Home » Massachusetts-based S3IDF is reducing poverty in India by helping entrepreneurs, small businesses

Massachusetts-based S3IDF is reducing poverty in India by helping entrepreneurs, small businesses

Helping people gain a livelihood to ensure linear rise towards success.

By Deepak Chitnis

WASHINGTON, DC: Despite the strides that India has made over the past decade in growing its economy and developing its infrastructure, the fact remains that the majority of the country still lives in what could kindly be called the “third world.” With nearly 67% of the country’s population subsisting on less than $2 per day, many of India’s citizens lack access to basic services like clean water, electricity, and other such necessities that serve as foundation for improved quality of life and economic development

One of the NGOs that is combating these multi-faceted problems is the Small-Scale Sustainable Infrastructure Development Fund (S3IDF), an organization based in Bangalore, Karnataka and Cambridge, Massachusetts, with the goal of helping reduce poverty in developing countries around the world, especially India.

“[We] believe that the poor cannot escape poverty by working outside of the mainstream economy,” said Elizabeth Friend, Senior Program Officer at S3IDF, to The American Bazaar. “By creating incentives and agreement structures that are mutually beneficial for all parties – from the entrepreneur to the financial institutions to the technology suppliers – S3IDF is able to influence and change the standard operating practices of these key players, making them more inclusive of the poor.”

Solar panels installed on this entrepreneur’s roof with S3IDF’s help provides him with enough power to not only provide energy for his house, but also give him enough income to power his enterprise and provide for his community.
Solar panels installed on this entrepreneur’s roof with S3IDF’s help provides him with enough power to not only provide energy for his house, but also give him enough income to power his enterprise and provide for his community.

The organization uses an approach it calls the Social Merchant Bank Approach (SMBASM), which provides entrepreneurs in India with three critical elements: leveraged co-financing, technology access and knowledge, and business development support.

The SMBASM strategy also allows for small-scale businesses to grow, and permits S3IDF to cater its resources specifically for each region that it works in.

“The SMBASM created by S3IDF is based on a principle of flexibility and providing unique solutions to the poor to not only rise out of poverty, but gain a livelihood to ensure their linear rise towards success,” said Nakul Kadaba, Project Associate at S3IDF.

The businesses that S3IDF supports provide lighting, drinking water, cooking solutions, computer/internet access, and renewable energy-based electricity used for household and income-generating applications. Technologies used in the businesses range from solar-powered computerized sewing machines to hydropower lighting systems to biogas-powered cooking solutions.

“Traditional approaches by government, multi- and bi-lateral development agencies, and major chari­ties to provide modern energy and infrastructure services often do not effectively reach or impact the poor,” said Russell J. deLucia, Founder and President of S3IDF in the US. “Instead, S3IDF works to integrate those who own, operate, and receive products/services from its small-scale businesses into the broader economy by changing the standard operating practices of financial institutions and technology suppliers.”

According to literature on their website, S3IDF’s mission is two-fold – to “positively impact the poor and the environment by employing the SMBASM in India” and to “achieve broader and greater impact within poor communities around the globe by challenging current development practices and mindsets as well as enabling other development entities to effectively apply the SMBASM.”

When looking for an area or business to invest in, S3IDF evaluates prospects based on four criteria: they must explicitly benefit the poor – or what we call pro-poor – be financially viable, highly replicable, and environmentally responsible. The organization then provides businesses that meet these criteria.

An ICT facility in Chitradurga run off of energy efficient technology consulted by S3IDF provides residents with access to the internet and an entrepreneur to run this internet café on rent.
An ICT facility in Chitradurga run off of energy efficient technology consulted by S3IDF provides residents with access to the internet and an entrepreneur to run this internet café on rent.

For example, S3IDF recently became involved in Maharashtra, joining forces with SELCO India to create clean energy solutions for citizens of rural communities within the state. Known for providing solar-based energy throughout India, SELCO is partnering with S3IDF to bring clean energy to 3,500 people in the tribal villages of Nandurbar. The energy solutions will not only bring affordable energy to low-income parts of India, but will also drastically reduce harmful chemical emissions that damage the environment.

Operating S3IDF in such a way, however, hasn’t always been easy. Because we are a very ‘business-like’ charity whose business model is a bit complex and is not easily understood, we often do not fit easily into funders’ program ‘slots,’ said deLucia. “Initially and continuing to the present, the founders helped overcome this challenge by supporting S3IDF with their own resources, both cash and pro-bono time. We now try to find ways to inform funders on the need to adopt and support new paradigms such as the SMBASM and other innovative approaches that allow their philanthropic and/or development capital to be leveraged with local commercial bank and other financial institution capital.

Since being founded in 2002, S3IDF has amassed close to 200 investments across India. The US branch is a 501(c)(3) non-profit public charity, while the India branch is registered under Section 25 of the India Companies Act. S3IDF has also won numerous accolades for its work, including the first World Clean Energy Award in the NGO and Initiatives category in 2007, the Top Innovation Award for “Clean Energy Finance Solutions” at the Asia Clean Energy Forum in 2008.

Additionally, the United States Agency for International Development has listed S3IDF’s collaboration on the South Asia Regional Initiative for Energy (SARI/E) as a success story, stating that along with other projects within the program “made critically important regional energy milestones.”

So what’s next for S3IDF?

“We hope to undertake different but interrelated activities, including expanding our portfolio of pro-poor investments and small businesses in poor communities in Indian states/regions in which we already operate and to continue working with existing and new partners to bring our SMBASM to poor communities in other states were we do not currently operate,” deLucia explained, further adding that the organization plans to continue its partnership with SELCO India and expand into more low-income areas with its SMBASM approach.

Solving the many economic misfortunes that afflict India is an expansive problem too big for any one organization to tackle, but S3IDF has made substantial progress in relatively little time. For more information about S3IDF, you can visit their website here.

To contact the author, email to deepakchitnis@americanbazaaronline.com