India must unlock USD 150 million annually in flexible funding over the next five years to enable 100 “non-profit unicorns” capable of impacting more than one million people each, according to a new report by Change Engine.
The study, titled Ease of Doing Good: The Flexible Funding Gap for Non-profit Unicorns, draws on responses from 146 organisations and argues that while India has produced over 100 startup unicorns, its social sector remains structurally constrained by limited access to unrestricted capital.
The report estimates that creating 100 large-scale non-profits would require USD 750 million in flexible funding over five years — equivalent to roughly 4 per cent of India’s annual CSR outlay and 1 per cent of total philanthropic giving. It describes the target as “ambitious but achievable”.
Flexible Funding In Short Supply
According to the survey, 80 per cent of organisations reported that less than 25 per cent of their funding is unrestricted. More than half operate with under 10 per cent of their budgets as flexible capital.
Across organisation sizes, small (annual budgets under Rs 1 crore), medium (Rs 1–5 crore) and large (above Rs 5 crore), the pattern remains consistent. Among medium-stage organisations, six in ten have less than Rs 25 lakh in unrestricted funding, despite being at a stage where they are attempting to scale proven models.
Nearly 60 per cent of respondents said that typical unrestricted cheques are below Rs 10 lakh, and only about 7 per cent reported access to cheques of Rs 50 lakh or above.
Also Read: In India, Rs 1.43 Lakh Cr Private Philanthropy Faces Limits
Multi-year funding is also scarce. Four in ten organisations said they have never received a multi-year grant. Among organisations without eligibility for foreign funding under FCRA or US 501(c) registration, this rises to 58 per cent. By contrast, the proportion drops to roughly two in ten among those eligible for foreign funding.
The absence of predictable, multi-year support has operational consequences. About 45 per cent of founders reported spending more than half their time fundraising, with 15 per cent saying fundraising consumes 75 per cent of their time.
“Small cheque sizes, slow decision-making cycles and absence of multi-year grants drain founder time,” the report states.
CSR And Domestic Foundations Lag
The study finds that high net worth individuals (HNIs) and crowdfunding are the primary sources of unrestricted funding. Fifty-five per cent of organisations reported receiving flexible funding from HNIs, while 41 per cent accessed it via crowdfunding.
By contrast, only 33 per cent raised unrestricted funding from domestic foundations, 23 per cent from foreign foundations, and 18 per cent from CSR contributions.
Organisations also reported that raising unrestricted funding is consistently harder than securing programme-linked grants. The contrast was sharpest for CSR funding: unrestricted CSR grants received an average ease-of-raising score of 1.4, compared with 2.9 for programme-linked CSR funding.
Also Read: India’s Rs 540 Billion Giving Economy Is Vast, Informal And Religion-driven
More than half of respondents, 55 per cent, cited regulatory and CSR rules as actively discouraging unrestricted funding. The report notes that CSR represents Rs 34,000 crores in annual funding in India, describing it as a “massive pool of capital” that remains largely inaccessible for flexible support.
Respondents also highlighted informal norms around low overheads and expectations of minimal salaries. Fifty-three per cent cited expectations of low operating costs as a barrier, while 53.4 per cent pointed to regulatory and CSR constraints.
Scaling Constraints And Investment Priorities
Nearly 80 per cent of organisations said they feel constrained in scaling due to a lack of flexible funding.
When asked what they would do with 25 per cent additional unrestricted funding, 75 per cent prioritised investing in talent and team capacity. Roles frequently cited include fundraising and communications, programme leadership, and monitoring and evaluation.
About 32 per cent said they would invest in pilots, innovation and experimentation, while 27 per cent would strengthen technology and systems, and 18 per cent would enhance monitoring and evaluation capabilities.
The report links this to earlier research by Change Engine, which found that early-stage organisations require around USD 500,000 over their first three years to invest in innovation and navigate iteration. With most funding tied to specific programmes, organisations struggle to build core teams, invest in technology or test new models.
“Flexible funding is the fuel non-profits need,” the report states, arguing that without risk-tolerant capital, organisations become more risk-averse, inhibiting innovation.
Policy And Ecosystem Shifts
Among proposed reforms, nearly half of respondents prioritised multi-year grants, while 28 per cent called for dedicated unrestricted grants. Suggestions included shifting from one-year to three-to-five-year commitments, simplifying reporting requirements and tracking outcomes rather than line-item budgets.
The report also recommends reviewing the 20 per cent cap on income from economic activities for organisations classified under General Public Utility, arguing that it limits the ability to build sustainable earned-revenue models.
Also Read: When Funding Ends, Can Communities Sustain Social Change?
Another recommendation is easing CSR eligibility norms that currently require a minimum three-year track record, which respondents said excludes early-stage organisations from accessing one of the largest domestic funding pools.
Change Engine positions the issue as systemic rather than episodic. The study acknowledges limitations, including non-random sampling and reliance on self-reported data, but describes the findings as first-of-their-kind evidence on unrestricted funding in India.
“The capital exists; what is required now is the will to deploy it differently,” the report concludes.
As India debates its path to becoming a USD 5 trillion economy, the report argues that improving the “ease of doing good” may be as critical as improving the ease of doing business. |
