Partners Who Share Risk and Insight Help Increase Capacity
When the foundation started working with Dr. Reddys’ Foundation (DRF) in 2007, the organization was already well-known as a top provider of vocational training programs focused on helping low-income youth obtain the skills they needed to find work. The 90-day program, which focused on the skills students needed to get and keep jobs in India’s growing service sector, was offered for free. Unlike many other training programs, DRF had an impressive placement rate of up to 70 percent.
DRF was on the leading edge of a movement, promoted by India’s government, to provide some 500 million unskilled youth (1.4 times the entire population of the US) with employable skills by the year 2022. While DRF was one of the most successful models in India at the time, having trained over 150,000 youth, the sheer number of students to be trained shined a bright light on the need to reach far greater numbers. This huge national aspiration provided a clear opportunity for DRF and the foundation to partner to reach an even greater number of urban youth.
Share risks and contribute insights to benefit partners
From the time it was founded, DRF was committed to training the poorest students—the so-called “bottom of the pyramid”—and helping them find work. In fact, 80 percent of DRF students had annual family household incomes of less than INR 30,000 (~USD 500.) DRF offered free courses, subsidizing costs through grants and through partnerships with the government, which provided subsidies to ensure programs remained free. However, in the face of trying to vastly accelerate the number of students served, the free model was hard to sustain—even with government subsidies. In partnership, we had to think creatively about how to construct a sustainable business model at greater scale. Over time, DRF began testing a financial model that had two additional components—a course fee charged to students and a placement fee charged to employers—in addition to grants and subsidies.
Recognize that how you grow—and who you grow with—is critical
This shift represented a massive organizational sea change, with repercussions that went much deeper than management or the foundation had anticipated. When DRF began evolve its business model, some key employees left, because they felt the shift affected the organization’s culture. Among those who stayed, center managers suddenly found themselves faced with a new and unfamiliar set of tasks: they didn’t just have to run effective training programs or recruit students, they also had to collect money and recruit employers to subsidize students. HR, meanwhile, had to hire for new skills and mindsets, and also had to establish new incentive structures, offering bonuses to employees who were able to more effectively recruit students and fill classes.
The challenges were difficult, but we learned that when testing out new models, the right partners are critical. DRF had a model that worked, but our collective aspirations pushed that model to its limits. We learned the value of having a partner who remained committed—even when the initiative appeared to jeopardize some of their past successes. And, as a funding partner, we were equally committed to staying the course—even when operational challenges prevented DRF from meeting key agreed-upon milestones.
Both DRF and the foundation kept the primary objective in mind—placing more urban youth in jobs. With adjustment and refinement on both sides of the partnership, DRF drove to reduce operational costs to lower student fees and to build a cadre of employer partners to increase overall placement fees. Each success allowed them to scale their baseline of grants and subsidies to help even more urban youth. Since the journey began, DRF has consistently increased the number of students it trains per batch. Over time, we expect significant scale to be reached; training over 50,000 students per year with an even more impressive 80 percent job placement rate. We also expect significant individual impact: After training, an average DRF student goes from no income, to income of INR 5000 per month ($85 per month) resulting in a dramatic change in life trajectory for their families.
Benefits of Trusted Partners
At some point, all non-profits struggle to increase social returns while improving operational efficiencies and lowering costs. It’s far from easy. Trusted partners will be committed to common long-term goals and help each other ask tough questions about baseline assumptions, about what is truly required to drive growth, and about how to maintain quality as models shift. Trusted partners stick together in tough times. Having a trusted partner supporting you as you work to create financial sustainability and systemic change will increase the likelihood of your own success.