Nidan: Tapping into ‘the Wealth of the Poor’ — Their Numbers

When Arbind Singh was named Social Entrepreneur of the Year for 2008 in India, one of the award’s sponsors described Singh’s non-government organization (NGO), Nidan, as “[building] profitable businesses and people’s organizations led by assetless, informal workers.”

“Social entrepreneurs embody excellence in creating disruptive technologies and ideas that empower the poor or the marginalized,” said Don Mohanlal, president and CEO of the Nand & Jeet Khemka Foundation, which sponsors the annual award with the Schwab Foundation for Social Entrepreneurship in collaboration with the United Nations Development Program (UNDP). Nidan’s “innovative techniques have fundamentally altered conventional development and business logic.”

Based in Patna, Bihar, with additional operations in the states of Jharkhand, Delhi and Rajasthan, Nidan comprises “a range of cooperatives, self-help groups, trade unions, and individual and community businesses launched by Nidan that have positioned unorganized workers as legitimate competitors in India’s globalizing markets,” according to the Khemka Foundation’s website.

In Hindi (and some other Indian languages), Nidan means “solution.” “That’s the difference between us and many others,” Singh says. “We have focused on providing solutions rather than just complaining. Though advocacy has been a major plank for us, our advocacy has always focused on giving solutions rather than just raising issues of concern.”

In 12 years, Nidan has launched and promoted 20 independent businesses and organizations that are governed and owned through shares by 60,000 urban and rural poor members, the foundation notes. “The enterprises include 4,618 self-help groups, 75 market committees, 19 cooperatives, two societies and one company, all envisioned and led by a complex of waste workers, rag-pickers, vegetable vendors, construction laborers, domestic helpers, micro-farmers, street traders and other marginalized occupation groups.

“Nidan taps into the wealth of the poor — primarily their numerical strength — and then aggregates them into economies of scale. This process of collectivizing generates social capital, representation and voice for the unorganized poor, which they then leverage to launch their own businesses and shift policy to be recognized as wealth creators.”

The award recognition, Singh says, will mean increased support and the scope to bring more into the fold. The need is clear. An August 2007 central government report on working conditions in the unorganized sector says informal laborers make up 92% of India’s workforce. These more than 340 million workers contribute 60% of national economic output, the report says. They constitute the poorest and most vulnerable segments of India’s population.

‘Reaching the Unreached’

The unorganized sector’s potential is evident in Nidan Swachdhara Private Ltd. (NSPL), a Nidan enterprise. Set up as an urban waste management company with initial capitalization from 1,606 waste workers who collectively bid for business, NSPL has won multi-crore contracts from the Patna and Jaipur Municipal Corporations. Last year, NSPL recruited its first chief executive from the business sector, satisfying shareholder demands.

“Reaching the unreached” has been Singh’s mission for years. After earning sociology and law degrees from Delhi University, “I appeared for the examination to enter the civil services,” he says. “But even while preparing for the exams, I realized my heart did not lie there. I had a lot of exposure during my college days to societal issues. I happened to meet the late Viji Srinivasan, who was running a large NGO [named Adithi] on women’s issues. I began working with her and she encouraged me to set up a separate organization. I realized that the development sector provides immense potential to impact lives of the poor.”

The poor do not want charity forever, he says. “We want sustainable organizations based on ongoing revenue generation. This will provide efficient services. Only corporatization will ensure sustainability. This is the future direction. Nidan is gradually becoming an incubator and resource organization for such [ventures].”

Nidan’s organizational structure is as complex as a medium-size company’s. Its many layers include a general body at the top with an executive committee reporting to it. In education, for example, the academic facilitator reports to the executive director and finance manager. Below the facilitator come community coordinators, ward facilitators, teachers and, finally, the community. “All the operations have their own structure,” Singh says. “We have 400 staff members and several volunteers.”

While Nidan is a profit-making organization, it relies significantly on donations. Singh notes that donors include international aid agencies such as the United Nations Development Fund and UNICEF, national agencies such as the United Kingdom’s Department for International Development, international NGOs such as the Ford Foundation, Indian NGOs such as the Sir Dorabji Tata Trust, state governments and district administrations. Revenue is also earned through services provided to government and local bodies. Residents and institutions pay for waste management services and purchase of handicrafts. “The spread from loan programs is also an important source of revenue,” Singh says. “The commission earned from the insurance program constitutes another source of revenue. And there are occasional consultancies.”

In 2007-08, Nidan earned Rs. 2.9 million (about US$60,000) from a program offering life, health, asset and property insurance to more than 35,250 members. It also received Rs. 45 million (US$925,000) in grants. Its own income was Rs. 8.6 million (US$175,000).

Individual units also contribute. NSPL, the waste management company, had a profit of Rs. 4 million (US$80,000). While that may not seem like much, consider that its capital base is made up of Rs. 100 (US$2) contributions from each of its 1,606 members — a total of Rs. 160,600 (US$3,212). The Wama Mahila Swablambi Sakhari Samiti, a cooperative that runs retail outlets, earned Rs. 133,269 (US$2,700). It has 351 members who have put in Rs. 10 (20 cents) each as share capital. The Gharunda Housing Cooperative made Rs. 134,851 (US$2,700). Its shareholding: 103 members chipping in Rs. 103 (US$2) apiece.

These minuscule numbers demonstrate the resource constraints of the people Nidan and Singh work with. But the numbers are far from small on another front. “Nidan reaches out to 60,000 poor workers, an equal number of middle-class households for waste management and 300,000 street vendors,” Singh says.

Value Beyond Numbers

The impact on individuals has little to do with numbers. “An individual served by Nidan gets the opportunity to realize his or her potential,” Singh says. “Nidan provides access to financial services, protection against harassment, legal aid when needed, insurance [coverage], help in getting children educated…. For its members, Nidan has become an alternate home where they can come for any help related to their work, their children and gender issues.”

“Nidan is a well-grounded organization with a deep insight on development issues within its operating region,” says Tarun Vij, New Delhi-based country director of the American India Foundation (AIF). “We feel it has matured tremendously and is ready to take on additional responsibilities. We could in the near future look at an integrated programming approach with them, one that delivers education, health and livelihood simultaneously for the overall wellness of the community it works for.”

AIF has supported Nidan for three years so far, and the NGO’s success with waste workers in Patna and Muzaffarpur has prompted the foundation to extend the relationship. “Through a government-citizen-corporate partnership model, the second phase of the program will not only promote sustainable and scalable enterprises of waste-pickers and sweepers but also seek to actively project their occupation as a dignified livelihood,” AIF said in a written statement.

Among the Nidan waste program’s benefits, according to AIF:

  • Significantly reduced vulnerability and insecurity for waste workers.
  • Increased average monthly income for individuals from Rs. 1,500 to Rs. 2,800 (US$30 to US$56).
  • Improved working conditions.
  • Provided an effective solution for municipal waste disposal.

More waste workers want to get involved. In the next phase, AIF will provide a grant of Rs. 29.5 million (US$600,000) and a loan of Rs. 14.4 million (US$295,000). AIF’s support will provide jobs to 2,306 people directly (in door-to-door waste collection and in composting and recycling facilities) and 3,468 indirectly (waste-pickers whose recyclables will be purchased). A total of 208,000 households are expected to be served.

Critical Foundation Support

The high visibility AIF’s support has provided has been critical for Nidan. AIF, founded in 2001 under the leadership of former U.S. President Bill Clinton, “is a bridge to channel philanthropy toward India,” says Sanjay Sinho, AIF’s New York-based chief executive. “Since inception, AIF has invested in nearly 100 high-quality Indian NGOs who are working on primary education, livelihoods and public health initiatives, including HIV/AIDs. AIF has worked in 21 states across India. Most of its funds come from Indians living in the U.S. and Indophiles. Among AIF’s achievements are its ability to launch programs to scale, and the manner in which it has been able to bring corporates, government and civil society together to form meaningful partnerships that foster inclusion of those who are less privileged. A recent example is our Rickshaw Bank program that allows rickshaw pullers to [secure] loans from banks and eventually become owners of rickshaws.”

Sinho says AIF is different in both “the way we view our work and the manner in which we carry it out. We identify local organizations of repute and handhold them throughout our association. We bring not only funds but valuable expertise and technical know-how to any partnership. On top of this we also provide linkages with other stakeholders to take the work to higher levels.”

“The role of organizations like AIF is that of being a bridge between people who are willing to donate resources and people who need the resources,” says N. Balasubramanian, chairman of the Centre for Corporate Governance and Citizenship at the Indian Institute of Management, Bangalore (IIMB). “There is need for this bridge. Very often donors have no way of assessing if their money and resources are going to an organization which will put them to good use. Organizations like AIF can do due diligence on the NGOs and their projects. They must, of course, first of all establish their own credentials and be completely transparent about their own operations: where they get their funds from, which are the units that they support and promote, and what is their process and criteria for evaluation of the NGOs.”

Country director Vij highlights some of AIF’s achievements. “AIF has sent 169 Service Corps fellows to serve for 10 months with Indian NGOs, and the Digital Equalizer Program has brought technology to touch the lives of over 570,000 students and 17,000 teachers in 1,400 schools across India. Many state governments have come forward to provide us with various kinds of resources.”

The Award’s Value

Through its awards, the Khemka Foundation has also played an important role in promoting social entrepreneurship. “We provide the winners with access to global platforms and showcase their work in national and international media,” award program manager Payal Randhawa says. “Apart from the national recognition, the winner is included in the Schwab Foundation’s global network of outstanding social entrepreneurs. Acceptance into global networks provides successful social entrepreneurs financial and technical support for their activities. In addition, the winner is eligible to be named a Khemka Fellow and receive a cash award of Rs. 800,000 (US$16,000) from the Khemka Foundation.”

Do organizations such as AIF and the Khemka Foundation complement the government or simply fill gaps? “Actually, a bit of both,” AIF’s Vij says. “Most of our programs work in tandem with government initiatives like the Sarva Shiksha Abhiyan (“Education for All”) and the national health missions. In many places across India we work with the government. But there are complex issues and concerns in India. No government can tackle these on its own, which is why the work of organizations like ours acquires relevance. The government recognizes this fact. So, yes, we are also filling gaps.”

“The upliftment of the poorer sections of society is the duty of the government,” says Balasubramanian of IIMB. “But it is also a fact that a vast majority of governments around the world are incapable of doing this. In such a scenario there is an important role for individuals, corporates and NGOs to do some of the things which were originally associated with government responsibility.” To that extent, he says, initiatives such as Nidan “are valuable and need to be encouraged and appreciated.”

Singh says the social entrepreneurship award has “dramatically raised the image of the organization. Being recognized by agencies outside Bihar, we expect we will have a better image with the state government, and this will improve considerably our access to government resources and officials. The award has given immense confidence to the members and staff of the organization. They now realize they are creating history.”

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