American India Foundation (AIF) Livelihood and Education for the Poor and Marginalized

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1 Livelihood and Education for the Poor and Marginalized October 23, 2006 Accelerating Social and Economic Change in India Recommendation: Donate Rating: (Good) Revenue: Rs 260,050,700 US $5,653,300 Tax Exempt Status: Donations to AIF in the United States and India are tax-exempt under the respective laws of these countries American India Foundation (AIF) is an innovative and efficiently managed non profit organization. It provides funds to select programs and NGOs (Non Governmental Organizations) in India in the sectors of elementary education, livelihood options with an emphasis on female empowerment, and public health with an emphasis on HIV/AIDS. Maximum Impact with Limited Resources AIF creates maximum impact with its limited resources through judicious grant disbursement, creation of sustainable development, and the sharing of innovative and efficient development models. In March 2005, it organized a conference to enable its grantees to share their best practices and development models on educating children of migrant workers. The conference was attended by several government officials including the Joint Secretary of Education. Qualified Management AIF s volunteer-led advisory council and full-time top management consists of experienced and qualified professionals. The President of AIF has received two awards in 2002 for her philanthropic activities, and the Executive Director of AIF-India has held positions with NGOs such as Partners in Change and ActionAid. Transparent Operations Transparent operations and information disclosure are an important part of the organization s vision. Other than the expenses of board members and the salaries of its staff, the organization discloses all the relevant information. It discloses the information such as financial statements, impact of its programs and grants, and fund allocation and grant making criteria as well as the names of its staff, board members, and volunteers. Focus on Long-term Rehabilitation AIF takes the view that since much relief work is well-covered by the government relief agencies, the organization should focus on the long-term rehabilitation of disaster victims. In 2004, AIF raised $2 million (Rs 92 million) for the Tsunami Relief Fund in three months; only 2% of the funds raised were spent on relief work and the remaining 98% will be committed to long-term rehabilitation projects, which include providing livelihood options through skills training, educating children, and developing infrastructure. Copal Partners Charity Research Copal Partners Charity Research 1

2 Mission AIF aims to speed up social and economic change in India by focusing on primary education for children and secure livelihood as a means of women s empowerment The American India Foundation (AIF) aims to catalyze social and economic growth in India and to enable all Indians to realize their potential. It not only raises and disburses funds to achieve its mission but also educates donors to become more effective philanthropists. It is envisioned as a professional organization that is secular, transparent, credible, and accountable for all its activities. Environment AIF believes primary education for children and economic independence for women can catalyze social and economic growth in India Despite enormous strides toward economic progress and a 7.6% growth in the Gross Domestic Product (GDP) in 2005, 26% of India s population still lives below poverty line and nearly 35% of population above the age of 7 cannot read or write. The circumstances are even grimmer because of the existence of gender inequity in the Indian society. As shown in Table 1, in spite of the increase in literacy rate, female population of India is still lagging behind by 22 percentage points as compared to the male counterparts. Male (%) Female (%) Table 1. Male and Female Literacy Rates Furthermore, 78% of the population in India earns less than $2 per day and many of India s citizens do not have access to basic education, secure livelihood options, and adequate healthcare. The circumstances of the already poor population become even more horrendous in the aftermath of natural disasters such as Gujarat earthquake of 2001, Tsunami of 2004, and Kashmir earthquake of Helping poor people struck by natural disasters was the initial motive behind formation of AIF. Genesis of AIF The AIF was formed in 2001 to raise funds for relief and rehabilitation of the Gujarat earthquake victims. It was established under leadership of the former US (United States) president Bill Clinton after discussions with Rajat Gupta, the former McKinsey & Co. Managing Director, and Victor Menezes, the Chairman and CEO of Citibank; these well-established figures exercised their influence to raise funds with the aim of addressing the crisis created by the earthquake in Gujarat. In January 2002, AIF expanded its focus from rehabilitation in Gujarat to accelerating social and economic change throughout India. It is a secular, nonpartisan, non-profit, and non-governmental organization that is registered in the United States. In the five years since its existence, AIF has raised over $30 million (Rs 1,380 million) from individuals, corporations, and other sources across the United States. AIF furthers its mission by awarding grants to education, livelihood, and public health projects with an emphasis on elementary education, women s empowerment, and HIV/AIDS, respectively. Although its primary focus is on the grant-making activities in India, AIF also administers the following programs: Service Corps (SC): This program aims to develop young American leaders by placing them with Indian non-profits. Copal Partners Charity Research 2

3 Digital Equalizer (DE): This program provides computers, internet, and technical training to students and teachers in under-resourced schools. League of Artisans: This new program builds business enterprises in the craft sector in India with the aim of creating a sustainable livelihood for the underprivileged artisans. Donor Education: This program aims to train individuals to become strategic donors. Business Model Thirty-four percent of AIF s funds for the year 2004 were generated from its own fundraising activities Sources of Grants and Donations for 2004 AIF generates its revenue from individual and corporate donations as well as its own fundraising events. Since 2002, the funds generated from donations by individuals have reduced from $3.3 million to $2.2 million but the funds generated through AIF s own fundraising events have increased from $.15 million to $1.9 million. It seems that AIF has reduced its dependence on donations by public and now follows a proactive approach for raising funds. In 2002, only 3% of the organization s revenue had resulted from its own fundraising events whereas in 2004 AIF generated 34% of its revenue from the fundraising events (see Table 2). Direct contributions by individuals, corporations, and foundations formed 97% of its revenue for 2002 and 65% of its revenue for % 21% 1% 39% 5% Individuals Corporations Foundations Fundraising Events Other Sources of Revenue 2004 (%) 2003 (%) 2002 (%) Individuals Corporations Foundations Fundraising Events Investment Return Other Table 2. Break-up of the Sources of Revenue Revenue growth was negative from 2002 to 2003 due to a significantly reduced amount of donations by individuals. As shown in Table 3, the revenue of AIF grew by 19% from 2003 to 2004 which was due to a significant increase in the funds generated by hosting its own events. The reason for this increase is the influx of contributions toward the relief and rehabilitation of destruction caused by the Tsunami Revenue ($) 5,642,000 4,582,000 5,710,600 Revenue Growth 19% - 25% -- Table 3. Revenue Growth of American India Foundation (AIF) Structure AIF is headquartered in New York, USA and has its operations office in New Delhi, India. It is governed by 33 trustees, a 19 member advisory council, 13 board of directors, and 13 India advisory board members. Its executive team consists of a President, an Executive Director in the United States, and an Copal Partners Charity Research 3

4 Major Sources of Funds in 2004 Source Funds ($) New York Gala 1,000,000 San Francisco Gala 1,000,000 Workplace Giving 400,000 Los Angeles Gala 275,000 Ford Foundation 200,000 Das Educational Foundation, Inc. Over 100,000 McKinsey & Company Over 100,000 Omidyar Network LLC Over 100,000 Pratham USA Over 100,000 The Starr Foundation Over 100,000 W.K. Kellogg Foundation 50,000 AIF has received a score of 27/30 because of its quality management, judicious resource allocation, effective strategy execution, and transparency of operations Executive Director in India. The executive team is responsible for day-to-day running of the organization. AIF has nine volunteer-led chapters which serve as a support base for the organization outside of New York. Through its chapters, AIF creates a nationwide presence to further its mission by forming relationships with community and corporate leaders, and organizations; these relationships help build awareness, raise funds, and spread the notion of philanthropic giving, for India s development, amongst the American communities. Grant disbursement is overseen by AIF s office in Delhi, which is headed by Shankar Venkateswaran who is an executive director for AIF-India. To expedite the grant-making decisions and co-ordinate project monitoring, AIF has added a staff person based in Chennai. AIF s experienced team of professionals in India, supported by education and livelihood advisory councils, identify the innovative, relevant, effective, and efficiently managed NGOs (Non Governmental Organizations) for grant-making. Our Rating AIF has received an overall score of 27 (see Table 4) on account of its quality management, judicious resource allocation, effective strategy execution, and transparency of operations. The maximum possible score is 30 with an equal weightage given to each of the six criteria; the maximum points that can be assigned to each criterion are five. Criteria Score Disclosure 4 Clear Strategy 5 Execution of Strategy 5 Resource Allocation 3 Management Quality 5 Ethics 5 Total 27 Table 4. AIF s Rating (Scale of 1 to 5) Operational Assessment Disclosure AIF considers transparency and information disclosure to be an important part of its vision. The annual reports, financial statements, and newsletters of the organization are publicly available on its web site. The newsletters published by AIF provisional revenue and expense summary as well as an update on the other activities of the organization. AIF demonstrates transparency of operations by disclosing the names, responsibilities, profiles, areas of expertise, and responsibilities of its trustees, board members, advisors, and staff. Even detailed profiles of chapter coordinators, who are volunteers, are available on its web site. The organization has also publicly disclosed its criteria for grant-making and the process of monitoring the impact of the grants. Upon request, the organization provides information to individual donors regarding the actual usage of their funds. Additionally, AIF discloses impact of grants for the projects that have been completed. Copal Partners Charity Research 4

5 We believe that AIF can further improve information disclosure by disclosing the expenses and salaries of its board members and staff. Clear Strategy AIF has made considerable progress toward fulfilling its mission by following a well-defined strategical path. As the organization has evolved, its strategy has shifted from providing disaster relief and rehabilitation to focusing on primary education and livelihood projects. AIF s livelihood projects emphasize women s empowerment because the organization believes female education and economic independence create positive effects for the entire family. Additionally, it seeks to promote innovative and efficient development models to maximize the impact of funds disbursed. Execution on Strategy AIF executes its strategy efficiently and effectively through judicious grant disbursement, long-term rehabilitation, creation of sustainable development, and sharing of innovative and efficient development models. The details of AIF s strategy execution are explained in the sections that follow. Tsunami Grant Distribution 2% 98% Em ergency Relief Rehabilitation Gujarat Earthquake Grant Distribution Efficient Grant Disbursement AIF disburses grants for projects that focus on providing elementary education and secure livelihood options to the poor and marginalized communities as well as migrant workers. AIF believes its greatest challenge is the optimal utilization of the limited resources that are available. The organization selects grantees after careful investigation and analysis. It monitors the project implementation to ensure that the funds are being used efficiently for optimal development. When required, AIF also collaborates with multiple funding partners to fund and implement projects. The organizations that have co-funded projects with AIF include Times Foundation, Omidyar Networks, Aga Khan Foundation, the Paul Hamlyn Foundation, and the Bill and Melinda Gates Foundation. For every dollar provided by AIF, the grantees receive additional funds from the funding partners. Long-term Rehabilitation AIF believes that much of the relief work is well-covered by the government relief agencies; therefore, apart from some small grants to supplement relief work, the organization focuses on long-term rehabilitation work. In terms of rehabilitation, it focuses on skills training, education, and infrastructure development. AIF s fulltime professional staff of development experts visits the disaster affected areas and identifies potential NGOs that can utilize the grants optimally and efficiently. 8% 5% 42% 45% AIF has raised $2 million (Rs 92 million) for the Tsunami Relief Fund; only 2% of the funds raised were spent on relief work and the remaining 98% will be committed to long-term rehabilitation projects, which include training and providing livelihood to the individuals who are adversely affected by the Tsunami. None of the funds collected for Tsunami relief will be expended for AIF s administration expenses. Similarly, 87% of the funds raised for Gujarat earthquake were utilized for long-term rehabilitation and reconstruction. Rehabilitation Phase Reconstruction Phase Relief Phase Grant Administration Sustainable Development AIF believes that projects can become self-sustainable only through community involvement. Therefore, it funds NGOs that involve community members in their project implementation. For every project, AIF plans to transfer the responsibility of development to the communities and the government in the long-run. For instance, in the early Copal Partners Charity Research 5

6 2005, a group of DE centers became independent of AIF funding after three years of support. AIF no longer funds the upkeep of these computer labs and over 90% of these centers are still thriving. Innovative Approach AIF awards grants to the NGOs implementing innovative solutions and enables these NGOs to further develop the quality of these solutions. Additionally, AIF seeks to demonstrate that the innovations it funds are not limited to just one community; they can meet larger needs on a regional or national basis and can be implemented by government agencies and NGOs in India on a much greater scale. Instead of substituting the services that government should provide, the organization invests in solutions that the government can adopt and implement to reach the most marginalized communities. The aim behind such interventions is to influence public policy for the good of the poor and marginalized communities. Sharing Best Practices AIF brings together groups of grantee organizations that are working on similar issues and enables them to learn from each other s experiences. For instance, in March 2005, AIF organized a conference for its grantees to share best practices on educating the children of migrant workers; the conference was attended by several government officials including the Joint Secretary for Education. AIF seeks to encourage government to increase the resources committed to educating these children. Additionally, it arranges for the grantees to visit NGOs that have implemented projects efficiently, effectively, and innovatively in the past. By helping grantee organizations share their best practices and train other NGOs, AIF furthers the strategy of creating maximum impact with its funds to catalyze development in India. Resource Allocation In 2004, 76% of the resources were utilized toward grant-making and program implementation. The percentage of funds allocated to awarding grants increased from 33% in 2002 to 65% in 2004 (see Table 5). AIF is a relatively new organization; therefore, it shows a lack of consistency in generating and utilizing its resources. In 2002, a whopping 41% of funds remained unutilized and were contributed to the reserves whereas in 2004 the surplus was only 4%. The 37% reduction in the surplus is a positive change between 2002 and (%) 2002 (%) (%) Grants Programs Fundraising Cost Administrative Expenses Surplus Table 5. Expenses as Percentage of Revenues For 2004, the organization had reserves of $5.3 million (Rs million), which indicate Ability to sustain its current activities for at least one year in case of zero fund generation Ability to expand operations to reach wider population Copal Partners Charity Research 6

7 Capacity to fund on-going projects and to develop new projects Even though AIF s fundraising efficiency has improved over the years, it is raising only $2.86 (Rs 132) per dollar (Rs 46) spent. The organization can still improve its fund allocation by reducing the fundraising costs thereby improving its efficiency in raising funds. Quality of Management AIF s volunteer-led advisory council and full-time top management consists of experienced and qualified professionals. The profile of AIF s executive team is as follows: Lata Krishnan, President of AIF is one of the Co-Founders and Chief Financial Officer of SMART Modular Technologies, Inc. She is a Fellow of the American Leadership Forum and an advisor for Narika (which is a shelter for abused women in the Asian community), the Indian Business and Professional Women s Association, and the Global Philanthropy Forum. She has received two awards in 2002 for her involvement in the philanthropic activities. Pradeep Kashyap joined AIF as an Executive Director in May 2001 and he is involved in administration, book keeping, fundraising and building partnerships for the organization. Prior to joining AIF, Mr. Kashyap was a senior Citibank official and has 34 years of professional experience. He has a Bachelor s Degree from Bangalore University and a MBA from the IIM, Calcutta. Shankar Venkateswaran joined as an Executive Director of AIF-India in June 2002 and his position is based in New Delhi, India. He has 20 years of experience in the corporate and NGO sectors. Prior to joining AIF, he was the Chief Executive of Partners in Change, an Indian NGO in the field of corporate social responsibility. He has also held various positions in ActionAid (a UK based international NGO) and was involved in appraising and monitoring the work of ActionAid s partner NGOs. He is a graduate of Indian Institute of Technology, Madras and Indian Institute of Management, Calcutta. Additionally, AIF s staff in India consists of a team of experts with vast amount of development experience. This team is supplemented by a Grants Expert Panel in each focus area. The panel is comprised of academics, social entrepreneurs, and policy makers who advise and guide the organization in its strategy. The efficiency and effectiveness of grant disbursement procedure is important since 65% of the organization s revenue is allocated toward providing grants. AIF identifies potential partners based on references from other funding agencies, well wishers, grant panel members, and its staff. Then, it matches the projects with its own goals and mission. Additionally, AIF audits the financial statements of its potential partners and establishes the authenticity and ingenuity of their work. AIF and the grantee NGO work closely to create a proposal outlining the project and budget concerns. After finalizing the details, a Memorandum of Understanding (MoU) is signed between AIF and the partner NGO. The organization disburses the funds in several installments. After the first payment, the project is monitored on the basis of semi-annual site visits and quarterly progress reports. The remaining funds are disbursed only if the goals outlined by the MoU have been accomplished. Copal Partners Charity Research 7

8 Ethics AIF is not affiliated with any political or religious group. Its activities are transparent and it follows an adequate disclosure policy. It informs donors about the usage and outcome of their donations. The board members and advisors are all qualified professionals who volunteer their time and services because they believe in the cause supported by AIF. This shows a high degree of ethical commitment on the part of these individuals. By regularly auditing the financial statements of grantees, conducting field visits, and monitoring, on a quarterly basis, progress of the projects funded, AIF ensures that the grants disbursed are being used for right cause and in an ethical manner. Another positive fact about the organization is that its members visit sites of the partner NGOs when they are already visiting India, which saves travel costs. For these reasons, we believe that the organization maintains a high standard of ethics in its functioning. Milestones AIF has achieved considerable success in furthering its mission. In 2004, AIF awarded grants to 19 NGOs, launched 20 Digital Equalizer Centers, and sent 26 Service Corps fellows to work with 20 NGOs. Following sections discuss a few of the key milestones attained by the organization Digital Equalizer Since 2001, AIF has trained over 1,200 teachers and 23,000 students. It has established 104 centers in nine states of India. All DE center students can use Office tools and 80% of them can create content using fonts in their own mother tongue. DE program is also partnering with the government of Punjab (a state in India) to monitor the quality implementation of 1,300 digital centers in government schools. Service Corps So far, AIF has sent 95 fellows to volunteer with 45 Indian NGOs. The organization receives about 220 applications for 20 fellowships, out of which it selects best qualified individuals. In , the Service Corps fellows developed English textbooks for elementary classes, assessed feasibility of a health micro-insurance program, created a handbook to share innovative HIV prevention and care techniques with policy makers and administrators, and conducted a research study on the way India should plan energy usage in its agriculture and transport sectors. Tsunami AIF raised about $2 million (Rs 92 million) in less than three months for recovery and reconstruction projects in India. The organization is still funding projects in the Tsunami affected areas. Following are the results of AIF s interventions thus far: In Cuddalore, 13 women s and 2 men s Self Help Groups (SHGs) have been formed; skill building programs such as fish net making, boat mechanics, and hollow blocks making are in progress; and more than 150 children are enrolled in 10 crèches. In Tuticorin, 58 women and youth SHGs were formed; 12 boats and 17 engines were repaired; and a Balwadi (a day care center for children) was constructed. In Nagapattinam, another Tsunami affected district, a boat production facility was enhanced to provide low-cost, high quality boats to fishing Copal Partners Charity Research 8

9 communities and 80 boats per month were produced in the peak demand period. Ways to Contribute Individuals and institutions can support AIF in fulfilling its mission in the following ways: Monetary Donations: Individuals and institutions can make monetary donations to AIF through the organization s web site, or by check or wire transfer. Services: Professionals and businesses can donate services such as Web Design, Graphic Design, IT support, event management and marketing, catering, accounting and legal services, and frequent flyer miles. Gifts-in-Kind: Individuals and corporations are free to contact AIF to discuss the nature of the gift; the gift must be approved by AIF prior to acceptance. Some items that AIF needs include copiers, projectors, printers, photo scanners, and digital photography equipment. Workplace Giving: Individuals can also contribute to AIF through their employer s corporate giving program. Even employees of the United States federal government can contribute through Global Impact, a notfor-profit organization which has an arrangement with the United States Office of Personnel Management to solicit funds from all federal employees, for contributions to organizations such as AIF, who operate internationally. Legacy: Through a will or living trust, donors can commit some or all of their assets to one or all of the causes supported by AIF. Other Options: Donors can also contribute stock, set up AIF as the beneficiary for their life insurance policy, and donate appreciated securities, real estate, or personal property while avoiding capital gains and other taxes. For more information or to donate, please visit AIF s web site at: Conclusion AIF leverages its resources for creating a maximum impact toward social and economic progress in India. The organization benefits poor and marginalized communities in India through effective partnerships, sustainable development, and sharing innovative and efficient development models. It seems that involving qualified professionals at the administrative level has enabled AIF to achieve its goals and come closer to fulfilling its mission. Copal Partners Charity Research 9