NGOs in crisis as pandemic shrinks funds

The Covid-19 pandemic has brought on a funding crisis for non-government organisations (NGOs) in Bangladesh and it could well prove to be the final straw for some of them with their survival at stake.

The economic slowdown at home and abroad means that just when they need more money to accelerate humanitarian programmes during the ongoing Covid pandemic, they are facing deep cuts in foreign grants. This has been made worse by a complete halt to the collection of micro-credit instalments for those organisations that were involved in providing small-scale loans to the impoverished.

Consequently, their high-cost relief activities and initiatives to protect staff's health also are under serious financial strains.

In the last fiscal year, the overall amount of foreign grants released for NGOs through the NGO Affairs Bureau fell by over Tk79 crore year-on-year. Though, they were able to raise around Tk274 crore in foreign funds to support the people affected by the pandemic.

During the same period, the approved volume of foreign grants for them also dwindled by about 17%, says a report of the bureau, which indicates a possible decline in future grants to be released in the current fiscal year too.

Economists and NGO workers express concern over the future of NGOs, saying smaller organisations may not survive amid this bleak financial situation.

They anticipate the grants inflow to Bangladesh may go down further after its graduation from the list of Least Developed Countries (LDCs), which will leave adverse impacts on socio-economic development by hurting delivery of basic services like health and primary education.

According to the bureau report, the funds for the NGOs from foreign donors declined in FY2019-20 for the first time in the last four fiscal years.

The country's NGOs received slightly over Tk7,850 crore last fiscal year, which was 1% lower year-on-year. The previous three fiscal years had seen a consistent growth in fund inflows.

Dr Hossain Zillur Rahman, chairperson of Brac – world's largest NGO based in Bangladesh, said several donor agencies and countries have stopped approving assistance for almost all sectors, except for those dealing with the pandemic. This will affect the overall development of the country.

"More grants were needed now to deal with a crisis like the Covid-19. But there have been fewer grant disbursements at these hours of need, and small and medium-sized NGOs are facing a financial crisis."

He noted the inflow of foreign grants would come down further after the country's graduation from the LDC status.

The government is aware of the issue and it has formulated a perspective plan based on that, said Dr Shamsul Alam, member (senior secretary) of the General Economics Division in the Planning Commission.

The Eighth Five-Year Plan will also emphasise domestic resources for development, he added.

"Private sector investments will play a big role in the country's future development. The Public-Private Partnership mechanism needs to be strengthened to finance development activities."

AKM Jashim Uddin, director of the Association of Development Agencies in Bangladesh (Adab), said many donors changed their grant disbursement priorities due to the pandemic.

The discontinuation of financial assistance from the donors for several projects has affected development activities and made it difficult for NGOs to meet their operating expenses, he also added.

He said NGOs without microfinance business faced financial trouble with the onset of Covid-19. Even organisations with micro-credit programmes have been in crises over the borrowers' non-payment of instalments for several months.

NGO Affairs Bureau had no lack of initiatives about helping NGOs to collect more grants, claimed Md Rashedul Islam, director general of the bureau, saying they arranged a mechanism to approve new projects of NGOs online amid the pandemic.

However, some issues have arisen recently regarding the proposal clearance by the home ministry, Rashedul Islam said, adding that objections from the ministry have caused a drop in the number of approved projects and disbursement as well.

The bureau is trying to meet with the Prime Minister's Office to resolve the issue, he added.

Regional NGOs in survival challenge

Manab Mukti Sangstha – a Sirajganj-based NGO – implements five to seven projects every year with foreign assistance. But the number has come down to three due to the coronavirus.

The organisation's Executive Director Md Habibullah Bahar said in a phone interview that the expired projects were no longer being renewed by donors. In some cases, the terms of the contracts had been shortened and allocations have also been curtailed.

The micro-credit business brings nearly Tk3 crore a year for the organisation, a large portion of which is spent on salaries and allowances, he said.

He also said, in FY2019-20, the NGO suffered a loss of Tk60 lakh, and it had to cut employee salaries by 50% in some months and could not pay them at all during the rest of the time.

Habibullah thinks it will take the NGO at least two more years to recover.

SM Nazer Hossain, executive director of the Chattogram-based Integrated Social Development Effort, said medium-sized NGOs will somehow survive by cushioning the pandemic's effects. But the financial crisis has put the smaller ones in death throes.

NGOs in Bangladesh are providing primary education to at least 2.52% of children from the poorest families and health related services to about 1% of the poorest people.

They are providing about 4.6% of skill development training in the country, said a report of the Bangladesh Bureau of Statistics.

NGOs registered with the Adab only have created over one million jobs in Bangladesh, said the director of the organisation.