Monthly Archives: June 2006

How much is a Billion dollars?

We were sitting at the site coordination office of SPARC, at Dharavi. SPARC is a Mumbai based non-profit working towards rehabilitation of Mumbai’s slum dwellers through local community organizations. The office is in the ground floor of a recently constructed housing complex, which previously used be a slum, now converted with help from the state government and local community organizations.

As we get into the office, an old man walks in. He had walking sticks, was almost shirtless and had bandages tied to his legs. He approaches the coordinator sitting there and hands him some documents, and starts conversing in Tamil. The coordinator, quite a young guy, could not understand a word. So, I became the interpreter.

Turns out Ramalingam, who is probably more than 60, hails from Thirukovil in Southern Tamil Nadu. He came to Mumbai 40 years ago with his family and since then has been begging in the streets of Mumbai. The little hut where he and his family currently live is scheduled to be demolished by the municipality in the next couple of days. However, he has been allotted a house, in one of the newly constructed apartment complexes to rehabilitate slum dwellers at Vashi naka. He had the keys for his new apartment. He was there at the office, because he was told by his neighbors that SPARC would also pay him some money for the shifting, given that Vashi naka is quite far from where he lives right now. However, he had to return empty handed, SPARC had no resources under that program, to pay for his shifting. Well, at least he got the house.

Later than afternoon, we went in-roads into Dharavi to see some more projects. I still could not understand why someone like Ramalingam, would leave his nice town or village to come to a city like Mumbai and live in the worst conditions possible. Was it extreme poverty or the lure of the big city? I heard that 60-70% of families living in Dharavi are people who migrated from Southern Tamil Nadu! Interestingly, Dharavi is also swarming with economic activity. A recent Time Magazine article estimates that the slum generates a GDP of $1 billion a year. And yet, people living in the worst possible conditions.

That afternoon reinforced my belief that creating rural livelihoods is an important step in preventing such large scale migration. Probably one day, Ramalingam’s children would want to come back to their little town.

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One bottom line is a lot

I came across this thought-provoking article, Non Profit and For-Profit: Blurring the Line, written by Howard Husock, who is the director of the Manhattan Institute’s Social Entrepreneurship Initiative, an award and research program, and a research fellow at the Hauser Center for Nonprofit Organizations, at Harvard University.

The artile does make us question the basic premise of ProGreen and ideals on which we were founded.

Indeed, not only is Adam Smith right that, by definition, all private business fulfills social needs (or goes broke trying), but so too, virtually any enterprise can be made to sound as if it’s serving a good cause.

When it started, for instance, Wal-Mart might well have claimed to be “bringing a full range of product choices to previously underserved rural consumers.”

Social enterprise, in other words, is, at best, more rhetoric than breakthrough; at worst, it is a corruption of the basic Adam Smith idea of private enterprise.

Social enterprises may not be a breakthough idea after all. And, I do agree there are many social problems that cannot be addressed by for-profit social enterprises and the only approach is philanthropy and non-profits.

However, when it comes to economic development of the poor, especially in India, both non-profits and the Government have not done much in the past few decades.

And with ProGreen, I have always believed that conceptualizing the business plan and winning the competitions was the easy part. Putting the plan to work, as we are slowly beginning to realize, is a whole new ball game. Eve, Howard has a word of caution.

Perhaps, but making a profit is no mean feat and may look only superficially easier than the challenge faced by traditional nonprofit groups, with their relentless need to raise money. The sheer terror and urgency of repaying investors or satisfying shareholders simply cannot be minimized. Put another way, one bottom line is a lot.

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Pleasure of doing Business

We are finalizing the deal with the machine supplier – J Paper Cups for the pilot unit at Samudram village. Slowly the boundaries between ProGreen's social mission and business goals are dissappearing.

The supplier, who promises to supply us machines of highest quality, was never willing to be flexible on the price. As like any other business, we kept pushing. Finally, they offered a price reduction, not being sympathetic to our social goals, but simply on the promise of future business.

It feels good, to do business, especially when you know for sure that you are not just maximizing Financial Return on Investment, but also the Social Return on Investment (SROI). 

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