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Fundraising after the passage of new FCRA Law

For the last 2 weeks, the non-profit space in India has been abuzz with the latest developments about the amended FCRA law. There has been much said and written about how it will impact the grassroots organization, the overall quality of programs and compliance, and also how the i-NGOs engaged only in fund disbursement and empowerment of NGOs may well choose to move out of India. I came across a nice document compiled by the good folks at Sattva which can help if you are looking to declutter this development. I think we have not yet heard the last word on what this will mean for development as well as the development sector in India and if these predictions would even come true. However, much has been speculated and if you are the founder of a small NGO reading this unsure about how life would be in the future, I can empathize with you.

There, however, are a few things that are most likely to happen and we must all be aware of the same and prepare to face the situation as it reveals itself. Given the ban on transfer of money from one FCRA registered entity to any other, the only way a grassroots organisation can receive foreign funds will be to register for FCRA and submit proposals to funding entities. This will mean that the small and medium-sized NGOs will have to build a lot of capacities in proposal writing and communications as the standards of international funding agencies are quite high. This will also mean that there will be increased competition in the domestic funding market viz; CSR, Corporate Funding (Non-CSR) and also all the aspects of individual fundraising. Monies raised from within India will have to be utilised not just for programs but also invested in capacity building, marketing and communications without which further fundraising may not be possible.

Keeping in mind the challenges that may present themselves ahead, new, small and medium NGOs must keep abreast with the changing landscape of fundraising and leverage technology for the same. A few pointers that can help are:

  1. The reliance on foreign donations must be reduced given the uncertainty. Plans for the next 5 years should be made with a focus on raising more than 80% of the funds domestically.
  2. CSR will burn out within no time given the new-found competition in the market and also because the government has also become a player in the fundraising space with PM CARES. This means new avenues like retail, crowdfunding, online marketing, events and other avenues that I cannot now foresee must be discovered and put to use.
  3. With every single means of communication bombarded with fundraising requests, one needs to stand out with clear concise stories of change and definitive calls to action. Investing in building a good fundraising and communication team may be the order of the day. Smaller NGOs can work with consultants and agencies to get the same job done. Gone are the days where NGOs would want to spend more than 85% monies in the program delivery. If one tries that, they will see the bottom of the barrel before they know.
  4. Collaborations among NGO community are not easy to come by, especially with everyone believing in their own “theory of change”. However, a consortium approach where human and other resources are shared between organizations working in the same geography might be the way to get the best bang out of your buck. Easier said than done though.
  5. Similarly, collaborations within domestic funders may also open up a culture akin to start-up funding in the development space. This would mean a group of funders funding a cause implemented by a group of NGOs, something you don’t get to hear every day in India.

Lastly, there is a great opportunity for intermediary organizations to tap into the HNIs of India, who are still quite behind in giving compared to their western counterparts. If an organization can inspire the vast population of HNIs to invest in a fund that aims to empower the NGOs, train them in governance, and set them up for sustainability, it could be the goldilocks solutions that we may all be after.

Dhimant Chovatia

The FCRA Bill and its impact on fundraising

Photo by Artem Beliaikin on Pexels.com

The Foreign Contribution (Regulation) Amendment Bill, 2020 has been passed in both houses of the parliament amidst mixed reactions from the development sector, politicians and administrative authorities. Being a fundraiser, I have had the opportunity to hear as well as understand this issue from several sides courtesy friends who work in various NGOs. For the benefit of people who are in the development sector, here is a breakdown of what is in store for your foreign fundraising efforts.

Argument against the bill
(Specifically made by Civil Society particularly empowerment and accountability NGOs)

  1. Reduction of admin expenses from 50% to 20% is not justified fully and seems like micro-management by Govt. Given the reduction of this amount, scale of impact may go down.
  2. Stopping of FC fund transfers among NGOs will hamper implementation outsourcing.
  3. Renewal audit/inquiry can lead to prejudice by authorities.
  4. SBI Delhi account is not practical for everyone. 94% of NGOs are based outside of Delhi.
  5. There is a lack of domestic funding for RBOs and empowerment work. FC is needed.

Argument For the bill

  1. NGO transfers of FC have been historically unregulated and also untraceable.
  2. Govt says reduction of admin cost from 50% to 20% is to reduce unnecessary expenditure on the part of the NGOs.
  3. Renewal audit should not threaten NGOs who are doing good work and not indulging in any wrongdoings.
  4. SBI account can be opened from any local SBI branch. It will be opened in Delhi without the need of the account holder coming to Delhi. Funds can then be sent to any Indian account.

Neutral Observations

  1. The idea of FCRA renewal only after scrutiny seems well intentioned, but has the potential to lead to administrative and bureaucratic challenges.
  2. Most of the argument from the Govt’s side (by politicians) has been w.r.t religious conversions and insurgency.
  3. The Aadhar debate seemed aimless from both sides.
  4. Fund Transfer (FC) ban may hurt implementing agencies and grassroots organisations who are the last mile connectivity for service delivery in many cases.
  5. Most NGOs have already been working with 10% admin expenses. 20% does not seem unreasonable at the first glance. We may need more info to establish a concrete opinion.
  6. NGOs may need to become more efficient in program delivery as less manpower (skilled) will be available for more impact.
  7. Domestic funding will come into focus for many agencies. This may probably lead to more competition while also bringing in innovation.
  8. FCRA account has been separate for all NGOs in any case. The change that it will now be with SBI Delhi does not look too difficult to follow and may lead to ease of tracking by the agencies when needed.
  9. Welfare and service delivery NGOs may be impacted less by this law. RBOs (Rights Based Organisations) and Govt accountability and Citizen empowerment NGOs will be affected more.

Dhimant Chovatia

Fundraising for new/small NGOs – A quick guide

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According to certain expert estimates, there are about 35,00,000 registered NGOs in India. This, of course, includes non-profit entities, political parties, temples and religious trusts and sundry. However, despite the variedness in cause and ideology, there is a big commonality among all these organizations, viz; need for funding in the form of donations. Traditionally, in the United States for which the data is readily available, charitable giving accounts for 2% of the GDP. This figure in India is estimated to be just 0.37%. If one had to do some basic calculation on the back on an envelope, there is only a little more than INR 1.75 Lakh donated per NGO in India.

Now, this, of course, is an average figure and also, the 0.37% is an estimate. But even at this scale one can see how little is the size of the pie that the causes are vying for and therefore how difficult it may be to raise each Rupee. Given this, plus the added apprehensions of a majority of Indians about how the non-profits function and if the money is being “used for the cause”, the life of a fundraiser in India is far from rosy.

For a new non-profit the avenues of fundraising are even lesser given the restrictive legislation and generally-accepted-donating-practices (GADP?) asking for 3-5 years of existence before they can receive funding. How does one exist for 3-5 years without mainstream funding sources like CSR, Government, Foreign Corporates or Domestic and International Institutions supporting them? Through this article, we try to explore the avenues for a new NGO to raise money through some non-conventional channels which do not tie them down in the 3-year existence clause. None of these channels is invented by us. They exist since ages but in the race of acquiring large funding, many NGOs tend to ignore these. Let’s have a look at each channel one by one:

Non-CSR Corporates

While most large corporation who are required by the law to spend money in CSR abide by the 3-year GADP(!), there are 1000s if not more corporates who do not fall under the act and hence are not required by law to either donate under CSR or follow the market. These typically are corporates who fall under the SME band but also some international captive offices who are not covered under the CSR law. These companies, despite not being required to, are happy to support NGOs as part of their own community responsibility. Of course, their budgets may be smaller and therefore the funding too, but there is very less competition in the area as most NGOs are knocking on the doors of large private and PSU firms. Also, the smaller corporates are more likely to have a close relationship with the cause as they are likely to be more empathetic and less bureaucratic.

HNIs and Individuals

Each city or town has those 20-25 influencers who invariably are HNIs as well. The larger the town, more such potential supporters for a non-profit. These individuals in their own right chose to support causes that are close to their heart and may be able to not just give money but also lend the power of their influence for the cause. Any new NGO must look for such supporters as it will give them the funding and marketing edge.

Apart from the HNIs, there are also the normal Is. The people. Retail fundraising is a great way to build support for one’s cause and many large NGOs even today rely on retail support as against institutional funding. A small and upcoming non-profit may employ many versions of retail fundraising in smaller units to garner funding support from people. Options include snail-mail (believe us it works even today), Tele-calling, Email, Online campaigns on social media and the one with the highest potential, Crowdfunding. These methods not only provide funding but also serve as marketing and communication platforms for your cause.

Crowdfunding is not a new thing in India. However, the term certainly may be. And of course, the technology is. One may recollect small community or school events organized by paisas and annas collected from village folk across the country. Today, a cause may use an online platform to appeal to millions of people at once who may choose to give INR 100 upwards. There are many examples of successful crowdfunding campaigns which have raised millions of rupees. Platforms like Ketto and Milaap are being used by new non-profits and even individuals with a quick cause to support.

Events

Finally, events are another time tested, yet a rarely used method of fundraising. While you may see fundraising walks and runs every single weekend in your local newspaper, seldom do non-profits think beyond that. Events offer a great way of connecting with masses and popularising your cause. They also serve as a potential in and out channel for all other modes of fundraising that a cause may employ. Your current supporters may participate in your event and your event participants may go on to become your ardent supporters.

Events need a lot of creative thinking and hard work, nobody’s patents. The key is variety though. Run-of-the-mill runs (pun not intended) and walks and dinners have been used and reused multiple times. As a new non-profit one must think out of the box and look for events that can capture the imagination of the people. Rest assured, you offer people something new to experience and support, people will join and donate.

Finally, fundraising for a new non-profit is a tough challenge and one must be ready to burn the midnight oil. However, it has been done by many and can be done. One just needs to believe and persevere.

All the best folks!

CSR Changing the face of Education!

Some months back I wrote on LinkedIn about how CSR can change the face of Education if the investments are made in the right area. Here I reproduce the same.

CSR investment in education can greatly benefit the children of our country if they are made in the following domain areas:

1. Making the school an attractive place for children to attend in the first place. Programs like BALA help in this in a great way!

2. Invest in improving the willingness of children to attend school and parent to send them to school. This can be done through behavior change exercises in communities through programs like Magic Bus.

3. Improving the experience of teaching for the teachers by helping them build their capacities. A lot of teachers do not have any exposure apart from the degree that they completed decades back. Programs like the one run by Kaivalya Foundation can be of great help.

3. Improving learning levels of children and focusing on learning vs passing. This is possible through a lot of initiative including the likes of Naandi Foundation and RIVER.

4. Lastly, no CSR should be required to fund such programs in perpetuity. If efforts and investments are made to strengthen the SMCs in schools and making the community responsible for the quality of education in their schools, the face of education can be changed in 5 years.

One of the reasons practically no CSR program has proven record of definitely improving education at the school level is that most of them invest in one of these components but never in all at one location. Therefore we have case stories but never “REAL CHANGE”. One of the best ways to do it is for a consortium of companies (investors) to engage a consortium of NGOs (implementors) to deliver a high-quality multi-faceted program in all schools in a Mandal/Block/Taluq/Tehsil. There are about 5500 sub-districts in India and to support them we have about 5000+ companies and about 30 Lakh NGOs. All we need to do is get them to trust each other and collaborate.

The reason this has not happened so far and, in my opinion, unlikely to happen in the near future is that everyone (Companies and NGOs) want “SOLO CREDIT” for development and do not collaborate happily. If we can change this we could usher in a new way development happens in our country and in 5 years move from an “average” education system to a “great” one.

DC