Business Standard

Funding cuts take a toll on frontline NGOS

Regulatory changes and the launch of PM Cares have all but dried up funds for organisati­ons engaged in Covid relief efforts, writes NAMRATA ACHARYA


Regulatory changes and the launch of PM CARES have all but dried up funds for organisati­ons engaged in Covid relief efforts at the last mile, writes

Last week, Goonj, an NGO working in rural areas, received an unusual request. It was from a middle-aged IT profession­al in Kolkata, Rajib Ray (name changed), who wanted help to buy medicines for his sick parents.

On March 18, as corporate India slipped into the comfort of work from home due to Covid-19, Ray, 48, received a terminatio­n letter from his employer.

“I was first asked to resign in January. But I refused and sought written grounds of my forced resignatio­n. When I pleaded, the company said they can offer help only if I resign on my own. On March 18, I got the terminatio­n letter,” says Ray.

Over the past few weeks, Goonj has received more such requests from salaried individual­s, who suddenly find themselves trapped in acute poverty.

“We need to ensure that secrecy is maintained in extending help to this class, as they were never dependent on NGOS for relief. People fear social embarrassm­ent about it. Whatever savings people had, are now depleted after a month of lockdown,” says Iftiqar, an employee of Goonj.

The experience of other NGOS is no different. “With the sudden loss of jobs, some people who were earning aboveavera­ge salaries have approached us asking them to help with house rent and grocery,” says a spokespers­on of Giveindia, one of the biggest NGOS in India.

In the fight against Covid-19, the outreach of NGOS in the nooks and corners of India is now much sought after. While donors, including government­s, are seeking their help to reach out to people, individual­s in need find them easily accessible.

Earlier this month, Niti Aayog CEO Amitabh Kant had written to over 92,000 NGOS appealing them to assist the government in identifyin­g Covid-19 hotspots and delivering services to vulnerable groups.

Ironically, since the present government came into power, NGOS have come under tight government scrutiny. Between 2014 and 2019, Foreign Contributi­on Regulation Act, or FCRA, registrati­ons of more than 16,000 associatio­ns were cancelled, data from the Ministry of Corporate Affairs shows. As many as 14,500 NGOS were banned in the last five years from receiving funds from abroad for violation of the Act, the government recently said in the Rajya Sabha.

NGOS in the past have helped weather several crisis situations, including severe floods and earthquake­s. However, in the face of the present pandemic, they are facing issues like never before, starting from funding crunch, logistics and increased government scrutiny.

On March 28, the government set up its own fund, PM Cares, to raise money for Covid-19, providing 100 per cent tax exemption, and attracting big corporate donations. Donations to NGOS entail only 50 per cent tax exemption.

The shrinking coffers of NGOS

While foreign funding for NGOS has shrunk, corporate funding available from corporate social responsibi­lity (CSR) kitty has found multiple claimants, including the government.

In 2014, the government made it mandatory for big companies within certain financial parameters to spend 2 per cent of their average profit of the previous three years on CSR activities every year.

Contributi­ons to mass government welfare schemes like the Clean Ganga project and Swachh Bharat qualify as CSR funding. Corporate entities can now also adopt a heritage site as part of their mandatory CSR.

While public sector undertakin­gs prefer spending money on government projects, big corporate entities like to spend CSR money through their own trusts. In 201718, India’s top CSR contributo­rs were Reliance Industries, Oil and Natural Gas Corporatio­n (ONGC) and Tata Consultanc­y.

In 2017-18, Reliance Industries’ total CSR spend was ~745 crore. Of this, ~304 crore was spent on Reliance University.

For ONGC, its second highest CSR spend was on Swachh Bharat Abhiyan at ~75 crore. Preservati­on of heritage and religious sites also figured in its CSR list. This included preservati­on of four kunds at Varanasi, promotion of Sanskrit language, cleanlines­s drive at Tirumala Tirupati Devasthana­ms and restoratio­n of Kedarnath temple, among others.

In 2018, demonetisa­tion came as a major constraint for CSR funding. Between 2015-16 and 2017-18, the overall CSR spend of companies dropped by nearly ~893 crore. In the same time, CSR spends on heritage, art and culture increased from about ~119 crore to

~212 crore, while the spends under the category of health, eradicatin­g hunger, poverty and malnutriti­on, safe drinking water, sanitation decreased from ~4,608 crore to ~1,774 crore, government data shows.

“In earlier disasters we saw much more fund flow than what we see now. Also, over the years’ a substantia­l part of CSR fund is also going to government schemes. There is more money after CSR Act, but it is going in few pre-defined causes in a few states where companies are located. In villages very little money is flowing. Also, CSR was never meant to filling up govt money,” says Anshu Gupta,founder of Goonj.

“After PM announced ~ 500 per month will be deposited in Jan Dhan accounts, individual­s as well as companies started questionin­g the need for further funds. When PM Cares was announced, the fund constraint­s worsened as close to ~7,000 crore went into that fund. Some corporate entities are still supporting us. However, some are adding riders like Aadhaar details of all the individual beneficiar­ies, a demand which we turned down,” says Arun Kumar, CEO of Apnalaya, which is working in Mumbai’s slums.

Kumar says, his NGO has ration to support close to 6,000 more families over the next eight to 10 days.

In addition, the reporting pressure on NGOS has increased as they are now required to furnish monthly details of foreign funding to the government.

For smaller NGOS, the problem is more acute. “The question is with so many funding constraint­s how do we survive?” asks Elsamarie Dsilva, founder and CEO of Red Dot Foundation, an NGO working for women safety.

“If the government can allocate some money from PM Cares for NGOS, that would be a good initiative,” said Ingrid Srinath, director of the Centre for Social Impact and Philanthro­py at Ashoka University.

NGOS in last-mile battle

About a week ago, in a remote village called Mawlai in Meghalaya, eight families ran out of money to buy ration. Cashrelief, an NGO, acted swiftly to mobilise its field team to send ~1,000 to each of the families. Almost a month before people in slums in Mumbai started getting ration from government, Apnalaya had begun distributi­ng food. Coro India, an NGO, while distributi­ng aid in rural areas is printing a helpline number for women and children on the packets to help victims of domestic violence. These are only a few instance of how NGOS are leading from the front to fight Covid-19. Interestin­gly, most of the funds of NGOS are being raised from individual­s rather corporate entities.

Apart from funding crunch, NGOS face operationa­l challenges in buying food grains and transporta­tion.

“Why should NGOS need to buy food grains from the Food Corporatio­n of India (FCI)? Ideally, the FCI or government should give it. It’s a complicate­d task to raise money from people to fill up these gaps. As we are more needed in the field. NGOS must get more respect and cooperatio­n. We are the best possible lastmile connects. And this nationwide disaster has proved the importance and significan­ce of the sector, ” says Gupta.

“Procuremen­t of relief material in bulk, especially when there is a paucity of goods available in the market, is a constant hurdle for the NGOS. Also, the cost of transporta­tion is high and the donation is generally for the relief materials and seldom cover the transporta­tion costs. One of the most challengin­g parts of distributi­ng relief material and reaching out to people in distress is to ensure the NGO volunteers are keeping themselves safe. They are at the frontline and could become infected themselves,” says the spokespers­on of Giveindia.

If the Covid-19 lockdown continues for long, NGOS might also run out of resources , and along with that will disappear the much-needed last mile connectivi­ty .

Perhaps, a more draconian act for NGOS is still in the making. Recently, the government published the Draft Companies (Corporate Social Responsibi­lity Policy) Amendment Rules, 2020. Under this, money spent on trusts and societies would not qualify as CSR . More than 90 per cent of NGOS work as trusts or societies. They would not get any CSR fund under the proposed law.

“If the NGOS start shutting, not only will many people be unemployed, we will also risk destroying the ground level capacity, something which will be difficult to build again,” says Srinath.

Between 2015-16 and 2017-18, CSR spends on heritage, art and culture increased from about ~119 crore to

~212 crore, while the spends on health, eradicatin­g hunger decreased from ~4,608 crore to ~1,774 crore

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