Why non-profits require flexible, long-term funding

India’s economic ecosystem has matured considerably over the past two decades, particularly in its support for enterprise-led growth.

- Deval Sanghavi and Neelesh Hundekari

India’s economic ecosystem has matured considerably over the past two decades, particularly in its support for enterprise-led growth. Consider the micro, small, and medium enterprises (MSME) sector: There are over 63 million registered enterprises, employing more than 250 million people, gaining from targeted incentives, working capital access, and formalised institutional support. This structured approach has enabled scale, resilience, and innovation.

India’s nonprofit sector holds similar potential. With over 3.9 lakh registered NGOs, many complement public systems and service delivery. These NGOs are partnering on flagship government programmes such as the Swachh Bharat Mission and Right to Education, among others. Their adaptive, frugal models bridge last-mile delivery gaps effectively at low costs. Yet, most function with constrained institutional capital and short-term funding cycles, making long-term planning and organisational development difficult.

Many organisations work in critical sectors such as early childhood care and education (17%), health and nutrition (9%), rural development (11%), or livelihoods and skilling (8%), among others. They often work in close proximity to underserved communities, and their role in implementation is substantial and growing. Yet, capital support has not kept pace.

According to the India Nonprofit Report (INR) 2025 by Dasra and Kearney, a survey of 400 NGOs revealed 91% operate on annual budgets below ₹1 crore, similar to micro enterprises in the private sector. However, over 70% reported funding deficits based on their annual budgets, and only one in five has a reserve corpus. Smaller organisations, most proximate to marginalised communities, are especially vulnerable to underfunding.