With international funding slowing down and domestic fundraising taking off strongly, local NGOs have to up their game to win hearts and minds

In the past decade, reliance on foreign funding for NGOs has been inconsistent and is on a slowdown. According to a recent report, there has been a decline of 40 per cent in foreign funds for NGOs over the past five years. Add the recent clampdown by the Government, which resulted in around 1,800 NGOs in the country being banned from accepting foreign funds for allegedly violating norms of the Foreign Contribution Regulation Act (FCRA). This has necessitated the need for local organisations to look for new ways to raise funds so as to support the causes they champion.

As has been seen, most community-based organisations working at the State level and rooted in local settings are less financially stable. Limited legal and financial knowledge, coupled with a lack of mentoring, make it even more difficult for them to survive or grow. Self sustainability itself becomes a big question for them. Thanks to the push from the Centre, funding under Corporate Social Responsibility (CSR) is maturing, which has seen a growth of 12 per cent in recent times.

The two per cent CSR mandate, which requires companies to spend at least two per cent of their average net profits made in the preceding three years on CSR, has led to an upsurge in corporate donations. Grants by individual philanthropists have also seen an upward growth in recent years. They have ensured that the role of private funding continues to grow despite slowing foreign fund inflows.

With foreign funds shrinking and corporate and individual sources of funding slowly increasing, NGOs need to rework their programme design strategy and financing approach. In such a scenario, diversification is the key. There is a need to have a healthy mix of long and short-term funding. Civil society organisations need to shift focus to CSR donations, local donors as well as internally generated resources by events and fundraisers among others. The challenge here arises that most NGOs lack proficiency in understanding donor processes before they want to invest and also after grants have been made. Understanding of compliance processes that professional donors expect is also lacking in NGOs. There is a need to impart basic know-how of dealing with funds to such community-level organisations.

Not only that, a local NGO has to enable cross-functioning system to work in tandem with its operational goals. Standard departments like administration, communication, finance and human resources need to be aligned with unique divisions like fundraising, institutional fundraising, grant seeking and management. All of this combined can be fairly overwhelming for an organisation that is driven by a single objective to bring change at the community level. The challenges of integration and servicing only mature as smaller NGOs grow in scale. With a one-line focus on working towards “civic driven change”, they seldom ignore the administrative functions. This not only hinders their day-to-day operations but results in major blowbacks, like cancelling of licenses or restriction on foreign funding as we have seen.

An effective solution to these challenges lies in sharing best practices by larger civil society organisations with their local counterparts. Although there is no data to exactly support the trend, the last few years have seen several large NGOs expanding their reach by working with smaller CBOs and partners. These agreements are a model example and support the growth of civil society as a whole through knowledge sharing and community development at the ground level. They also enable dialogue across a wide spectrum of issues, further enhancing the effectiveness of such organisations.

A blended-learning approach, which includes a combination of online and classroom learning, is one way to inculcate change in operational behaviour. Though very few institutes provide such courses, the ones that do, focus on alleviating the dependency on foreign funding and channel the responsibility to reduce poverty to where it ultimately belongs, the countries themselves.

Workshops aimed at knowledge sharing and best practices are also very useful. These workshops help the civil society to rethink their business models, think strategically about its financial models and adopt new and innovative approaches that will help the sector maintain its independence and still be sustainable. The idea exchanges that happen through the workshops empower the smaller units with long-term and short-term fundraising goals.

The legislative environment and policies related to the economic downturn in the top-tier funding countries and changing donor priorities have made dependence on foreign funding a very tricky option. Financial sustainability is about diversifying financial resources in order to have a healthy mix of long and short-term funding, CSR donations, foreign and local donors as well as internally generated resources by events and fundraisers.

(Writer: Santanu Mishra; Courtesy: The Pioneer)

With international funding slowing down and domestic fundraising taking off strongly, local NGOs have to up their game to win hearts and minds

In the past decade, reliance on foreign funding for NGOs has been inconsistent and is on a slowdown. According to a recent report, there has been a decline of 40 per cent in foreign funds for NGOs over the past five years. Add the recent clampdown by the Government, which resulted in around 1,800 NGOs in the country being banned from accepting foreign funds for allegedly violating norms of the Foreign Contribution Regulation Act (FCRA). This has necessitated the need for local organisations to look for new ways to raise funds so as to support the causes they champion.

As has been seen, most community-based organisations working at the State level and rooted in local settings are less financially stable. Limited legal and financial knowledge, coupled with a lack of mentoring, make it even more difficult for them to survive or grow. Self sustainability itself becomes a big question for them. Thanks to the push from the Centre, funding under Corporate Social Responsibility (CSR) is maturing, which has seen a growth of 12 per cent in recent times.

The two per cent CSR mandate, which requires companies to spend at least two per cent of their average net profits made in the preceding three years on CSR, has led to an upsurge in corporate donations. Grants by individual philanthropists have also seen an upward growth in recent years. They have ensured that the role of private funding continues to grow despite slowing foreign fund inflows.

With foreign funds shrinking and corporate and individual sources of funding slowly increasing, NGOs need to rework their programme design strategy and financing approach. In such a scenario, diversification is the key. There is a need to have a healthy mix of long and short-term funding. Civil society organisations need to shift focus to CSR donations, local donors as well as internally generated resources by events and fundraisers among others. The challenge here arises that most NGOs lack proficiency in understanding donor processes before they want to invest and also after grants have been made. Understanding of compliance processes that professional donors expect is also lacking in NGOs. There is a need to impart basic know-how of dealing with funds to such community-level organisations.

Not only that, a local NGO has to enable cross-functioning system to work in tandem with its operational goals. Standard departments like administration, communication, finance and human resources need to be aligned with unique divisions like fundraising, institutional fundraising, grant seeking and management. All of this combined can be fairly overwhelming for an organisation that is driven by a single objective to bring change at the community level. The challenges of integration and servicing only mature as smaller NGOs grow in scale. With a one-line focus on working towards “civic driven change”, they seldom ignore the administrative functions. This not only hinders their day-to-day operations but results in major blowbacks, like cancelling of licenses or restriction on foreign funding as we have seen.

An effective solution to these challenges lies in sharing best practices by larger civil society organisations with their local counterparts. Although there is no data to exactly support the trend, the last few years have seen several large NGOs expanding their reach by working with smaller CBOs and partners. These agreements are a model example and support the growth of civil society as a whole through knowledge sharing and community development at the ground level. They also enable dialogue across a wide spectrum of issues, further enhancing the effectiveness of such organisations.

A blended-learning approach, which includes a combination of online and classroom learning, is one way to inculcate change in operational behaviour. Though very few institutes provide such courses, the ones that do, focus on alleviating the dependency on foreign funding and channel the responsibility to reduce poverty to where it ultimately belongs, the countries themselves.

Workshops aimed at knowledge sharing and best practices are also very useful. These workshops help the civil society to rethink their business models, think strategically about its financial models and adopt new and innovative approaches that will help the sector maintain its independence and still be sustainable. The idea exchanges that happen through the workshops empower the smaller units with long-term and short-term fundraising goals.

The legislative environment and policies related to the economic downturn in the top-tier funding countries and changing donor priorities have made dependence on foreign funding a very tricky option. Financial sustainability is about diversifying financial resources in order to have a healthy mix of long and short-term funding, CSR donations, foreign and local donors as well as internally generated resources by events and fundraisers.

(Writer: Santanu Mishra; Courtesy: The Pioneer)