Well, the government seems to think so, and not just the present government, earlier ones too. Particularly, if a non-government organisation (NGO) champions a controversial cause, plus takes foreign donations, it is seen to be an agent of outsiders who want to create ‘trouble’ in India. Governments hate such NGOs.
A few months ago, the Union government tightened the screws on NGOs by introducing an amended The Foreign Contribution (Regulation) Act, (FCRA) 2010, which governs the receipt and utilisation of donations that NGOs receive from abroad.
Some aspects of this law are quirky, to say the least. For example, repairs of premises have been put under administrative expenses on which there is a cap. If the principal activity of an NGO is running a residential school for destitute children, it may have to spend quite a bit on keeping its dorms and classrooms in good condition. How is this an administrative expense, and not an essential ‘running expense’ for this NGO?
Another one: an NGO cannot spend more than 20% of its foreign donations ‘utilised’ in a year on admin expenses. Setting aside any debate on what admin expenses should, or should not include, the question arises, 20% of what?
To explain, say, an NGO gets Rs100 in donations in a year, of which Rs75 is Indian and Rs25 is foreign, and its admin expenses, as defined, are Rs20 a year. Does the new law mean that the limit on admin expenses is 20% of Rs100, or Rs25 (the foreign portion)? If the latter, the NGO will have to stop accepting foreign donations because it simply would not be able to bring its admin expenses down to Rs5.
So much for FCRA and the related headaches. Foreign donations are not that important anyway. India’s philanthropists (individuals and trusts) donated Rs40,000 crore to the social sector in FY17-18, substantially more than foreign donations (Rs16,000 crore) while corporates contributed Rs13,000 crore (Source – Bain & Co report 2019).
Yes, people do support NGOs. But not all of them.
NGOs, which champion the causes of the common people—consumer rights, right to information (RTI), and right to adopt an individual lifestyle or bring to the open the malfunctioning of regulators, biases of rating agencies, unfair business practices and so on—they do not get much public support, let alone financial support (CSR—corporate social responsibility—donations) from corporates.
Perhaps the feeling is: ‘not my business’.
Such NGOs toil alone, perhaps crying in the wilderness.
NGOs that are involved in social welfare do get public and CSR support, because Indians do like to donate to a good cause. But these NGOs face a different problem—lack of trust.
There is a perception that NGOs are run by people of dubious character, who use the NGO’s money for their own benefit, do not keep proper accounts, or have no governance.
The primary concern is: Where does the money go? Will my money be misused or diverted (or to use India’s favourite expression—‘siphoned off’)?
Some NGOs have eliminated this question by not dealing in money at all. A notable example is the Robin Hood Army (RHA), which collects surplus food from eateries and distributes it to poor people. All workers are volunteers. If you want to help, lend your labour, or pay a restaurant to prepare food which RHA will distribute.
But this model is not workable for most NGOs, because money is needed for any sustained social work. So, if an NGO wants to gain trust, and thus attract donors, what does it need to do?
I can relate to you the story of a successful NGO, where I have been a volunteer for the past decade:
- The founders started on a tiny scale with the help of a few volunteers. After five years or so, they handed it over to a professional management team, supervised by a volunteer board, and became mentors.
- There is a very tight system of ongoing concurrent audit at the head office, where all the money and accounts are centralised.
- There are manuals and standard operating procedures (SOPs) for everything, and all processes and activities have to be ‘by the book’.
- Every recognised governance process, from budgeting and audit to whistleblower channel and sexual harassment committee, are in place and fully functional.
- No board member gets any remuneration or fee whatsoever.
- Every donor, regardless of the amount of donation, is welcome to seek a detailed and audited statement of exactly how the donation was spent. For example, a donor who funds yoga classes, can ask for, and get, monthly statements of how many people attended yoga classes at every location, how many classes were held, on which dates, and how much was spent on teacher’s fees.
All this may sound very onerous. In my early days, I had questioned why we were setting up an in-depth data mining system to satisfy a relatively small donor.
The answer, given with a smile, was “Every donation is important. Besides, by doing this we are strengthening our own management information system (MIS), so that we can offer similar data to other donors, too.”
It does make sense, and does work, for this NGO.
In the past decade, its corpus has grown 10-fold, it has helped countless families, and has won several awards, including ‘best place to work’.
Whether this is the right formula for an NGO, I don’t know.
But what seems to be clear is that:
- If your NGO supports social causes, it may not get support.
- If your NGO supports social welfare, it can get support, provided it generates trust.
If the government so wills!
(Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world (until Covid, that is), playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog)