India needs $750 million in flexible funding to build 100 ‘non-profit Unicorns’ in 5 years: Report

India will need around $750 million in flexible financing to build 100 ‘non-profit unicorns’ over the next five years, according to a new report released on Thursday. The report finds that nearly 80 percent of surveyed nonprofits struggle to scale due to a lack of flexible capital.

Report – ‘The Flexible Funding Gap for Nonprofit Unicorns’ – part ofThe Ease of Doing GoodChange Engine’s ‘series’ estimates this amounts to $150 million annually; this is just 1% of India’s total philanthropic giving.

‘Non-profit unicorns’ are organizations that can reach at least one million people or 5% of their target user base.

Soft funding refers to non-allocated or soft-allocated financial contributions that allow organizations (particularly non-profits, UN agencies, and humanitarian groups) to allocate resources where they are needed most, rather than being limited to specific projects.

“This funding rigidity forces organizations to spend disproportionate time on fundraising rather than focusing on innovation and impact. The problem is not the lack of capital, but how it is designed and deployed. Respondents indicated they would invest in strengthening core teams with greater flexibility, prioritizing innovation, pilots and evidence generation,” the report said.

The first accelerator of its kind for nonprofits, Change Engine supports extraordinary founders of nonprofits that can meaningfully impact one million people.

unlimited capital

“Beyond doing good for society, nonprofits are also economic enablers. Funders should fund nonprofits like startups by providing flexible funding to develop innovative solutions that will have a population-wide impact on India’s deepest problems. Unlimited capital gives nonprofits the freedom to experiment, adapt, and innovate, enabling solutions that are grounded in the realities and evolving needs of the communities they serve,” said Varun Aggarwal, Co-Founder of Change Engine.

Over the past few years, Change Engine has worked with 10 impactful organizations that have raised over $2 million in follow-on funding.

Shubham said, “India has produced more than 100 startup unicorns through patient, risk-tolerant capital. If India wants to achieve social development goals (SDGs), it needs a comparable number of nonprofit unicorns to deliver impact at the Indian scale. Lack of flexible funding is one of the biggest bottlenecks for nonprofits to scale. The capital is there; what is needed now is the willingness of funders to use it differently and the support of policymakers to ease regulatory constraints.” Bansal, Co-Founder of Change Engine, said:

Key findings of the report

• Lack of flexible funding: 80% of surveyed nonprofits struggle to scale due to lack of startup-style innovation capital; 1 in 2 organizations has less than 10% unrestricted capital.

• Restrictive regulations: 55% say regulation is the main constraint on raising unrestricted (i.e. not tied to a program) funds; This is followed by poor understanding of nonprofit cost structures and criteria among funders.

• Limited resources: 55% of organizations raised flexible funds from HNIs (High Net Worth Individuals) and only 33% from local foundations. Additionally, local foundation funding favors large organizations (more than 200 with budgets). ₹5Cr.), leaving little capital resources for early-stage organizations.

• Small check sizes and one-time grants: 60% of organizations reported typical check sizes are less than: ₹10 lakhs and most of these grants are one-time. Only 4 in 10 locally funded organizations received a multi-year grant. Only 2 out of 10 organizations participating in the survey ₹50 lakhs in multi-year support.

• Flexible financing is innovation financing: If teams had more flexible financing, the survey found, 75% would invest in hiring talent, 32% would invest in bolder experiments, and 27% would invest in technology and data.