Based on the case study authored by Raveendra Chittoor and Geetika Shah
Set in April 2014, the case describes the key challenges faced by the Azim Premji Foundation and outlines the importance of scale, strategy and effective execution in achieving its goals efficiently. The case highlights the challenges of building a large, professionally managed not-for-profit organisation and the strategic decisions that have to be made to grow it into a sustainable organisation.
In a developing economy such as India, with a burgeoning population of 1.1 billion (as of 2010), the social challenges are monumental. In this context, the importance of the social sector in addressing gaps in poverty alleviation, inequality and deprivation, education, health and nutrition is well understood. However, most not-for-profit organisations tend to be small and fragmented. It is only in the past couple of decades that the organisational landscape of not-for-profits has undergone a dramatic change with the emergence of very large, highly professional organisations such as the Bill and Melinda Gates Foundation. A similar change has been taking place in India as well, with the Azim Premji Foundation pioneering this trend.
Azim Premji Foundation – Set up and Funding
The Azim Premji Foundation, a not-for-profit organisation in India, was established in 2001 to try and make significant and long-term contribution to national development through its vision of facilitating a just, equitable, humane and sustainable society. After evaluating various areas that needed attention and intervention such as health, poverty, nutrition and education, the foundation had chosen to focus on education and related development areas. Within the sphere of education, the foundation had decided to focus on school education for the direct impact and significant multiplier effect that emanated from education.
The model of a family-run business organisation creating a separate foundation or trust that was largely funded by the profits from the business was the most common model of philanthropy in India. In February 2013, Azim Premji, Chairman of Wipro Limited, announced the transfer of 295.5 million Wipro shares worth INR 123 billion (around US$2.3 billion), representing about 12% stake in the company, to the Azim Premji Foundation. This was the biggest ever charitable gesture in India. It came just about two years after the business tycoon had donated 8.7% of the total stock of Wipro, amounting to about INR 88.46 billion (about $2 billion), to the foundation in December 2010. At that time, Premji had said, “The foundation’s significant increase in scale and its clear focus on social purposes will require a substantial long-term financial commitment, which is the purpose this endowment will serve.”
The foundation was unique in the sense that it was entirely funded by one individual and had no other source of funding. The shares of Wipro Limited donated by its Chairman, Azim Premji, were meant to be sold to run the activities of the foundation. With no self-sustaining sources of revenue, the foundation would require funding literally “forever” to ensure its sustainability. This created the need for a financial system that could support the foundation in perpetuity. Like many universities and similar foundations in the US and Europe, the foundation chose the endowment model, where a corpus is created and in turn invested and managed professionally. The endowment corpus for the foundation was held in a private trust that was a fully tax-paying entity.
The foundation followed a two-CEO structure with the duo of Dileep Ranjekar and Anurag Behar at the helm. While founding CEO, Ranjekar, carried with him the history and knowledge of the foundation, Behar brought in a new perspective to the organisation.
Growth in a Phased Manner
During its initial phase of existence, the foundation worked closely with existing NGOs and provided them with funding to run their programmes. However, the foundation felt that this was not really helping them meet the overall objective of gaining and disseminating knowledge in the field. Thus, the second phase, between 2001 and 2010, involved exploring and learning, building capacity and building certain legitimacy within the sector. The foundation decided to work towards enabling the public education system and not supplanting it by setting up its own schools. During this phase, establishing deep relationships with the government, the foundation built a strong field presence in 13 Indian states at the district and block levels through its state offices and programs. During this period, it also developed extensive domain knowledge through rich field experience and extensive research.
The third phase was about fine-tuning their strategy. This need primarily arose out of a feeling that unless the underlying issues, such as the lack of professional talent and availability of an institutionalised architecture in the education sector were addressed, there would be very little impact or progress. Thus, the foundation transitioned to incorporating an institutional approach in phase three and made a concerted effort to build scale and develop people. To support the critical need for such people in this space, the foundation also decided to establish a private, not-for-profit university, the Azim Premji University, which was committed to social service and dedicated to education and development.
Thus, with a sharper focus on its strategy, the foundation began growing at a fast pace. From 310 people in 2010, it grew to more than 460 members by October 2011 and had ramped up to 800 by May 2013. Over the next three to five years, this number was expected to reach 4,000. Its growth plans to have 50 district institutes and a University with 3,000 students gave rise to a steep increase in its people requirements.
Challenges Ahead
In April 2014, sitting in the calm environs of their eco-friendly office in bustling Bangalore, Ranjekar and Behar took stock of the significant progress the foundation had made over the years. Several important questions loomed as the foundation entered the second decade of its existence with fresh plans and renewed vigor. Having worked extensively on various aspects of education across the country for a decade, the foundation was more committed than ever to continuing its efforts in the education and related development space. The organisational strategy, after carefully reflecting on the foundation’s past work, was characterized by the idea of working in an “institutional” mode and not merely in a “programmatic” mode. This meant establishing a long-term presence in the places where the foundation operated, that is, in the relatively more disadvantaged districts of the country, and engaging with the public education system on a continuous and long-term basis to facilitate change.
The foundation had managed to bring in some exceptional people and retaining them was crucial for achieving the foundation’s long-term plans. Would they be able to do that successfully? At present, the organisation had strong values and a frugal culture, but would it continue to do so as it grew to a massive size? Should it benchmark itself against existing organisations or should it pioneer a new standard of professionalism in the social sector? These were some of the many questions that played on their minds as the duo contemplated the foundation’s future plans.
About the Case Study
“Azim Premji Foundation – Bringing Professional Excellence to Philanthropy.” Indian School of Business case no. ISB060 (Indian School of Business, March 2016). Harvard Business Publishing. http://hbsp.harvard.edu/
About the Authors
Raveendra Chittoor is Assistant Professor in the Strategy area at the Indian School of Business.
Geetika Shah is Associate Director at the Centre for Learning and Management Practice at the Indian School of Business.
About the Writer
Vineet R Bhatt, Content Lead with the Marketing and Communications department at the Indian School of Business, wrote this summary.