There were large-scale protests against the construction of a nuclear power plant in Kudankulam, Tamil Nadu. The government of the day believed that foreign funders and social organisations were behind these protests and cancelled the foreign contribution (regulation) act (FCRA) licences of three main organisations involved in the protests, despite claims by some that they had not received any funds from abroad. The government froze banks accounts of organisations such as Indian Social Action Forum (INSAF), citing that their work was against public interest, as specified in the FCRA.
Another example is that of Navsarjan Trust, Gujarat’s oldest Dalit-rights organisation, which believes its protest in Una may have been the ‘immediate provocation’ for the government to cancel its FCRA license. Navsarjan had to let go of its 80-member strong staff and shut down the three primary schools it ran. Its work in over 3,000 villages of Gujarat is currently under stress.
The government claimed, “Navsarjan Trust has come to adverse notice for its undesirable activities aimed to affect prejudicially harmony between religious, racial, social, linguistic, regional groups, castes or communities,” as mentioned in a statement issued by the ministry of home affairs (MHA).
Navsarjan maintains that no evidence of prejudicial activities has been provided by the government, and believes that the organisation is a victim of selective targeting.
What do these things mean to professionals in the social sector? A study within the sector finds out.
This study reviewed the changing trends in the funding of the non-profit sector in India, particularly in the recent context of the Indian government’s heightened attention on inflows from international donors. It examined the impact of these trends on local civil society organisations in India, on organisations that focus on rights and advocacy work as well as those that enable service delivery. The research was a qualitative exercise, which complemented the quantitative analysis conducted by Centre for Social Impact and Philanthropy (CSIP) and How India Lives on foreign funding flows.
The CSIP at Ashoka University is India's first academic centre focused on enabling a strategic and robust philanthropic ecosystem geared towards greater social impact. It informs sector strategy through credible research and data, convenes platforms for norm-setting and collaborative learning, and offers programmes that strengthen civil society capability and sustainability.
Over 30 interviews were conducted with Indian philanthropists, foreign funders, social organisations, and legal, financial and technical experts to bring in multiple perspectives on the topic. The interviews were aimed to understand both personal experiences as well as the broader trends in the sector.
The report discusses significant areas of opportunities that have been identified for Indian philanthropists to play a larger enabling role in the non-profit sector, particularly by supporting certain kinds of rights and advocacy work that have a structural, longer-term impact. The end goal of the study has been to support decision making by providing perspectives from multiple stakeholders on what lies ahead for the Indian social sector, as well as their hopes and expectations for the future of Indian philanthropy.
“This research comes at an extremely crucial moment, when the role of civil society is increasingly being contested by powerful interests. While civil society is hailed as the ‘social basis of democracy’ encompassing diverse groups, networks and movements that play myriad roles in strengthening the common good, the space for democratic dissent is shrinking, especially for those who work to promote, protect and strengthen human rights and advocate for policies that challenge exclusion,” observes Ingrid Srinath, Director, Centre for Social Impact and Philanthropy, Ashoka University.
Rights and advocacy work is almost always supported through Indian or foreign private wealth – philanthropists, family foundations or individuals – because private funding has fewer legal restrictions on how it can be used, unlike government or CSR funding. The funder has the ability to take a long-term view, unlike an elected official or a company that has to regularly report to shareholders about CSR. Ideally, the funders’ giving can be viewed as separate from their business or professional interests, thus enabling the funder to support “riskier” work, points out the study.
While there are many complaints in the field from recipients of foreign donations due the strictness of the FCRA legislation, largely, those who are continuing to do their work and are receiving foreign donations are happy with the greater transparency in the system.
There is also caution among those who have been chastened by the government action. Funders and social sector leaders also spoke of a growing fear in the social sector that has impacted the way social organisations, donors and institutions engage with each other. Several interviewees used the phrase “chilling effect” to describe how the use of FCRA by the government was leading to self-censorship among social organisations. Importantly, funders and organisations had redesigned programmes to drop certain critical interventions, rather than risk facing an FCRA denial.
Two quotes on the general air of caution:
“In this environment of self-censorship and fear, NGOs (non-governmental organisations) are unwilling to support each other on even issues they think might be contentious.” - Leader of a Social Organisation.
“Many NGOs, even those who still have their FCRAs, have also begun to change the way they describe their projects and programmes” - Leader of a Social Organisation that is concerned about losing FCRA.
Relationships between banks and social organisations were spoken of as a major casualty, as financial scrutiny is at the centre of the FCRA law. However, the issue was described as being broader than access to foreign funds. There was an increased reluctance on the part of banks to even want social organisations as their customers, which places a significant hurdle in their functioning. “Banks consider NGOs high-risk customers now and do not want their business,” says an expert in the social sector.
Some philanthropists hesitate to step up and fill the funding gaps created by FCRA de-registration; possibly because of the widespread apprehension about being seen as supporting organisations against which the government has taken action. The few philanthropists who do pitch in to help are often loath to publicise their efforts, because of similar apprehensions, points out the study report.
Several interviewees mentioned that Indian philanthropists have a low risk appetite. The tendency to give ‘safe’ grants is speculated to be governed by how closely businesses are still linked to philanthropy, by reputational risk, the possibility of legal backlash, as well as the risk to other grantees or partners, the study report said.
With the scarcity of donors and funds being as it is, an expert in the social sector observes that channelling of donations has become skewed for the purpose for which it is utilised. “Retail funding happens for movements or events but not for NGOs and their work because it is hard to explain to the individual donors what NGOs actually do with that money. No one wants to pay for the salaries of a field worker, they want to pay for something more tangible,” observes the expert.
A passionate CSIP, which wants funds allocated for rights and advocacy, points out in its study: “Interviewees strongly recommended that Indian philanthropists take some time to do research on rights and advocacy issues and reimagine their grant-giving strategies. However, immediate (within 6 month) and short-term (6-18 month) measures could be implemented to provide relief to rights and advocacy organisations that have lost foreign funding.”
CSIP wants philanthropists to be outspoken in their views and not make anonymous donations. The study report observes, “It was believed uniformly that Indian philanthropists would have to take a more proactive role not just through their grants but also through their voice, platforms, and influence. Many interviewees spoke about the far-reaching effect that this would have on the sector.”
Finally, we make a plea for building a strong human resource base of staff in the social sector and NGOs, and philanthropists should not shy away from salaries funded through donations – both domestic and foreign.
