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