Foreign funding of NGOs drops 14% till May of FY21

The flow of foreign grants to non-governmental organisations (NGOs) working in Bangladesh declined by 14% till May of the fiscal year 2020-21 when compared year-on-year due to the impact of the Covid-19 pandemic. 

This has severely limited the scope of their development activities, data from the NGO Affairs Bureau show.

The more than Tk1,000 crore drop in grant-based project funding is causing an existential crisis for many small and medium NGOs as they struggle to cope with the financial strain of high-budget relief activities, protecting staff health and other maintenance costs, such as employees' salaries.

The amount of foreign grants – which stood at Tk6,195 crore till May last fiscal year – would appear even lower if the annual funding for Rohingya refugees in Bangladesh is excluded from the total figure. The lion's share of Rohingya funding goes to international (iNGOs) and United Nations (UN) agencies.

On average, the NGO Affairs Bureau has been disbursing around Tk1,000 crore every year following  the massive Rohingya influx from Myanmar in August 2017, said its Deputy Director Abdullah Al Khayrum.

Bangladesh received 1,860 foreign-funded projects till May of FY21, an increase from 1,655 in the previous fiscal year. 

However, regardless of the number of projects, less funding means less opportunity for NGOs to carry out their development activities, insiders have said.

'Facing an existential crisis'

People's Oriented Program Implementation (POPI) is one of the smaller NGOs that depend on foreign funding to work in sectors such as health, education, agriculture, child protection and women empowerment in 23 districts of Bangladesh.

Speaking on the matter, POPI's Executive Director Murshed Alam Sarker said, "We dealt with only two projects with Tk5 crore to Tk7 crore in foreign grants amid the pandemic.

"During pre-Covid times, we had worked on at least 20 projects per year with a grant of Tk10 crore to Tk15 crore."

Murshed, who is also chairman of a network of more than 700 micro finance institutions called Credit and Development Forum (CDF), said, "More than 200 NGOs of our network depend on foreign grants.

"But they are now facing an existential crisis and firing their staff as the number of foreign-funded projects has been declining."

Around 2,500 NGOs are currently operating under the bureau in Bangladesh. Foreign funds for these NGOs declined in FY2019-20 for the first time since FY2016-17.

These organisations received slightly over Tk7,850 crore in the 2019-20 fiscal year, which was 1% lower year-on-year, the NGO Affairs Bureau said.

On the issue, Brac Senior Director KAM Morshed said, "All NGOs became affected amid the Covid-19 pandemic as the amount of foreign funds shrank. The survival capacity of any NGO does not depend only on foreign grants; diversified programmes are essential too.

"Brac's grant-based activities have also been impacted amid the pandemic, but we developed various initiatives such as social enterprises in the last few years."

Meanwhile, Centre for Policy Dialogue's Research Director Dr Khondaker Golam Moazzem said, "When Bangladesh fulfilled the eligibility criteria for LDC (least developed country) graduation for the first time in 2018, foreign development grants for NGOs started to fall, excluding the funding for Rohingyas.

"Because the donors think that such funding should go to other LDC countries, especially in Africa. Now, the Covid-19 pandemic has worsened the situation for these NGOs."

He continued, "The new poor are now a fresh reality in Bangladesh. The government should make an effort to encourage donors so that NGOs can engage in development activities based on their grants.

"The government should also allocate separate funds for NGOs through a trust fund to help them survive. The inflow of foreign grants will decrease further after Bangladesh's graduation from LDC status in 2026."

Rohingya funding affecting other sectors

A number of NGOs claimed that the bureau's process of releasing funds has become slower, which is compounding their problems regarding grant shortage.

Firmly denying the allegation, the bureau's Deputy Director Abdullah Al Khayrum said, "Covid-19 is a global crisis, and it might have slightly impacted foreign funding flow for NGOs."

International aid agencies have been providing funds to NGOs since the beginning of the Rohingya influx, supporting Bangladesh in offering life-saving assistance to the forcibly displaced Myanmar citizens.

"But funding for Rohingya has adversely affected the amount of funds available for tackling other types of humanitarian crises in Bangladesh, such as cyclones and floods," said Rezaul Karim Chowdhury, executive director of Coast Trust – an NGO working for coastal people. 

He added, "We did not receive sufficient funds from international donors when the last two floods took place, as they are now spending on Rohingyas on a priority basis. But only 4% of the foreign-funded Rohingya projects are implemented by Bangladeshi NGOs.

"Oxfam and the UK-based research organisation Development Initiatives jointly published a report in 2018 on the funding of NGOs working in Bangladesh. Development Initiatives published another report in 2021 as well. Both reports showed a trend – starting from 2016 up until recent times – that funding to local and national NGOs has gone down, but it has increased for iNGOs and UN agencies."

Rohingya funding is the reason behind this trend, Rezaul says.

On multiple occasions, the Cox's Bazar CSO NGO Forum (CCNF) – a network of 50 NGOs – has demanded that more participation of local organisations be ensured in the Rohingya response.

"Local aid groups and volunteers were the first to respond to the Rohingya crisis. Today, locals are being sidelined by dozens of international aid agencies – who dominate donor funding and the response itself," said Abu Morshed Chowdhury, co-chair of the CCNF.

UK aid cut hits NGOs

The UK government's decision to cut foreign aid aimed at dealing with the economic fallout of the Covid-19 pandemic in Bangladesh will severely hamper social development activities in the country, several NGO representatives told The Business Standard.

They have reduced the annual foreign aid budget from 0.7% to 0.5% of their national income, and opponents of the cuts are calling for them to be reversed, reported BBC in June this year.

Thousands of people living in extreme poverty in Bangladesh will be affected by the UK's decision to cut aid to the country's largest non-profit agency BRAC Bangladesh. Brac has dubbed the UK government's funding cuts as a "gut punch" after a successful £450 million partnership spanning 10 years.

It will leave hundreds of thousands of girls without an education, millions of women and girls without access to family planning, and hundreds of thousands of people in extreme poverty without support, Brac Executive Director Asif Saleh told The Guardian recently.

His remarks followed an announcement on 15 June that the UK would spend an extra £430m on girls' education in 90 countries over the next five years.

Evidence submitted by Brac to the international development committee's investigation into the aid cuts described the withdrawal of support as "catastrophic" for the tens of thousands in Bangladesh who live on under a dollar a day.

The Foreign Commonwealth and Development Office's (FCDO) withdrawal from the Brac Strategic Partnership Arrangement (SPA) will mean a "dramatic scaling down" of programmes running since 2011.

In a letter accessed by the BBC, eight NGOs that provide humanitarian aid to Bangladesh's Rohingya refugees say the UK's funding of £321m has been cut by 42%.

"When global needs increased in the pandemic, the UK had the chance to be more generous. But we have observed the opposite feedback from the country," said KAM Morshed of Brac.

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 (BBS). An official of the organisation further said NGOs registered with the Association of Development Agencies in Bangladesh (ADAB) have created over one million jobs.