Re-engineering philanthropy the Deshpande way

Although he’s now known for being a visionary entrepreneur and investor, Desh Deshpande’s journey into entrepreneurship wasn’t a planned one. The IIT-Madras graduate assumed he’d spend his career working in academia after completing his PhD at New Brunswick, Canada. He even spent a year teaching before taking up an offer to work for the engineering unit of a company owned by Motorola. (The company went on to do over $100 million in revenue in 1991). The success of his work led to him to strike off on his own, and he dove into entrepreneurship. His second venture, Cascade Communications, was so successful that at one point 70% of all internet traffic was flowing through switches produced by the company. Cascade’s $3.2 billion sale to another company earned him his first big money as an investor. He’s been widely recognised for his entrepreneurial acumen, most recently co-chairing US President Obama’s National Advisory Council on Innovation and Entrepreneurship in 2010.

Desh and his wife Jaishree were looking for a way to share the fruits of their success. They set up The Deshpande Foundation as the philanthropic vehicle for their charitable activities. But the Foundation’s work in India is not charity as many of us know it. Their idea is to create a culture of entrepreneurship and back entrepreneurs who will solve society’s most pressing problems.

Teach a man to fish

Desh’s philanthropy reflects the learnings of his career. A self-made man, Desh achieved his successes on the strength of his technical training, drive and innovative solutions. The sunrise years of the computing and information technology sectors saw his products succeed in one of the most competitive markets in the world, proving the importance of the market in building world-class products. At the same time, it illustrated the importance of creating a culture of excellence for employees and organisations to deliver ground-breaking results.

Much of Desh and his wife Jaishree’s philanthropy bears the characteristics of his work in the for-profit sector. They place long bets on the future, invest in systems rather than processes, and aim for scale to achieve big results. Desh felt that innovation in the world of engineering “had a bad supply chain”. This drove the idea of the Deshpande Centre for Technological Innovation (DCTI) at MIT in 2002. The Centre was set up to facilitate research and development of products that had viable commercial potential. It wedded the technical acumen of MIT engineers to the business savvy required to sell their products in competitive markets. The Centre has been instrumental in the creation of 28 ‘spinout companies’ that have since attracted $500 million in capital.

They were then struck by the idea of bringing the same model to the non-profit sector. They chose Hubli, Desh’s hometown as the spot to build their incubator of social enterprises and entrepreneurs. Hubli now houses the Deshpande Foundation’s flagship offering. The Sandbox is an institution geared to provide social entrepreneurs and innovators with funding, leadership support, market linkage and other handholding they need for their organisation to succeed.

Lab to Market: Creating an innovation supply chain for the social sector

Desh’s philosophy seems focused on helping entrepreneurs succeed, and creating a pipline of entrepreneurs who will tackle solutions to developmental issues. His philanthropy doesn’t consist merely of grants (though that is a part of their work), but in creating leaders who can solve problems of the future. Desh believes strongly in entrepreneurs, and backing to succeed in realising their goals.

The Sandbox and its institutions act as an incubator and multiplier for organisations in their care. They are publicly asking what none would dare to ask NGOs. At the Deshpande Dialogue, their annual conference, it’s common to be asked ‘what’s your business model?’ and ‘what’s your revenue model’, unusual for non-profit conferences!

There are other features that they bring in from their work in the technology space. Desh has mentioned that work in the ‘for- profit’ contains a strong feedback loop – “either you get to a place where you’re useful to the world or you die”, some of which they want to bring to the social sector. This ruthless efficiency isn’t to turn NGO workers into a bunch of suits. Rather, it’s to ensure that they achieve the best results possible for as many people as they can.

The most striking feature is his willingness to place bets on the intangible. The conservativeness of the philanthropy sector makes the work of the Hubli Sandbox seem like the work of a maverick. However, it indicates that he’s operating from a different risk threshold than others in the fray. To quote DCTI Director Leon Sandler, they’re “not growing lettuce, we’re growing oak trees”.

Nonprofits can be run like for-profits

Another key feature of his vision, and one that is not articulated as much by others, is that non-profits can be managed and run like for-profit businesses. The Deshpande Foundation helps an organisation in developing a proof-of-concept (evidence that the ideas can work on the ground). They believe in the discipline required to have the non-profit deliver the best possible services.

The Foundation’s grantmaking programmes have evolved over the years. They do not want to be perceived as a resource for money to support NGO operations. Earlier, they funded programmes of established nonprofits like Habitat for Humanity, India, Mann Deshi Mahila Saharika Bank, The Energy and Resources Institute (TERI). Their current partners are smaller in size and reach. However, they’re being groomed to provide high-impact programmes that fulfil community needs, keeping in mind the possibilities of scale and self-sustenance.

Desh has mentioned that in the initial years of the Hubli Sandbox the plan was to invite prominent American  NGOs to work in India. When they realised this approach was not working, they changed track and focused on  building local leadership. The impact delivered by the Hubli Sandbox led to sharing this model to be replicated  by entrepreneurs in Nizamabad and Varanasi. The Foundation now runs an accelerator helping businesses and  entrepreneurs in Merrimack, Boston, another Sandbox in New Brunswick, Canada and the Deshpande  Innovation Network aimed at connecting universities who encourage innovation and entrepreneurship. They’ve  achieved a significant amount of reach in the twenty years they’ve been operational!

Conclusion

The oak trees that will grow from the seeds that the Deshpandes have planted will be seen in the future. It seems evident that they have set up a strong and nurturing environment to help social entrepreneurs and organisations flourish.