COVID-19 relief hits cash-strapped NGOs hard, finds survey

A man with breathing problem is wheeled inside a COVID-19 hospital for treatment in Ahmedabad. (Representative image: Reuters)

Non-governmental organisations (NGOs) are facing severe financial difficulties as most funds and donations have been diverted towards management of the COVID-19 pandemic and relief efforts, said a new study.

The survey conducted by The/Nudge Foundation, a Bengaluru-based NGO, found out that with funds diverted to COVID-19 healthcare and immediate relief, many NGOs are facing the threat of closure and job cuts.

A large amount of corporate Social Responsibility (CSR), retail and philanthropic funds were expected to go to COVID-19 healthcare and relief, both in the near- and medium-term, impacting the overall funds supply available to NGOs.

That in turn is bound to hit non-COVID activities of such organisations such as literacy programmes, building community participation, women empowerment, sustainable development, advocacy and raising awareness, among other social welfare projects, where many NGOs  - apart from a few rotten apples - have been offering yeoman services, to even places where the government machinery is unable to reach in a vast and diverse country like India.

“The reduced funding is likely to lead to closures and job cuts, potentially even more than the past year as many NGOs have eaten into their reserves. This may have far-reaching consequences both because of the work NGOs do, and because the sector had seven million jobs,” said the survey titled ‘Some potential implications of the second wave of COVID-19 for NGOs’ conducted by Ayesha Marfatia and Ashish Karamchandani.

Biraj Patnaik of the National Foundation of India (NFI) confirmed that with decreased funding and greater government compliances, the additional burden of COVID relief has made the road ahead difficult for NGOs.

"If you look at funding, the fact that close to Rs 11,000 crore has gone to the Prime Minister Cares Fund (PM Cares Fund), which would otherwise have been spent through NGOs, is a huge blow to the sector. Add to it, changes in the Foreign Contribution (Regulation) Act (FCRA), leading to donors shifting their priorities. Large institutional donors have been put under the scanner. And there is a squeeze on fresh money coming in,” he told Moneycontrol.

Patnaik, formerly the principal adviser to the commissioners of the Supreme Court in the Right to Food case for close to a decade, who has also been part of the right to food campaign in India since its inception, said that this drastic reduction of funds is bound to impact the rural economy.

``It will not only slow down economic recovery in the post-pandemic scenario, the removal of safety nets has implications for societal violence, especially in areas impacted by left-wing extremism,” he said.

On the impact on NGOs in the medium term, The/Nudge Foundation survey said they were increasingly seeing burnout and mental health issues in their teams. In addition to the stress of the past year, a significant number of people working in the sector have now been affected directly. “Job security is also a looming worry,” it said.

The study, which covered many NGOs, 23 experts, economists, and statisticians, revealed that “compliance requirements are becoming more onerous and for many NGOs, with Foreign Contribution (Regulation) Act, there are issues with sub-granting and operating the SBI accounts mandated for use by the government, and as a result, there is difficulty accessing foreign funds. This is impacting the effective use of the foreign aid coming into the country.”

Harsh Jaitli, Chief Executive Officer (CEO) of Voluntary Action Network India (VANI), the apex body of Indian voluntary organisations, concurs that contributions directed towards PM Cares has meant reduction of  CSR funds for Indian NGOs, which has undoubtedly reduced their capacity to work on socio-economic and health issues. This setback, however, has not dampened their initiatives.

"NGOs have been working for COVID mitigation during the worst phase of pandemic. A special group comprising CSOs or civil society organisations was created under NITI Aayog and NDMA (National Disaster Management Act). This group was coordinated by the CEO of NITI Aayog, its basic objective being to synchronise collaboration between government and CSOs. Their efforts were highly appreciated by the government. Even the WHO has recognised the outstanding contribution of ASHA (Accredited Social Health Activists) workers, which is the outcome of this innovation,” Jaitli told Moneycontrol.

NGOs have perennially been under the government hammer, a trend which began during the Congress-led UPA regime but reinforced with greater vigor by the current BJP government.

Close to 15,000 NGOs have been barred from foreign funding through FCRA and somewhat stringent compliances have made life difficult for these organisations. In 2020, it was reported that the government had cancelled the licenses of over 6,600 NGOs in a three-year time span for violating provisions of the FCRA.

But the outbreak of the coronavirus has changed attitudes. To manage the scale of the pandemic, the government had no choice but to turn to the voluntary sector. In April 2020, the Niti Aayog’s CEO, Amitabh Kant, wrote to over 92,000 NGOs, seeking their help in identifying COVID-19 hotspots and distributing relief. They were asked to set up community relief kitchens to provide food for the urban and rural poor.

Additionally, the government directed all FCRA-licensed NGOs to submit monthly reports on their Coronavirus relief activities.

Amitabh Behar, CEO of Oxfam India, agrees that sources of NGO funding have become smaller. "The shift of donors has impacted livelihood issues like employment, education and health for the NGO sector as a whole, even though I have to admit that our pie did not shrink on account of COVID relief,” he told Moneycontrol.

“Oxfam India has been working with the government and communities during the biggest crisis in the history of independent India. During these tough times, our teams have been helping to strengthen the government and civil society’s relief work and ensuring that no one is left behind,” he said.