The world is faced with a terrible testing time as the Covid-19 pandemic has adversely impacted almost every sectors. Governments have adopted a slew of measures to soften the setback inflicted by this frightening pandemic. In such a disastrous circumstance, the Niti Aayog urged and listed 92,000 NGOs to join hands with the administration in its battle against Covid-19. But, the economic slowdown is expected to disrupt all NGOs’ operations in a number of ways.
A recent CBI report states that there are approximately 31 lakh NGOs in the country. Even though many of them are not actively operating, yet there are lakhs who are implementing several target based welfare programmes. Indian Philanthropy Report 2019 by Bain and Company said annual fund flow to this sector is estimated to be around Rs 70, 000 crore and much of this is actually contributed by individual philanthropists (62%). Domestic corporation-driven majorly by CSR mandates inject another Rs 13,000 crore (19%). Resources received from foreign sources were approximately Rs 13,000 crore in 2018.
Contributions of “individual philanthropists” who constitute the major share of total resources may dip as this comes from a handful of ultra-high-net-worth individuals and groups as their revenue generation and profits will presumably be hit significantly. With low economic activity and no surplus funds, any liquidity in NGO funding could get diverted to Government identified priorities.
CSR funds as mandated by law require to be a minimum of 2% of the profit on activities specified under schedule VIII of section 135 of Companies Act 2013. 11,584 companies added Rs 13,326 crore to the social sector. With business prospects being decimated by the lockdown, funding will be squeezed or channelized to prioritise for other corpuses like PM-CARES as it attract 100% tax benefit (against 50% if donated to NGOs) besides being accounted as company’s CSR spending.
The multiplier effects on globally connected economies also translate into less foreign funding possibility for roughly 21,000 NGOs with FCRA approvals.
Due to the lockdowns, many of those scheduled programme deliveries may not be attained or inordinately delayed. Many donors have asked their partner NGOs to reduce budget and undertake quick exit plans. Pipeline projects scheduled for sanction and budget allocation are being shelved.
Sudden onset of financial constraints brings many unwelcome changes and inevitably the reduction in manpower. This is more so for NGOs having single donor option and with limited resource base.
In view of the emerging situation, intervention areas are likely to be re-prioritised. Livelihood, a hard hit area, has garnered top focus. Health and sanitation, which are directly linked to mitigating risk of Corona infection, get more attention. Education, which receives 34% of CSR expenditure, may get less attention.
This is the time for many NGOs to reposition their programme portfolio to mobilise monetary resources to address social issues arising out of ongoing pandemic. NGOs should identify local social issues with underlying solutions in the wake of Covid for fund mobilization with potential donors. They must go beyond just a survival plan and explore diversified option of resource generating through crowdfunding, social media marketing, impact bonds, etc.
However, the new challenges can become new opportunities with simple systemic changes for the NGOs.