisations, their funding plays a decisive role in what they are able to respond to, how quickly they can adapt, and whether they can build the institutional capacity to stay for the long-term. Yet the way much of their funding reaches them is structured very differently from the realities they counter.
According to the India Nonprofit Report 2026, 80% of NGOs surveyed work on annual budgets under ₹3 crores. 68% of nonprofits reported a funding deficit in FY 2024–25, rising to 83% among micro-organisations; 73% have no corpus fund, and 90% cite funding and financial sustainability as their primary challenge. The dominant funding instrument in India’s social sector remains project funding: Grants tied to defined activities, fixed budget lines, and typically short reporting periods, with limited provision for the cost of running the organisation behind the activity.
Salaries between projects, finance and compliance systems, leadership, governance, technology, and the slow work of building a team rarely have a place in a project budget, and are routinely underfunded as a result. The pattern, termed by the sector as the ‘non-profit starvation cycle’, is self-reinforcing because lean overheads then become the benchmark against which the next grant is judged. The Bridgespan Group’s work on ‘pay-what-it-takes’ philanthropy has shown how deep the resulting indirect-cost gap runs, and that it falls hardest on rural organisations and on Dalit, Bahujan and Adivasi-led organisations.
The very architecture of this form of funding also seems to punish integration of solutions, and instead forces changemakers to artificially slice their work into sectors and their support to the communities into disparate activities. A funder may have separate portfolios for education, climate, or gender, while the community organisation is dealing with all three at once.
So, on one hand, sector-specific funding can determine what an organisation is able to work on, while on the other, project-based funding can determine how it is able to spend. Together, they can leave little room to respond as community needs evolve. Of course, sector priorities or project grants are not inherently flawed, given that they’re designed to create accountability and allow the pursuit of defined outcomes. The problem is when they become the default even where the work itself is interconnected.
DEHAT India, an organisation working in Uttar Pradesh’s Terai belt, for instance, built its work around children rather than a predefined sector. It connected them to health services and the police, built networks to track child marriage and school dropouts, and worked with local panchayats on child-friendly practices. Addressing one concern required engaging with several others around it.
Dasra’s work with changemakers across the country is also showing what becomes possible when organisations have the resources to strengthen themselves alongside their programmes. Among organisations we worked with, dependence on founders almost halved, the use of data to drive strategy increased nearly fivefold, while about half were able to expand to new blocks or wards, and three-fourths were able to offer additional services to the communities they served. Nearly all saw an increase in community awareness and dialogue. These institutional gains are crucial because stronger organisations are better able to retain talent, use evidence, and adapt their work to stay responsive to communities over time. Funding, therefore, needs to strengthen an organisation’s ability to respond, rather than narrowly prescribe that response.
A more effective playbook for development funding would match the capital to the nature of the work, the organisation, and the time required for change. It means supporting the people closest to the problems they are working to solve; allowing funds to serve the cause rather than forcing the cause to fit the grant; giving organisations the flexibility to respond to how problems actually present themselves; and investing in their resilience so it becomes one less problem that can take away their ability to work on all of the others.
This is where the growing wealth of India should be playing a role, in ensuring that resources reach the organisations and changemakers who are doing this, enabling them to experiment, fail, grow, respond.
India's problems don't respect sector boundaries, and communities are already solving problems across sectors. The funding ecosystem needs to catch up and fund them that way.
(The views expressed are personal)
This article is authored by Anantvijay Singh, associate director and Isha Maniar, manager, Dasra.
