Pre-engagement: EdelGives Due Diligence using sector

overviews, transparency and funders network

Pre-engagement processes include sourcing, screening (including due diligence) and
structuring social investment deals. Social investors need to be creative about how to locate
suitable deals and make the pre-engagement process effective. Often, there is even a stage
before spotting deals, wherein many social investors build the pipeline by raising awareness
of social entrepreneurship. Once funders locate suitable organisations, understanding the
organisations and its goals, also known as conducting due diligence, can be a lengthy and
expensive process. Practices can be proprietary depending on the funding organisations
aims, but almost all investing organisations do have a process in place and use a number of
documents and interactions to determine whether the engagement is fruitful for both sides.
The last stage of the process includes structuring the engagement. This structure ranges in
complexity depending on whether resources are shared such as consulting and/or expertise,
equity is bought by the investor, debt is accumulated by the organisation or grants are given.
In previous AVPN conferences, participants highlighted the role of partnering and coinvestment in order to access deals and minimise risk. As we build the sectors knowledge,
we are keen to understand what works for different social missions and investments
(expertise, grants, debt, equity) and share our findings here. The case of Edelgive Foundation
illustrates the approach of a foundation providing mainly grants, yet also selecting
organisations whose capacity can be built.
In this report, AVPN highlights EdelGive Foundations pre-engagement strategy as an example
of an organisation that collaborates actively with non-profit organisations and their cofunders to streamline the initial phase of its partnership process.

Organisational Portrait
Established in 2008, EdelGive Foundation is the strategic philanthropic arm of Edelweiss
Group, a leading financial services firm in India.i EdelGive supports non-profit organisations in
three key focus areas with the following objectives:
1. Education: Transform students attitudes towards academics and improve learning
outcomes
2. Livelihoods: Enhance income levels & employability and reduce social & economic
vulnerability of rural communities
3. Womens Empowerment: Improve and protect the social status of women in India
EdelGives partner organisations are typically 2-3 years old and in the seed and scale stages
of development. EdelGive identifies these phases as crucial periods for an organisation, as it
holds significant potential for impact and investment. It works to empower these

organisations in scaling their operations, after which EdelGive is able to backtrack and allow
them to develop independently.
EdelGive Foundation aggregates funds from high net worth individuals (HNWI), foundations,
Edelweiss and other corporates, employees and other partners. It then channels these into
financial support and organisational capacity building to non-profit organisations with the aim
of creating a high impact social sector. Till date, EdelGive has invested approximately 35 crore
in over 60 non-profits and has impacted over 260,000 lives across India.ii

Source: EdelGive Foundation

Significant to EdelGives development is its strong connection to its parent company,

Edelweiss. EdelGive is able to leverage Edelweisss resources to sustain its zero cost platform.
In covering all of EdelGives administrative costs, Edelweiss allows the foundation to channel
all funding from its partners directly to the non-profit organisations it supports. Beyond
financial assistance, Edelweiss, with an employee strength of over 5,000 professionals, is able
to offer corporate volunteers who work on a pro-bono basis in identifying capacity building
gaps and offering key recommendations to non-profits. Edelweiss also provides instruments
such as systems, processes and technology that are crucial for an efficient operational
structure.iii

Pre-engagement Strategy
The social sector in India is extremely dense and diversified, holding approximately 3.3 million
non-profit institutions.iv Given the sheer number of non-profits operating in India, EdelGive
has implemented an efficient pre-engagement strategy to identify potential investees for
partnership.

Research & Sourcing Finding partners in the ecosystem

EdelGive looks for non-profit organisations that are in the seed and scale stages of
development with potential for serious investment. It screens potential investees based on
their programme's structure, impact, sustainability and leadership. For this process, the
foundation employs sector experts in sourcing credible non-profit organisations for potential
engagement.v EdelGive meets frequently with its existing non-profits and their investees,
gaining thorough insight into partnerships between organisations that are working on similar
projects.vi EdelGive also relies heavily on their sectorial understanding, referrals from its
existing network and the regional media.
Notably, EdelGive does not invite applications for partnership from non-profits. Naghma
Mulla, Chief Operating Officer at EdelGive Foundation, indicates that inviting applications will
result in an overwhelming number of appeals, thereby leaving other well-suited organisations
neglected.vii
EdelGive does not impose general conditions for partnership but instead employs a different
set of parameters for each organisation it engages.
Due Diligence & Evaluation Testing the partnership in a three-step process
EdelGives investment process is grounded on evidence-based impact evaluation that
assesses non-profits for credibility. Once EdelGive identifies a prospective organisation
through the sector experts on the due diligence team, it first takes 2 to 3 months conducting
due diligence and surveying the organisations projects. EdelGive conducts a field visit to
prospective investees that qualify after its due diligence stage to examine the organisation at
a grassroots level. Furthermore, EdelGive gathers both the non-profit and the non-profits cofunders in meetings to engage in active dialogues about its progress and challenges. By
facilitating an open environment for genuine discussion, EdelGive is able to discern if the
organisation is suitable for partnership.
Following the initial assessment through the EdelGive team, EdelGive commissions a thirdparty verification of the non-profit and also asks for references from other funders who have
worked with the organisation. These three steps allow EdelGive to gain a holistic view of the
organisation before investing.
Noticeably, EdelGive locates potential organisations and conducts its due diligence before
structuring a deal around the investees needs and EdelGives resources. For other funders or
social investors in this field, this first phase can often be more of a marketing phase while the
deal structuring tests the work partnership. For EdelGive, transparency is key.viii
Deal Structuring Formalising the partnership
Once EdelGive agrees to fund a non-profit, it signs a Memorandum of Understanding (MoU)
to establish key timelines, KPIs and deliverables. Usually, the total grant amount is divided
into tranches that will be distributed according to milestones. This deal structuring process
typically requires a period of 1.5 months.

These milestones are not necessarily set in stone. At times, especially in agriculture, the
milestones may not be achieved due to climatic conditions such as drought. In these
situations, EdelGive benefits from the transparent relationship it built in the first part of their
due diligence and expects a pro-active renegotiation of these from the NGOs side.
EdelGive recognises that collaborating with non-profit organisations and their co-funders is
necessary in magnifying social returns. This does not mean to suggest that EdelGive engages
with other funder organisations for co-investment, as doing so will result in unnecessary
complications. Rather, EdelGive strives to identify and work on areas in the non-profit space
where other funders have yet to invest in. This prevents overlaps between projects and allows
non-profits to receive the greatest value-add from its investors. Also EdelGive informs other
funders about the funded non-profits to allow others to consider financing other aspects of
the non-profits growth.

What drives EdelGives Success?

Since its inception in 2008, EdelGive has experienced significant growth and internal
development. The Foundation has managed to maintain a steady deal flow while balancing
its resources and has succeeded in building meaningful partnerships. Its activities currently
span across 10 different states in both rural and non-rural communities in India.ix In the
following section, we highlight key elements in EdelGives pre-engagement strategy that have
been central to its success.
Sector Overview
While it is important to delve into the specifics of an organisation, such as its projects,
deliverables and grants, EdelGive prefers to adopt a top-down approach when working with
its non-profit partners. Having an overview of the organisation and its broader context is
necessary in understanding how it operates, and in locating areas in which it may be lacking.
Furthermore, EdelGive notes that being actively concerned about the non-profits position in
the field of social impact and its future prospects will generate greater satisfaction from the
non-profit.
Diverse Team Composition
At the core of EdelGives operations is a professional team, 80% of whom come from a social
work background and 20% from a financial background. EdelGive values experience in the
social sector greatly, since social workers have networks in multiple states and are familiar
with grassroot operations. Given that EdelGive does not invite partnership applications from
non-profit organisations, an in-depth understanding of the sector and continuous updating of
expertise through site visits and conversations allow EdelGive to convert grassroots
experience into a tangible pipeline of deals. Furthermore, with employees from a range of
professional backgrounds, EdelGive is able to overcome cultural and linguistic borders and
succeed in extending its activities across India.

Deep-rooted Engagements Grounded in Practicality

EdelGive remains deeply engaged with its partners throughout its investment process. It
adopts an open and hands-on approach in its due diligence process by encouraging nonprofits to be open about their problems and achievements. Doing so allows EdelGive to get
an immediate sense of the organisations overall structure, impact and sustainability.
EdelGive is therefore able to preserve a high retention rate for its partnerships once the
investment process commences. This prevents time, effort and resources from being spent
on investigating partnerships that are incompatible.
EdelGive readily identifies with its partners failures and achievements as it emphasises that
transparency is key to creating partnerships based on mutual trust. It remains responsive to
its partners challenges and circumstances. For example, in situations whereby an agricultural
programme is stunted by natural disasters such as flood or drought and crops are destroyed,
EdelGive understands that it cannot continue to enforce predetermined metrics. It
encourages the non-profit to take the initiative to approach EdelGive as soon as the problem
arises such that they are able to discuss solutions for immediate action.x
A Dynamic, Transparent Network
When EdelGive was first founded, many organisations in the social sector were hesitant in
sharing valuable data and information. The Foundation has since made a conscious effort to
foster an environment of mutual sharing and exchange of information. EdelGive achieved this
by making it a priority to build connections with donors and encourage cross-learning through
annual dialogues, workshops and knowledge sharing sessions. Funders and non-profit
organisations are thus able to draw upon each others experiences, ultimately enabling the
social sector to develop collectively.
In establishing its credibility and position in its field, EdelGive is able to engage with a diverse
range of investors and philanthropists to create a robust co-funding model that seeks to boost
transparency and accountability. This network is crucial in all 3 of EdelGives pre-engagement
process:
1. Research & Sourcing: EdelGive can rely on third-party referrals to potential investees
whose models are in line with EdelGives structure and objectives.
2. Due Diligence & Evaluation: EdelGive is able to contact a non-profits co-funders to
gain a better overview of the organisations programs and challenges before agreeing
to partnership.
3. Deal Structuring: EdelGive is able to identify and add value to areas in which a
partnered organisation has yet to receive assistance from its co-funders. It can also
make key recommendations to other parties in the network who wish to facilitate the
non-profits activities in other ways.
EdelGive contributes actively to the sectors database, providing valuable information and
avenues for other co-funders to build on their efforts in the organisations that EdelGive has
invested in.

Preparing for Future Growth

With 7 years of experience behind it, EdelGive is currently on the verge of serious growth. It
has developed extensive networks, gained significant sectorial expertise, and now possesses
the confidence to initiate further expansion. However, EdelGive notes that in order to
facilitate this process, it must look internally to restructure its team in preparation for
anticipated growth.

Sources
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
EdelGive Annual Report 2013
EdelGive Annual Report 2014
About Us, EdelGive Foundation, available at http://edelgive.org/subcat.php?scid=4&ccid=1
accessed July 3, 2015

About Us, EdelGive Foundation, accessed July 3, 2015 http://edelgive.org/subcat.php?scid=4&ccid=1

EdelGive Annual Report 2014, p. 8
iii
EdelGive Annual Report 2013, p. 8
iv
Comment by Deval Sanghavi, Dasra, 2015 AVPN Conference
v
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
vi
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
vii
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
viii
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
ix
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
x
Conversation with Naghma Mulla, Chief Operating Officer, EdelGive Foundation, July 1, 2015
ii

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