MUMBAI: Traditionally, a not-for-profit entity or non-government organization (NGO) got grants for various socially relevant projects and implemented them. But, with grants drying up and an increasing tribe of social impact venture capitalists willing to invest in a for-profit corporate set up, a large number of NGOs are adopting the hybrid model. This also helps them to scale up the value chain and hire the right talent.
Corporate and tax laws necessitate setting up of two distinct legal structures. Typically, the not-for-profit arm carries out its activities as a trust or society, whereas a private company is set up for carrying out business or profit-based activities.
“Transitions towards hybrid models are more visible when poor families are willing to pay a small fee for services – say agri inputs on phone for farmers or vocational skill training; or when there is a market for goods produced by people at the bottom of the pyramid,” says Parvathi Menon, MD, Innovation Alchemy Consulting, which nurtures entities undergoing such transformation.