an Ashoka Publication

fellowconnectJune 2011

www.india.ashoka.org

Direct Tax Code

How does DTC impact your work ?

an Ashoka Publication

fellowconnectJune 2011

Dear Ashoka Fellows,

You have in your hand the third issue of Ashoka

FellowConnect. Encouraged by the positive feedback we have

received from several Fellows, we have yet again increased

the number of pages of FellowConnect to 16.

We are pleased with the support you have extended to this

quarterly magazine that attempts to offer a platform to

share your rich knowledge among fellow social

entrepreneurs. We are glad that more Ashoka Fellows are

committing themselves to contribute to this magazine.

We firmly believe that this magazine must publish more

content and information that are contributed by Ashoka

Fellows. We urge you to send us articles that generate

healthy discussions among the members of the Fellow

community.

We also welcome you to write to us with your views on

what you would love to read in the forthcoming issues of

FellowConnect.

Social entrepreneurship is increasingly becoming popular

in India. The concept is gaining visibility with more social

entrepreneurs being written about in the media. The youth

today are keen to be connected with social causes and are

willing to explore opportunities to launch entrepreneurial

ventures that are socially relevant.

This increased visibility also throws a challenge at us.

Consumers of media today require greater amount of

information and knowledge. They want to know not just

the success stories of social entrepreneurs but also several

other aspects of the journey. As leading social

entrepreneurs, your knowledge is being sought after by the

masses.

For them to build a better understanding of how the social

sector in India is evolving, they need more good quality

content. Content that is based on our rich experiences in

the scores of areas that we work in. Content and

information that reflect our learned view of the prevailing

social situations, possible solutions, future trends, and

those that occasionally offer guidance.

The good news is that today we have the luxury of

choosing the media we want to publish such content for

our target audience. Traditional media such as newspaper

and print magazines are always open to accepting good

quality content.

Ashoka FellowConnect is the stepping-stone for us to

generate and share our expertise, knowledge and

experiences through content that eventually is picked up

by the mainstream media for consumption by the masses.

Let us strive towards this goal.

If you have an article, an idea for an article or content in any

other form, send them to us.

Ashoka's technology team has been busy developing the

Hub, an exclusive online platform for the Fellows. Besides

an article that provides you more information on the Hub,

this edition comes to you along with a small booklet that

provides you a sneak peak to the Ashoka Hub.

We wait to hear from you.

Warm regards,

Manoj Chandran

2 fellowconnect

Ashoka is pleased to share with you the news that Bill Drayton, CEO and Founder

of Ashoka: Innovators for the Public has been awarded the Prince of Asturias Prize

for International Cooperation, Spain's highest honor. An international jury

carefully weighed the impact and influence of all 25 global candidates, before

determining Bill to be the best fit for this year's honors.

3 fellowconnect

Over the past three decades Ashoka

Fellowship has grown to include

leading social entrepreneurs from

over 70 countries. Through a rigorous

internal selection process, Ashoka

Globalizer identifies Fellows within

this network who carry the greatest

potential to catalyze global systems change. These

entrepreneurs are challenged to further refine their leading

social innovations in order to adapt their strategies for

accelerated global spread. Throughout this intense process they

are supported by experts from the Globalizer team, working

alongside advisors from McKinsey & Company and Ashoka

Support Network of business leaders committed to social

change.

Ashoka Fellow Vishal Talreja, Co-founder and Director, Dream A

Dream, was part of the Globalizer held during March 26-28,

2011 in Stockholm, Sweden. Vishal shares his experience of

being a part of this global event.

When you put together a bunch of inspiring people

irrespective of their backgrounds, ethnicities and

geographies, magic is bound to happen.

I was part of the Ashoka Globalizer Summit, which was held

during March 26-28, 2011 in Stockholm. And, it was a life-

changing experience for me as an entrepreneur looking to

scale my organization and its impact.

The Ashoka Globalizer Summit is a unique opportunity

that brings together 16 Social Entrepreneurs (Ashoka

Fellows) and 16 senior and successful Business

Entrepreneurs from across the world. The focus is on

supporting Ashoka Fellows to take their impact and work

to other countries that might have similar challenges.

For Dream A Dream, this was an opportunity to present

our work, our plans to scale and our core philosophy to a

global audience with influence, capital and networks. It gave

us a platform to explore potential collaborative

opportunities to take our work into the global arena.

The most important takeaway from the Summit was the

idea of “Scaling Your Impact and NOT your Organization”.

For Dream A Dream, it gave a whole new perspective to

our scale plan. For as opposed to scale in the business

space, here scale was really about exploding your impact

with very little resources and in the quickest time possible

with an impact so far-reaching that it has the potential to

solve a global problem.

The design of the summit itself was quite remarkable. For

two months before the summit, we worked with a

successful business entrepreneur and a consultant from

McKinsey to tighten our scale strategy and plan. At the

Summit we got exclusive time with some of the most

successful entrepreneurs from across the world to share

our idea, philosophies and scale plans. The most important

value-add of the panel was the thought-provoking

questions they asked, pushing our limits of creative thinking

and innovation. The informal nature of the summit itself

helped to continue these conversations through the three

days.

Additionally, sharing our models with other Ashoka

Fellows gave us inputs and ideas on some core challenges

we were currently facing but maybe some other

Globalizing Impact

entrepreneur had already found a solution to them. Sharing

of personal stories added a huge emotional inspiration to

the whole summit.

The panel discussions were interspersed with expert

sessions on different models of scale. For example, sessions

on open source and smart networks helped deepen our

understanding of “How to scale impact? And we learnt

from each other's experience.

The Globalizer Summit has been one of the most thought-

provoking and inspiring forums I have attended in the past

few years and was definitely most relevant at this juncture

of Dream A Dream's journey as we look to scale our

impact across national and international borders.

4 fellowconnect

Continued on Page 11

Ashoka Changemakers is a global online community that supports

everyone's ability to be a changemaker by inspiring, mentoring and

collaborating with other members of the community at every level of

changemaking. Changemakers hosts collaborative online competitions to identify and connect the best social innovators

and implementers.

Ashoka's Changemakers will launch two very important competitions shortly to source innovation in the field of media and

health respectively. Here are brief details on them.

Citizen Media : A Global Innovation Competition

Media connects people to their world, gives voice to their ideas and dreams, and equips

them with knowledge to improve their lives and the lives of others. In all these ways, media

catalyzes participatory citizenship, on both a local and global scale. But even in this age of

pervasive media, many millions of people marginalized by political and economic barriers

lack access to even the most basic tools of information -- thereby depriving them of

valuable input and connection, and depriving the rest of the world of their voices.

Ashoka Changemakers and Google hope to change that by

inviting the world's citizens -- notably you -- to enter Citizen Media: A Global Innovation

Competition. The competition will be launched on July 13, 2011 and will be packed with activities

that would engage our thought process around the theme throughout the participation period.

For more information, visit www.changemakers.com/citizenmedia on July 13, 2011 (site would be

inactive before that).

Upcoming Ashoka Changemakers Competitions

5 fellowconnect

We Welcome New Ashoka Fellows To Our Family

Shilpi Kapoor, BarrierBreak

Pushkin Phatriyal, Executive Director, Central Himalayan Environment Association

Svati Bhogle, Sustaintech Private Limited

Sam has invented an inexpensive, universal solar-powered lighting solution which will

reduce health hazards and carbon emissions while simultaneously enhancing productivity.

His lighting solution can leapfrog a grid network without the use of electricity. Such

versatility renders Samuel's solution applicable for both rural and urban regions. In

addition to improving health and safety standards, the solar powered solution also

prevents approximately a 100 percent of greenhouse emissions.

Samuel Goldman, D.light Design

Shilpi is building an eco-system in India that enables differently-abled people to

fulfill their rights. Through her work Shilpi is systemically eliminating information

discrimination by empowering differently-abled people to demand accessibility

by transforming the e-space, bringing innovative technologies for inclusion to the

Indian market, building public awareness through world class accessibility

conferences and lobbying with the government.

Pushkin Phartiyal has established a community led environmental governance system that

promotes sustainable livelihood opportunities in the Himalayan region, by conserving and

facilitating the regeneration process of forests and natural resources. Based on the premise

that price-incentives drive proactive community management, Pushkin gets the

government and the international carbon market to value "ecosystem services"

(goods/services from nature) to create economic incentives for local communities to

compute carbon sequestration, sustainably manage their natural resources and a

marketplace for stewarding those services.

Svati has come up with a distribution system to counter the use of

inefficient cooking stoves by street food vendors in India that enables

them to easily own fuel efficient stoves, save money on fuel and make

better profit. Built on ecological considerations, these improved stoves

not only increase their incomes but also ensure better health for both

vendors and their consumers.

The recent movement against

corruption and the call for the Jan

Lokpal bill to be passed by the

Parliament saw the entire nation

come together in an unprecedented

manner. Ashoka Fellow Dr H

Sudarshan, who has been a

member (Vigilance Director) of the Karnataka Lokayukta,

shares his views on the various aspects of corruption and the

role of social entrepreneurs in this movement.

On Lokayukta and the Grievance Redressal Mechanism

When I was the chairman of the task force for health and

family welfare set up by the Government of Karnataka, we

were asked to look at the entire health sector in the state

and make recommendations to improve the healthcare

system. We made 12 major recommendations and pointed

out our concerns. Corruption in the healthcare system

was the issue that topped the list.

During that time, I had the good opportunity to meet

Justice M.N. Venkatachala. He invited me to join the

Karnataka Lokayukta as vigilance director – health,

education and social welfare.

The unique opportunity at that time was the Grievance

Redressal Mechanism. Justice Venkatashala was the first

Lokayukta to say that we should go to the people than they

approaching us at our Bangalore office with their

grievances. During the first round, we went around all the

districts. In the second round, we covered all the Talukas.

We spent a day in a Taluka and covered the entire state,

reaching out to the people. In each Taluka, we would first

visit all the public offices – the hospitals, tahsildar's office,

food and civil supplies department, etc. We had a judicial

team that would collect complaints during the morning

hours. Post lunch, the Lokayukta would hold a court and all

the complaints were taken up. Relevant officers from

various departments would also be present and if we could

resolve the case, a decision was announced immediately.

Else, a week's time was given to the officer to resolve the

issue. It was a wonderful mechanism that worked.

Credit should go to Justice Venkatachala, and now Justice

Hegde, for efficiently utilizing Karnataka Lokayukta Act..

There are also other methods such as prevention of

corruption, under which traps and drives are conducted.

There are inherent weaknesses in the Lokayukta system. I

have seen the functioning of the Independent Commission

Against Corruption (ICAC) in Hong Kong. They had a

similar issue in 1970s. They created an independent body.

The recruitments to ICAC are direct. Whereas in the case

of Lokayukta, officials are on deputation from various

departments.It has been one of our suggestions to the

government that Lokayukta should be given the powers to

directly recruit its officials.

The Lokpal Bill and implications

The Lokpal Bill is a welcome move. I am happy to see that

the efforts of Anna Hazare, Arvind Kejriwal and others have

moved us closer to realizing the Lokpal Bill. However, it

may not be comprehensive to focus only on the Lokpal Bill.

In my view, it is a good beginning. We should try and bargain

for a comprehensive act for district, state and national level

mechanism for both prevention of corruption and an

effective grievance redressal mechanism.

“It is good to see that we have seized the opportunity. We now need to go to the people.”

Corruption Is A Bigger Fight

6 fellowconnect

It is good to see that we have seized the opportunity. We

should now go to the civil society and engage into a wider

consultation and try to involve the people. In the

discussion, we should also include the various other

aspects, including the role of state Lokayuktas and the

district level ombudsmen.

Clearly, a lot of thinking has gone into drafting the Jan

Lokpal Bill. Inputs were collected from the Karnataka

Lokayukta, too. We have learnt lessons from the inherent

weaknesses of the state Lokayuktas and want to ensure

that this done not take place under the Jan Lokpal Bill. An

important question to ask is how much power can be given

to Jan Lokpal. I learn that citizens can directly write about

their grievances to the Jan Lokpal. I think it will be

unmanageable if all those simple issues that can be resolved

at the district or state level are sent to the Jan Lokpal. We

need to segregate for a more efficient management of

grievances and complaints.

The other point of discussion is whether Lokpal should

have powers over investigative agencies such as the CBI. In

my view, these agencies should remain autonomous. Lokpal

should be able to give the cases to the agencies and ask

them to investigate. The latter should, however, operate

independently.

I also feel that judiciary should not be excluded under the

Jan Lokpal bill. Definitely, they should be covered, too. There

“This is a space where every single citizen has a role to play as a changemaker. Social entrepreneurs can help citizens become aware of their role as changemakers to fight the issue of corruption.”

should be no exemption for any offices in the country.

Social entrepreneurs in the fight against corruption

Social entrepreneurs have a huge role to play in two spaces

on the issue of corruption - prevention of corruption and

creating awareness. In their sphere of influence, they can

use tools such as Right to Information to prevent

corruption. More importantly, since they have a higher

degree of influence on the masses, they can impact the

mindset of the masses by creating awareness about the

perils of corruption.

At the root is this issue of corruption as a culture. In my

experience, I have noticed that corruption exists at

different degrees in the geographies of India. And, it has to

do a lot with the culture. In some Indian states people do

not have the culture to give bribes, and hence we see lower

levels of corruption there. And, I believe that social

entrepreneurs have a much larger role to inculcate a

culture of discouraging corruption.

There is a need for the fight against corruption to become a

movement. I see this throwing up huge opportunity at two

broad levels.

Social entrepreneurs should come together and explore

opportunities to collaborate to create innovative

solutions. They are known for their creative skills and ability

to develop unique solutions to social issues. There already

are a lot of social entrepreneurs who are implementing

different solutions – some have helplines while a few others

are using the RTI route. When they collaborate, I believe

the impact can be far reaching.

Secondly, this is a space where every single citizen has a role

to play as a changemaker. Social entrepreneurs can help

citizens become aware of their role as changemakers to

fight the issue of corruption.

7fellowconnect

8 fellowconnect

The Direct Tax Code (DTC) was brought in to replace the

present Income Tax Act, 1961. The DTC was initially

disclosed to the public in August, 2009, following which the

government received more than 1500 representations,

which in turn led to a revised discussion paper being

released by the government in June 2010. The DTC 2010 is

presently tabled before the Lok Sabha and may be passed in

the Winter Session of the Parliament in 2011, with a view to

be implemented from April 1, 2012. The Code in its present

format may impact NGOs and hence it is extremely topical

and relevant to civil society in India today. Ashoka

organised a consultation on the Direct Tax Code(DTC), in

order to assist Ashoka Fellows in understanding the new

tax regime that is being brought in by the Code. The idea

behind the consultation was also to understand if the

Ashoka Fellows felt it necessary to engage in advocacy to

get the DTC amended and made more favourable to civil

society organisations. The consultation involved

understanding both for-profit and not-for profit structures

and experts engaging in problem-solving with the

participants.

On May 27, 2011, Ashoka: Innovators for the Public, in

association with premier tax firms Nishith Desai

Associates (NDA) and KPMG, hosted a consultation in

Mumbai on 'De-coding the Direct Tax Code'.

The consultation started with discussions on the policy

behind the Direct Tax Code. NDA and KPMG presented

the new features being brought in by the DTC and the

impact it will have on the self-sustainability of not for profit

organizations.

In the concluding session, the participants brainstormed on

ways in which not-for-profit organizations (NPOs) across

India could meaningfully advocate policy change in the

Direct Tax Code. It was decided that a representation must

be made to the Standing Committee on Finance of the

Parliament, highlighting the key issues and the changes that

need to be made to the DTC in order to safeguard the

interests and sustainability of NPOs.

It was also decided that NDA and KPMG in association

with Ashoka would organize a web-based consultation for

the benefit of the civil society organizations to make them

aware of the problems that they would face in light of the

proposed DTC regime. This would be done with a view to

generate awareness on these issues and also in order to get

a buy-in from all major NPOs in India towards the

representation.

A formal representation will be made to the Standing

Committee on agreed lines by end of July. In the event, you

would like to get involved in making a representation to the

Standing Committee of Finance of the Parliament, please

write to alahiri@ashoka.org. The large issues

identified which would specifically impact NPOs

are as follows:

Direct Tax CodeHow Does DTC Impact Your Work ?

Sl. No. Issue

Non Profit Organizations (NPOs) on par with any other taxpayer

Change being brought in by Direct Tax Code

Under the DTC, NPOs have to pay tax @ 15% on the aggregate of the surplus (post allowed accumulation) in excess of INR 1 lakhs. Under the existing law, NPOs enjoy total exemption from income tax subject to the fulfillment of the conditions prescribed in section 11/12.

(I)

9 fellowconnect

(vi)

(vii)

(viii)

(ix)

(x)

Method of Accounting

Compulsory activities on an annual basis

Conversion into business organization

Impact of Anti-Avoidance Rules

In-sufficient incentives for donors

The current law allows accrual as well as cash basis of accounting and income has to be computed accordingly. Under the DTC, every NPO, other than a section 25 company has to mandatorily follow cash system of accounting.

The DTC proposes that NPOs need to carry on charitable activities during the financial year to retain their NPO status.Therefore failure to perform charitable activities in any particular year may lead to a loss of tax benefits.

Under the DTC, an NPO shall be taxed at the rate of 30% of its net worth if it converts or merges with a for-profit organization or fails to transfer all its assets to another NPO within 3 months from its dissolution. In certain cases this may also lead to double taxation.There is no such provision in the current law regarding conversion of an NPO into a business organization.

The general anti-avoidance rules proposed in the DTC gives wide discretion to the Commissioner of Income Tax to deny any deduction/incentive or impose tax if he is of the view that the arrangements are abusive or are not backed by any commercial substance. It is possible that these anti-avoidance rules may in certain cases result in loss of tax benefits for genuine NPOs as well as Donors.

The DTC only allows a 50% deduction for donors who contribute to registered charities. Existing benefits such as the 100% deduction for eligible projects or schemes under section 35AC of the Income Tax Act seem to have been removed.

(v)Power to cancel registration

Power of Commissioner of Income Tax (CIT) regarding cancellation or withdrawal of approval has been extended to cases where activities of NPOs are not in accordance with any law applicable to it or under which it is was registered. This is a very wide power being given to the Commissioner.

The current law provides for an accumulation to the extent of 15% of the gross receipts for an indefinite period without any condition related to application of the same. In addition, if the remaining 85% of the income is not applied then it shall be accumulated/set apart for a period of 5 years to be applied for specified charitable purposes provided the same is invested in specified modes of investment. Under the DTC, an NPO can accumulate 15% of total income or 10% of gross receipts, whichever is higher for carrying on charitable activities. The amount set apart /accumulated has to be applied for carrying on charitable activities over a period of 3 years, provided the same remains deposited in specified modes of investment.

Constraints on Application and Accumulation of Income

(iv)

(iii) Charitable purpose vs. charitable activity

The Income Tax Act provides for an inclusive definition of 'charitable purpose' wherein the purposes were specified. The DTC has substituted the word 'charitable purpose' with 'charitable activity' which seems to be narrower in scope thereby increasing the ambiguity in the law.

Taxability of business incidental to charitable activity

Genuine charitable organizations earning additional income from incidental activities (in the interest of sustainability) may lose tax benefits due to ambiguities in the definition of 'incidental business' and 'charitable activity'.

(ii)

Everyone A Changemaker: What Does It Mean To Me?

Dr Tara Thiagarajan Recently, in a conversation with

Manoj Chandran, Director of

Marketing at Ashoka in India, I had

the opportunity to learn about

Ashoka Innovators for the Public

and its vision of 'Everyone a

Changemaker' (EACH). It's a

bold statement that got me

thinking. What does it really mean for everyone to be a

changemaker?

Let's focus first on changemaker. When is it that any one of

us can become a changemaker? First, it requires

dissatisfaction with the status quo, a desire for something

to be different. The origins of such desire usually stem from

one of two things: an exposure to something different that

seems somehow better in comparison, better in standard

and therefore worthy of emulation, or the emergence of

new ideas and innovations that are typically better

solutions for common problems. New ideas and

innovations, however, don't come from thin air. The mind is

an open system and relies on input from its external

environment to trigger its meanderings. The more diverse

the inputs, the more possibilities it might explore and the

more ideas and innovations it will produce. What we

choose to cogitate on depends profoundly on our field of

experience and frame of reference.

Then of course, there is the next step: the translation of this

desire, idea or innovation into something real – real change.

This is often even harder. This step most likely takes

resources and a valuation of one's personal opportunities

and risks. Do I have what it takes? Can I find the resources?

Is it worth it for me to do this? How far do I really think I

can get? Can I convince other people that this is worthy?

Ashoka Fellows are a small group who have made this

journey, crossed these barriers and are slowly but surely

effecting change.

Yet Everyone a Changemaker to me says something

profoundly different. Not a top down approach with a few

people trying to effect change but a societal paradigm

where everyone is somehow involved in a march towards

progress. And to think of it in this way topples most of our

common frameworks when we consider the

circumstances of the large majority. Take P. Manikantan thfrom Vadipatti in Tamil Nadu. He is 33, 12 grade educated

and works as a Panchayat Clerk. He has lived in the same

village since birth and interacts only with his neighbours

and relatives. The last time he ventured beyond 2 km from

his village was over a year ago, and that was a rare occasion.

He has a phone but he mainly uses it as an alarm clock,

calculator and camera. He only makes a few calls a year.

And when asked what he'd like to achieve in the next five

years, he shrugs. He doesn't know.

Of the 6+ billion 'everyone', most people have this sort of

profile. Only 15% are college educated and more than half

l ive in smal l rural

communities that they

rarely leave. For these

people the edge of the

world is a walk away,

t y p i c a l l y 5 k m s

e n c o m p a s s i n g

ecosystems of less than

5 , 000 peop l e , t he

population of one high

rise block in Mumbai. In

these small communities everyone knows everyone and

everyone knows what everyone else knows. Exposure is

highly limited, information flow is minimal and diversity is

rare. There is little to feed the desire for change - it is

virtually impossible to create new paradigms out of thin air.

10 fellowconnect

And furthermore, when you live in a small closed-knit

community like a village, there is a stronger force to

conform, for everyone to agree. Nothing worse than

conflict with the neighbours that you have to bear day after

day, year after year. Such conformity and the ensuing

groupthink are not fertile grounds for change. So what can

possibly be done to make good on a statement as bold as

'Everyone a Changemaker'? To me it is about seeding

conditions of change across the world that enable more

people to experience the conditions that provoke change –

the constructs of possibility. This means connecting

fragmented communities in ways that allow information to

flow more freely, so that more people gain greater and

more diverse exposure to the world. To get there it is

imperative that today's small group of changemakers work

towards consciously seeding these conditions, connecting

impoverished communities with resources and

information in whatever capacity they operate. What if

every Ashoka Fellow consciously seeded conditions for the

Manikantan's of the world to see new possibilities? To do

this faster and better requires dialogue and discussion

among one another and with the greater communities to

seed new perspectives and ways of doing things and spread

the stories of methods that work.

It is only then that a few changemakers can grow to

become more changemakers and even more

changemakers until everyone is participating in change in a

world with one global standard, marching relentlessly to a

better place. And when that happens, imagine the

possibilities. Imagine what mankind might accomplish!

(The author is Chairperson of Madura Microfinance Ltd. She

also blogs at www.physicsofpoverty.com)

11 fellowconnect

Making More Health: Achieving Individual, Family, and Community Well-Being

Of all the advances to look forward to in the 21st century, none may be more critical – and more promising – than those in

the field of health. Never before have innovations in human networks, technology, and science been so poised to converge

for the improved health of all the world's citizens.

The Making More Health competition, launched by Ashoka's Changemakers in

partnership with Boehringer Ingelheim, seeks innovative models that are transforming the

field of health to sustainably increase the well-being of individuals, families, and communities.

We welcome solutions and collaborations along the entire health continuum, from

prevention and lifestyle, to detection and treatment. Here is the link to the competition site

which would provide detailed information on everything vis-a-vis the competition post its launch on

July 6, 2011: www.changemakers.com/morehealth. The entries period would remain open until Sept 21, 2011.

For queries and clarifications, please contact Indrani Sharma, Community Manager - Asia at isharma@ashoka.org.

Continued from Page 4

Upcoming Ashoka Changemakers Competitions

Ashoka Hub is a limited-access online space where Ashoka's social entrepreneurs and strategic

partners find one another, exchange resources and self-organize for collaborative action. It was

conceived through a partnership with Ashoka's Venture-Fellowship and ITI Teams, and co-

designed with a core group of 25 Ashoka Fellows. It will extend to Fellows, Staff and Ashoka

Support Network members, as well as carefully vetted external partners.

For 30 years, Ashoka has been facilitating offline collaborations among Fellows to tackle a broad

spectrum of issues in the citizen sector. Moving forward, Fellows can collaborate autonomously

on-demand, in a many-to-many way through Ashoka Hub. Fellows themselves designed the space

to solve fundamental issues in the citizen sector by:

* Lowering the high cost of sharing actionable, real-time knowledge among social change

practitioners

* Reducing challenges to achieving economies of scale by deploying shared resources toward

shared goals

* Accelerating the development of trust and common language between the citizen &

business sectors

Enabling Connections

The platform enables users throughout the global Ashoka network to:

* Find one another easily

* Contact one another easily

* Share up-to-date information about their work

Exchange resources:

* Users can post needs, such as the need for free legal consulting, media contacts or

partners in the field.

* Users can promote events, both public and private, such as a focus group, a meeting, a

conference or an online discussion.

* Users can offer resources to the community, such as job openings, expert advice or

partnerships.

Who's There?

Ashoka Hub is a private community, where we hope you will build trusting relationships. In

addition to Fellows from around the world, Ashoka staff and members of the Ashoka Support

Network from around the globe will join you on Ashoka Hub. The Ashoka Support Network

consists of donors and partners whose vision and work is aligned with Ashoka, and who work

with us closely to support Fellows and the sector as a whole.

Ashoka Hub: An Exclusive Online Platform For Fellows

PEOPLE

OFFERS

NEEDS

12 fellowconnect

EVENTS

INFO

Get Started

To start using Ashoka Hub, go to http://hub.ashoka.org, and log in using your email address and a

temporary password, then follow the steps in the attached guide. We look forward to being

connected!

How it Works?

As an Ashoka Fellow, you can activate your Ashoka Hub profile to present your new idea and your

story as a social entrepreneur to the community. Once logged in, you can integrate your Ashoka

Hub profile with other online social networks and tools including Facebook, Twitter, LinkedIn and

Skype.

Tags: Ashoka Hub uses “tags” to identify people, offers, needs and events throughout the site. You

can choose tags for yourself and for the offers, needs and events you create based on our lists of

fields, locations and populations. If you don't see the tag you're looking for, you can simply create a

“free tag”.

Following: “Following” is the easiest way to stay up-to-date on the offers, needs events and people

that matter to you. We'll start by having you automatically follow some tags then you can decide

what you'd like to stay up-to-date on by changing and adding tags.

ONEs: You can follow people, offers, needs and events individually or follow tags related to the

fields, locations and populations you care about. Following tags related to you will ensure that

you'll learn about the most relevant opportunities on Ashoka Hub.

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13 fellowconnect

Impact Investing: Hybrid Models NeededWhile the spectrum of capital

available for impact investing has

grown significantly over the past

two decades, and explosive

growth has taken place in the

kinds of institution involved in the

sector, the field is still young and

there is as yet no industry standard and little consolidation.

There are two main challenges ahead: first, how can

different forms of capital work together across institutional

structures and constraints in order to deliver maximum

social impact? Second, how can this be done at scale since

scaling up requires both operational excellence and

innovation in creating the kinds of hybrid institution able to

attract many forms of capital.

While capital previously came only from philanthropic and

government finance, today it also includes public equities,

private equity, debt and venture philanthropy, as well as

traditional philanthropy. Not-for-profit organizations,

commercial organizations seeking market-based returns,

quasi-commercial organizations that attract a blended

form of capital, even government social welfare

programmes – all are active in the sector. Ancillary

organizations like social investment banks, consulting firms

and network organizations have also increased significantly

in number.

In the Indian healthcare sector, for example, the greatest

need is to reach a low-income consumer base effectively by

increasing efficiency, developing streamlined protocols and

enhancing skill levels dramatically. The solution lies in

developing hybrid business models where governments

can work with the private and not-for-profit sectors

through special-purpose vehicles that can attract

philanthropic capital and public finance for market creation

activities. This type of hybrid business also allows for scale

up of operations, which in turn allows those businesses to

hire the best talent available.

The challenge that still needs to be overcome is how to

create hybrid legal structures with independent

governance norms whose incentives are aligned in such a

manner that philanthropic capital is not used as a cheap

subsidy for greater returns to commercial investors.

Creating structures where part of the commercial return

goes back into the pool of philanthropic capital is, we

believe, part of the answer. Regulatory reforms that allow

innovative public-private initiatives to be established

without unnecessary red tape would open the door to

this.In order for these structures to work, governments

need to rethink their tendering processes so that

organizations do not bid for and win tenders as loss

leaders. This happens repeatedly in South Asia, and the

winning bidder inevitably fails to deliver because of its cost

structures. Not only is a transparent bidding process

“This type of hybrid business also allows for scale up of operations, which in turn allows those businesses to hire the best talent available”

14 Ashoka Fellow Connect Magazine

Image courtesy: eHealthpoint

critical; its management must also be outsourced to

organizations that understand the cost and income

implications of tenders they receive.

Another crucial element is adequate capitalization. To

achieve large-scale social impact, investments have to

come in at the business's critical growth period when

working capital is stretched and traditional private equity

firms won't invest because their return expectations and

timeframe don't match the needs of the business. As a

result, there is currently a significant lack of impact capital

in the US$7 million to $10 million per investment range in

this sector. In order for the not-for-profit sector's assets to

be made more efficient, hybrid for-profit structures need

to be developed which can embrace a number of

organizations. For example, many not-for-profit eye

hospitals could roll up under one brand and focus on

increased efficiency and protocols, and in turn have greater

impact. These also need to be adequately capitalized so

that they can attract the medical and management talent to

do this. Finally, there is a continuing need to encourage

start-ups. In this regard, we believe there is not enough

creative thinking in the use of public and not-for-profit

sector assets. There are a few notable exceptions: the new

social impact bond developed by Social Finance in the UK;

and Life Spring Hospitals, a for-profit, low-cost, high-quality

maternity hospital chain promoted by Hindustan Life Care,

a Government of India healthcare company, and Acumen

Fund, a global not-for-profit social venture fund.

Maximum impact can be achieved without huge advances

in technology or a scattergun approach to supporting first-

time entrepreneurs. By introducing appropriate hybrid

investment structures and leveraging existing assets and

infrastructure, investors can make a real difference in the

social impact space.

(Varun Sahni is managing director at Impact Investment

Partners. Email varun.sahni@impactinvestmentpartners.com

This article was first published in Alliance Magazine, which

publishes content on philanthropy and social investment. As an

organization based in India, you can sign up for an electronic

subscription free of charge at www.alliancemagazine.org.)

15 Fellow Connect Magazine

The Platform is Ashoka HFA's (Housing for All) quarterly

newsletter. Through the newsletter we hope to keep you

informed about our work. HFA India is currently facilitating

market-based models that provide quality homes at

affordable prices.

Read and download the June 2011 edition at

http://india.ashoka.org/housing-all-newsletter-platform

The Platform: Ashoka Housing For All Quarterly Newsletter

www.india.ashoka.org

A Collaborative Framework for Rural Innovation

Over the past years, Ashoka has focused on electing leading social entrepreneurs with innovative solutions for farmers

and rural citizens and supported them to spread and share their insights with the larger aim of advancing the field of

rural innovation as a whole.

Towards this, over the last few months, Ashoka India and Africa teams have been working together to map the work of

Fellows. Having narrowed down the barriers and solutions pursuant to discussions with our Fellows and other experts in

the domain, Ashoka drew up a mosaic of solutions created by entrepreneurs on a regional basis. Regional meetings were also

organized in India and Africa with select Fellows to identify trends and patterns in the sector from the entrepreneurial and

innovation lens.

In May 2011, Ashoka staff from Africa, India and the global office met at Washington DC to take these discussions further.

This meet threw up interesting insights. It was observed that while innovations are important vehicles for social change, the

right collaborative platform that will catalyze the space to take the innovation of Fellows further, will be important to

transform the field. Given that issues (education, health, livelihoods, governance etc) are intrinsically connected, the new

paradigm has to enable entrepreneurs to take advantage of existing innovations and access different products and services

that are available.

We observe that several Fellows have products and services that are critical for other players to scale or stabilize their work.

In this context, we are exploring the idea of creating a national / global platform that will create incentives for entrepreneurs

to share ideas and solutions with each other and attract changemakers to the rural space. We believe that if the appropriate

information is aggregated to facilitate economic transactions on such a platform, different stakeholders will be incentivized

to come together and Fellows will be able to enhance value for their communities.Another opportunity we are seeing is in

the integration of the health and agriculture space. The thinking envisions the larger debate on food security moving towards

'nutrition security' resulting in a paradigm shift in farming practices, supply chain, market opportunity and related process.

Ashoka will spend the next three months, working with Fellows and other experts, to determine more concrete steps to

test, shape and materialize these ideas. In the meantime, we welcome any thoughts on these insights. ( The author is Venture

Manager at Ashoka India )

Dear Ashoka Fellows,

Ashoka FellowConnect is a communication platform for Ashoka Fellows. We look forward to hearing your experience

of reading the third edition of Ashoka FellowConnect. We welcome Ashoka Fellows to use this platform to share their

knowledge, points of view and other information with others. You can either send your letters to our postal address or

drop me an email at manojc@ashoka.org – Editor

Editorial Team : Manoj Chandran and Vallabh RaoAddress : 54, 1st Cross, Domlur Layout, Bangalore 560071, India © Ashoka Innovators for the public

Supriya Sankaran

Printed at : Maya Printers LLP Ph:26591311 / 9449767501