How $750 million in venture style funding could unlock 100 non-profit unicorns in India

Rocket Learning, a technology non-profit, is a good counterpart. It built an app for anganwadi workers that enables early childhood education for 1.5 million children from low-income households. Together, commercial and social startups can help realize the Viksit Bharat dream.

A recent Ease of Doing Good report estimates that just $150 million provided annually over five years, in VC-style, totalling to $750M, could unlock 100 non-profit unicorns by 2030. This includes funding for pipeline development, stage-wise support for high-potential non-profits and early years of scaling impact.

India already sees $15 billion in annual philanthropic giving, nearly 100 times the annual need estimate. This is comparable to India’s startup funding, placed at around $12 billion dollars every year. Yet, 80% of non-profits struggle to scale due to funding constraints. The issue is not capital but a lack of ‘flexible funding.’

Flexible funding, akin to venture capital for startups, is a distant dream in the non-profit sector. Most funders restrict grants to specific programmes, tightly defined budgets and short timelines.

We have argued previously that building scalable, low-cost solutions requires iteration, experimentation and adaptability—conditions incompatible with line-item funding.

The funding mix reinforces this rigidity: 26% comes from corporate social responsibility or CSR budgets (largely programmatic), 27% from domestic foundations and high net-worth individuals (with unrestricted funding reserved just for mature non-profits), 30% from retail giving (rarely directed toward non-profits doing systemic work) and only 17% from international foundations (which are typically more open to unrestricted funding).

The result: 80% of non-profits report that only a quarter of their funding is unrestricted and 60% say such grants are typically below ₹10 lakh. Nearly 60% of organizations unable to receive foreign funding (lack of Foreign Contribution Regulation Act approval) have never secured a multi-year grant.

Endowments for non-profits, which provide a long-term capital cushion, are common in the West but still at a fledgling stage in India. Non-profits also cite regulatory barriers and limited donor awareness as their biggest fundraising challenges. The consequence is lack of innovation and stifled growth.

The Indian ecosystem will find solutions to this problem. But we believe that the government could step in to unlock the creation of non-profit unicorns, as it did for the startup ecosystem by offering seed capital and easing regulations.

Three steps need priority: a philanthropy fund-of-funds (FoF), regulatory reform and national recognition of social founders.

First, a fund of funds for philanthropy: India has already deployed this model through SIDBI’s FoF for startups and its new Research, Innovation and Development Fund for deeptech. Government capital catalyses private investment while leaving allocation decisions to the market. A $375 million ‘Vikas FoF’ over five years ($75M annually) could similarly unlock unrestricted capital for non-profits.

The government would achieve two things by providing 50% matching funds. It would seed unrestricted philanthropic funds, a new emerging instrument for the social sector. Second, the FoF’s matching funds would incentivize philanthropists by giving them a bigger bang for their donated buck.

Philanthropic funds would apply to the FoF and be evaluated by a professional and independent team, with grant decisions based on rigour and potential impact. Funds should disclose the expected impact of their portfolios, so that the sector benefits from clearer metrics and discipline.

Much like startups, not all funded organizations will succeed and success should be measured at the portfolio level rather than at the individual organization level. Crucially, capital must back long-term, high-impact bets rather than short-term, easily measurable gains. The goal should be a high-risk, high-reward portfolio—much like venture investing. Done right, this can seed a new funding architecture for non-profits in India.

Second, we need deregulation: The government has undertaken a sustained push for deregulation through its High-Level Committee on Non-Financial Regulatory Reforms and a similar high-level panel on Viksit Bharat. It is time to re-examine constraints on the non-profit sector as well.

CSR budgets, worth nearly $4 billion annually, are highly regulated: restricted to programmatic use, accessible only after three years of non-profit registration and bound by strict rules on unspent funds and director liabilities.

Further, non-profits with tax exemptions (12A/80G under ‘general public utility’) cannot generate more than 20% of their total annual budget from revenue-based activities. This creates a structural barrier: even when governments want to pay non-profits to scale proven solutions, these organizations cannot accept such funds without breaching caps. Such constraints must be systematically reviewed and reworked to unlock the sector’s full potential.

Third, offer recognition: The government must celebrate the good work of non-profits and their founders. The government celebrates film performers, scientists, startup founders and even influencers, among others. It should also celebrate social founders through national platforms and top-level recognition. This would elevate role models and help the sector attract talent.

With these steps, India can catalyse 100 non-profit unicorns, organizations capable of making an impact at the scale needed for Viksit Bharat.

The authors are, respectively, Jorge Paulo Lemann professor, Harvard Business School; and co-founders of Change Engine.