The Mumbai-based Swades Foundation, which works in rural Maharashtra, opens its issue on the exchange on Friday.In Oct 2023, the exchange listed its first ‘company’, Unnati, a Bangalore-based voluntary organisation (NGO) which equips underprivileged youth to find employment. Other organisations listed include Swami Vivekananda Youth Movement, also in Bangalore, and the Delhi-based Transform Rural India.
The unusual exchange, operated by the National Stock Exchange (NSE) and monitored by markets regulator Sebi, enables social enterprises and NGOs to raise capital through equity, debt as well as units that operate like mutual funds. Given that donors are often perplexed over how to select a deserving organisation, and whether their money is being used effectively, the listed organisation must comply with various governance and financial transparency requirements both to get listed and also continue to stay listed on the exchange.
The organisation must maintain a social impact scorecard. Donors will receive a quarterly report, just like in the case of other listed companies. All entities who are allowed to invest in the capital markets – retail investors, institutional investors, high networth individuals – are allowed to invest in these.
“There is a large population of people who want to go out there and donate but they have had credibility issues,” said Swades co-founder Ronnie Screwvala. “Impact measurement are some of the issues that have not allowed this sector to scale. This will hopefully attract retail people beyond the normal donors.” Swades Foundation is aiming to raise Rs 10 crore for its projects in Raigad and Nashik districts through zero coupon zero principal bonds, which will be the highest issue size by an NGO listed on the Social Stock Exchange.
The idea of a Social Stock Exchange to scale philanthropy was first raised in the 2019-20 Budget.
