Tatas might start funding social enterprises

Ratan Tata has in the recent past invested in several local startups through his personal investment vehicle RNT Associates. Now, the septuagenarian wants Tata Trusts, a group of charitable institutions that own 66% of Tata Sons, to invest in social enterprises. As of now, these enterprises can only get grants from Tata Trusts.

For this, a three-tier structure is being set up, which would fund socially relevant businesses before they receive support from Tata Sons; following this, they would catch the attention of several other investors.

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"I have Mr Tata's support to set up a new fund that will straddle the middle path between philanthropy and venture capital. The fund will sit outside the Tata Trusts' architecture but will invest in socially relevant and viable businesses incubated within the trust," Manoj Kumar, head of innovation at the Tata Trusts, told ET.

Tata Trusts has its innovation centres in Indian Institute of Science, Indian Institute of Technology and Massachusetts Institute of Technology, which would be used as the first layer in this structure.

Socially relevant business ideas will get funds through grants that these institutions get, and the ones that will prove their worth would then get transferred to the Foundation for Innovation and Social Entrepreneurship (FISE), under Kumar's leadership.

FISE will be the second layer of the structure.

The third layer would then be a fund for enterprises with maximum potential for social change.

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Tata Trusts have been granting funds to educational institutions, and to individuals and non-profit organisations involved in socially useful work. Reputed cancer treatment facilities, viz. Tata Memorial Hospital (Mumbai) and the Tata Medical Centre (Kolkata) have been running by the support of Tata Trusts.

In last FY, the trusts collectively spent about Rs 800 crore in the form of grants, out of which more than two-third amount was spent on health, education, natural resource management and livelihood.

(Image source: InsideIIM)