Wednesday, April 26, 2006

Some thoughts on corporate funding

Recently, the issue of approaching corporations for funds came up at an Asha meeting. What was interesting about it was the absence of much discussion on the issue. Very little was said, most people didn’t seem very opposed to the idea and probably had not thought about it enough.

What's wrong with corporate funding, the question arises. Clearly, more funding means more projects, higher levels of monetary involvement in various aspects of our projects including infrastructure and so on. And corporate funding is just another source of funding, the argument goes. More dollars in the bank using which we can do more things. I suspect many of us would see no issue here. What indeed is the problem with corporate funding? Oh sure, there are those who hate corporations and all that, but darn, they’re just raging leftists who can never take a balanced, objective view of things, who think with their heart more than their brain.

Yet the issue is critical in my opinion. Let me state my position first – I am opposed to corporate funding. Since there are many doctrinally assumed reasons for why one might be opposed to corporate funding, let me start with what are not some of the reasons for my position. No, it's not out of ethical considerations, even though I am opposed to corporations as an institution. They are fascist structures, totalitarian institutions of the worst kind, vested with enormous power by the state. However, owing to this very power, they are omnipresent. They dominate every walk of life. If I were to make a list of how dependent my life is on them, the list would be endless - beginning with food to medicine to where I work to search engines to book stores to sources of entertainment, etc. At the risk of digressing, let me hasten to add that my opposition to corporations coupled with my rather direct dependence on them does not make me a hypocrite. Why am I raising this issue, you might ask. Well, there are many that hold what is to me a rather strange point of view – that since one is so dependent on this magnificent institution, one must therefore feel obliged to not oppose or criticize it (I will leave you to reflect upon the deep-rooted totalitarian strains behind this point of view).

Back to the original point, I do hate 'em. But that is not why I'm opposed to their funding. In fact, I have no problem with using matching funds, using corporate resources such as machines, office-space and software for non-profit work (imagine doing our non-profit work without the web, google and all!). We cannot choose the world we live in, after all. Since the world is dominated by an institution and since we have to live in this world, it follows quite naturally that we use the institution to our ends as much as possible.

No, that is not the point at all. My opposition to corporate funding stems from something different. Note first that all said and done, funding is important. After all, it does substantially widen the scope of things you can do. It helps you dream bigger. It helps broaden the impact of our work. But, and this is often missed, this comes with a price. I strongly feel once an organization grows accustomed to a certain level of funding and the things that go with it, it makes it much harder to accept or even consider a lower level of funding. The threat of donors withdrawing, of the same money not being raised the next year, becomes real. Whether we like it or not, this becomes a big consideration in whatever we do. In other words, there is a rather significant hidden cost that we must bear in mind in planning our funding strategies, namely the burden of renewability – how easily can the funds be renewed?

It is especially critical to keep this in mind if as an organization, we seek to constantly challenge our approach and even change strategy if needed (in short, if we’re serious about socio-economic change). Just imagine the constraints that funding would impose on you should you wish to change direction. Taking the example of Asha, say we wish to switch to a more activist role as an organization. Say we wish to broaden our focus, to go beyond education. Say we wish to allow Asha volunteers to be grass-root social workers. Well, these are all significant changes in the way the organization is structured and we have to understand that these changes will be that much harder to achieve if the burden of fund renewability is high. No matter that an overwhelming majority of volunteers feels it is the right thing to do.

Now, corporate funding is usually huge and unlike individual donations which are spread out among many individuals, corporate funding can easily be concentrated in few hands. Moreover, it is worth recalling that corporations never donate out of philanthropic motivations. That is legally prohibited. No, I’m not kidding. That is legally prohibited. To them, it is a public-relations exercise. Why does this matter, you ask. We get the money, who cares what the donor’s motives were; perhaps it was tax deductions; who cares? Again that is not the point. The issue is that the corporation’s commitment to the cause is weak, by its very definition. Well, that clearly implies the corporation might easily switch the cause to which it is contributing. The switch is determined purely by public relations, things like what is a hot topic, where is media attention higher, etc.

As a result, the burden of renewability that corporate funding carries is much, much, much more. We will be effectively held hostage to it. That to me is the crux of why corporate funding is undesirable. And this applies not just to dollar contributions. Say tomorrow Asha decides to seriously take up sending learning aids, on a large scale, to all its projects. And say a corporation is willing to contribute for free. We ought to be very careful before accepting, for exactly the above reasons. In fact, I would oppose it.


At 7:33 AM, Anonymous Anita Balasubramanian said...

I agree with the crux of your argument - that most corporations are not committed to the cause, and so the funding may not be a constant.

Another reason why privatising public education or getting private funds to support public education does not work. I was hearing a program on Chicago Public Radio which is a series on the public education scene in Chicago. And one of the sessions was on "private funding in public education". One of commentators argued that most private institutions, corporations (and even philanthropic institutions - some do resemble corporations) go through a 10 year funding cycle on a average after which they change where their money goes. And so getting public education dependent on that would be harmful in the long run.

At 2:00 PM, Anonymous Anonymous said...

In short, you are saying that NGOs that are taking money from corporations should have good finance risk mgmt otherwise they may get into tough situation.

I feel Asha finance team should be notified about it and if they can balance it then Asha can go ahead with this model.


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