SOCIAL STOCK EXCHANGE: GO & NGO
Among the most interesting announcements in the Budget 2019 speech was the proposal to set up Social Stock Exchange. While fructifying the idea is likely to be some distance away, it he idea does spurn a new energy, by this disruptive thought, into country’s NGO sector. Mostly, all NGOs, who are doing meaningful work, are cash strapped currently. In a low liquidity environment, NGOs are likely to be first and foremost affected. Also, NGO sector has hardly witnessed any innovative development in last decade or two!
There are a million queries in stakeholders’ minds though. While the ‘Why’ of the question is easy to answer, it is ‘When’ ‘Who’ and ‘How’ that needs thinking. Will the Exchange be modelled on similar exchanges in Canada, UK or Singapore? Will they be governed by equity exchanges (BSE and NSE) like SME Exchanges in India or will SEBI devise another mechanism? What will happen to the current India-centric Impact Funds that are currently operated from Exchanges overseas? Will Charity Commissioner’s role be redefined? Will it take a sort of B2B shape and allow only corporates to ‘invest’ their CSR funds or will it have a retail play also? How will the tax benefits of investing in such instruments/causes be accrued to investors? Will the property construction be allowed to NGOs using this money if CSR funds come through this route? What type of companies will be encouraged – NGOs or vendors to NGO sector or both? Will the not-for-profit companies also be allowed to list? Can a NGO think of raising a corpus through an IPO and then run its activities besides from the Interest earned from the corpus amount? Will there be a compulsory to list an NGO, if it gets government or foreign aid?
Our honourable Finance Minister, in her budget speech, had proposed, “an electronic fundraising platform – a social stock exchange” for listing social enterprises and voluntary organizations “working for the realization of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund.” It now depends on the Regulator to take it forward in a most practical manner. If it would be like a mutual fund, then an annual SIP-like mechanism will be an idea worth considering.
I have a suggestion to make here. Let the listing be made easy and lucrative to all NGOs. After leaving a large part of their annual budget and fund raising at their discretion, let a portion of their annual needs be mobilised through Social Stock Exchange. Let the CSR funds from corporates, government aid and foreign support come through Exchange. This will ensure better compliance, work as an incentive to excel on the core objective. Besides, it will also ensure that one thing that is always a question mark on NGOs: trusting them with your money.
Ofcourse, all those employees who part with their day’s salary annually for charity need to be involved too. Somehow.
What an idea, madamji!