Foreign Aid for Indian NGOs: Problem or Solution? 9780415563154, 9781138380370, 9780367817923

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Foreign Aid for Indian NGOs

Foreign Aid for Indian Problem

or

NGOs

Solution?

Pushpa Sundar

First published 2010 by Routledge 912–915

Tolstoy House,

15–17

Tolstoy Marg, New Delhi

Simultaneously published in the UK by Routledge 2 Park Square, Milton Park, Abingdon, Oxon,

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Routledge is an imprint of the Taylor & Francis Group, an informa business

Transferred to Digital Printing 2010

© 2010 Pushpa Sundar

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rights reserved. No part of this book may be reproduced or utilised in any or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system without permission in writing from the publishers.

form

British A

Library Cataloguing-in-Publication Data catalogue record of this book is available from the

ISBN: 978-0-415-56315-4

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Library

for My grandchildren, Rosa and Ilan, global citizens and Sundar, the Argumentative Indian

‘I do not want my house to be walled in on all sides and my windows to be stuffed. I want the cultures of all the lands to be blown about my house as freely as possible. But I refuse to be blown off m y feet by any. I refuse to live in other people’s houses as an interloper, a beggar or a slave.’ — Mahatma Gandhi

Contents List

of Tables, Figure

and Boxesix

Prefacexi Acknowledgementsxii Acronyms and Abbreviationsxv 1.

1 Introduction Part I:

Setting

the

Stag e

2.

The NGO 'Beneficiaries'

31

3.

Of Sources and Resources

55

4.

The

82

5.

Of

6.

The Government

Donors

Foreign

Strategies

and

113

Programmes vs.

NGOs and Donors

131

Part II: Aid in Actio n 7.

An

8.

Sustainability

9.

Calling

Unequal

an

Music: The NGO-Donor Interface and Other

No Free Lunches

11.

Looking

List of

Fairy Tales

Alien Tune: Donor Driven

10.

Back

to

161 188 220

Agendas

257 Look Forward

295

Appendice s

Appendix

1:

Appendix

2:

List of NGOs Which Responded the Questionnaire List of People Interviewed

to

325 327

Bibliography

334

About the Author Index

350 351

List of Tables, Figure and Boxes TABLES 3.1 3.2 3.3 3.4 3.5

4.1

Amount of Foreign Contribution Received 10 Recipient Organizations at Periodic Intervals Break up of Reporting Associations According to Amounts Received Top 10 Recipient States at Periodic Intervals Top 15 Purposes for which Contribution Received, 2006-7

71

Top

Grant Assistance:

Top

Five Bilateral Donors

72 74 75 76

to

9 2008-9 India, 2008-

88 98 100

4.2 4.3

Top Top

10 Donor Countries, 1993-2007 10 Donor Agencies, 1993-2007

5.1

Bilateral Aid

Indian NGOs

127

9.1

Break up of Receipt of Foreign Contributions by NGOs According to Religion

247

to

BIM ARU States: Rank, Amount & Percentage 10.1 BIMARU of Receipt to Total National Receipt of Foreign Contribution at Select Intervals

290

FIGURE 10.1 NGOs Classified According Contribution, 2006-7

to

Size of

Foreign 268

BOXES 5.1

Proactive

vs.

Responsive Philanthropy

129

7.1

Defaulting

8.1 8.2

Funding for Sustainability Non-Grant Routes to Sustainability

on

Commitments

186 208 209

Preface Though money is not the only factor making the world go round, it certainly plays a major role. This book grew out of a preoccupation, both at a practical as well as at the intellectual level, with the funding of social action by non-governmental organizations. Plural sources

of funds are necessary not only to assure the success of any initiative but also to ensure independence of action. But there is no such thing as a free lunch, and he who pays the piper calls the tune. I have always believed that practice needs to inform theory and in turn needs to be guided by intellectual reflection. Therefore, this interest in funding of social action led, on the one side, to the

cofounding of the Sampradaan Indian Centre for Philanthropy (SICP)

in 1996 to promote and strengthen Indian philanthropy as one source of funds for social action; on the other, it led to research on other sources. My book, Beyond Business: From Merchant Charity to Corporate Citizenship (2000) explored the role Indian business funds have

played in Indian social development. A second book, edited and largely written by me, titled Investing in Ourselves: Giving and Fund Raising in India (2001) surveyed individual charitable giving, while the third, For God’s Sake: Religious Giving and Social Development in India (2002) considered whether religious organizations which receive a large amount of charitable funds could be a significant

source for development organizations. I found it too daunting a task to investigate government funding of non-governmental organizations (NGOs), because funds flow to them from the local, state, and central government agencies and ministries. The scale of work, I felt, was beyond my capacity. I hope some body or some organization will attempt it in the near future

because it is an important piece of the puzzle. I turned instead to an exploration of foreign aid, the other major source of funds for social action and its impact on Indian society, especially since the founding of Sampradaan and the investigation into the other sources were triggered by the search for an alternative

to foreign aid. This book is the result. At some point I hope to turn my attention to the market as a source of funds for NGOs. I am conscious that there are many gaps in this book. It is my sincere hope that others will feel inspired to fill them. It is also that my interpretations may provoke controversy. If they do, one of my aims—to promote debate on the subject—will have been fulfilled.

possible

Pushpa Sundar

Acknowledgements I owe a deep debt of gratitude to many people and organizations, but for whom this book would not have been possible. My first debt is to the Sir Ratan Tata Trust. Their one year research grant enabled me to collect the material for this book. The fact that they have reposed faith in me on more than one occasion makes my debt even greater. There are few philanthropic organizations in India which understand the importance of social science research for the advancement of society and the Tata Trusts belong to this rare class. Their ability to back cutting-edge ideas and experiments make them the philanthropic leaders they are in India. My most sincere thanks. My thanks also to the Sampradaan Indian Centre for (SICP) for administering the grant for a year. Without the willing co-operation of all those who have helped me with information and data by answering my questionnaires and giving precious time for an interview, I would have had neither the nor the insights into this subject. My heartfelt gratitude therefore to all those who have helped on this count, particularly to those mentioned in Appendices 1 and 2 of the book. I owe a particular debt to Sanjay Aggarwal of AccountAid for his stimulating comments and interaction at various stages of the book. He pushed me to think deeper and provided many insights which opened my eyes. Many thanks, Sanjay! I would like to acknowledge Michael Norton of Centre for Innovation in Social Action (CIVA) U.K., the publishers of the book Life Goes On (1999), and its authors, the late M.K. Bhat, Anita Cheria, and Edwin, for permission to quote from the book. I must also acknowledge the help given to me by the library staff of Parliament House Library, especially Saroj Bala, and of the India Habitat Centre Library, particularly Ainul Abedin. My thsanks also to Meenakshi Gosain from Winrock International India who helped me format some tables; and to my domestic help Kailash Singh Dhaila who unobtrusively did his best to leave me free to write.

Philanthropy

understanding

My final debt is to my daughters—Aparna for her encouragement and moral support, and Nandini who read some of the drafts and offered comments and suggestions throughout the work. Thank You All!

Acronyms and Abbreviations Action AA Aid

Agricultural ADATS Development and Training Society All AIDAN India Drug Action Network AIF American India Foundation AKF Khan Foundation Aga AKRSP Khan Rural Support Programme Aga AP Andhra Pradesh Association ASSEFA for Sarva Seva Farms AVARD of Voluntary Agencies for Rural Association

Development AWARE Action for Welfare and Awakening in Rural Environment AusAID Australian Agency for International

Development BAIM Bilateral Assistance Informational Memorandum BIMARU Bihar, Madhya Pradesh, Rajasthan, UP

Bharatiya BJP Janata Party Below BBL Poverty Line CA Alliance Credibility CAG and Auditor General Comptroller Centre CALS for Applied Legal Studies Centre for Advancement of Philanthropy CAP CAPART Council for Advancement of People's Action and Rural Technology CARE for Assistance and Relief Cooperative Everywhere CAS Assistance Strategies Country CASA Church's Auxiliary for Social Action CBOs Based Organizations Community Christian CCF Children's Fund CEBEMO Central Organization for Mediating in

Co-financing Development Programmes

CECODECON

Center for Community Economics and Development Consulting Society CFAs Co-financing agencies CFLI Canada Fund for Local Initiatives CINI Child in Need Institute CIA Central Intelligence Agency of the USA CIDA Canadian International Development Agency CIOSA Confederation of Indian Organizations for Service and Advocacy CIVICUS World Alliance for Citizen Participation CORDAID Catholic Organization for Relief and Development Aid CPI (M)Communist Party of India (Marxist) CRY Child Rights and You CRS Catholic Relief Services CSE Centre for Science and Environment CEE Centre for Environment Education CSOs Civil Society Organizations CSWB Central Social Welfare Board CYDACentre for Youth Development and Activities DACDevelopment Assistance Committee DANIDA Danish International Development Agency DEADepartment of Economic Affairs DFID Department for International Development (UK) ECOMWEL India EMMAUS Community Welfare Fund India EED Church Development Service ERDS Economic Rural Development Society EU European Union EZE Evangelische Zentralstelle fur Entwicklungshilf e.v. (Protestant Association for Co-operation in Development FAO Food and Agriculture Organization FCMC Bill Foreign Contribution (Management and Control) Bill FCRA Foreign Contribution (Regulation) Act FDI Foreign Direct Investment FEMA Foreign Exchange Management Act FERA Foreign Exchange Regulation Act FF Ford Foundation

FMSF Financial

Management Services Budgetary Support

General GBS

Foundation

Gross GDP Domestic Product Global Environment GEF

Facility

Gross GNP National Product Government GOI of India Grassroots GROs Organizations GTZ Gesellschaft fuer Technische Zusammenarbeit

(German Agency for Technical Cooperation) Human HDI

Development

Index

Humanistisch HIVOS Instituut

Sameenwerking Agricultural

Intensive IADP

voor

Ontwikkelings

Districts

Programme

Indian IAS Administrative Service IB Intelligence

Bureau

Inter ICCO Church

Organization

for

Co-operation ICDS Child Development Integrated

Development Services

programme

ICE information, Communication, and Education Environment Facility India-Canada ICEF International IDE(I) Development Enterprises (India) International IDEA Institute for Democracy and Electoral Assistance International IDRC

Development Research Centre IFES International Foundation for Election Systems International IMF

Monetary

Fund

International INGOs NGOs INTACH Indian National Trust for Art and Cultural

Heritage INTBAU International Network for Traditional

Building, Architecture and Urbanism IPCC Panel on Climate Change Intergovernmental IRNET Indian Rural Energy Network Johns JHU Hopkins University International Co-operation Agency Japan JICA JSW JSW Group of Companies

KOICA South Korean International

Co-operation

Agency KVIC Khadi and Village Industries Commission KVM Kheti Virasat Mission KZI Central Agency for Development Catholic Aid LRC Resources Centre Legal Millennium MDGs Development Goals MHA of Home Affairs Ministry Multinational MNC Corporations MYRADA Resettlement and Development Mysore

Agency NAACP National Association for the Advancement of Colored People NACO National AIDS Control Organization National NAEP Adult Education Programme NCA Church Aid Norwegian National NFI Foundation for India Non NGDOs Governmental Development

Organizations Non-Governmental NGOs Organizations Sri NINASAM Nilakanteshwara Natyaseva Samgha NIRPHAD Naujhil Integrated Rural Project for Health and Development NORAD Norwegian Agency for International

Development NOVIB Netherlands Organization for International Development Cooperation Non-Profit NPOs Organizations National NREGA Rural Employment Guarantee Act National NREGS Rural Employment Guarantee Scheme Non-Resident NRI Indians Official ODA Development Assistance OECD Organization for Economic Cooperation and

Development Organization OPEC

of the Petroleum Exporting Countries Oxfam Oxford Committee for Famine Relief PACS Poorest Areas Civil Society Initiative of DFID

PADI Action for Development India People's PIL Public Interest Litigation PIOs Persons of Indian Origin PO Programme Officer PRA Rural Appraisal Participatory Professional PRADAN Assistance for Development Action PRI Panchayati Raj Institution PRIA Participatory Research in Asia Public Interest Research Group PRIG PUCL People's Union for Civil Rights Private PVOs Voluntary Organizations RSS Rashtriya Swayam Sevak Sangh Scheduled SC/ST Caste/Scheduled Tribe Swiss SDC Agency for Development and

Cooperation SDI Slum Dwellers International Sir SDTT Dorab Tata Trust SEWA Women's Association Self-Employed SEZ Special

Economic Zones Small SGP Grants Programme Self SHGs Help Groups Swedish International Development Agency SIDA SIPA South India Producers Association SISIN Sustainable Income Security for the Rural Poor in India SKTGSM Shree Kundla Taluka, Gram Seva Mandai Small SMEs and Medium Enterprises SPARC Society for Promotion of Area Resource Centres SPWD for Promotion of Wasteland Society .

Development SSNS Sparc Samudhaya

Nirman Sahayak Sir SRTT Ratan Tata Trust Swami SVYM Vivekananda Youth Movement The TERI Energy Research Institute The TIE Indus Entrepreneurs United UN-DESA Nations Department of Economic and Social Affairs UNDP United Nations Development Program

UNFPA United Nations Fund for Population Activities United UNICEF Nations International Children's Emergency Fund USAID United States Agency for International

Development VANI Action Network India Voluntary VHAI Voluntary Health Association of India VOs Voluntary Organizations World WCED Commission

on

Environment and

Development WHO World Health Organization Winrock WII International India WSF World Social Forum WTO World Trade Organization

1 Introduction ‘He who imagines he can do without the world deceives himself much; but he who fancies the world cannot do without him is still

more mistaken.’ La Rochefoucauld

It is not usual to begin a book by saying what it is not. But I plead a precedent in Indian philosophical enquiry which explores the Ultimate Reality by saying Neti Neti, it is not this, not this. In similar vein, this book is not (entirely) about the excesses of international aid — the freewheeling lifestyles of aid bureaucrats in the midst of poverty, commitments made and broken, and the power, prestige and corruption of the multi-billion dollar aid business. Nor is it about the blessings conferred by aid on recipient nations who ought to be grateful but not always are. Both have been competently chronicled elsewhere. It is also not concerned (except indirectly), with the big questions of aid — whether it has helped reduce levels of poverty and inequalities of wealth and power, or whether the models of adopted have been appropriate or not. Instead, it addresses the narrower question of whether, and how, development aid has shaped the nature and growth of organizations (NGO) or the voluntary sector in India. It explores what difference development aid has made to the size, style of functioning, values, and future direction of the sector, and the impact it has had on its relationship with government and business. At the first level, it is a documentation of the Indian NGOs’ experience with foreign aid between 1960 and the present — the why, who, how much, and how of foreign development assistance. But simultaneously it also seeks to analyse some of the issues which are the subject of contemporary debate with regard to aid to NGOs. Four reasons have prompted the book. One, as is elsewhere in the world, NGOs have become a force to reckon with in India. Two, a major factor contributing to this development has been the increase in external resources available to them. Three, there has been a

development nongovernmental complexity,

Foreign Aid for Indian NGOs

dynamic evolution of both the NGO sector and foreign aid since aid first started in the 1960s. Both aid and the voluntary sector have beeen transformed due to globalization and other factors, but also due to interaction between the two. This has led to much debate on the role, quality, and practices of aid and aid givers. The time is thus opportune to see the issues in a broad historical perspective, and to learn from hindsight in order to meet the challenges of the future. Finally, given that the source and nature of resources raised by an organization drive and shape organizational growth, surprisingly little attention has been paid in scholarly or popular writing to the relative importance of this source compared to other sources, at least for India, especially since aid has aroused debate and passions quite out of proportion to the monies involved.

THE RISE AND RISE OF NGOs No discourse on poverty, development, globalization, democracy, or governance is today complete without the term ‘NGO’ figuring in it. The term refers to a wide range of value-based, non-profit independent from government, engaged in social action and development ‘to relieve suffering, promote the interests of the poor, protect the environment, provide basic services, or undertake community development.’ 1 Popularly, the term used in India for such organizations was, and continues to be, ‘voluntary agency’, or ‘voluntary organization’, meaning primarily charitable and welfare oriented, relief and rehabilitation type of organizations run by people who give their services voluntarily and do not receive compensation. In development discourse, however, the term NGO is more used. First used in the UN system in the context of poverty and disaster relief, it has passed into common parlance, its usage broadened over time to include other issues such as human rights, governance, women’s rights, and status of Dalits2 in society. One of the major goals of NGOs is to protest or

organizations,

popularly removal environment,

1 This is the definition of NGO used by the World Bank, in Operational Directive 14.70, ‘Nongovernmental Organizations and Civil Society/Overview’. Available at the World Bank website: http://wbln0018.worldbank.org/essd/essd. nsf/NGOs/home. 2 The term Dalit is today the preferred term for the outcastes of Hindu society, formerly called Harijans or children of God, a name given to them by Mahatma Gandhi.

Introduction

redress some injustice or deficiency in service on the part of either government or business. The global growth of NGOs, or civil society as they are sometimes referred to in the collective, is said to rank as one of the outstanding developments of our time. They are said to have majorly contributed to such world changing events as the demise of colonialism, of Apartheid, the disintegration of the Communist Bloc, and, within India, the lifting of the national Emergency. Fifty years ago, NGOs had little place in public consciousness. There has been a sea change since. NGOs have now become major players both in the global and national arena, being called upon to play new roles both at the national level as well as the international level. At every major global conference, NGOs from across the world are either protesting the policies of global institutions like the World Trade Organization (WTO) in the streets or sharing the table along with government delegates, as at the UNsponsored conference on Climate Change in Bali. 3 And Indian NGOs and their leaders are right there among other members of the global civil society, or government delegates.

dismantling

conference

Within India, the word ‘NGO’ figures regularly in connection with

an incredibly wide variety of issues of public interest, ranging from pushing for withdrawal of unapproved and harmful drug to protesting state-sponsored private vigilante movements polarizing tribal society, or moral policing of couples in parks.

combinations,

NGOs are much sought after by both government and business.

Recently, the Vaidyanath Aiyar Committee, reviewing the training of the Indian Administrative Service (IAS) officers, recommended that they serve a period of internship with an NGO as part of their training. Courses on NGOs have also entered business school In short, NGOs play an increasingly active role in today’s political and social life, both at the global, national and grass-roots level, and wield great influence on development. They are an indispensable third leg of the three-legged stool, of which government and business are the other two. Nothing pronounces the fact that NGOs have ‘arrived’ more than the fact that they have become the subject of satire as well as invective. A recent article lampooned NGO activists, or the ‘jholawalas’, as they are called in jest, because of the ubiquitous ‘jhola’ or cloth bag

curricula.

considered

3 News item in Mail Today, New Delhi, 18 December 2007, p. 10.

slung over the shoulder to complete their attire of pajama-kurta and open sandals. It noted the change in their humble demeanour by remarking, ‘They used to call us jholawallahs, derision and ridicule

were our lot, we were accused of slowing down the revolution — but 2007 will always be remembered as our year.’4 No wonder. There has been a dramatic expansion in their size,

scope, and capacity, especially since the 1990s of the last century, aided by the process of globalization, the expansion of democratic

governance, the development of telecommunications, market transformations, and economic integration. Changes in the nature of

the social contract between the citizen and the state, and increases in the quantum of foreign aid flowing to them have aided the The Johns Hopkins University (JHU) Civil Society Project estimated the number of NGOs in the 22 countries studied at 20

process.

million, with annual revenues exceeding $1 trillion. Of these, 1.2

million are said to be in India, though almost 50 per cent of them are unregistered, mostly in rural areas, and mostly small, having one or no paid staff. 5 They are said to offer sizable employment, with nearly 20 million persons working on a paid or volunteer basis in them, and to contribute 14.8 per cent (based on paid employment only) to the gross domestic product (GDP). Overall, they vary enormously

according to their purpose, philosophy, sectoral expertise, scope of activities and size. With expansion in numbers and size, has come more visibility, power and influence, especially since collectively NGOs represent sizable investment of funds in development. Because of this they can impact the nature and direction of development, both nationally and

internationally. Although the number of big NGOs is small they have acquired considerable clout. Business and government can ignore them only at their own peril. A protest by a powerful NGO against foreign direct investment (FDI) in retail can affect business investment; a campaign against pesticides in Colas by Centre for Environment Education (CSE), a Delhi-based environmental NGO,

brought the Cola companies to their knees. The recent enactment of the National Rural Employment Guarantee Act, and the Right to Information Act, both landmark legislations, were spearheaded 4 Aditi Phadnis, ‘The Year of the Jholawallah’, Business Standard, New Delhi, 28 December 2007. 5 According to a recent survey (December 2002) conducted by the non-profit organization, Participatory Research in Asia (PRIA), New Delhi.

by the NGOs represented on the National Advisory Council, chaired at the time by Sonia Gandhi. NGOs such as Gene Campaign, CSE and the Narmada Bachao Andolan have been able to influence

international

policy on issues of trade, genetic modification of crops, climate warming and financing of big dams respectively. As NGO expertise and influence grows, corporations, parliamentarians, media and opinion leaders increasingly seek them out for information, advice and partnerships. With more visibility has come more public scrutiny, especially over

sources of funds and fund utilization. The changes in the life and operating styles of many of the top foreign funded NGO executives have not gone unnoticed, either by their peers or the general public. The satirical piece, ‘The Year of the Jholawallahs’, quoted earlier, makes fun of their ‘jet setting’ style, the quick changing funding fashions of donors, or the NGO propensity to change their mission to make money from these fashions. Consider these two excerpts: I am soooo jet lagged and hung over — between dashing from Washington to Seattle to Geneva to Delhi, the last two weeks have been really exhausting. I don’t know if all NGO chiefs have to fly across continents, but I do know that if I didn’t , my set up would run out of funds. It is a “I scratch your back, you scratch mine” world. The carbon trading stock market fell today. This is the area to pursue — a lot of money in the Climate Change area. Could get a paper written by one of the young things. All I have to do is polish it up and

may be it will catch Nick Stern’s eye? 6 There are other dynamic changes in civil society, as NGOs get called

upon to play new roles, at national and international levels. One of these is that NGOs are, in many cases, moving from non-profit to becoming for profit social enterprises. There is a churning in the voluntary sector itself with generational changes in leadership and with leaders debating the best way forward in terms of goals, values and funding.

ventures IT'S THE MONEY HONEY

Many believe that the malpractices, greater clout, and changes in the voluntary sector ethos are a fallout of the increase in funds going into 6 Both extracts from Aditi Phadnis, ‘The Year of the Jholawallah’, Business Standard, New Delhi, 28 December 2007.

the sector, both domestic and foreign. Undoubtedly, the expansion in numbers and scope of NGOs has been enabled by an increase in the volume of funds available to them. The corollary is that their need for funds is growing exponentially as the sector expands further. Finding different sources of funds is a central preoccupation for NGOs. NGOs worldwide finance their work through a variety of sources including self-generated funds (membership dues, sale of products and services, user charges), charitable donations and government grants. For NGOs in developing countries there is an additional source which has become increasingly important to them, viz., foreign aid. While public donations sustained Indian NGOs in the preIndependence period and for some years thereafter, since the 1960s, the two major sources of funds for NGOs in development have come to be government grants and foreign aid. Both have increased steadily. External development assistance began soon after Independence but went largely into the account. Aid for NGOs has become significant only in the last three decades. It includes both official development assistance (ODA), a part of which goes to NGOs either through government or directly, and private philanthropic assistance, which is regulated by the Foreign Contributions Regulation Act of 1976. Since 1990, ODA at the global level and in India has seen a number of ups and downs, declining steadily after the end of the Cold War but increasing around the Millennium, fuelled by the Finance for Development initiative which kicked off at Monterrey in 2002, debt write-offs, and the Tsunami. The levels are again declining due to fiscal problems in many Western countries. The recent global crash of September 2008 will only exacerbate this trend, at least in the near future. ODA in India enjoyed a peak period from 1955–60, but steadily thereafter, both in absolute amount as well as in significance. As a percentage of India’s gross national product (GNP), it is estimated to be only 0.4 per cent during the last decade, and even smaller if one considers only the grant assistance; so too as a percentage of development expenditure in the country (estimated at 2 per cent). It is also declining as a proportion of total external resource flows (see Chapter 3). Bilateral aid in particular is tipped to become less significant for the government in the coming years because in 2003–4 the announced that in view of the fact that its economic position

government’s

declined

government

had improved, and that it was itself offering aid to smaller

developing countries, it would no longer accept any aid with conditions, or aid below $25 million from six bilateral donors.

By contrast, external aid to NGOs, from both official and private

sources, has continuously increased in spite of the gloomy forecast by the NGO sector in 1990 that aid to it from external sources would go down in consequence of diminished levels of aid worldwide after the end of the Cold War, and diversion of private aid to African and East European countries. In 1990, the private philanthropic

assistance received by Indian NGOs was Rs 9,454.7 million. By 2006–7 (the latest year for which this data is available) they had received the not inconsiderable sum of Rs 122,896.3 million from private international donors7 in addition to the approximately Rs 10,000 million from official donors, bilateral and multilateral.8 There are few widely accepted estimates of how important foreign funding is, either as a proportion of the total funds invested in the

voluntary sector, or as a proportion of individual NGOs budgets. The estimates range from 7.4 per cent of the Rs 1,79,220 million, said to be mobilized by the voluntary sector to 50 per cent of the estimated annual investment in the sector.9 Whatever the exact proportion, the fact is that of the 1.2 million NGOs said to exist

in India, only 33,937 associations have registered with the FCRA authorities10 to receive foreign contributions, plus 522 who received prior permission to receive funds during 2006–7. Of these only 19,011 NGOs filed a report about receipt of foreign contributions, which included the 522 who received prior permission. Actually,

the number of NGOs who received foreign money is even smaller at 11,581 because of the 19,011 reporting, 7,430 NGOs filed a

nil report. Assuming that some of those who are registered do 7 Annual Report of the FCRA Division of the Home Ministry, 2006–7. 8 This figure is a guesstimate of the amounts which go to NGOs out of the Rs 27,480 million grant assistance in cash and kind received by the Government of India (GOI) in 2008–9. It is assumed that the major portion of grants would go to NGOs rather than to government. 9 Samuel (2000b: 48), quoting a 1985 UNICEF report. 10 The Foreign Contribution (Regulation) Act of 1976 or FCRA, amended in 1984, requires those NGOs desirous of receiving foreign contributions, as under the Act, to register themselves with the authorities. Without this, they are not permitted to receive foreign contributions.

defined

not report even if they receive the money, the numbers of NGOs receiving contributions is not likely to be more than around 20,000–

25,000 or roughly half the number of organizations formally as NGOs. Though in the total the volume of aid is small compared to

incorporated government budgets, if one considers the fact that many of the formally

incorporated NGOs are very small, and that a bulk of the receipts go to a few large NGOs, and that it is these NGOs who have become the leaders of the sector, and wield clout, one can begin to

understand the importance of aid to the NGO sector. Put another way, almost every NGO of some size and significance is a recipient of foreign aid. Besides, even if they do not receive aid, most NGOs aspire to receive it, and in this sense the idea of aid may be said to have permeated the sector.

CHANGING CONTOURS OF AID AND AID ARCHITECTURE The third reason prompting this book is that the context for aid, its composition as well as its practice, is very different today from what

it was when aid first started, and is likely to change further. The sector and aid institutions are at a crossroad today. Indians have always been fascinated by things ‘foreign’, whether

voluntary

they be people, goods, ideas or money. But the attitude has been

ambiguous: if they have been curious and attracted on the one side, they have also been wary, fearful and insecure on the other. Nowhere is this ambiguous attitude more evident than in the case of foreign aid for Indian development. Aid was welcomed immediately after

Independence, despite memories of colonial rule still being strong. By contrast, even after 60 years of Independence, the fear of domination still haunts sections of the generation which is now in power, not only in politics but in business, academia, and civil society.

The future scenario is, however, likely to be different. India has one of the youngest populations in the world. The younger generation, which has grown up in freedom, has no memories of subjugation, and with the confidence born of the strides made by a nuclear India

in the last few decades, it openly embraces the foreign, confident of being able to field any challenge. Future attitudes to foreign aid are thus likely to be different from what they have been hitherto.

A large number of the world’s billionaires are now from India. FDI is becoming more important than aid. This has begun to change the way India looks at the world and the way the world looks at India. A new self-confidence is visible not only among business and government, but in almost every field, and will very likely change the relationships which have existed so far between the developed world and India. India is becoming a big market for development ideas and, paradoxically, is attracting more capital flows, including philanthropic aid, than when it needed them more. At the same time, as more wealth is created within India and outside by Indians, and as Indians gain more self-confidence the question will inevitably be asked by the Indian government and by donors equally, whether aid is needed by India at all. Especially for Indian NGOs, foreign aid versus indigenous funding will become more of an issue to be confronted. If aid was one important window to the world, bringing with it Western ideas, lifestyles, technologies and models of development, it is no longer so, and restricting aid will no longer stop the inflow of culturally ‘inappropriate’ elements, and the anxiety about cultural hegemony may have to be seen against a new broader canvas. Finally, religion is once again playing a more central role, not only in individual lives but also in politics, national and international. It has become a major factor driving both terrorism and transfer of funds internationally. Terrorism itself has introduced a new element into international funding of NGOs. It is diverting resources meant for development into meeting the emergencies created by terrorist activities, and rehabilitation efforts thereafter. It has also led to national governments, including the Indian government, restrictions on giving and receiving of foreign aid, and has thus acted to curb freedoms and civil liberties. The changes in the voluntary sector are matched by changes in the aid architecture. There is much difference between pre-1990 and post-1990 attitudes and practices of donors. International NGOs who played an important part in funding NGOs in the early years are themselves facing an identity and resource crisis, and reorganizing themselves to meet the new situation. Again, their funding is likely to worsen due to the global fiscal crisis of 2008. By contrast to ODA and international NGO (INGO) funds, private philanthropic players have become more numerous and the funds flowing from them to NGOs have increased over the period,

several putting

situation

due to the emergence of a second flowering of wealth. The way new philanthropy approaches development is different from the way traditional philanthropy did. It believes that business methods can solve social problems and that these are superior to other methods in use in the public sector or civil society. The approach of the new philanthropists includes a more hands on engagement with the work, and therefore exercise of more control over the recipient and an insistence on metrics or assurance of outcomes. The world leaders in the new (as in the old) philanthropy are the American foundations, though Germany and other European nations have also seen an increase in the number of foundations, many of which have begun to have significant overseas interests. Other new sources of funds for Indian NGOs have begun to appear, including funds from MNCs, the Indian diaspora, and venture philanthropists. New ways of doing business are replacing the traditional grant-making mode of transferring resources, online donations and social investment which offer either total freedom to NGOs to decide what to do with donated funds, or market solutions and instruments. Due to all these changes there is more debate at the national and international levels on what constitutes ‘effective’ aid, with many interpreting this as ‘efficient’ aid. Though aid money is small to public investments in development, its impact on the margins has been substantial. Besides, aid arouses emotions, positive as well as negative, quite out of proportion to the monies involved because of the implied inequality between donor and recipient.

recipient’s

including

compared THE AID DEBATE

In the early years of aid, the debate about the advisability or of accepting aid related only to government acceptance of aid. As the levels of ODA became insignificant as a proportion of total external resource flows to government, while the amounts going to NGOs increased significantly, the focus of attention shifted from the government to NGOs. Most NGOs themselves love foreign aid. They see in it the money and extra resources needed to overcome the vast abyss which separates India from the developed nations of the world and which, if available, would enable her to close the past deficits faster than would be the case if she had to rely on her resources alone. It is not

otherwise

only the extra resources which they value, but also the quality of this aid, especially when it is compared to other alternatives, particularly government grants (See Chapters 3 and 10). Nevertheless, there are others, both within the sector and who are troubled by a number of things about aid. Of course, some criticism arises purely out of envy of the haves by the have-nots among NGOs. But not all criticism is of a frivolous nature. Some of the critics object to India seeking foreign aid per se, whether to or NGOs. Others are critical only of aid to NGOs. They do not mind if the government accepts foreign assistance or if raise resources abroad, but object to aid to NGOs on the ground that NGOs who are closer to the grass roots and represent the social and cultural values of society, but are small and financially weak, can be more easily manipulated than the other two sectors of society. The critics of aid to NGOs line up a number of charges, which broadly fall into four categories. One, aid leads to cultural especially domination by the West, and NGOs are more to donor agendas than government. Two, extremist activity is financed with funds from abroad and NGOs are used as fronts. India’s security can be compromised if aid is allowed in freely. Three, there are charges that foreign money is used for religious by Christian NGOs who work at the grass roots, adding to religious strife between communities. Four, excess and easy money from foreign aid has an adverse impact on the development agenda and the values of the sector. Those critical of foreign aid per se, whether to government or NGOs, include those unable to shake off the fears of imperialist domination even after 60 years of Independence. They see in aid the ‘foreign hand’ out to politically destabilize the country and make it an appendage of the West; others see in it a subtle attempt to assert, if not outright, cultural hegemony, at least cultural homogeneity, bringing in culturally inappropriate lifestyles and values. In the vanguard of these arguments has been Prakash Karat, leader of the Communist Party of India (Marxist) or CPI (M), who labelled foreign funding an imperialist strategy of penetration into neo-colonial settings and NGOs as instruments of subversion (Karat 1984, 1988). Others are disturbed by the begging bowl image and the unequal power relationships that aid implies, and urge self-reliance as a value essential to national dignity.

outside,

government companies

imperialism, susceptible

conversions

At the heart of the debate over foreign funds compromising national security is the much disliked (by NGOs) Foreign (Regulation) Act (FCRA) of 1976 that was amended in 1984, which was enacted ostensibly for national security reasons. In recent years, the passion and debate has come to centre on the more stringent FCRA 2006, which is proposed to replace the 1976 Act. So far it has been stalled by NGO opposition to it but is slated to be enacted by the new Congress-led government which came to power after the elections of 2009.

Contribution

The critics of aid on religious grounds point out that a large

portion of the money received as aid comes from Christian missionary organizations and goes not to secular NGOs but to their own branches in India or to other Christian organizations who, alongside their secular development work, also evangelize. This is countered by the argument that Islamic and Hindu funds are equally going to NGOs who use them not for development purposes, but for pushing a particular religious agenda. According to both camps, NGOs have become fronts for covert operations, political and religious, since foreign donors talk of lack of transparency in NGOs but are not transparent about their own sources of funds. The non-political, secular, developmental critique is summed up by an NGO technocrat thus:

especially What is more pernicious is the widespread tendency of aid givers to support activities in receiving countries that cater mainly to the demands of the rich and politically powerful; increase disparities; lead to alien consumption patterns, inappropriate technological choices and costly out of scale production systems; destroy the resource base;

obliterate cultural diversity, undermine self-reliance, and generally promote a development pattern that is neither in the interest of the recipient country as a whole nor sustainable. (Khosla 1992b: 4)

In relation to NGOs specifically, foreign aid is accused of distorting NGO missions and agendas, creating a deep divide in the sector between donor aided and non-donor aided NGOs, increasing in society, and of changing the nature of voluntarism itself. Bunker Roy, a stringent critic of aid to NGOs, famously called for a ban on foreign funding on the grounds that it has destroyed the values held dear by the voluntary sector (Roy 1988: 17–19).

corruption If there is any meeting ground between the critics and the

protagonists of aid it is about the interpersonal relationships between

the donors and the recipients. Even those who favour a continuation of aid find the paternalistic and condescending attitudes of aid givers and their arrogance difficult to tolerate. Against this background, foreign aid has become a stick with which to beat NGOs. Business, government and political parties look at the source of NGO funding when they want to discredit it. For instance, critics of the Narmada Bachao Andolan — an NGO fighting against big dams on the Narmada — tried to discredit it by claiming it was driven by foreign donors. Meanwhile, donors too have their viewpoints and dilemmas.

Since their funds too are finite and they are accountable to their who expect to see some tangible results from their use, they want proper utilization of their funds and therefore tend to exercise control over NGOs. The other side sometimes sees this as donors driving NGO agendas. Apart from the charges and counter charges mentioned above, aid raises several other questions which deserve serious consideration. The first and foremost issue raised is who will decide what is development and how it should be brought about — the national government, civil society, or aid givers? The question really boils down to whose values will have primacy, given the fact that the north has power because it holds the purse strings and technical Put another way, the point at issue is who is in the driver’s seat, or who controls the agenda for development. The issue of who the agenda or sets development priorities is important because people in developing countries, however poor, want to be in charge of their own destiny and not mere pawns in a great global game (Knight and Hartnell 2008). Apologists for aid claim that though the charge of donors development agendas may have been true in the early years of aid, with experience, donors (official and private) have improved the quality of aid allowing more ownership over the aid process to the recipients. In regard to official aid they point to the newly instituted practice of requiring the recipient nations to write Poverty Strategy Papers, which differ from the earlier Country Strategy Papers in that they are produced by a country’s government, not by donors or donor consultants, and with full participation of civil society, so as to ensure country ‘ownership’. Critics of aid argue that, in fact, claims of improvement donors have been hesitant to relinquish control over

constituencies

superiority. controls controlling Reduction

notwithstanding,

aid spending (Hulme 2008). Donor control over development agendas, whether by official or private donors, is said to be increasing,

especially in the case of private aid to NGOs. Western critics of private philanthropy in particular make a between the old or traditional philanthropy, that is of the

distinction older foundations and international NGOs, and the ‘new’ philanthropy practised by the ‘philanthrocapitalists’ like Pierre Omidyar,

the founder of eBay, the Google founders, Sergey Brian and Larry Page, and Microsoft’s Bill and Melinda Gates. It is argued that this ‘new’ philanthropy, because it wants to be more ‘strategic’, is more

technocratic, less people oriented, exercises more control, and is less flexible and directed away from a social change agenda. The regarding allocation of resources are primarily driven by

decisions

the donors ‘who focus resources, assemble professional teams, set

measurable targets… and develop clear plans to achieve them’ (Kayser 2008: 1). On the other hand, recipients in developing countries question whether in fact there is any material difference between the old

and new ODA and the old and new philanthropy. They are still waiting for a bottom-up process where funding priorities are set in collaboration with local citizen sector organizations (NGOs) and involve the participation of local ‘beneficiaries’, where local

knowledge and empowerment of the beneficiaries is used to achieve social transformation (Kayser 2008, Patel 2008). The method of transferring funds is also coming up for scrutiny. Grant making has been the predominant mode for transfer of

charitable resources from the developed world to NGOs in nations. Philanthropy is usually defined as charitable giving without expectation of a quid pro quo. But grant making is

developing essentially a contract between a donor and a recipient, laying down conditions and expectations of a certain return, if not in money, in some

other intangible social value. It is, moreover, based on an unequal power relationship, such that the recipient is unable to assert his

position without jeopardizing his funding. So, the question is, can grant

making be called philanthropy? Is grant making the best way to transfer donor funds, or is there a better alternative such as outright donations or venture funding of NGO ventures? The answer of course would seem to depend on who is deciding what change is beneficial

for the recipient society. From the donor’s point of view it may be

the best way because it makes it possible for the donor to impose his ideas or vision of society/development on the recipient, but for

the recipient it may not be the best solution.11 Another aspect of the same issue relates to the grant-making style. Should grant making be proactive, where donors set their priorities according to their vision of the kind of social change they would like

to see, and then use grants as building blocks to achieve that vision? Or, should it be reactive grant making, where donors respond to requests from local NGOs? In this context of the ownership of the development process, a

question also arises that if development should be directed not by external agencies but be driven by ideas and resources from within a society, then why did foreign aid come to permeate the voluntary sector today? Why did it become such a sought after option? Why

was Indian philanthropy unable to meet NGO needs when it had played an important part in social reform and development in the pre-Independence era? Has the impact of aid on Indian philanthropy been negative or has there been a positive contribution as well?

A second major issue related to aid concerns the means or

approaches to development. Today, the Western techno-economic

model adopted soon after Independence and the more recent market-driven approach to development are being reviewed in the

light of a resurgence of interest in Gandhian values and methods. It is being argued that Gandhian ideals of austerity, the primacy of ends over means, of self-reliance and decentralized development lead to more sustainable development than the development

paradigms adopted so far. But this debate over top down vs. bottom up, over professionalization of the sector to get the best talent into alternative development vs. political and social activism at the grass roots has become superimposed by the political and cultural issues

raised by foreign aid. Also under debate is the question of the best agency for and therefore who should receive aid. Is it the government

development,

or civil society? In the earlier years most aid went to the government,

including from private agencies like the Ford Foundation. Later, aid to NGOs increased while aid on official account decreased. What made for this change, and has the pendulum swung too far? Can 11 Some beginning has already been made. See, Patel (2008).

NGOs really deliver what’s needed in the absence of the state? Should not the main goal of development assistance be to strengthen

government capacity to rule for the common good and funding of NGOs the mechanism to enable them to exert pressure on the state for this? If NGOs are the best agency to bring about social development,

then has the role of the Indian government been overly constraining on NGOs, or has it saved India from being a basket case like many other aided economies? India has had its own vibrant tradition of voluntarism, which has not been completely subverted by aid as yet,

as has happened in some developing countries in Africa and South Asia. In others, foreign funding of NGOs accompanied a process whereby the state was almost replaced by a virtual parallel state, amenable to foreign influence. Foreign aid became the new Western

instrumentality of this process. Why did this not happen in India? One obvious answer is that India’s physical size and complexity, and the insignificant size of aid relative to the size of government spending, prevented a similar situation. But did the government

play a role too? Finally, has aid made for more self-reliance or increased Given that the Indian economy is growing dynamically,

dependency? will India and Indian NGOs keep needing aid?

This book explores the transformations in philosophy and practice as well as the issues debated in greater detail. It is hoped that the historical perspective adopted will help to shed more light than heat.

MINDING THE GAP An additional reason for undertaking this study is the paucity of work on funding of Indian NGOs. How an NGO is funded is of great interest not only to other NGOs but also to others interested in NGOs. If the answer to the

question ‘How are you funded?’ reveals that the NGO is funded by foreign donors, one of three reactions are noticed. One, the salary/ fees quoted/expected by a potential employee or consultant will be higher than if the NGO is not so funded. Two, the NGO will be

regarded with more respect, its credibility being established as a bona fide and effective NGO. But three, there is also the possibility of a contrary reaction: the legitimacy and credibility of the NGO

and its cause could be questioned as being ‘tainted’ by the fact that it is foreign funded.

In short, the source of funds is very important not only to the viability of an NGO but also its credibility, and the nature and direction of its growth. Surprisingly little attention has been paid in scholarly or popular writing in India to the different ways in which

NGOs finance their work, in spite of the fact that there is a vast and growing literature on various other aspects of the NGO sector. If at all the question of funding is noticed in newspapers or serious journals, it is mostly related to misutilization or misappropriation

of humanitarian and development funds, or the need for local

resource mobilization. There is some work on different techniques of

fund raising, but hardly any on the amount of resources invested in the sector, the merits or demerits of each source of funds, or the

consequences of using one type of resource over another for either individual organizations or the sector as a whole. Nor has the role of government policy, especially tax policies, impacting on the financial well being of the sector researched.

It is true that foreign aid as a source of development funds has received scholarly attention, both globally and in relation to India, but this pertains mostly to ODA. True also that there are several

critiques of foreign aid, as a source of funds for NGOs, but the studies

are mostly by Western academics and look at aid from a macro, global perspective, or draw on the experience of aid in African or Latin American countries.12 The notable exception is Goonatilake’s (2006) study of the effect of aid on Sri Lankan NGOs, in which he

lays the responsibility for destroying the Sri Lankan tradition of voluntarism squarely on Northern aid givers, both official and inofficial, and Perera’s (1997) study, which equally indicts aid for destroying one NGO, viz. Sarvodaya.

The corpus of academic work related to foreign assistance, private and official, for non-governmental humanitarian and developmental work specifically related to India is limited. One such study is by Cox et al. (2002), which looks at the effects of bilateral aid offered by six

European countries — the EU, Denmark, Germany, the Netherlands, 12 For instance, Adelman (2003), Biekart (1999), Edwards (1999, 2000, 2004b, 2008a, 2008b), Fowler (2000a, 2000b, 2000c), Holloway (1999), Reidar (1996), Sogge (2002), Tvedt (1998), Wallace et al. (2006) and others.

Sweden and the United Kingdom — to India, and discusses donor strategies and approaches, along with the microanalysis of a large

number of funded projects and programmes. Another very recent study is by Gerster (2008), of the development of co-operation between India and Switzerland. There are said to be three main reasons for the limited number of

independent evaluations of foreign aid to NGOs: one, the problem of evolving effective methodologies, especially for longitudinal two, an absence of outside pressures on donors, unlike the

evaluations;

pressure by donors on NGOs to undertake impact evaluations,

(neither agency boards nor the donating public are interested in systematic evaluations so long as funds are spent according to rules and the public image is positive);13 and three, because of the vested interests that develop round it. If NGOs or donors feel that their

funding and policies are vulnerable to scrutiny and potential

cutbacks, critical evaluations do not happen and the results are described in a more positive manner than the reality shows.

Even when external evaluations are done, the fact that

government officials, journalists, academics, INGO personnel, and officials

of aid agencies all develop vested interests round aid, hoping to gain consultancies, jobs, reporting assignments, foreign travel and other benefits out of association with aid giver, ensure that they are not

publicly harsh (Edwards and Hulme 1997). Amongst studies by Indians are George Mathew’s (2005) study, which is an impact assessment of Danish International Development Agency (DANIDA) aid, and a few recent books by Indian scholars

like Chandra (2001), Murthy and Rao (1997), Oommen (1997), and Samuel (2000a, 2000b, 2000c). While Mathew’s study is confined to one donor, the others have touched on the role and impact of foreign aid to Indian civil society as part of a wider look at Indian

NGOs, and are not concerned with issues of funding alone. The book Life Goes On by Bhat et al. (1999) is an exception in that its exclusive focus is the effect on NGOs of withdrawal of funding by foreign donors.

Most of the rest is in the form of unpublished and published papers and articles, evaluative memoranda and reports for aid agencies, 13 See Biekart (1999), Fowler (2000b, 2000c), Hancock (1989), Martens et al. (2002), Tvedt (1998).

many of which deal with specific aspects of aid to civil society.14 For instance, Khosla (1992a, 1992b, 1993, 1996, 1997, 2006) is with adoption of inappropriate technologies by NGOs due to aid, Raghuram (1999b) with the normative aspects of aid, Biswas (2003, 2006) and Samuel (2000b) with the depoliticization of NGOs due to aid, and Roy (1988, 1996) with the effect of aid on the spirit and values of the voluntary sector. Sethi (2003), Tandon (2003) and others have argued for removing undue restrictions on NGO access to foreign funds. The lack of aid studies relating specifically to funding of the sector in India is perhaps not surprising because aid has not occupied a prominent place in the scheme of financing development in India. It may also be that with the growth of India’s economy and a change in its global status, the debate about ODA may become meaningless. But studies of aid to NGOs continue to be relevant, not because of the size of the aid, but because of its potential to penetrate the deeper levels of the recipient society and change development paradigms, social structure and values of both the voluntary sector and the wider society. There is, besides, more room for an Indian voice if only because the lack of a critical mass of scholarly literature on aid and civil society by Indians is in itself a manifestation of the continued of the developed North over the developing South in the domain of knowledge creation and dissemination. As Raymond Williams, Antonio Gramsci, A.P. Thornton, Edward Said and others have argued, the acquisition, dissemination and representation of knowledge is not politically innocent, even in non-political arenas. The scholar is a product of his time and society and the organized political structures obtaining when the knowledge is produced. When the bulk of the scholarship is by a people who perceive themselves as superior to those being observed, it is their view of themselves and of the observed that is propagated and reinforced. To quote Thornton:

concerned

voluntary

dominance

14 The Government/NGO interface with regard to foreign funding has been touched on by Saxena (2003), by the Home Ministry (FCRA Division) reports on FCRA, in AccountAble Bulletins of AccountAid and in some unpublished material of campaigns against FCRA led by VANI and some other organizations. There is also some work on the Indian Diaspora and their philanthropic It too is limited and of recent origin.

contributions.

The history of the splendid Greek civilization is not the view seen by a woman, by a Spartan, or by a slave. Annotated and commented upon by generations of scholars whose pupils have been drawn from the governing class, it is the photograph taken by a similar elite; by men who, whenever they debated the principles and practices of

government, were convinced that this style of analysis must always remain

the intellectual monopoly of their own kind. It is they who make the judgments in whose light the world moves forward. They determine the path that those to come will take; they landscape the vistas that those to come will admire. (Thornton 1965: 15)

A Zimbabwean saying puts it more earthily: ‘The stories of the Hunt will be tales of glory until the day when the animals have their own historians’.15

OBJECTIVES OF THE BOOK It is hoped that the documentation of aid to NGOs in the last 50 years will serve a threefold purpose. One, that it will help to arrive at the truth behind the charges and counter charges mentioned above, and increase an understanding of the issues related to aid and development — of how aid operates and with what impact. Two, that it will throw up lessons to make aid more effective in future. And, three, that donors and NGOs in other countries, as well as Indian donor organizations and the government, will be enabled to learn from some of the foreign donor approaches and practices described. India’s voluntary sector is one of the most dynamic in the world and has now matured to a level where it is able to join the ranks of Western experts in exporting development models to other developing countries. Indian NGOs are also questioning Western paradigms and no longer unquestioningly accepting donor viewpoints. India’s long history with aid thus makes her experience particularly rich to others.

DEFINITION OF TERMS Before concluding, a clarification of some of the key terms used in the book is called for. In the Upanishads it is said, ‘Ekam sat, Vipra bahuda vadanti’, that is, Reality is One, but sages call it by many names. Likewise, 15 Popular saying in Zimbabwe, quoted by Sogge (2002: 166).

the reality of multitudes of institutional and group formations

mediating between the state, the market and the individual, and engaged in social action, has been described by a variety of terms. John Samuel (2000b: 3) claims that there are at least 20 usages. Often the terms are used interchangeably, but like the blind men describing the elephant,

each one at best describes one dominant characteristic but not the

whole phenomenon. Finding a commonly accepted nomenclature for social action organizations is still an unresolved issue. Globally, the terms most popularly used are private voluntary organizations (PVOs), non-profit organizations (NPOs),

Nongovernmental Organizations (NGOs) and civil society organizations (CSOs). The collective entity of which they form a part is then variously referred to as the voluntary sector, the non-profit sector, the NGOs sector, or civil society.

Following international development usage, the term NGO, as defined at the beginning, has come into wide circulation. But not all within the sector in India favour the use of the term. Some object on the grounds that it uses a negative rather than a positive

characteristic to describe voluntary or social action. Others object that the term does not fit social movements and people’s organizations which are locally and ideologically motivated initiatives (Seth 1982). While

not rejecting the term ‘NGO’ several development organizations

such as PRIA, a Delhi-based NGO, have been arguing for a separate classification of voluntary development organizations as a distinct class of actors within the voluntary or the NGO sector, as those which are engaged in providing developmental support to the needy

communities or emerging issues. These would be called NGDOs (PRIA 1991). The term ‘non-profit organization’ (and therefore the ‘non-profit sector’) was made popular by the Johns Hopkins Comparative

Nonprofit Sector Project. Salamon and Anheir (1992), who led the project of mapping and defining the voluntary sector globally, defined non-profit organizations as those which are private, non-profit

distributing, self-governing and voluntary. But this term too has its critics. They argue that not making profits is no longer a hallmark of voluntary action, since many organizations have been forced to engage in profit-making activities as a way of subsidizing their social activism. What ‘non-profit organizations’ have in common with

‘voluntary organizations’ is that they do not distribute the profits to

members or staff. But foundations, business chambers, youth clubs, and sports groups, are also legally constituted as non-profit and those engaged in grass-roots development work feel these do not belong to the voluntary sector. The terms PVO, NGO, and NGDO would exclude charitable trusts and foundations, which give money to voluntary organizations rather than undertake development work themselves, from the NGO or voluntary sector, whereas the term non-profit organization would include them. To add to the fun, one more term has emerged and is fast gaining currency. This is ‘civil society’. The usage of the term ‘civil society’ began in the 1990s, largely influenced by its international in the post-Soviet Union political context. The concept was used in East European societies, both to mobilize citizens against the Soviet ideology and as a measure by which to judge the quality of their present state. As commonly used in the West, the term refers primarily to the wide variety of voluntary associations and citizen groups which the primary vehicle for individual citizens to articulate their views, participate in policy processes and contribute to the progress and well being of all strata of society. A CSO is a non-governmental and not-for-profit organization that has a presence in public life, expresses the interests and values of its members or others, and is based on ethical, cultural, political, scientific or philanthropic Civil society is the sphere outside the family, the state, and the market (World Bank 2003b). Today, the terms civil society and CSOs are beginning to be in global academic and development circles over NGOs and NGO sector, because the latter refer more narrowly to organizations which advocate and/or provide services in the areas of economic and social development, human rights and welfare, and emergency relief, whereas it is believed that many national and global problems require solidarity and coalitions beyond narrow boundaries. Social action groups need to make common cause with a wide range of interest groups such as community-based organizations, media, trade unions, industry associations, foundations and the like. The term civil society is gaining increasing acceptance in India as well. Firstly, because of the non-agreement on the usage of other terms such as NGO, voluntary organization, NPO, etc. Secondly, because, with its changing roles and functions, the voluntary sector is

organizations,

manifestation

constitute

considerations.

preferred

moving closer in terms of spirit and objectives to the broader reality described by ‘civil society’. Its growing usage by international and the donor community also adds to its greater and usage.16 NGOs are only one of the components of civil society, the others being labour unions, political parties, media, social movements, professional and business associations, and educational institutions. But very often the two terms — NGOs in the collective and civil society — are used synonymously. Given that there is no consensus on the exact term to be used for organizations engaged in social action, in choosing the term for the purposes of this book I have, like Humpty Dumpty, the famous eggshaped character of Alice Through the Looking Glass, decided to make a word ‘mean just what I choose it to mean — neither more nor less.’ Though Alice questions ‘whether you can make words mean so many different things,’ Humpty Dumpty argues that ‘it is only a question of ‘which is to be master – that’s all’ (Carroll 1986).

organizations acceptance

Accordingly, I have decided to choose the term NGO, and it

denotes private, self-governing, non-profit distributing, and organizations outside the state and market sphere, which engage in struggle as well as relief and development. What sets them apart from the traditional voluntary organizations is that they seek to bring about social change or transformation through their work and are not concerned merely with palliative work. Secondly, their relationship with donors who fund their work is essentially of an unequal nature unlike that of the traditional voluntary The pre- and early Independence voluntary agencies raised their money largely through donations from the communities among whom they worked or from some wealthy individuals. The between the donor and the recipient ended with the giving of the gift and was not a continuing relationship as is the case with modern NGOs and their organized donors, which enables the latter to exert influence on the NGO’s mission. I have chosen to fly in the face of current practice by preferring ‘NGOs’ to ‘civil society’ for four reasons: One, the term civil society is of very recent origin in India and not widely used or understood whereas ‘NGO’ has passed into common parlance. Two, even when people use the term ‘civil society’ in India they really mean the

developmental

organizations.

relationship

16 For more details on the terminology debate, see PRIA/JHU Institute for Policy Studies (2000).

voluntary sector comprised of NGOs. Three, ‘civil society’ would include charitable foundations, which do not depend on outside donors for their income whereas the defining characteristic of NGOs is that they depend on donors to fund their work. Finally, until recent times, most of the aid for anti-poverty development work that did not go to government went to development NGOs, and not to the other components of civil society such as media, trade unions, etc. It is only in the past decade or so that external donors, even when funding NGOs, have emphasized the civil society or advocacy and watchdog aspect of their work. Though NGOs were initially overwhelmingly concerned with poverty reduction, since the 1980s they also took on board other issues such as human rights, educational reform, governance, women’s rights, gender, and status of Dalits in society because these have a close link to poverty. Thus, when donors talk of encouraging civil society they are still talking of NGOs acting in their role as civil society organizations. However, sometimes, where appropriate, I have used the term civil society interchangeably with the voluntary or NGO sector. ‘Foreign donors’, as used here, includes bilateral agencies and international NGOs who act as a channel for funds from official and individual donors in the North, and private foundations, with some caveats. Private foreign donors include all those whose contributions fall under the purview of the FCRA 1976, amended in 1984. While including all private international philanthropic donors, individual and organized, and bilateral donors to the extent they contribute directly to NGOs, in the statistical data, individual donors and donors are excluded for purposes of analysis. This is because the amounts are comparatively insignificant, their contributions ad hoc and dispersed, and their impact in the aggregate not Above all, they do not expect a continuing relationship with the recipient, as do donors who transfer resources by means of grants. Only when funds are transferred through grants is it possible for donors to exercise any influence on organizations, and through them on development in general. I have left out the UN agencies from my purview with the partial exception of the World Bank because their direct funding of NGOs is exempt from the FCRA and because they fund NGOs largely at the margin and largely through government.

corporate

significant.

I began with the idea of excluding official bilateral donors too from the purview of this book and concentrating only on private philanthropy, because the contributions of the former go largely through government and are not reflected in the FCRA figures,

international

unless they fund NGOs directly. However, as I progressed with my

reading and data collection it became obvious that not only were Indian NGOs increasingly being funded directly by official donor agencies such as the Swedish International Development Agency (SIDA), the Canadian International Development Agency (CIDA), the Norwegian Agency for International Development (NORAD), and DANIDA, but that some of the most creative and beneficial

funding of NGOs was by some of the bilateral donors. Therefore, for the detailed examination of funding practices I have included official bilateral funding of NGOs through government, and directly. In ‘external development assistance’ I have excluded humanitarian aid and focused largely on assistance for long-term development, though I am aware that it is not possible to draw a rigid line between

the two. Many foreign donors, especially church related organizations and INGOs began their funding of Indian civil society due to a humanitarian crisis. This was converted to funding for long-term development once the crisis had waned. Conversely, many INGOs continue to extend humanitarian aid if the need arises, for instance, at the time of the Tsunami.

The period covered by the study is 1960–2009. This period divides somewhat unevenly into two — 1960 to 1990, and the post-1990 period, when globalization and reforms changed the context within and outside India for both voluntarism and aid.

METHODOLOGY The study has used secondary material (published and unpublished), data from interviews and structured questionnaires, participant observation, and personal experience.

Using several databases of NGOs, 17 a list of 100 NGOs was

compiled, selecting 20 each from the north, south, east, west and central

zones to get a sample representative of the country as a whole. The selection then took into consideration age of NGO (established as well as fairly new ones), size (large, medium and small), and location 17 Such as those of VANI, Give Foundation, Sampradaan and others.

(in metro cities and smaller towns). The selected NGOs were sent a structured questionnaire.

The response to the questionnaires was very poor with only 10 responding in detail. The names of those who responded are given in Appendix 1. Of these, nine were from metros and other large cities, and only one was from an interior location in Gujarat. Five out of the

total were established post-1990 and the others were between 20–25 years old. About half had budgets of over Rs 10 million and the remainder had budgets between Rs 1 million p.a. (very small) and Rs 8 million p.a. (medium).

External assistance accounted for 70–89 per cent of the budget for only four and for the rest it was between negligible to 40 per cent. While it was not possible to do statistical co-relations with such a small sample, the responses nevertheless gave many insights into

attitudes and practices of both donors and NGOs. To get the donor perspective I sent a questionnaire to several international donor organizations. I received no response to this but was able to interview representatives of several international

donor organizations like Ford Foundation, ActionAid, Oxford Committee for Famine Relief (OXFAM), NORAD, DANIDA, CIDA and SIDA, and the Department for International Development, UK (DFID). Though Germany is an important bilateral donor to NGOs

it was unfortunate that the donor organization Gesellschaft fuer Technische Zusammenarbeit (GTZ) did not respond, either through writing or request for personal interview in spite of repeated efforts on my part.

In addition, I interviewed several other individuals from Indian donor organizations and government, and heads of NGOs, as well as knowledgeable academics and professionals who have been involved with the non-profit sector over a long period. In all I did in-depth

interviews with over 55 individuals. This was supplemented by written material provided by them. The names of those met, and interviewed are given in Appendix 2.

contacted

Important insights were also gained from participation in, and

discussions at various seminars, conferences, and focus group related to the subject. Finally, I have also drawn on my own experience and inside

discussions knowledge of over 30 years in the voluntary sector, from both sides of the fence, first as a programme officer in an international grant-making

foundation and later as the co-founder and director of a non-profit intermediary organization. In the text, quotes have been only selectively attributed to the NGOs or NGO leaders concerned, and the names used in the case study have been fictionalized in order to protect their identity, for obvious reasons!

STRUCTURE OF BOOK Section I sets the stage with descriptions of the main actors and the facts of aid — motives, size, history, and legal contexts. Chapter 2 describes one of the three main protagonists of the book, viz. the NGOs, because to know the impact of aid on the NGO sector one must know the anatomy of the sector — its history, structure, and functions, and its challenges and opportunities. Chapter 3 discusses the various sources of funds for NGOs, and the pros and cons of each, before foreign aid as one of the sources is described in more detail. Chapter 4 describes the second main protagonist, viz. foreign donors. It looks at the distinguishing characteristics of the different categories of donors who make up the grouping. In the popular mind, ‘foreign donors’ is a homogeneous category, with little distinction being made between different categories of donors such as bilateral donors or INGOs who raise funds from other donors to fund Southern NGOs, and private grant-making foundations. But in fact each category has some differences and some similarities and fits into a broader aid architecture, which has its own language and its own rules. Chapter 5 gives a brief history of the strategies adopted by the donors for disbursing aid and the changes in styles of operation over the period reviewed. Chapter 6 is about government, the third protagonist in the drama, in its relationship with the other two: NGOs and donors. Section II, titled Aid in Action, examines some of the main charges levelled against aid and then attempts to draw up a cost-benefit balance sheet. Chapter 7 analyses the micro-level interaction between donors and NGOs and why, in spite of high NGO satisfaction with aid, there are also areas where friction arises. Chapters 8 and 9 examine whether the two main charges against foreign aid to NGOs — that it has not addressed the question of

sustainability but made NGOs more and not less dependent on aid, and that NGOs are donor driven to adopt donor agendas — have any substance. Chapter 10 attempts to draw up a balance sheet of the benefits aid has brought to the voluntary sector and Indian society, against the costs this has entailed. The final chapter (Chapter 11) wraps up the study by considering what almost a half century of aid has taught donors, NGOs, and government alike about making aid effective. It then takes a peek into the future and attempts an informed guess as to what shape the new aid regime will take, and how it will differ from the old. In a panoramic work of this nature it is likely that some issues

may not have been dealt with in the depth they deserve, but it is hoped that what it lacks in depth will have been compensated by the breadth of perspective. It is also possible that many will not agree with the statements and interpretations in the book but as many sacred and other texts point out, there is no such thing as absolute truth; all truth is relative. As the great Kurosawa demonstrates in his film Roshomon, a single event can be interpreted and narrated by different people who have been party to the same event. He makes the point that no one conclusion is right and conversely all conclusions may be right; it is difficult to know who is lying and who is telling the truth, and human beings are incapable of judging reality much less truth. This being so, the best that one can do is to present the facts as objectively as one perceives them and leave the readers to draw their own conclusions.

differently

Part I Setting the Stage

2 The NGO 'Benficares' ‘When I joined the World Bank you could be sacked for talking with an NGO; now you can be sacked if you don’t.’1

Indian NGOs are at a crossroad, behind which lies over a hundredyear history of growth and development. Ahead lies the new which is likely to see a major rethinking on the relative roles and boundaries of the three main sectors of society — the state, the market, and civil society. In order to understand what difference foreign aid has made to the NGO sector, this chapter describes its since Independence in terms of its history, size, roles, achievements and the challenges that lie ahead. It also provides the socio-economic and political context against which both NGOs and foreign donors developed their strategies and programmes.

millennium,

development functions, A BRIEF HISTORY

The Beginning: 1947–60 Organized voluntary action in India existed a long time before but its modern phase may be said to have begun in the late 19th century. The social reform movements of the 19th century saw the formation of many formal and informal citizen’s groups like the Brahmo Samaj, Satyashodhak Samaj, the Arya Samaj and others to protest prevalent social ills such as child marriages and sati, and to take care of a variety of social needs such as education, famine relief, and orphan and widow care. Workers organizations, literary and societies and political bodies too were proliferating. Most of the social action was concentrated in urban centres, the exception being the work of Christian missionary organizations which was largely directed to the upliftment of the poor and people in rural and tribal India.

Independence,

educational

marginalized 1 A World Bank staffer quoted in Clark (2002: 114).

Foreign Aid for Indian NGOs

In the early 20th century voluntary action was stimulated by the freedom struggle, the Gandhian movement for national regeneration through constructive work for the rural and disadvantaged poor, the Church’s concern for the welfare of the poor, and Marxist ideology. These pre- and early post-Independence organizations were known as voluntary agencies or voluntary organizations (VOs). Those inspired by Gandhi saw voluntary action as a means to civic engagement and the creation of a social base for self-governance and self-reliance by the community. Though driven by different ideologies, church groups and those inspired by Marxist ideology aimed to bring the poor marginalized groups in society into the fold of social action. Though all social activists believed in simple living, the Gandhian in particular insisted on simple living, self-reliance, and to the development of their community, either by giving of money or shramdaan, the donation of labour. These values became the hallmark of voluntary action for many years thereafter. What distinguished voluntary action of the pre-Independence period from that which followed was that the social action organizations of the time were almost entirely supported by contributions from within the community, the one exception being Christian missionary organizations which received contributions from abroad — either from their parent organizations or from donations raised by them overseas. They also supported their work by levying user charges in the schools and hospitals run by them. Significantly, the early 20th century witnessed important debates regarding the need to reform existing practices of charity and in India. Aristocratic and elite mercantile philanthropy was re-channelled into constructive areas of concern such as modern education, while the more common, day-to-day charity of ordinary individuals began moving away from personal and largely religious acts to secularized and organized undertakings that were intended to benefit bigger communities. The new tenets of philanthropy were about social service, social action and active citizenship (Sundar 1994, 1997a, 1999a, 2000, 2006a, 2006b, Watt 2005). Charity and also became democratized. Ordinary individuals began to participate in useful acts of organized charity represented by orphanages, widow’s homes, social reform and literary societies. The new type of active charity was supported by novel techniques of fund raising which targeted not only the rich but also petty bourgeois groups and the poor, as evidenced by the fund-raising campaigns for the

organizations contributing

philanthropy

philanthropy

The NGO ‘Beneficiaries’

Benaras Hindu University and the Aligarh Muslim University, two major institutions of the time funded entirely from indigenous (Watt 2005). After Independence, many voluntary sector leaders moved into government and left the voluntary scene. Others went into people’s movements, which were funded by local support, with the leaders living on their own means. The first two decades of Independence were years of intense nation building. The government itself became the locus of social, economic and political transformation. Nevertheless, VOs saw a role for themselves, particularly in the process of rural transformation and community development, and often joined hands with government to share in the tasks of national reconstruction. The development strategy adopted by VOs in the first phase was to promote improved agricultural practices and income generating activity, especially village crafts and industry, and other constructive work for rural development. Christian mission organizations gave more attention to education and public health delivery, along with rural for the poor. The role played by most VOs was mainly that of a paternalistic carer of last resort and service provider. Development work was something undertaken for the poor who played a passive role as beneficiaries. The Partition of India brought in a flood of refugees who had to be given relief and rehabilitated, and this led to a spurt in organized action. The VOs worked together with government, first for relief, and later for long-term development. Since those then in power and those engaged in voluntary action had been comrades in arms in the freedom struggle, the government began to fund VOs such as the Khadi and Village Industries Commission (KVIC) and the Adimjati Sewa Sangh, who in turn helped smaller VOs. Voluntary action was stimulated further by the establishment of the Central Social Welfare Board to promote voluntary action for development. It marked the beginning of government funding through grants-in-aid. Slowly, the Gandhian VOs which had derived support from the people became dependent on government grants and patronage, though some Gandhian organizations such as the Sarva Sewa Sangh continued to derive support from the people and to operate according to Gandhian principles of simple living and working according to local conditions. Some, like the Gandhi Smarak Nidhi, managed to survive by living off the interest on the corpus collected during the

contributions

development

voluntary

freedom struggle though, as inflation eroded the value of money, their incomes became progressively reduced. In newly independent nations like India, economic modernization became the dominant paradigm. The rulers believed that knowledge and technology transfer from the developed world were needed and desirable in almost every sector of the economy. It was also assumed that new institutions had to be built and that good models for these existed abroad and could be replicated in India. This worldview was not shared by Gandhian VOs. To aid the government in its task of planned development, the sought and welcomed foreign aid on official account. The developed countries on their part were eager to help in this task of building a new India. Promoting development and alleviating poverty with aid programmes was considered to be the most promising way of stopping the spread of Communism, at that time a major of the West.

government

preoccupation Radicalization and Professionalization: 1960–90

In the late 1960s, the country was caught in a crisis of economic stagnation and political instability, made worse by massive droughts, floods and cyclones. The challenges were met by a tremendous growth in voluntary action, which was further stimulated by the Bhoodan Movement and the Bihar famine. The several natural calamities brought several INGOS like OXFAM and the Cooperative for Assistance and Relief Everywhere or CARE to India to assist in the government’s development plans and to provide relief. It marked the entry of private foreign aid into the NGO sector. CARE in fact had come to India as early as 1950, with contributions of food and medicines, rather than cash. Some Gandhian VOs steadfastly refused to accept foreign funding for ideological reasons, while others like the Sarvajanik Gram Vikas Kendra in Midnapore in West Bengal, the Antyodaya Chetna Mandal in Orissa and the Association for Sarva Seva Farms (ASSEFA) in Tamil Nadu, all grass-roots organizations doing excellent work on Gandhian lines, did. Today, those who did not accept aid are, by and large, in a poor shape financially.2 To facilitate foreign funding for rural development and other voluntary activities the Government of India set up in 1960 a special 2 Interview with P.M. Tripathi, Director, AVARD, Delhi, 13 October 2006.

organization in the Ministry of Rural Development to pool and foreign funds to voluntary agencies. This body was called People’s

channel

Action for Development India (PADI), later renamed Council for

Advancement of People’s Action and Rural Technology (CAPART). It was to be a clearing house and it was not compulsory to channel aid through it. PADI would receive money from foreign donors and give it to NGOs who had negotiated projects with donors. Though PADI was also required to get clearances from four ministries for each project, the time taken was quite short, possibly because the

numbers were small. In partnering the state and aid agencies on many development activities, the earlier links of the voluntary sector with India’s business forged during the freedom struggle, and later, became weak. This was unfortunate because it meant that when the state became

omnipresent the voluntary sector did not have an alternative to fall back

on, and foreign aid filled the gap (Mehta 2006: 2). With hindsight some voluntary sector leaders now feel that one of their biggest mistakes, as also of political leaders of the time, was that although they were capable of creating indigenous funding mechanisms for supporting voluntary action from the enormous indigenous support (money, land, buildings and other assets) they

received during the freedom struggle, and from the Bhoodan of the 1960s, they did not do so. No permanent mechanism was created to capitalize this for voluntary action. Now, one of the challenges before the voluntary sector is of how to revitalize the indigenous giving habit.3

Movement biggest

With the beginning of planned development and the aid regime

the term NGO became popular in development discourse and came to be used to include a wide array of institutions outside the That the term is now widely used and understood within India and globally is itself an indication of the powerful role played by foreign aid henceforth in defining the development discourse in

government.

India and elsewhere.

The years till the early 1970s were years of learning for NGOs, when experience showed what would work and what should be avoided. It was a prelude to the next phase when voluntarism would gather force as an engine of social transformation. The limited success of the trickle-down development theory, dissatisfaction with the government’s slow implementation of 3 Interview with P.M. Tripathi, AVARD, Delhi, 13 October 2006.

programmes, increased unemployment among educated youth and growing dissatisfaction with the institutional arrangements, all further exacerbated by the Bangladesh War of 1971 which led to a massive influx of refugees into India, gave an impetus to voluntary action. Not only was there a massive expansion of voluntary in the 1970s but a radicalization and a professionalization of voluntary action as well. The widespread student and peasant movements across India gave a new direction to the voluntary movement, and brought in a new generation of activists who raised fundamental questions about the structural causes of poverty and social inequality. The new social activists saw the state as perpetuating structures of inequality and therefore took a more adversarial stance against the government. The 1970s also saw church-directed charity and service-oriented activities across the world face a schism in their ranks due to the impact of Marxism/Communism, liberation theology, and Paulo Freire’s Pedagogy of the Oppressed (1972). The fallout of this was that many church-led organizations became radicalized too. Simultaneously, the launching of the Sarvodaya or Total movement by Jayaprakash Narayan and his followers, in 1973–74, led to a number of voluntary organizations rallying round him to build up People’s Power (Lok Shakti) as distinct from state power (Raj Shakti). The subsequent declaration of Emergency in 1975 — and the coming together of the Left and the Right to fight it — forged cohesion among NGOs. The NGOs positioned as serious players on the development scene offering development strategies and programme implementation comparable to state action. As the numbers expanded, and as they grew more sophisticated in both theorizing and implementation, they began to recognize as part of a distinct entity, which now began to be referred to as the Voluntary or the NGO Sector. Many of those connected with social development preferred to use the term ‘social action’ to ‘voluntary action’, because social action as a practice is said to samrachana (reconstruction) and sangharsh (struggle). They also rejected the term NGO to describe social movements and people’s organizations because they saw the latter as locally and ideologically motivated initiatives, in contrast to NGOs which were believed to be aid driven (Seth 1982). But the term NGO continued in common usage.

initiatives

Revolution

themselves alternative

themselves

encompass

Though integrated rural development continued to be in vogue, NGOs began to specialize in sectors such as health, or education or livelihoods, partly due to the influx of a large number of from these fields into the sector, inspired by the launch of the Sarvodaya or Total Revolution movement of Jayaprakash Narayan. There also developed an internal differentiation in the sector due to different objectives. Hence, there were NGOs concerned primarily with relief and welfare; indigenous NGOs formed by INGOs and welfare wings of churches; NGOs formed by middle-class community-based organizations formed by the poor with the help of other NGOs; non-political but activist groups; NGOs formed by corporations as part of their philanthropic initiatives; and, NGOs formed by the government. With the declaration of Emergency, receipt of foreign funds an instrument with which to intimidate the voluntary sector. The FCRA of 1976 was passed to maintain surveillance over NGOs which received foreign funds. The reasons for the Act and its later history are given in Chapter 6. The Janata government (1977–80), which came to power after the Emergency, assigned a special role to NGOs. Industrial and business houses were also granted special tax concessions to involve NGOs in rural development works, thus bringing a new funding element into the picture. Though the Congress which came back to power in the 1980s was supportive of NGOs as a whole, there began a witch hunt of which were close to Jayaprakash Narayan, and who received foreign funds (see Chapter 6). The theorizing and critiques of social action at various stages of its history have helped the Indian NGO sector to apply needed and to move on to the next stage. The debate during the late 1970s and early 1980s focused on the ideological underpinning of social action — Leftist, neo-Leftist, liberation theology — and on alternative transformative policies for poverty removal (Samuel 2000b: 4). The Church, the Left, the Gandhian and the Lohiaite movements converged on issues of development. The search for alternative development strategies, which would focus on the poorest and the marginalized, such as landless labour, tribals and the scheduled castes, led many to test out new and targeted approaches to poverty alleviation. Thus mobilization of the poor, raising their awareness about their condition and their rights, their formation into

professionals

professionals; developmental became

organizations

correctives socialist

groups to demand their rights from the government, and designing programmes with the poor at their centre became the new of NGOs, in addition to their earlier development work. Later, projects directly targeted to poverty alleviation for the poorest with emphasis on livelihoods to improve incomes became a thrust. New concerns such as gender justice and environmental were added to issues of livelihood and income generation. projects in social forestry, soil and water conservation and low cost appropriate technology for meeting energy needs, as well as provision of micro finance to meet the costs of income generating projects, were taken up by NGOs. A participatory approach involving the beneficiaries in projects for their benefit gained greater over top-down decision making. Development by and with the beneficiaries, and not only for them became the new watchwords. Organizational experimentation for the purpose led to the and strengthening of community-based organizations such as Self Help Groups (SHGs) and Sangams. In the 1980s, while the government continued to acknowledge the important role of NGOs in the country’s socio-economic making a specific financial allocation for them in the Seventh Plan (1985–90), it also began to exercise greater control over them. Apart from tightening the FCRA, the Finance Act of 1983 also the income tax exemptions that were previously given to for donations to rural development projects undertaken by NGOs on the ground that they had been misused. Tax exemptions for income generating activities of NGOs were removed as well. These developments were either preceded by or triggered by the debates of the time focusing on the role, funding and impact of the social action process; the relationship between the government and the voluntary sector; new social movements and their implication in the macro political context. Due to the quick proliferation of NGOs, some of doubtful and practice, in 1986 it was proposed to form national and state councils for rural voluntary agencies and a Code of Ethics for NGOs to abide by if they wished to join the councils. But this was not a government proposal. It was floated by Bunker Roy, a leading social activist, who was then an advisor to the Planning Commission on voluntary action. The Code was to be purely voluntary. However, due to personal differences within the ranks of voluntary sector leaders,

preoccupations

popular conservation Experimental

acceptance

formation development,

removed industries

intentions

the move was made out to be another instance of increasing regulation of the sector and shot down. A similar move at self regulation begun at the turn of the Millennium was more successful. Clearly, the time was not ripe in the 1980s. It is possible that if the councils and the Code had been adopted at the time, the later public, government and donor concern with increasing NGO malpractices may have been stemmed. NGOs became popular as agents of development during the period because, in the wake of massive calamities, natural and manmade, not only were they first on the scene in offering relief and but were also able to mobilize community help and resources. A second reason was disenchantment with state performance in bringing development to the poor and backward communities, and in governance generally. It was believed that economic policy, the provision of services and infrastructure, regulations and market mechanisms rarely targeted vulnerable groups, whereas NGOs were perceived to reach the poor and marginalized more successfully. Past experience of operating anti-poverty programmes and social services also showed that there were several leakages and inefficiencies in the government delivery system. It led to a search for alternative paradigms and delivery mechanisms, with an emphasis on pluralism and citizen participation. Finally, the existence of a ‘democracy deficit’ both at the national and international levels gave NGOs an important role to play. NGOs were perceived to have some special strengths which gave them an edge over government as agents of development. They had strong grass-roots links which enabled them to reach, inform, mobilize, educate and sensitize the poor in inaccessible areas as to their rights and entitlements under state programmes. They were also able to attune official programmes to public needs by acting as a conduit for public opinion and local experience. Over time, they had also field-based development expertise. As organizations supposedly driven by self-reliance and selfgovernance it was believed that NGOs were able to identify with the interests of the poor, have a more realistic appreciation and on local problems, and be more committed, flexible and than target-oriented government bureaucracies. They had proved that they were able to innovate and adapt technologies and development approaches to suit local conditions. Many a new strategy, approach or technology was first pioneered and tested out on the

government

rehabilitation,

development

developed perspective innovative

ground by NGOs and later the successful models were adopted by government for mainstream development. In many cases they also collaborated with the government on various projects. They had developed participatory methodologies and tools for working with the poor and disadvantaged and were believed to be able to effect popular participation in decision making at all levels, provide community leadership, and convey legitimate dissent. Their process-oriented approach to development, long-term commitment, and cost-effectiveness due to lower staff, administrative and costs also went in their favour. NGOs had demonstrated these strengths by notching up several successes in innovating development methodology and technology, and promoting alternative models of development. Some instances of appropriate technology promoted by NGOs included a hand pump now widely used by the United Nations International Children’s Fund (UNICEF) and Government of India (GOI), developed by NGOs working in the field of water development in the aftermath of the drought in western India in the early 1970s. The concept of health workers now adopted widely in health care delivery was first tried out by the Comprehensive Rural Health Programme at Jamkhed in Maharashtra; the initiative to integrate child care now the main feature of the Integrated Child Development Services programme (ICDS) was also piloted by NGOs. The SelfEmployed Women’s Association (SEWA) in Ahmedabad shattered the myth that poor women are not creditworthy; this enabled micro finance for small entrepreneurs in the informal sector to become the buzzword it is today; the Hyderabad-based Cooperative Foundation achieved remarkable successes in its pursuit for reforms in the Cooperative law. The list of innovations can be Those in literacy and education led to the National Adult Education Programme (NAEP) in 1978. The NGO sector was also instrumental in promoting human rights, women’s rights, ecology, consumer rights, and sustainable as priorities in political and policy discourse, and in sensitizing the mass media in these. As NGOs gained recognition for their ability to reach the grass roots better than government, and for cost-effective operations, funding became available from foreign donors in search of alternative paradigms of development. Through the 1980s, foreign assistance created opportunities for serious institutional work around

transaction

Emergency community

services,

Development multiplied. development

increased

the idea of people’s participation and community self-governance. Initially, one of the constraints in effectively accessing foreign funds was the absence of expertise for project formulation and submission of reports to funding agencies. But early on it spawned a whole of proposal writers who could churn out proposals for a fee. So much so that foreign funding agencies soon became wary of which were suspiciously alike, though from different corners of India. As funding increased, from both government and foreign sources, so too did the dependency syndrome — dependency of NGOs on grants and of people on NGOs. Self-help efforts, and especially efforts to raise funds locally, slowly began to decline. By the end of the 1980s private aid was firmly established as an indispensable part of the NGO sector and NGOs became deeply integrated into the development assistance system. The increased availability of funds led to further growth and in type of NGOs, as well as greater complexity and in the operation and management of many organizations. Far from being the simple, austere organizations working in a few villages with dedicated staff leading frugal lives and working on a purely voluntary basis or on very low salaries, many NGOs, especially those in large metropolitan cities, began to have budgets which ran into millions and large well paid staff using the latest technology in their operations. Their work expanded to cover several states, and some began to resemble government or corporate organizations. Either to raise money for their charitable work, or as part of their development work, many NGOs began engaging in business activities such as bee keeping, sericulture, food processing, or production and marketing of crafts, printing and sale of greetings cards and so on. These trends were to strengthen over the 1990s, a period which was to see a more radical transformation of the voluntary sector. The with NGOs that was to begin in the late 1990s was also distant.

profession proposals

diversification sophistication

disillusionment Post Globalization Years: Drive to Maturity

The decade of the 1990s marks a watershed for the development of the voluntary sector, as well as its relationship with foreign aid. The sector took on new roles, responsibilities and therefore functions. New issues emerged, which were different and therefore needed a different type of response. The spirit of voluntarism itself began to

undergo a transformation, thanks to political and economic within and outside India and an ever-growing availability of foreign aid. The beginning of the 1990s saw globalization and the ascendancy of the market as an engine of development, heralding a gradual shift of power from the state into private hands. Within India it saw the of a process of economic reforms and liberalization, which, with the process of globalization, led to far reaching changes in the economy. For one, it saw the beginning of a structural adjustment programme in 1991. Faced with a mounting balance of payments crisis and fiscal deficit, the government embarked on stabilization and structural adjustment measures. These impacted adversely on the poor and were vigorously protested by NGOs. The consequent reforms, globalization, and the revolution in information and communication technology which coincided with them unleashed unprecedented growth, with wealth creation at an all time high. However, the fruits of growth were not equitably distributed. If India was shining for the rapidly expanding urban middle class, it was dark for those below the poverty line, for whom the liberalization of the economy, new industrial and development projects like big dams, and steel plants were bringing only displacement, pollution of the environment and loss of traditional livelihoods. While and liberalization expanded markets for both Indian and MNCs by creating new needs in the villages — such as Coke and Pepsi instead of tea, coffee or buttermilk, their traditional drinks — the rural poor were being transformed into the urban poor. Global and urban illnesses like HIV AIDS and bird flu also became rural illnesses. By the early 1990s it was clear that in spite of half a century of planned development and a high growth rate, poverty and were still widespread. Structural distortions in land and ownership, power relations and lack of access to productive assets like water, markets, technology and credit were preventing equitable development, and large segments of society — women, the lowest castes, indigenous peoples, and minorities — were falling out of the net, in spite of almost two decades of so-called targeted efforts. Development and distributive justice were also being retarded by gender discrimination and environmental concerns. The negative impacts of development were not confined to poverty issues alone. The forests, rivers and soil of large parts of the world,

developments

initiation together

economic

globalization industry

deprivation property

including India, had experienced rapid deterioration; species were becoming extinct and climate change was causing alarm. Therefore, both mainstream official development policies as well as voluntary development action became conscious that if development was to be sustainable it would need to ensure empowerment of the marginalized sections of society, and integrate gender, environment and human rights or social justice concerns into mainstream development and processes even more effectively than had been done so far. Sustainable development became the new watchword. The post-1990s decade also saw political realignments in India and the emergence of coalition governments, representing different interest groups, especially the backward and scheduled castes, giving them a voice in the political dialogue. There was, in addition, incidence of Hindu and Muslim fundamentalism, and caste and ethnic politics. Social conflicts and tensions arising from these and geographical discrimination, an ineffective and weak delivery mechanism, poor governance and corruption, became everyday challenges. On the social front, social movements — women’s movements, tribal movements, and ecological movements such as the Narmada Bachao Andolan — marked the period. These movements challenged the anti-poor policies of the state and multilateral agencies. Though their rate of success varied, they have played a positive role in the rights of women and Dalits and putting environmental concerns in the forefront. Meanwhile, the cumulative result of the reforms, the socio-economic changes within the country, and global developments, was to increase people’s expectations about the quality of governance and the quality of life that was acceptable. An attempt on the part of the government to meet these led to the passing of the 73rd and 74th constitutional amendments in 1993, which devolved power to the Panchayats and Nagarpalikas, increasing scope for the poor, Dalits and women to take part in governance. As many as 29 functions have been devolved to these local bodies in order to reverse the top-down planning for development, leaving the development priorities to be decided by the people, though the necessary resources are yet to be devolved proportionately (Seeta 2002). The introduction of the three tier Panchayati Raj, as the devolution of power to local bodies is known, introduced a new element into the development discourse, raising the question of the relationship between

policies

increased

government

upholding minimum especially

Panchayati Raj institutions (PRIs) and NGOs. Till this introduction, the NGOs were the only ‘modern’ development organ-izations at the grass roots which could claim to speak for the poor. Now a parallel structure with constitutional and political legitimacy, which had both legal and executive authority to undertake development, had emerged to occupy the space. How this is likely to pan out vis-à-vis NGOs it is too early to tell. It is possible that with the success of PRIs the uniqueness and utility of NGOs will get diminished. Or it may be that NGOs will move from playing the developmental provider role to a more activist civil society role of making the local administration more accountable, in a parallel to civil society’s national level role of making the state accountable to the citizens. Due to their earlier successes in reaching the disadvantaged, and in developing new paradigms for development, NGOs became even more important for both governments and official aid agencies who were now called upon to meet the adverse consequences of and structural adjustment, particularly for women, peoples, and other vulnerable and marginalized groups. As environment issues came to the fore after the 1990s, NGOs who had worked with communities living in environmentally sensitive areas (forests, deserts, urban slums, hills) were called upon to offer their knowledge and expertise. This therefore led to an unprecedented growth in the numbers of NGOs. Several analysts attribute the rapid expansion in numbers of NGOs to increased funding from international donor agencies, and government, as a corollary of the greater recognition of NGO capabilities. However, this was obviously only one of the factors, the other major one being the need for social action, especially in the context of a changed social contract between state and citizens. NGOs were forced to take on new roles and activities, being called upon, for instance, to engage in activism, to give a voice to those who were affected by the processes of globalization, by criminalization of politics, administrative corruption, and human rights abuses under the guise of fighting terrorism. For fulfilling their activist roles, research, mobilization, legal action and media campaigns for advocacy came to be accepted as intrinsic and essential aspects of NGO work. The new roles and functions demanded by the times, as well as increased availability of foreign funding, led to a further amongst organizations for fund raising, marketing, and and evaluation, and to the emergence of many new types

service

globalization indigenous

specialization monitoring

of organizations. Associations of micro finance organizations like SADHAN, domestic networks and alliances such as Voluntary Action Network India (VANI), Voluntary Health Association of India (VHAI), Credibility Alliance, and chapters or branches of groupings such as Transparency International, Human Rights Initiative, Centre for Civil Society all became recognized as part of the NGO sector. NGOs also began demanding a more humane capitalism from the market sector in the form of a greater acceptance of corporate social responsibility. As grant income from government or foreign donors became insufficient to meet their greatly expanded needs, NGOs also began to explore different funding options. They explored private domestic sources like companies and Indian foundations as well as the Indian diaspora overseas. They considered using equity for their business operations, while grants funded their non-profit ones. They began to enter the marketplace themselves to turn market forces to the advantage of poorer groups. Thus alternative modes of production and organization and different legal options and organizational structures for conducting social activity began to be explored. There was experimentation with purely for-profit subsidiaries by poor producers, as well as combinations of non-profit and for-profit funding arrangements and organizational forms. Instead of being limited to incorporation as registered societies and trusts, many NGOs began to experiment with incorporation as non-profit companies and producers associations under Section 25 of the Companies Act, or using the company form as an addition to their existing non-profit legal status. These developments in turn led to the founding of new organizations such as Sampradaan Indian Centre for Centre for Advancement of Philanthropy, South Asian Fund Raising Group, Give Foundation, and Partners in Change to indigenous philanthropy, corporate social responsibility and to act as a bridge between donors and NGOs. The net result is a more diversified, more complex and more sophisticated sector. Many NGOs which started as parts of movements or one man-led social initiatives have today become more institutionalized, larger and more bureaucratic. Their growth can be attributed to availability of more funds, to ever increasing social needs and demands for their services, and also to growing capacities. According to one observer, it is also the result of the desire of NGO leadership to increase its span

international Commonwealth

activities,

intermediary Philanthropy, promote

of control, outreach, visibility and prominence within and outside the sector, both for reasons of policy advocacy but also for selfrealization and promotion of their own fiefdoms (Roubos 2006b).

Emergence of Global Civil Society Meanwhile, globalization threw up new issues such as a faster

depletion of the world’s renewable resources, a degradation of the

environment, and a quicker spread of communicable diseases such as HIV AIDS. All required social action at the global as well as national levels. The challenges posed by globalization led, on the one hand, to the emergence of a global civil society as a distinct category and to the introduction of new terms — ‘NPOs’ and ‘civil society’ — into the development discourse on the other, though the term NGO still continued to enjoy more popular currency. Civil society, as an intellectual response and as a collective action frame for NGOs campaigning against neo liberalism has been in many ways. Kaldor (2003), Edwards (1999, 2004b), and others view it essentially in normative terms, and believe it is a concept, which advances the values of social justice and human rights. Structurally, its institutional forms are distinct from those of the state, family and market and include an aggregation of formally constituted pluralistic private social institutions such as voluntary associations and citizen groups which mediate between the and the state. Historically, civil society has also been viewed as a counterweight to a dominant state reflected in efforts to create political space in which citizens could exercise their rights to free association and usually in opposition to the state. However, it is not that civil society be in opposition to the state always. Many times it can act in co-operation with the state for a healthy and development of society. It is now also used to include social movements and other non-formal groupings. The NGO or civil society role at the global level is seen by some as that of a countervailing force to the expanding influence of the markets, of putting a human face on capitalism, as well as protesting the declining authority of the state, which left some vulnerable to the unaccountable abuse of power. If in the 1980s the focus of civil

defined progressive individual

expression necessary democratic

society attention were the MNCs, which perpetuated or aggravated social and economic conditions in developing countries — for

example, Nestle for baby food promotion instead of breast milk, Brook Bond for conditions of tea workers, and Barclays Bank for having a truck with Apartheid — the attention in the 1990s shifted to aid that damaged the environment, and the failure of official aid

and loans. These shifts were in part due to the changing dynamics of civil society. By the 1990s, improving global communications

international

and information technology made the Northern activists aware of the

concerns of their Southern counterparts. The maturing of the civil society in Southern countries, especially in India, had led traditional donors to choose direct relations with Southern NGOs. They were thus able to put forth their view that rather than specific cases of

multinational

corporation (MNC) injustice, the inequities in the system itself were at fault. The market mechanism was loaded against poor people and poor countries, and this system needed reform. Economic justice became thus an important plank for international civil society,

and the World Bank and WTO became the targets of civil society, as witnessed by the demonstrations at the Bank, Fund meetings in Madrid in 1994, and the WTO meeting in Seattle. The global civil society also played an important role in getting

the Millennium Development Goals (MDGs) passed and is playing a positive part in monitoring their implementation by nations. The Goals grew out of a realization among the developed countries that increasing polarization between the haves and have-nots is a

preeminent moral and humanitarian challenge of our age. It led to the Millennium Declaration at the United Nations Millennium Summit in September 2000. The Declaration committed governments to work towards the adoption of the MDGs, and nearly 190 countries have

subsequently signed up to them. These goals are what national civil societies have striven for all along. The eight MDGs range from halving global poverty and hunger to protecting the environment, improving health and sanitation, and

tackling illiteracy and discrimination against women. Alongside the goals, a series of 18 targets were also drawn up to give the community a number of tangible improvements to aim for

international

within a fixed period of time, and also make it easier for them to

measure their progress to date.4 These were introduced as part of a wider attempt to encourage the international community to stop talking about making a difference in the developing world and join forces to start doing something about it. The target date for achieving these goals is 2015. While some significant progress is being made towards meeting some of the targets in some of the affected countries, in many cases progress is patchy, too slow or non-existent. For India it looks very unlikely that the MDGs will be achieved by 2015. The adoption of MDGs is one of the instances of global civil playing a critical role in global networking, bringing together advocates of environmental protection, supporters of regulations to combat climate change, indigenous rights campaigners and of sustainable development in the North and South. The was mostly operationalized through international NGOs which operate through lobbying, information exchange and personal and avoided the more contentious forms of collective action that began to appear across the globe in the mid-1990s, such as the protests at Seattle, Genoa and elsewhere over the World Bank and WTO policies. In spite of the fact that the global civil society movement is Western dominated, and both gender and racial inequalities are evident, 5 Indian NGOs have found it useful to become integrated with the global civil society. As members of the movement they have found a place at many of the international meetings such as at the Rio meetings on environment, and the WTO Qatar meetings, and so have been exposed to experiences, contacts and collective action frames which they could use in their own countries. This, combined with the increasing impact of global policies and markets on Indian development, led a few research and support

society

advocates project influence,

4 The eight MDGs are: Eradicate extreme poverty and hunger; Achieve

universal primary education; Promote gender equality and empower women; Reduce child mortality; Improve maternal health; Combat HIV and AIDS, malaria and other diseases; Ensure environmental sustainability; Develop a global for development. For more information on the Millennium Development Goals please see the UN Millennium Development Goals website: http://www. un.orgmillenniumgoals. 5 More than 85 per cent of NGOs with consultative status in the ECOSOC are from the North, and of the 738 NGOs accredited to the WTO’s 1999 Seattle conference 87 per cent came from industrialized countries. See Edwards and Gaventa (2001: 9), UNDP (2002: 8), Wild (2006: 5–6).

partnership

organizations — Participatory Research in Asia (PRIA), Netherlands Organization for International Development Co operation (NOVIB), ActionAid, The Energy Research Institute (TERI), Centre for Environment Education — to advocate that Indian NGOs should intervene not only at the local level but also at the global level. Indian NGOs thus began seeking strategic alliances, national and

international, with other parts of the broader national and global civil society such as academic institutions, business associations, the media, and international networks. At the same time they also the global civil society’s prerogative to speak on behalf of the

contested South, claiming that the priorities of the poor presented at international fora were the priorities interpreted by the dominant North

and not those of the South. However, some critics feel that Indian NGOs do not have the capacity to address the larger issues of globalization such as causes of poverty, and therefore do not try to influence policies of donors; instead they protest only government policies, and prepare proposals

to fit into donor policies as they are.6 Be that as it may, there is no denying the maturing and selfconfidence of the NGO sector. A two-way process of interaction and transfer of knowledge has begun which sees not only increased by Indian activists, development experts and NGOs in

participation

global meetings and organizations like World Alliance for Citizen

Participation (CIVICUS), but also them taking a lead in the and being asked for consultancy advice in other developing countries. More than 100 organizations/professionals from Indian NGOs have received international awards and recognitions, and several Indian NGOs and their staff have also been involved in

deliberations supporting development projects in other developing countries.

Finally, many Indian NGOs/NGO professionals have found a respected place in regional and global fora such as the UN, World Bank and WTO. It is perhaps symbolic of the change that has taken place that the Intergovernmental Panel on Climate Change (IPCC), which was awarded the 2007 Nobel Peace Prize jointly with Al Gore of the USA, for raising global awareness of climate change has, as

its Chair, Dr R.K. Pachauri, the head of the Indian environmental NGO TERI. 6 M.K. Bhat, in conversation with author, Bangalore, 15 September 2006.

In the words of a recent Ford Foundation report: ‘The dynamism of this voluntary sector and the variety of experiences, skills, and ideas it represents are probably without equal elsewhere in the world’ (Staples 1992: 29). The Indian NGO sector can truly be said to have ‘arrived’!

NGOs TODAY Indeed, the sector has come a long way since Independence. Most

importantly, it has seen a dramatic expansion in size. There are few accurate or comprehensive estimates of the size of the sector today, and there are wide variations in such estimates as exist. According to a survey undertaken by PRIA, Delhi, in December 2002, the most comprehensive so far, there are an estimated 1.2 million NPOs in India. These include not only NGOs as defined, but also a very wide

diversity of organizations such as youth clubs, mahila mandals, private schools, hospitals, charitable trusts and foundations, organizations, and so on. Of the total number, 50 per cent are unregistered, mostly rural and small, with 73.4 per cent having one or less paid staff, and only 8.5 per cent having paid staff above 10.

religious Several organizations based in urban areas also serve rural

communities. About 60 per cent of these organizations are concentrated

in the four states of West Bengal, Tamil Nadu, and Maharashtra and Uttar Pradesh (PRIA 2002). Though the number of NGOs seems very large, the number of exclusively developmental NGOs, the focus of this book, is small. An indication of this number can be had from the NGOs on the books

of government-funding bodies such as Central Social Welfare Board (CSWB), CAPART, KVIC and Ministry of Social Justice and Empowerment. Together they have about 10,000 on their books. The Planning Commission’s website on the voluntary sector7 lists 13,000 NGOs of which only 1,424 have been validated according to select criteria as being credible organizations. This does not indicate

that the others are not credible, only that the process of validation is incomplete. Another indication can be had from the number of organizations listed with the Home Ministry’s FCRA division for purposes of accepting foreign contributions. The number of NGOs with FCRA 7 See www.planningcommission.nic.in/data/ngo/

registration and those receiving prior permission for accepting foreign contributions was 33,937 registered and 522 granted prior

permission during the year 2006–7. Therefore, the number of active NGOs engaged in development work of all kinds may not be more than 40,000–45,000. Since there is an almost continuous expansion of NGOs, with new ones being registered every day, this number

may be somewhat more. Nearly 2.7 million persons are estimated to work full time on a paid basis in NGOs of all kinds; in addition would be those who work part time or on a voluntary basis. In total this is estimated to be 3.4

per cent of the total adult population in the country. Total receipts of NPOs for 1999–2000 were said to be Rs 179,220 million (PRIA 2002), and nationwide the share of NPO contribution to the GDP based on paid employment only, from ‘other services’ sector at

current

prices is 14.8 per cent and 33.6 per cent if volunteering is taken into account (ibid.). But not all accept this figure. According to the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, Indian NGOs contribute only 0.1 per cent of India’s GDP

in contrast to the Netherlands and the USA where the of the voluntary sector to GDP is as high as 4 per cent and 2.3 per cent respectively.8

contribution

Apart from its size, the scope of the sector is also truly amazing.

There is almost no field in which NGOs are not found, and the range of these is also astonishing. There are organizations offering networking and support, technical consultancy, fund-raising

services, and undertaking research and documentation, in addition

to those who provide the traditional development services in the fields of education, public health, agricultural development, and There are also advocacy organizations to secure rights for

disability. the disadvantaged; women’s organizations working for women’s empowerment and gender issues; those offering legal services; and intermediary funding organizations like Child Rights and You (CRY)

who both raise and disburse funds. There are also organizations to promote indigenous philanthropy; to train NGOs in mobilizing

resources from within the community; consumer action forums; organizations to promote corporate social responsibility; and environmental 8 Montek Singh Ahluwalia, speaking at the VANI National Convention 2006, quoted in VANI (2006: 6).

watchdogs. There is almost no field of endeavour which does not have an NGO working in the public interest. Far from being the simple, austere organizations of yesteryears, working in a few villages with dedicated staff leading frugal lives and working on a purely voluntary basis or on very low salaries, some of today’s NGOs, like TERI, Mysore Resettlement and Development Agency (MYRADA), Search, Development Alternatives and others are large, multilevel and multifunctional, and have large budgets and staff. Indian NGOs have also taken on two new roles in the post-1990 period in addition to those played earlier, viz. the role of social critic and advocate critiquing government policies and practices, and that of building civil society, globally and within India for reform of global institutions. NGOs began engaging more with the policy process in the post1990 era. The most common form of engagement is to resist policy reform by protesting against existing policy and call for its change, as in protests against locations of special economic zones (SEZs), steel plants or a dam at particular locations, mainly through popular mobilization. The second type of engagement is to get the voice of the unheard constituencies affected by a policy or scheme, heard by the policy makers (for instance, through organization of Jansunwais or public hearings) on issues such as public distribution system or shelters for pavement dwellers. The third is to act as a watchdog for proper implementation of programmes and public policies such as minimum wage legislation, allotment of land to the landless, and ban on child labour (Tandon, n.d.). The watchdog role is now considered as important, if not more, as micro development and provision of development goods and The watchwords have become critical collaboration with in anti-poverty programming and provision of development services, but constructive confrontation to oppose the state’s abuse of power in the economic or political arena. The civil society role includes enabling all citizens, including those on the margins, to participate in social action, policy processes, and governance at both national and international levels. Overall, NGOs have adopted two broad approaches: one, small-scale integrated development action, rural and urban, largely project-based and sectoral, and implemented through grass-roots

services. government

organizations. Two, to use social action to mobilize the poor to

demand better services and their rights in terms of better wages, access

to commons, property rights, and greater social justice, and to build alliances within the sector and outside it for the purpose. there has been a convergence between the two approaches, and the same organization adopts both as part of its work. Noting the changes in operating strategies of NGOs through different periods, an observer of the sector summed them up in the phrase, ‘For the people, with the people, and by the people.’9 The watchwords of NGOs today are ‘people centred’, ‘empowerment’ of the deprived sections, ‘civil society’, ‘social justice’, ‘human rights’, ‘self help’, ‘sustainable development’, and ‘participatory development’.

Increasingly

Achievements and Limitations NGOs have notched up several successes over the years (elaborated in Chapter 10) which, along with their greater numbers, has made for greater visibility. But the downside of this enhanced visibility is that it is also attracting greater public scrutiny. It is being recognized that though they have several strengths as change agents, NGOs have their limitations too. These are cited as limited geographical reach and institutional capacity in terms of resources, human and financial; low levels of self sustainability; isolation and lack of horizontal or coordination within civil society; small scale of lack of understanding of the broader social and economic context; and, difficulties in mobilizing the array of specialist skills required to solve problems of poverty (Clark 1991). For all their successes, disillusionment with NGOs is beginning to set in. Many are beginning to question whether they can be a for the state (see Chapter 10). Not surprisingly, there is a churning and a questioning within the sector itself of where the sector is headed. The malpractices in the sector, stemming from a lack of transparency and accountability in particular, have disturbed the sector’s leaders who have felt it to take steps for self-regulation to pre-empt stricter government control. Initiated in 2002, the two-year widespread consultation

communication interventions;

substitute

necessary

9 Phrase used by a Project director of one of (Inter Church Organization for Development Co-operation’s (or ICCO’s) partner organizations, quoted by Roubos (2006b).

process resulted in the establishment of the Credibility Alliance in 2004. It is a voluntary body to educate NGOs about the need for transparency and accountability and to meet the demand for an accrediting body to validate, if not actually to rate, NGOs on and performance. It is too early to evaluate its impact on the sector.

governance Challenges before Indian Voluntary Sector

Obviously, the major challenge before the sector today is how to restore people’s faith in voluntarism as an engine of social change and to motivate those working in the sector to work with the same outlook and spirit as before. There also are other challenges, both internal to the organizations and in the external environment related to the above. Internally these include ensuring good governance, transparency and good institution building and constructive work; giving women more space in the NGO domain and especially in ensuring sustainability both of the organizations themselves and their work; avoiding dependence of NGOs on donors and of on NGOs; and, retention of staff in the face of competition with the corporate sector and international organizations. There are also issues of democratic functioning: leadership (continuity and change); clarity of identity, role, and perspective; putting in place norms and standards; and, most of all, securing a stable resource base. Externally the challenges include getting academia interested in civic action and philanthropy to provide the sound and authentic knowledge and data base for policy action; changing power, and social relations through policy advocacy so that the poor and marginalized can benefit from development; making accountable; and, securing a more enabling and supportive legal, fiscal and administrative framework for the NGO sector. Other challenges include finding a voice for the poor and disadvantaged in policy making and stimulating voluntary action in underserved regions to overcome the uneven development of the sector today. If they are able to meet these challenges successfully, Indian NGOs will continue to play a valuable role in the foreseeable future. The chapters which follow consider how foreign aid has to the changes in the NGO sector described above, both positive and negative. But first it is necessary to place foreign aid in the context of the other sources of funds available to NGOs.

accountability, leadership; beneficiaries

property government

contributed

3 Of Sources and Resources ‘Resources steer organizations. How you raise the resources you need, and from which source has a strong influence on what an organization

is and what it can be.’ Alan Fowler (2000a: 53)

Anyone who is at all familiar with NGOs will be only too aware of the critical part availability of funds and sources of funds play in NGO lives because the most outstanding feature of NGO income is that it is sporadic, uncertain and volatile. It cannot be planned for with any degree of certainty. While government agencies or organizations can exercise some element of compulsion in securing their income (from taxes, or contractual obligations to pay for products and services), NGOs have no such option. Their income is dependent on voluntary giving by donors and therefore on donor motivation to give to the cause, and on whether they are happy about the work done. Hence, there is intense competition among NGOs to access and retain donors.

commercial

One of the inevitable questions asked of an NGO either by a

fellow NGO or others is, ‘How are you funded?’ This is not an idle question. The source of funds is as important for an NGO as the volume of funds available. It gives an indication of how credible and independent the organization is. Both credibility and independence are important if NGOs are to play the role of a watchdog on and business effectively. Unlike government or business NGOs derive their legitimacy in public eyes because they are supposed to embody moral authority derived from values of trust and selfless and dedicated action. Unlike business they are to the public whom they represent. Whereas business motives are suspect of being self-serving and driven by the profit motive, and government actions can be partisan, coercive, or driven by politics, NGOs are supposed to have public interest at heart. An NGO cannot always maintain its legitimacy, independence and ability to speak or act freely if it becomes identified with the position

government organizations

accountable

Foreign Aid for Indian NGOs

or interest of its source of funds. Though overtly there may be no strings attached to the funds, the funder is always in a position to the design and outcome of any activity through ‘interaction’, ‘advice’, ‘persuasion’ or outright diktat. Just as the state can direct change and development to achieve its vision of society by selectively granting or withholding subsidies from certain groups, activities or sectors, so also can other donors. Who funds the NGOs, in what manner, and for what purpose is as important as how much is given. Funding sources influence NGO policy choices, the outcome and implementation of any venture, and even more important for society, the nature and direction of the whole sector. It is therefore important to know the source of funds.

influence

therefore particular

Some sources of funds are inherently suspect, though what these

sources are can differ depending on the cultural and socio-political context. In general, multilateral or government funding of NGOs is not suspect because it is supposedly transparent and publicly though this is not always true. In recent years, massive citizen protests organized by NGOs and grass-roots movements against the G-8, the WTO, the World Bank and the International Monetary Fund (IMF), have challenged their unaccountable and undemocratic decision making. Government funding of right wing think tanks and fundamentalist NGOs in both developed and countries against the backdrop of terrorism, religious and environmental concerns, have brought this source too under scrutiny. The same sources of funds need not be suspect for all types of non-profit activity. A service providing organization which uses either corporate or international funds for purely relief or development may not suffer a loss of credibility, provided it accounts for the funds properly. However, an advocacy or research organization which uses these funds for research may come under a cloud. For instance, a research organization which comes up with the finding that butter does not increase cholesterol is likely to lose the credibility of its research if it is found that the research was sponsored by a dairy company. Failure to disclose sources of funds can impact adversely on an organization’s credibility, for public interest may conflict with the interest of the funder. Then again there is the question of ethics — of ends and means. Many NGOs would hesitate to use funds offered by say a tobacco

accountable,

developing fundamentalism,

products

Of Sources and Resources

company or arms dealer, even if the end purpose is entirely laudable, simply because the source of the money is considered tainted, and means are as important as ends. Others have no objection to using ‘tainted’ money, say ‘black’ money, because the end is good and those funds may otherwise be used either for wasteful consumption or some other harmful purpose. In short, it is not only the source of funds, but the cultural and

sociopolitical context in which the funds are given and received, the

nature of the cause or activity for which funds are used, the type of organization which uses the funds, the mode of transfer, and an own ethical stand and reputation which determine whether the credibility of a recipient NGO is affected or not. As mentioned earlier, NGO income everywhere comes from two main sources: self-generated income and voluntary giving. The income from voluntary giving is again of two kinds: donations or grants. Donations are generally unconditional and an NGO is free to use them in the way it thinks best, unless the donor specifies use. But a grant which is a commitment by the donor to make payments to an institution, to an agency or to an individual over a set period of time in furtherance of charitable, educational, or scientific invariably implies a conditional use of money where the donor specifies how the money is to be used, for what purpose, over what period and so on, and the NGO agrees to the conditions While donations are typical of individual and unorganized giving for charitable causes, grant funding is the model adopted by organizations interested in development such as national and government organizations, companies, and private trusts and foundations, both domestic and foreign. Though NGOs do raise resources through sale of products or generally the scope for self-generated income is limited because such activity is only incidental to the real mission of the organization which is essentially non-profit in nature, and to which it must devote its main effort. Besides, there are many functions such as research, advocacy, empowerment of the disadvantaged, or monitoring of government or business activities, which offer almost no scope for raising income from fees or ancillary business. Such work, which is in the public interest, can only exist if it is treated as a public good and is provided for by the government or some philanthropic agency. If NGOs are to be credible and able to act independently, without fear or favour, two conditions are necessary: adequate and stable

organization’s

purposes,

imposed.

international charitable services,

funding, and plural sources of support. Adequate and stable funding is necessary for the optimum functioning of civil society. The ability to attract and retain quality staff, to scale up, to institutionalize, and to replicate successes, is dependent on an assurance of a stable and adequate resource situation. Unfortunately, NGO needs are both vast and expanding but the funds available are not commensurate. The excessive claim-making characteristic of many NGOs today, as also their disinclination to share information or to collaborate with other NGOs, reflects their anxiety not to lose existing and potential donors given the sporadic and limited nature of funds available to them. Plural sources of support are necessary because, as the popular saying goes, he who pays the piper calls the tune. When money is given by way of a grant there are usually conditions attached to the way the money must be used. This enables the donor to dictate what is to be done with his money. He can thus influence the nature and direction of action by an NGO. The very fact that civil society voluntary action in the private arena, which may be in to the state, market, or extra national forces, makes it possible that any of them may withhold support in conflictual situations. If a plurality of actors is necessary to act as a counterforce to state power and market excesses, so also is a plurality of funding sources necessary for independence of action. It is for these two reasons that it is necessary to study the nature and sources of funds for NGOs, how they are given and for what purpose. This chapter analyses the various sources of funds available to NGOs, and their pros and cons, in order to put foreign aid in and to understand why it has assumed the importance it has in the NGO sector.

embodies opposition

perspective SOURCES OF FUNDS

Apart from self-generated income, the other sources from which Indian NGOs derive their income today are: • Indian private donors (individuals, religious organizations, charitable trusts and foundations, and companies) • Diasporaphilanthropy • Government • Foreign aid, official and private Each is considered in more detail ahead.

Indian Private Charitable Resources Individual Household Giving Though unacknowledged till recently, Indian charitable giving is sizable. According to Sampradaan Indian Centre for Philanthropy’s survey of household charitable giving in India in 2000, 96 per cent of upper- and middle-class households donated for charity the amount of Rs 16,160 million in that year, which is about a fifth of the foreign contributions of Rs 78,775 million received by NGOs in 2005–6. Moreover, since the survey covered only 6,400 in 14 of the largest Indian cities and was projected for only 28 per cent of the urban population, the actual figure of individual giving may be said to be much larger. However, of this total, less than a quarter (21 per cent) or Rs 335 million goes to NGOs, the rest going to individuals (50 per cent of the total ) and to religious organizations (29 per cent of the total) (SICP 2001a: 30). According to another survey (PRIA 2002), total charitable giving from households in India, rural and urban, was Rs 42,140 million per annum (1999–2000), about half of the foreign contributions in 2005–6. Unfortunately, no survey was undertaken later. Even if the higher figure is accepted, the fact is that the average size of donation by individual households is small and less useful to NGOs because it is ad hoc, unplanned charity, given by large numbers of individuals. This means NGOs cannot factor it into their regular budgets and plan accordingly. This source therefore has less potential for change than strategic giving by organizational donors. Besides, it is driven by compassion or emotional appeal, and, therefore, the bulk of it goes for humanitarian relief (22.1 per cent of amount given to NGOs) or social welfare (23.1 per cent of total going to NGOs).1 Research and advocacy organizations or those working on social justice issues, which do not have the same emotional appeal as some of the other sectors, find it very difficult to raise money from the public. The plus side is that most of the individual giving is unconditional and leaves the NGO free to use the money in the way it likes, for meeting overhead costs or programmes of own choice.

whopping

households household

1 Sampradaan Survey (SICP 2001a: 42), Table 14. For purposes of the Sampradaan’s survey, ‘social welfare’ included child welfare, old people, the handicapped, etc.

Indian Institutional Giving There are no quantitative estimates about how many (and how much) Indian institutional donors (business or private foundations

and trusts) contribute to NGOs, but reportedly the amounts are still very small compared to funding by government and foreign donors. There are figures for some trusts, such as the Tata Trusts, which are among the largest grant-making trusts in India, and these give some idea of how much money is disbursed to NGOs. In 2006–7, the Sir

Dorabji Tata Trust disbursed Rs 765.9 million (USD 18 million) to NGOs, which was 89 per cent of its total disbursement of Rs 860 million (USD 20.49 million) for the year. The Ratan Tata Trust, the second of the two largest Tata Trusts, disbursed Rs 1,110 million in 2007–8 of which about 70 per cent went to NGOs.2 In addition would be smaller sums contributed by the other Tata Trusts and other grant-making foundations. Though the number of grant-making

foundations and the amounts given by them is growing, not many NGOs consider Indian foundations as donors of significance for the following reasons. There are a very large number of charitable trusts in India, but there is little money for NGOs. For one, the composition of the Indian

foundation sector is skewed in terms of the size and income of trusts and

the scope of activity. Almost 85 per cent of the trusts are religious trusts that have to use their funds strictly for achieving their religious objectives. Of the non-religious trusts, many are defunct and exist only on paper. A vast majority have very low incomes amounting to only

a few thousand rupees. According to the Comptroller and Auditor General’s (CAG) Report No. 5 (1991–95), as of March 1992, of

the 72,129 trusts in India, approximately half, that is 39,485, had incomes below the taxable limit. An equally large number, 31,775, had incomes between the taxable limit and Rs 0.5 million. Only 869 had incomes above Rs 0.5 million per annum. Later statistics are not available but it would be safe to conjecture that the position is

not materially very different. One reason for a number of small, rather than a few big trusts, is the preference of individuals to set up a separate trust in the name of a loved one, or for a particular purpose instead of giving the money to already established organizations for charitable use. This tendency 2 See Sir Dorab Tata Trust (2007) and Sir Ratan Tata Trust (2008).

exists even in the case of large business houses which set up several small trusts, each for a particular purpose like setting up a college, a

hospital, a research institution, or for sports, instead of a single, large foundation with several programmes of giving in different fields of interest. Partly this is because of a preference for controlling and operating charitable projects, so that most of the trusts are ‘operating

foundations’; partly it is because such trusts are created in memory of somebody or to perpetuate a family or company name; and partly it is to avail of tax benefits. The preference for creating new and

several trusts, whether on the part of individuals or companies, is also

because other organizations working for the same purpose, do not exist or they have no knowledge of or confidence in them. These same reasons prompt more trusts to be ‘operating’ rather than ‘grant making’. They also militate against amalgamation of trusts, though

feasible under law. Most Indian foundations and charitable trusts — including the newer foundations such as Dr Reddy’s Foundation, the Azim Premji Foundation and the Infosys Foundation — prefer to undertake their

own developmental projects, though sometimes in partnership with NGOs. One consequence of this preference for direct operation rather than making grants is that charitable/developmental

organizations depend more on government and foreign donor agencies.

Not only is the income of most trusts small, it is also unutilized or

under-utilized. A 1991 study by the Consumer Education and Research Centre of Ahmedabad found that of the approximately 8,000 trusts in Ahmedabad registered with the Charities Commissioner, only 144

had incomes of over Rs 0.1 million, amounting in the aggregate to Rs 44.2 million. Of this, almost 16 per cent, or Rs 7.29 million was unused. Another 16 per cent was set aside as ‘reserve funds’, bringing the total of unutilized income to 32 per cent of an already

small amount. The Gujarat story is not untypical of the rest of India and though there have been no later studies to provide further data, anecdotal evidence suggests that the situation is unlikely to have improved.

Despite the fact that a few trusts are well organized and managed, there is lack of accountability on the part of many. Misutilization of funds for private benefit of trustees, lack of transparency in operation and absence of annual reports, characterize many trusts. Some trusts

are little more than tax dodges.

Not only are grant-making trusts few but they make less of an impact on social progress than they can because, except for a few such as the Tata Trusts, and some of the newer foundations, few have a defined, articulated and publicized policy for giving. Giving is ad hoc, in response to requests, rather than a result of active seeking out by the trusts of good projects or ideas to fund. Again, for many, giving is in the nature of a one-time donation, rather than a longterm commitment according to a planned strategy. Due to smallness of size, very few are professionally staffed; staff is limited to a secretary/accountant or clerical staff. In a corporate foundation, the work is looked after by some department in a Paucity of funds is one main cause, but it is also due to a lack of awareness of what professional philanthropy can accomplish. there is a disinclination to publicize giving programmes, partly due to fear of inability to cope with the extra requests, given the small income and limited staff. Overall, there is heavy emphasis on a few fields of interest or social sectors such as health, education and rural development, and a reluctance to branch out into green fields. Many emerging needs are not met, for example, rehabilitation of bonded and child labour, for education, monument conservation, experimental theatre, public interest litigation, consumer protection, and public libraries. Social justice concerns in particular are within the ken of very few, again with some notable exceptions like the Tata Trusts. Mostly, the trusts give awards for lifetime achievements; to individuals for education, including education abroad; and fellowships for a period of a year or two in a particular field. Some have endowed lecture series and Chairs. But few offer project or support to NGOs over a period of years such as is offered by foreign donors. While some may give donations for buildings and equipment, very rare is the offer of core support to an institution or organization for a period of years to enable it to establish itself and meet its running costs. Support for untested, experimental but promising work is even rarer. Finally, most trusts work in isolation with little dialogue with their peers, with government or with the grantee community, about expectations, rights and duties vis-à-vis the other (Sundar 1999b). Fortunately this scenario is changing, albeit slowly. Whether and how much this is due to interaction with foreign donors is examined in a later chapter.

company. Moreover,

museums

scholarships

institutional potentially

Corporate Giving Corporate philanthropy is no doubt growing. An Economic Times study of corporate donations made by public listed companies showed that they gave only Rs 2,800 million in FY 2005–6, though in FY 2004–5 the donations had jumped to Rs 4,000 million due to the Tsunami disaster. The number of companies who donated any amount, in FY 2006 also fell by a quarter to 520. As against the top 10 donors giving away Rs 1,700 million for various purposes in FY 2005, the top 10 donors in FY 2006 gave away only Rs 1,160 million.3 However, the data released by the income tax (IT) department, which gives exemptions for charitable contributions, shows a much higher figure of corporate donations in FY 2006. It indicates that companies donated Rs 2,20,000 million to charity in 2005–6, almost three times the inflow of foreign contributions to NGOs that year and the amount was estimated to be higher at Rs 3,00,000 million in 2006–7. 4 However, with the economy currently threatened by a recession, corporate giving is likely to be at a low level in the near future. Even when giving is at a high, it does not necessarily mean that the money went to NGOs. Though companies are looking to NGOs to partner them in community development work, businesses, by and large, prefer to carry out their own philanthropic programmes rather than give grants to NGOs for theirs. Therefore, a large portion of this donation is likely to have been diverted to in-house projects approved under Section 35 AC, which gives substantial tax benefits to donors. The revenue forgone statement of the IT department shows that the government lost Rs 350 million (and companies gained) due to such tax deductions, and the amount is likely to be Rs 510 million in 2006–7.5 In fact, there is much misuse of this section by and NGOs alike. If NGOs have a certification under Section 35, donors to these projects can get 100 per cent tax deduction for their donation. Unscrupulous companies seek out NGOs with such certification. Equally unscrupulous NGOs then give back the money to the company retaining some as commission.

companies

3 ‘Donation Drive: India Inc Cuts Back on Charity in 05’, Economic Times, New Delhi, 16 October 2006. 4 ‘Tax Hounds Chase Charity Black Sheep’, Economic Times, New Delhi, 8 March 2007. 5 Ibid.

Besides, the tendency is to concentrate giving in the sectors of health, education, public amenities, sports and arts. Natural resource management, community development and livelihood support are less popular, while consumer rights, legal aid, literacy, human rights and old age care have few takers. Most activities supported are located in the vicinity of company premises. The profit motive does not consistent spending on causes that are entirely distinct from business objectives, whether thematically or geographically. Business philanthropy is often likely to be a one-time or sporadic investment, in structures, rather than in services, and in nearby rather than distant locations or national causes. A firm could thus be expected to be far more amenable to setting up a college for women, in say Hyderabad, rather than to teach girls to read and write in the villages of Barmer district of Rajasthan. Further, while it would do an admirable job of the former, its professional expertise would be severely limited in the latter (Singh 2001, Sundar 2000: 304). What this suggests is that social investment by business is unlikely to be directed towards less known or less visible public causes.

encourage

probably

There is another reason why NGO work does not benefit greatly

from corporate philanthropy. Not many companies have a policy for corporate philanthropy and there is ad hocism in their giving. What companies give is often in the form of sponsorships or purchase of products or services, rather than outright grants. In sum, the of making a large impact on, or bringing about change in, society through corporate philanthropy is not very significant as of now.

likelihood

Giving by Religious Organizations As for donations by religious organizations, while they receive a significant portion of charitable giving by individuals (29 per cent according to the Sampradaan survey) they spend most of it on their own activities, including social development, and give very little to NGOs (SICP 2001a).

Diaspora Philanthropy Diaspora philanthropy, that is giving by people of Indian origin settled abroad, is mentioned separately as a resource because it does not quite fit in the domestic giving category, as it is given by people overseas. It also does not fit in with the private foreign donor because many of the givers are Indian citizens, and the FCRA does not treat such donations as ‘foreign contributions’ although, if

category

the donating individuals or organizations are non-Indians, even though of Indian origin, their contributions are counted under the FCRA. Diaspora philanthropy is a source that has recently begun to grow

in size and importance. In the decade of 1991–2000, total foreign contributions from Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs) were estimated at Rs 39,246.3 millions or US $835 million. Giving by the Indian diaspora in America topped the list at Rs 52,603.7 million. During 1999–2000, 17 of the Indian states received foreign contributions of over Rs 150 million or $ 3.2 million. The highest amount was received for rural development, followed by health, orphan care, and for poor, aged, and destitute (GOI 2001: 491–92, chapter 34). Diaspora philanthropy is only now becoming an important source, though it may prove more significant in the future, especially because it does not require FCRA clearance if the givers are Indian citizens. However, as yet it cannot compare to government or foreign funds because it too suffers from some of the same drawbacks as domestic individual giving. Much of it is religiously motivated giving and goes primarily to religious organizations in India such as the Ramakrishna Mission, Satya Sai Trust, Tirupati Devasthanam and others, or to fundamentalist religious organizations. Though secular funds may go to NGOs, a large amount goes for relief and rehabilitation of victims of natural disasters, or for family, religious and village purposes, rather than to activities for social change. There is a preference for building the physical infrastructure in their home regions rather than giving for ‘soft’ concerns such as changing attitudes and values, and there is reluctance to fund projects that seek to change power relations or to redress the balance of social injustice. Unless educated about issues in India, not too many give to projects for of women or of scheduled castes and tribes. The more organized or institutional givers are not always aware of the complexity of development issues in India. They tend to their experience of USA or other countries where they are based to Indian development and feel they know what good development is and how it should be done. Consequently, their interventions are not always welcomed by NGOs. Finally, many NRIs are more in wealth creation, and not in philanthropy, in investment, and not social investment. There are many portals like Give Foundation, Indian NGOs.com and others that are now educating NRIs and other international

development empowerment

project interested

givers about NGO projects and development issues and this may change the quality of their aid in future. To summarize, though contributions from all private indigenous sources may be sizable, from any one source they do not make much impact. While charity in India is still largely funded by indigenous funds, development funding by domestic private sources is taking time to mature in India. NGOs have therefore come to depend either on government funding or foreign donors for development funds.

Government Funding of NGOs Official government support to Indian NGOs has existed since the early 1950s. The government recognized the potential of voluntary action for supplementing and complementing its efforts as early as the First Five Year Plan itself. Since then it has provided increasing amounts of funds to voluntary organizations through the central and state Social Welfare Boards and other government ministries and so that the government is today perhaps the major source of funds for NGOs. In the Seventh Plan, an allocation of Rs 1,500 million was made for NGOs. In the Ninth Plan, Rs 13,990 million was actually disbursed to NGOs from the central and state budgets of various ministries and departments against an outlay of Rs 16,265.2 million.6 The amount allocated increased to Rs 28,781.7 million in the Tenth Plan (2002–7) for just eight ministries. The exact figure of total government funding of NGOs is not available since funds flow to NGOs from different levels of (state, central, and local) as well as several quasi government organizations such as the central and state welfare boards, CAPART and KVIC. No attempt has been made by government or by research organizations to calculate the total government funding going to NGOs. Thus, currently we have only a partial picture. CAPART, the government’s main funding arm for rural projects of NGOs, has disbursed Rs 8,894.6 million from 1986 to end of 31 March 2006. In 2006–7 it distributed Rs 661.7 million (CAPART 2008). The size of grants is mostly small, with only 26 NGOs getting grants of Rs 1 million or more in 2005–6 (CAPART 2007).

departments

government

independent development

6 Planning Commission website: www.pcserver.nic.in/ngo allocation 10th. asp?stednext=99&fg1=1

While government support is undoubtedly sizable in the whole, from the point of view of individual NGOs the resources are both in terms of quantity (very small size of grants), as well as quality, and also difficult to access. Most of the funds are given only according to the rules of specific schemes and cannot be negotiated. The amounts provided for various items such as staff costs are totally divorced from ground realities. There is no flexibility to meet actual situations and needs. Innovation and need flexible funding, and are discouraged by a rigid regime. There is also red tape and delay in getting the funds, as well as a need to pay under the counter to actually get the funds released. Some allege that this commission is sometimes as high as 30 per cent. The government has also not played a proactive role in building partnerships with good NGOs (possibly because doing so may open it to charges of partisanship) and has contented itself with funding or not funding those who apply for its funds. Additionally, the funds NGOs mostly for providing services in the social sector to supplement or to substitute its own programmes. The funds are, therefore, more in the nature of contractual fees rather than venture funds for doing innovative and creative work which can society. NGOs that take adversarial positions in pursuance of their watchdog role run the risk of having their grants stopped if they fall foul of the establishment or powerful politicians.

inadequate,

independently

creativity funding

government transform

Foreign Aid Foreign developmental assistance consists in the main of two

categories: Official Development Assistance (ODA) given directly or indirectly to NGOs, and private philanthropic giving. This last includes giving by foundations, international NGOs like OXFAM and

Action Aid, wealthy families, service organizations such as Rotary International, individuals who give either directly or through some organization, corporate giving, and private venture capital. While the last four sources are growing in volume and significance, so far the only two sources capable of making a systemic impact on the NGO sector, and through it on Indian society, have been official aid and private institutional philanthropic giving. A large part of official aid flows to government departments or

parastatals, and only some of it goes to NGOs as part of the GONGO collaboration where NGOs are implementers and facilitators.

A small fraction of the aid flows directly to NGOs and since 2004 this has been captured in the FCRA figures (earlier, giving to NGOs by bilateral or multilateral donors directly did not require FCRA registration). Official aid has been significant for NGOs, not only for its larger volume per NGO, but for its quality; it offers flexibility and has been made available for experimental work, as well as a wide range of non-service providing activities such as research, advocacy, and the like. The figures compiled by the FCRA division of the Home Ministry give an indication of the volume of private philanthropic assistance going to civil society in India, and the number of receiving it. It is necessary to note here that the number of organizations registered does not indicate that they all received Only the figure of reporting organizations indicates how many actually received the amounts that year. Since many do not report, in spite of being statutorily so obliged, the actual number of NGOs who receive funds is likely to be greater than mentioned under this head. One can, however, say with confidence that since there is a danger of having the registration certificate for non-reporting, most major and bona fide organizations would be reporting. Compliance has also improved over the years. Therefore, one can take reporting organizations as a good indicator of the numbers who receive foreign contributions.

organizations contributions. organizations cancelled Official Developmental Aid (ODA)

Official Developmental Aid or ODA consists of both loans and grants, from bilateral and multilateral donors. Over the period 1968–97, India received in total $96,852 million of net ODA (net of repayment of debt), of which, • 0.9 per cent came from the Organization of the Petroleum Exporting Countries (OPEC) • 40.7 per cent from multilateral organizations • 58.4 per cent from bilateral Development Assistance (DAC) donors

Committee

During this period bilateral donors were clearly more important for India than the other sources. ODA has shown an almost constant decline, especially from 1970 onwards. During the 1970s, the average annual net ODA

disbursements from all sources were $3,660 million. By 1997, the average ODA disbursements were down to $2,120 million (Cox et al. 2002: 29). In 2008–9, the total net external assistance to India (net of repayments and interest payments), including both grants and loans, was Rs. 123,510 million ($2520.6 million), the larger figure being due to increase in multilateral loans.7 However, it was only 1.3 per cent of total receipts of the GOI.8 In the 1960s, aid to India used to finance a substantial part of the Indian budget, but since the 1990s, aid as a proportion of either GNP or public investment has become insignificant. Even as a proportion of total capital flows, the significance of aid has decreased. From a high of 26.2 per cent in 1990–91, external assistance as a of total capital flows has come down to 6.9 per cent in 2005–6, while foreign direct investment 9 and private remittances (estimated at US $24 billion currently)10 have overtaken external assistance in terms of importance, though in social sectors aid still counts for a lot. There have been changes also in the nature and composition of donor assistance. While in the 1970s and 1980s the dominant mode of assistance for bilateral donors was to give import support or loans partly tied to procurement in the donor country, with a small portion earmarked for projects with a social and economic development dimension, after the 1990s most donors adopted new strategies laying more stress on direct poverty reduction. The function of aid has also changed. In the early years its role was largely of helping ease macroeconomic constraints especially in supply of food, both through direct import of food as well as of agricultural productivity and irrigation capability. Lately it has been used to remove bottlenecks in the infrastructure sector, for human resources development, and for the social sector— for urban slum upgrading, rural primary health care, family planning,

percentage

subsidized

enhancement

7 GOI Receipts Budget 2009–10, Statements 1 and 2, Finance Ministry,

Government of India. Rupee–dollar exchange rate taken at 49:1 as of 25 February 2009. 8 Ibid. 9 FDI was estimated to be US $24.5 billion in 2007–8, and estimated to go up to US $35 billion in 2008–9; Commerce Minister Kamal Nath quoted in ‘Safe Haven: FDI leaps 56% in 08’, Times of India, New Delhi, 3 May 2008. 10 Ila Patnaik, ‘Home is Where the Dollar Goes’,Indian Express, New Delhi, 14 March 2008.

nutritional assistance, and policy reform. This has tended to benefit the poor more directly than the earlier agricultural development, which benefited the upper-class farmers in the absence of land and other structural reforms.11 Similarly, there has been a change in the proportion of aid received from multilateral as against bilateral donors. In 1969, more than 83 per cent of all net ODA to India came from bilateral DAC donors and the remaining 17 per cent from multilateral sources. In a reversal, the ratio of multilateral to bilateral aid is now around 80:20 percent. However, since only the grant assistance is relevant for our purpose, bilateral assistance is still the more important. In 2008–9, grant assistance in cash and commodity was Rs 27,480 million, of which the bilateral share was Rs 20,477 million, while the balance came from multilateral agencies and international bodies like the United Nations Development Program (UNDP), World Health Organization (WHO), and Global Environment Facility (GEF).12 Finally, only a small fraction even of the grant assistance, from whatever source, goes to NGOs, the exact figure not being available. Amongst official sources, the bilateral source has been, and continues to be, more important for NGOs.

dramatic

Private Philanthropic Aid In addition to official aid, Indian NGOs receive private philanthropic assistance from abroad. In 1984–85 (when figures first began to be compiled), private assistance amounted to Rs 2,530 million, and the number of organizations registered with the FCRA, 3,612. Since then the amount of aid received by non-profit organizations has increased exponentially at an average of 15 per cent per year. There was a sudden jump in the 1990s, and by 2002–3 the amount had increased to Rs 50,465.1 million and the number of organizations who filed reports about receipt rose to 16,590 (those with FCRA registration were 26,404). In 2004–5, there was a sharp increase in assistance because of the Tsunami. Surprisingly, there was, once again, a steep increase of 56 per cent over the previous year in 2006–07, without any obvious cause such as the Tsunami, the amount received as

philanthropic

11 See Cassen (1993), Annexure B. 12 Government of India Interim Budget 2009–10, Finance Ministry, Annexure 2, Statement 2 of Receipts Budget.

foreign contributions being an unprecedented Rs 1,22,896.3 million. Though 19,011 associations reported to the authorities, of these, only 11,581 actually received any money because 7,430 associations reported nil receipt.13 The average contribution received by each organization has also

steadily gone up and in 2006–7 was Rs 10 million, though admittedly this figure is meaningless since small organizations do not receive this much and big organizations receive much more. Table 3.1 the position since 1990, as the statistics for the earlier years are incomplete. Table 3.2 looks at the top 10 organizations who have received funds over the years.

summarizes Table 3.1 Table 3. 1 of Foreign Contribution Contribution Received Amount of Received Amount

(In Rupees Million) No. of Registered

Associations

Year

9,317

1990

No.

of Reporting

Associations N/A

Total Receipts tin Millions of

Rupees) 9,454.7

% Increase Over Previous Year 56.01

(over 1988) N/A

1991-92

(15 months) 1992-93

N/A

1993-94 1994-95

1995-96 1996-97 1997-98

1998-99 1999-2000 2000-1 2001-2

2002-3 2003-4 2004-5

2005-6 2006-7

Source:

15,039 15,723 16,740 17,723 18,489 19,834 21,244 22,924 24,563 26,404 28,351 30,321 32,000 33,937

9,013 or 9,012 10,201 10,963 11,422 10,950 12,136 12,198 13,775 13,986 14,598 15,598 16,590 17,145 18,540 18,570 19,011

14,121.3

49.36

15,843.0 18,657.0 18,924.3 21,688.4 25,716.9 28,645.1 34,029.0 39,246.3 45,352.3 48,705.2 50,465.1 51,054.6 62,566.8 78,775.7 122,896.3

12.19 17.76 1.43 14.61 18.57 11,39

18.8 15.33

15.56 7.39

3.58 1.17 22.55 25.9 56

Compiled from the Annual Reports of the FCRA Division, Ministry of Home Affairs, Government of India, New Delhi.

13 Annual Report 2006–7, FCRA Division, Ministry of Home Affairs,

Government of India.

Source:

10

9

Compiled from the

161.4

167.1

177.1

193.2

198.5

201.5

217

247.7

268.7

403.7

Amount Ì11 Rs Million

Table 3.2

2000-1

Recipient Organizations at

OXFAM India Trust, Delhi

Sanstha, Gujarat Caritas India, Delhi Gospel for Asia, Kerala ActionAid, Karnataka

Bochasanwasi Akshar Purushottam Swaminarayan

465.4

518.8

580.9

600.9

641.4

643.9

676.7

748.8

854.2

881.8

Amount Ì11 Rs Million

Believers Church India, Kerala Caritas India, Delhi Rural Development Trust, Andhra Pradesh Handmaids of Sacred Heart Jesus Society, Maharashtra

Help in Suffering His Sanctuary, Rajasthan

World Vision of India, Tamil Nadu North Karnataka Jesuit Educational & Charitable Society, Karnataka

3328.6

Santhome Trust of Kalyan, Maharashtra Sovereign Order of Malta, Delhi

1183.8

1218.6

1267.6

1489.6

2087

2295.5

2560.6

3007.9

6213.4

Ranchi Jesuits, Jharkhand

Amount in Rs Million

[In Rupees Million) 2006-7

Recipient Associations

Periodic Intervals Interval s

Sri Sathya Sai Central Trust, Andhra Pradesh World Vision India, Tamil Nadu The Watch Tower Bible Tract & Society of India, Maharashtra Foster Parents Plan International, Delhi Rural Development Trust, Andhra Pradesh

Recipient Associations

10

Annual Reports of the F CR A Division, Ministry of Home Affairs, Government of India.

Community Aid Sponsorship Project, MHA

ActionAid, Karnataka MYRADA, Karnataka Gospel for Asia, Kerala

7

8

CSI Council for Child Care, Karnataka

Maharishi Veda Vigyan Vishwa Vidyapeetham, Delhi Save the Children Fund, Delhi

Foster Parents Plan International, Delhi World Vision India, Tamil Nadu Caritas India, Delhi

6

5

4

3

2

1

Rank Recipient Associations

1993-94

Top

From the statistics it is clear that only a few purely developmental NGOs such as MYRADA, Bangalore, Maharishi Vedvigyan Viswa Vidyapith of Delhi, Council for Child Care, Karnataka, and Aid Sponsorship Project of Maharashtra figured among the

Community recipients such as Foster Parents Plan International, ActionAid India, top 10 recipients in the early years. Many of the other top

OXFAM India Trust, World Vision, and SOS Children’s Villages were receiving funds from their parent organizations for their own establishment expenses in addition to those for development work. Others were religious organizations such as World Vision of India, CARITAS, CASA, and Sri Sathya Sai Central Trust Andhra Pradesh,

and Mata Amritananadamayi Math, Kerala, who similarly received money from either parent organizations or other donors from abroad, for immediate distress relief as well as long-term development. Important development NGOs like Women’s Development Trust,

Andhra Pradesh, SOS Children’s Villages, Delhi and Society for Development Alternatives, Delhi, have figured lower down. The

trend of religious organizations dominating the ranks has continued. In fact, in 2006–7 nine out of the 10 receivers were religious the change being noticeable even over 2005–6, and this perhaps explains the sharp spike in contributions in 2006–7. In the past few years, religious activity in India, funded from abroad, has

organizations,

noticeably increased.

As for secular organizations, Development Alternatives was not even in the top 15 in 2006–7. The purely development organizations who had made it to the top 15 were international NGOs like ActionAid Karnataka and Plan International Delhi, and others like the Board for Integrated Rural Development and Society for Rural Education & Development, both from Tamil Nadu.

If one looks at donor contributions to NGOs according to size of grants given (see Table 3.3), it is seen that a few well funded NGOs receive the large bulk of funds, while the majority of NGOs receive smaller amounts, and while the numbers at the bottom of the pile have remained more or less the same, the numbers at the top have sharply.14 As will be seen later, this bears out the recent change in donor policy to fund the bigger and more established organizations, rather than numbers of small ones.

increased 14 Ibid.

Table 3. 3 3 Table 3. Break up of Reporting Associations According to Amounts Amounts Received Received Break up of Reporting Associations According to

(In Rupees Million) Below Year

2001-2 2002-3 2003^ 2004-5 2005-6 2006-7

Rs 10

m

14,761 15,650 16,187 17,373 17,258 17,352

Between Rs 10—SO

m

Between Rs 50—100 m

Above Rs 100 m

721

77

59

798

76

66

818

83

57

985

112 143

70

99

169

147

1,070 1,343

Table 3.4 shows the geographical distribution of aid. It is evident from this that more NGOs from states in the south, with the exception of Delhi capital region, have received foreign funding than those in the north and north-east, at least in the initial period.

The latter have come into the picture only recently, again as a result of a donor policy change. From 1991–92 to 2004–5, the top five positions have been

occupied by the same states, viz. Tamil Nadu, Delhi, Andhra Pradesh,

Karnataka and Maharashtra, though their inter se ranking might have varied from year to year. Tamil Nadu has remained in the first position most of the time, with Delhi a close second. But in 2006–7, Kerala and Jharkhand (with its large tribal population) have

emerged among the top 10 recipients. The BIMARU states of Bihar, (now bifurcated into Bihar and Jharkhand), Madhya Pradesh, Rajasthan,Uttar Pradesh, which have the lowest rank in the human development index with all the major development parameters being

adverse, together receive less than 10 per cent of the total foreign contributions. The same pattern is found in the distribution of aid according to districts. It is the most developed metros, and the districts of which

they are a part, which receive the maximum amount of funds. In 2006–7, the seven districts of Delhi along with Chennai, Bangalore, Mumbai, Hyderabad, Kolkata, and Anantapur in Andhra Pradesh received 27 per cent of the total contributions. It is worth noting

that the new entrants to the top ranks — Ranchi (at No. 3), Jaipur (No. 6), Uttar Kannada (No. 7) and Ahmedabad (No. 10) — are also those where the recipient organizations are among the top 15 and are

366 8

3

803

9

m

1,341 2,074

-

6,495 7,631 5,895 4,900 4,669 3,603 2,568

Amt in

5

3

-

6

8

10

11

13

17

14

% of Total

9

12

15

8

6

4

5

3

2

1

R

Note: Source:

22,443 21,867 12,110 10,771 11,955 8,844 5,169 1,314 1,912 3,890 2,165 7,256

m m

6

2

3

2

1

4

7

10

9

10

18

18

% of Total

2006--7

(In Rupees Million)

Araf

Rank; Figures have been rounded off to the nearest decimal. Annual Reports of the F CR A Division, Ministry of Home Affairs, Government of India.

Compiled from the

R=

7

-

-

9

3

6 7

9

6 3

840

5

11

4

3

14 11

1

2

R

13

16

% of Total

702

m

10

8

7

3,464 3,527 2,742 2,749 2,423 1,583

4,050

Amt in

2000--1

Jharkhand

6

Table 3.4 States at Periodic Intervals

1996-97

Recipient

11

-

4

9 6

5

10

10

2

8

3

1

R

10

Orissa

-

478

8

9

Gujarat

3

2.6

849

7

3

5

4

6

17

19

2,656 2,267 1,175 1,481 1,326 1,527

% of Total

1

2

m

Tamil Nadu Delhi Andhra Pradesh Karnataka Maharashtra Kerala West Bengal Bihar Uttar Pradesh

Amt in

R

States

1991--92

Top

Table 3. 5 Table 3.5 15 Purposes for for which which Contributions Contributions Received, 2006-7 Received, 2006–7 Top 15

(In Rupees Million) Amount of Contribution

(In

Purpose

No.

8

Establishment expenses Rural development Relief/rehabilitation of victims of natural calamities Construction and maintenance of school/ college Welfare of children Grant of stipend/scholarship/assistance in cash and kind to poor/deserving children Welfare of orphans Construction/repair/maintenance of places of

9

worship Construction/running of hostel for

1 2 3 4 5 6 7

poor students

Rs

Million)

8,166.1 8,013.4 5,095.7 4,688.5 4,064.5 3,217.1 2,926.4 2,300.8

10

Research

11

Awareness about AIDS/treatment and

2,018.2 1,916,8 1,908.9

12

rehabilitation of persons affected by AIDS Construction/running of

1,709.2

13

hospital/dispensary/clinic Maintenance of priests/preachers/other religious

1,581.8

14 15

functionaries Religious school/education of priests and preachers Construction and management of orphanage

Source:

1,404.5 1,381.0

Annual Report 2006-7, FCRA Division, Ministry of Home Affairs, Government of India.

largely religious organizations. These areas are also the ones that have witnessed more religious fundamentalism in recent times. Table 3.5 gives top 15 purposes for which the funds have been received in 2006–7. For the purpose of classification and tabulation of foreign funding, 56 different purposes have been prescribed under the FCRA Rules, 1976. From the above it is clear that of the total of Rs 122,896.3 million received, education (Nos 4, 6, 9, 10) received only 9.6 per cent, health 2.9 per cent, a little more than half of which went to AIDS, and rural development 6.5 per cent. Thus, purely long-term development may be said to have received only 19 per cent of the total. Establishment

expenses were met by 6.6 per cent of the contributions, while purely religious purposes (Nos 8, 13, 14) received 4.3 per cent of the total contributions. The balance (70 per cent) can be said to have gone into welfare or charitable activities. Thus it would appear that the bulk of the funds go to non-development purposes (relief, charity, establishment, and religious purposes) and only about 19 per cent on long-term development activities. Thus, though the absolute quantum of aid appears large, the portion that can make a real dent on poverty is small, though it is true that some of the amounts said to be going for relief and rehabilitation would also have some portion going to long-term development. Another noteworthy feature is that of the top 15 purposes, around 8 per cent out of 19 per cent goes into the ‘hardware’ of development, that is purely construction activities, rather than into the ‘soft’ aspects of changing attitudes, and life and work patterns. The implications of this distribution of funding among NGOs, regions and purposes are examined in later chapters.

RELATIVE IMPORTANCE OF SOURCES How much influence a particular source wields depends on the importance of the source for an individual organization as well as for the sector as a whole. There are few authoritative statistics of the relative importance of the different sources for Indian NGOs. Some believe that NGO dependence on foreign funds is not substantial. In a chapter titled, ‘Who’s Afraid of Foreign Funds’, Samuel (2000c) claims that development organizations receive much less foreign funding than is generally perceived. In support he quotes a study (no citation given) which had analysed the 1994 FCRA data to show that less than Rs 5,000 million of the Rs 25,716.9 million total contributions received that year went to voluntary development organizations and other professional social change institutions; and that of the first 25 top recipients only two organizations can be considered indigenous social development organizations. 10 of the recipients are Indian branches/regional offices of international organizations such as Foster Parents Plan International, etc. The others are religious organizations such as Sri Sathya Sai Central Trust (Andhra Pradesh) and Maharishi Veda Vigyan Vishwa Vidyapeetham (Samuel 2000c: 141–50). AVARD, a network of NGOs working on rural development, which has 650 members, similarly claims that less than one-third

relative

voluntary

of their members receive foreign money. P.M. Tripathi, AVARD’s director, avers that the dependency of the Indian voluntary sector on foreign money is a myth.15 On the other hand, almost 50 per cent of the Confederation of Indian Organizations for Service and Advocacy’s (CIOSA’s) members, a network of 120 NGOs in south India, are recipients of FCRA funds. The only comprehensive survey of the non-profit sector carried out by PRIA (2002), Delhi, mentions that of the Rs 179,220 million mobilized by Indian non-profit organizations in India in 2000, • 32.4 per cent came from government • 16.6 per cent was from Indian and foreign donors • 51 per cent was self-generated PRIA’s survey also claims that overall, foreign funds in total receipts of NPOs account for only 7.4 per cent of their income, and that even in Tamil Nadu and Delhi, which together and individually receive the maximum amounts of development assistance, foreign funds constituted only one-eighth of total receipts (13.2 per cent and 13.5 per cent respectively). But these figures are not necessarily accepted by all. My own reading of PRIA’s estimate of foreign contribution is that it is likely to be a gross underestimate for two reasons. One, the survey was of NPOs and included informal groupings, movements, and small SHGs, associations, and others, and not only NGOs. It also masks the fact that what was received was by a few NGOs, who themselves constituted a very small proportion of the total number of NPOs in the sector. Two, this is also evident from the state-level surveys which fed into PRIA’s main national report. For instance, the survey for Maharashtra state showed that there were about 88,000 active NPOs in 1999–2000 in Maharashtra of which 60 per cent were in rural areas and 40 per cent in urban areas. About 77 per cent were formally registered and 23 per cent unregistered informal units. Of these, a sample of 312 NPOs was surveyed from seven districts and the results projected. The findings showed that the receipts of the NPO sector in Maharashtra showed an increasing trend over time,

community-based developmental

15 Interview with P.M. Tripathi, Director, AVARD, New Delhi, 13 October 2006.

growing at about 10.23 per cent per annum. In 1999–2000, the average receipts were Rs 0.12 million per NPO, and for the sector

as a whole were Rs 10,550 million in 1999–2000. Of these, self-generated sources (community contribution, fees

and service charges, and membership fees) contributed the most to total income of an NPO, that is 53 per cent. Grants accounted for 24

per cent and loans were 13 per cent. However, the figures for grants related mostly to government grants and foreign grants were not at all. Only donations from foreign sources were mentioned

reported

as being Rs 305.2 million or only 2.9 per cent of the total receipts.

The survey admits that either the NPOs receiving foreign funds have not been adequately netted, or the units falling in the sample did not respond properly. This being so, the low, all-India figure of NPOs receiving only 7.4 per cent of their income from foreign sources is

clearly an underestimate. Anecdotal evidence suggests that for a large majority of NPOsinformal movements and groupings, SHGs, neighbourhood

associations of all kinds, membership bodies, etc — self-generated resources

are indeed the main source of funds. But for developmental NGOs, which are a distinct subset of NPOs, the only significant sources are government and foreign donors, and that external assistance is more significant than the above figures suggest. Clearly, more work is

called for in this vital area. In the absence of authoritative statistics the extent of dependence can only be ascertained from circumstantial evidence and the FCRA statistics. There are two distinct aspects to the question of dependency,

both of which are important. One is the proportion of its budget an NGO receives from foreign funds, and the other is the proportion of the sector, or the number of NGOs in the sector who receive foreign funds. The first would show whether individual organizations are

foreign aid dependent, and the second, whether the sector as a whole is aid dependent. According to a 1985 UNICEF report quoted in Samuel (2000b: 48), about half the estimated annual investment in the voluntary action

sector came from foreign agencies; similarly, a survey of Indian

grassroots organizations (GROs) also quoted in the same work (date not

given or citation), apparently concluded that they have received about

50 per cent of their budget from foreign donors, 30 per cent from

local contributions and 20 per cent from government.

The questionnaires requesting this information for this book show a variable position. Of the 10 respondents from different parts of India, for five respondents, aid was around 30 per cent of their budget, for four it was between 70–90 per cent, and one received a negligible amount. Of the four in whose budget aid was a large proportion, three had budgets near or over Rs 10 million and could be considered big NGOs and were based in large metros. Other well known big NGOs (non-respondents) derive 50–80 per cent of their budget from foreign aid. But then, of the five in whose budget aid was only one-third the total, four had budgets near or over Rs 10 million, that is were big NGOs. So at best all that could be said was that the less aid dependent but big NGOs had diversified their sources of income, while still being big recipients of aid. However, some NGOs which had high dependency on foreign donors earlier, have managed to bring it down to 30 per cent on an average, in spite of having large budgets (for example, The Banyan, CYDA –[40 per cent], Manav Kalyan Trust and SVYM [35 per cent]). The interviews for the book, which were largely with heads of large NGOs in metro towns and considered leaders of the sector, showed that with the exception of Give Foundation, Mumbai, which did not take foreign aid in principle, aid was a large proportion of the budgets of the rest till recently, and in many cases, continues to be so.16 Without generalizing too much it appears that those who are providers and are working with constituencies such as children, tribals and the disabled have been able to mobilize indigenous funds from government, companies or individuals, while those whose work is largely advocacy, support or research, that is national level work, have found it imperative to depend on foreign donors, and more difficult to lessen their dependence on external donors. As for the other aspect, the sector’s dependence on aid, if the sector (meaning only the development NGOs) is said to comprise approximately 40,000 NGOs, and of these only 11,581 are actually receiving any contribution, if we consider the 2006–7 figures, then

considered

service

intermediary

16 Aid dependency of some leaders in the field: PRIA, 80 per cent; Pratham (budget Rs 450 million), 70 per cent; ICCR, Chennai, 50 per cent; VANI (budget Rs 60 million), 83 per cent; VHAI, 70 per cent; PIC, 90 per cent; CSE, 60 per cent. This information is as per their annual reports or statements made during interviews.

only 29 per cent are receiving foreign contributions and the sector cannot be said to be heavily dependent on aid. Even if we take the higher figure of 19,011 associations actually filing reports (even if some of them have filed nil reports for the year), then though the figure goes up to 48 per cent it still shows less than half as being But if we take the number of associations registered (that is those hoping to get aid at some point or are actually getting it) as 35,972, then the percentage at 90 per cent is very high indeed. Even if we allow for many of the registering associations as being religious and non-developmental, it still indicates wide permeation of the sector by aid, perhaps not by actual amounts received, but by the idea of aid and what it stands for. This perhaps explains why the sector is so agitated by the restrictions on receipt of foreign contributions imposed by the FCRA and the proposal to further tighten these. If indeed the sector as a whole depended on aid only to the extent of 7.5 per cent, as asserted by PRIA, then the sector’s vehement opposition to the FCRA seems inexplicable.

dependent.

Moreover, more noteworthy than the overall dependence is the

fact, substantiated by FCRA statistics, that those NGOs who receive a substantial amount of aid may be few in numbers, but by their size and clout in society they are the leaders of the NGO sector and civil society. They are influential in aid circles, government policy and in the sector itself, and therefore influence the nature and direction of the development of civil society. And they have grown to this stature in most cases because of the funding they have received from foreign donors. Foreign donors have also played a large part in establishing some NGOs like Partners in Change, Society for Promotion of Wasteland Development, Aga Khan Rural Support Programme, Development Alternatives, MYRADA and others. These NGOs have received both financial assistance as well as non-financial assistance until they were well established. The point being made is not that most of the sector is aid dependent but that aid has permeated the sector at all levels, from big to small NGOs, and that a few NGOs receive a large volume of foreign funds which makes them influential in the sector. The next chapter describes the donors who have contributed to the sector and why.

making

4 The Foreign Donors ‘The Development Set is bright and noble. Our thoughts are deep and our vision global.

Although we move with the better classes, Our thoughts are always with the masses.’1 ‘In order to have the continued opportunity to express their “generosity” the oppressors must perpetuate injustice as well. An unjust social order

is the permanent fount of this “generosity”, which is nourished by death, despair, and poverty.’ Freire (1972: 26)

In the popular mind, and even for many NGOs, ‘foreign donors’ is an undifferentiated category. But it is far from being a homogeneous whole, and comprises a variety of international donor organizations whose history, ideologies, motives, objectives, structures, strategies, funding approaches and nature of aid differ in detail. Official donors differ from private donors, and within the category of private aid itself, aid agencies differ in their agendas and approaches according to whether they are from Europe or USA, whether they are secular or faith based, and whether they are foundations or international NGOs channelling aid in addition to their service functions. Externally however they belong to a distinct international system which has been variously called the aid regime, the aid industry, the aid chain and the aid architecture, which links NGOs in the global South, including India, with their donors at different levels. The system is socially integrated because its members, in spite of several differences, also share certain common characteristics, functions and features, and its professionals frequently move between donor agencies, or from governments to donors. The system is reproduced and integrated through national, regional and international gatherings which explains why development buzzwords

produced, 1 Anonymous, The Diary of Oxfam, U.K.

The Foreign Donors

like ‘empowerment’, ‘gender’, ‘micro finance’ and so on travel across the world so rapidly (Tvedt 1998: 75).

The donor organizations are funded from outside the system, usually by the public or by governments, and the money is transferred from the donors to NGOs as grants, with tangible expectations in the form of conditionalities, or intangible expectations in the form

of value outcomes. The system was established by official donor money in the early 1960s, and expanded dramatically in the 1980s and 1990s because of more money earmarked for the channel. In the international aid hierarchy, the official donors occupy

the top place followed by the larger INGOs like CARE, Plan

International, OXFAM, ActionAid, Save the Children, EZE, HIVOS, ICCO, and NOVIB. Then come the smaller INGOs.

The private, endowed foundations like Ford, Rockefeller, Van

Leer, Gates and others, are not strictly part of the hierarchy, since they do not receive money from official donors. According to Tvedt (1998), they are integrated into the system by sharing a common development language or donor speak — ‘project planning’, ‘targets’,

‘indicators’, ‘outcomes’, ‘impact assessment’, ‘logframes’, ‘monitoring’ — a common rhetoric around concepts, values, methods, policies and procedures of resource transfers, and because they draw on the same pool of professionals. Since many NGOs share the same donors

across the world, the system more or less shares the same development strategies for NGO support. The aid system is thus a transmission belt of a language and concepts of development which are often Western, since most of the donors who fund NGOs are Western (ibid.: 75).

MOTIVES Whether official or private, nowhere is international aid the result of pure altruism, with no expectation of reward of any kind. More often it is the result of a mixture of motives — true altruism, enlightened self-interest, or desire for political and cultural influence

or economic gain. Some motives may predominate over others depending on type of donor. Motives may also vary over time for the same donor. Finally, there can be diametrically opposing interpretations of why donors in wealthy countries give, or should

give to poorer nations, depending on the ideological and spatial positioning of the observer. While Woodrow Wilson may exhort Americans to give ‘to enable the world to live more amply, with

Foreign Aid for Indian NGOs

greater vision, with a finer spirit of hope and achievement’, Paulo Freire may see in donor generosity camouflaged the oppression of poor nations by the rich. It is important to understand this right at the outset. In the main, rich nations, like rich individuals, give to poorer and nations either for ethical reasons, or out of self-interest, enlightened or otherwise. Ethics imposes an obligation on people fortunate to be born rich to help the less fortunate and to relieve suffering and distress. In international terms this translates into aid to show concern and compassion for victims of disasters, or to relieve the poverty and misery of large numbers in less developed countries, or to demonstrate concern about human rights abuses. Enlightened self-interest arises out of the notion of the world as one interconnected whole, a global home. The better off among nations realize that a better world, for themselves and their children, a world that is more healthy and more prosperous, and which celebrates diversity is possible only if people behave responsibly and ensure that misery anywhere in the world, whether out of poverty, disease, or oppression, is wiped out. If not, it will boomerang on them. AIDS and other diseases, or climate change, are no respecters of boundaries; oppression in any one nation sets up a chain of migrations which also affects the stable and prosperous nations. If and when the bell tolls, it tolls for the rich and the poor alike. Equally, increased prosperity round the world benefits the rich too, expanding markets for their goods and services, while threats to world peace or well being due to terrorism, disease, and environmental degradation are reduced. Besides these two main motives others operate selectively. Both rich nations as a whole and individuals in rich nations also give out of guilt to salvage their collective conscience, especially in the era, hoping to atone for the past wrongs of their forebears. Others give because even in the post-colonial period, the Third World is continuing to suffer economic exploitation at the hands of the developed nations on account of unfair trade, commerce, and exchange. Conversely, Third World recipients see aid not as charity but a matter of entitlement and compensation for the reverse drain of wealth, past and the present, from their countries to the rich nations. Official aid is driven less by the moral imperative than by and commercial self-interest. Development assistance is not philanthropy but politics by another name. To be fair, the moral

individuals

postcolonial

unequal political

imperative is not completely absent. Governments too are driven to respond to common problems of the globe, whether terrorism, HIV AIDS, malaria, global warming, or migrations. But by and large, in the short term, aid is given as a prelude, or a sweetener, to ensure a successful outcome of negotiations, to enlarge markets, to provide a base for intelligence gathering, and to influence decision making in international fora. In the long term, aid is given to gain political alliances (it was especially visible during the Cold War), to influence the recipients to accept a doctrine (communism, democracy, or a free market to reinforce and maintain a donor’s dominant position, to stabilize economic or demographic trends in a country or region (for example, to slow population growth in Asia), or to stem unwanted effects such as terrorism and migration (aid to Afghanistan, Pakistan) or spread of disease (AIDS in Africa). At home, giving international aid can buy the political support of ethnic voters and others. In commercial terms, aid is offered to win, expand and protect trade and investments, seize market opportunities, and get strategic access to key raw materials and labour. This is particularly evident in relation to India at this juncture of her growth. In private giving, either directly or through international NGOs or endowed foundations, the moral and humanitarian ethic is stronger. The great 19th-century capitalists like Carnegie, Ford and Rockefeller created the idea of the large, professional, private foundation in order that private giving could be used in a planned and organized manner to make society more progressive and to wipe out the root causes of human problems such as poverty and disease. Today’s new rich similarly want to use their money to support innovation to solve the world’s problems and make it a better place to live. They are looking for a purpose in life beyond wealth creation, particularly since wealth has come at a relatively young age for people like Bill Gates and Pierre Omidyar. Some of them are influenced by the teaching of a religious leader, or personal experience of or emotional exposure to some problem in a developing country. Some give out of gratitude for their fortune, others due to guilt, or peer pressure. Involving children and grandchildren in their philanthropy is also seen as a way of passing on family values and giving them a sense of purpose. Americans, the leaders in global philanthropy, especially individual and family philanthropy, are said to give internationally because they believe that the ethical obligation on Americans is greater, not

philosophy),

only because of their greater national and individual affluence, but also because American prosperity is due in large part to US-based global corporations selling goods and services the world over, and because it promotes American values and interests round the world (Dobriansky 2003, Fleishman 2005). Though private donor rhetoric is more about ethical and concerns, in practice self-interest underlies both official and non-official aid. The motives of both categories of donors, though different, also converge at times because every donor is situated in a particular political and cultural context. While some donors are open and transparent about their motives and agendas, not all are. Though in private aid the word ‘conditionalities’ is not used, it is latent and implicit, unlike in official aid where it is sometimes easier to deal with because it is explicit. The distinctions between different motives are important when it comes to analysing whether recipient NGOs are donor driven to accept their agendas. In private giving, voluntary charity offers a morally approved vehicle for self-aggrandizement and enhances public reputability. Similarly, international giving (whether ODA or private) offers the same benefits to the donor, viz. hegemony over the recipient, of higher status, and enhancement of reputation in the community of nations. It is correctly observed that charity may have less to do with the wants of the needy than with the needs of the donor (Kidd 1996: 192). This is clear if one looks at the origin of official development aid to developing countries. In general, Western ODA has two origins: the US fear of communist extremism and European imperialist politics. For the US, aid was an extension of the Cold War containment policy to the poorer countries of Asia, Africa and southern Europe. As for European donors, initially the aid of the imperial and ex-imperial powers alone went to their former colonies. Later, these countries were joined by others like Denmark, Sweden and Germany as a result of US pressure to share the ‘burden’ of providing aid to the developing world. Most developed nations created special agencies, such as NORAD, USAID, and DFID, to channel their aid for development. Private aid for development, on the other hand, began largely as humanitarian aid for overcoming distress and evolved into aid over the long term.

humanitarian

conferment

development

It is because there is self-interest involved in both official and

private aid that few in donor countries are against cessation of aid,

unconvinced though they may be of its success in achieving its

objectives. As for recipient countries, to argue for cessation of aid would

be tantamount to committing suicide. As Prof Bauer of the London School of Economics observes, Whatever happens in the recipient countries can be adduced to support the maintenance or extension of aid. Progress is evidence of its efficiency and so an argument for its expansion; lack of progress is

evidence that the dosage has been insufficient and must be increased. Some advocates argue that it would be inexpedient to deny aid to the speedy (those who advance); others that it would be cruel to deny it to the needy (those who stagnate). Aid is thus like champagne: in success you deserve it, in failure you need it! (Bauer 1981)

The following describes the main categories of donors in some more detail.

OFFICIAL DONORS: BILATERAL DONOR AGENCIES India sought international aid soon after Independence to aid it in its task to make good the technology and institutional and

resources deficit that existed. But most of the aid went to government

because it was believed at the time that government should be the lead change agent in economic and social development. Besides, NGOs did not have the capacity for undertaking large-scale development programmes anyway. The peak period for ODA was during 1955–65,

and most of it was from Western nations. Official donors, multilateral and bilateral, currently number around 23. Amongst the bilateral donors, the USA and European donors have been and are the most significant for NGOs. European aid from the European Union (EU) and individual

countries together formed 30 per cent of all net ODA to India

between 1968 and the beginning of the 1990s. Amongst the donors,

six countries — U.K, Germany, the Netherlands, Sweden, France, and Denmark — together provided 85.2 per cent of all bilateral aid from EU countries. These donors, with the exception of Germany, gave most of their ODA in grants, and were the countries together with Norway who were also important donors to NGOs.

After 1990, the inter se importance of bilateral donors changed. The EU donor share in bilateral aid (grants plus loans) decreased,

mainly due to an increase from Japan. Though Japan is currently India’s largest bilateral donor, it gives only a very small fraction of

its aid as grants, and very little of it goes to NGOs. The US share has also declined comparatively. The assistance offered by EU, CIDA, USAID and DFID in recent years is entirely grant assistance while Germany, Japan, France, Italy

and Switzerland offer both grants and loans. The major bilateral donors offering grant assistance to India in 2008–9 are given in Table 4.1. Table 4.1 Table 4.1 Grant Assistance: Five Bilateral Bilateral Donors 2008-9 Donors to to India, India, 2008–9 Grant Assistance: Top Top Five

Grant Assistance (in Rs million)

Country

16,760.0

UK

Germany EEC US AID

Japan Note: Source:

362.7

2,464.4 842.1 48.0

Grant assistance includes cash and commodity assistance. GOI Interim Budget 2009-10, Finance Ministry, Annexure 2, Statement 2 of Receipts Budget.

USA, UK, Canada, and Germany have been giving aid since the 1950s. Others joined in the 1960s. Though the Netherlands, Norway, Sweden and Denmark have not been among the top donors in terms

of total volume of aid, they have been important donors to NGOs. After 1980, and especially after 1990, most official donors turned their attention to funding NGOs directly, though each major bilateral agency turned its attention to NGOs at a different time. DANIDA

was among the first to support NGOs and had NGO partners even before 1980 when others such as NORAD joined in. NORAD, the Norwegian government’s funding arm, began supporting NGOs in the early 1980s, though till 1983 it primarily

supported

projects of church organizations. Later, it began to support secular organizations as well. After 1980 NORAD’s support for NGOs increased steadily, and a number of large grants, though to fewer organizations, were made. With the growing contacts and

interaction of NORAD staff with NGOs the number of projects supported increased after 1985; there was also a greater variety in the types of NGOs supported, ranging from service organizations

training grass-roots workers, to those working with the disabled. After India’s nuclear testing, Norway froze its general aid but continued its aid to NGOs. Likewise, Dutch bilateral aid to NGOs began only in 1980s, but a substantial part of Dutch ODA went to NGOs, mostly as of government projects. DFID did not fund NGOs significantly till the 1990s, since its ODA was concentrated mostly on technical aid to government, and relied largely on highly paid European consultants to provide technical assistance. Indian NGOs, if at all funded, were given funds for programme implementation, and only as part of the funding given to government. Now DFID is the largest donor to NGOs. Before 1990, bilateral donors supported civil society in one or more of the following ways: NGOs were supported as and facilitators in government programmes. Government was involved in the selection of NGOs and also in monitoring their activities. Funds passed to NGOs either directly from the donor or through a government department if the government contracted the NGOs to implement particular projects, as in the Andhra Pradesh District Primary Education Project. NGOs were also funded separately by the donors for pilot and innovative programmes, but funds were routed through government agencies such as CAPART. By and large, neither the donors nor their partner NGOs were happy about this route because they felt it was subject to the same negative dynamics as funding through government. Sometimes, small, one-time grants were made through funds at the discretion of the embassy. For instance, the Canadian High Commission administered the Canada Fund for Local Initiatives (CFLI), the small responsive mechanism to provide funding directly to Indian NGOs. Similarly, Japan gave small grants to NGOs through its embassy. Some donors gave a large part of their aid to their own co-financing agencies (CFAs), or to their own NGOs who in turn partnered Indian NGOs. The Dutch government in particular gave a substantial part of its ODA to NGOs through the mechanism of co-financing agencies. The co-financing scheme came into being in the mid-1960s, when ICCO and CEBEMO (now renamed the Catholic Organization for Relief and Development Aid or CORDAID) first applied for support from the Dutch Ministry for Foreign Affairs. Both these organizations

implementers

implementers

are of Christian background, the former of Protestant and the latter of Catholic denomination. ICCO was followed by HIVOS, NOVIB, Plan Nederland, and Terre des Hommes. The size of the CFA programme has grown from roughly 2.4 million Euros (USD 3.8 million) in 1965 to about 628 million Euros (USD 996 million) 2 in 2004. In 2007–10, the programme is expected to receive Euros 500 p.a.3 All six CFAs, generally categorized as INGOs, have a high level of autonomy and are free to prioritize their activities. DFID indirectly funded NGOs through British NGOs such as OXFAM, ActionAid or Christian Aid. NGOs also received some funding directly from funds specifically earmarked for NGOs in the Joint Funding Scheme and the British Partnership Scheme, but these schemes are relatively small when compared to the bilateral budget. Otherwise, prior to 1990 there was little scope for direct funding of NGOs by DFID. CIDA, the Canadian aid agency, had a somewhat similar by which its Canadian Partnership Branch managed 14 responsive programmes available to the many kinds of civil society organizations in Canada. CIDA contributes to these Canadian NGOs, who in turn fund partner Indian NGOs. The Canadian government also funded NGOs from the India-Canada Environment Facility (ICEF). In short, direct funding of NGOs prior to 1990 was rare, though DFID had tried direct funding of NGOs in a limited way in the case of the Parivar Seva Sanstha for a reproductive health project in Orissa. But like most other donors it was reluctant to use this model on a larger scale for a variety of reasons. One reason cited was that of distinguishing the good ones from the bad or mediocre. Another was that the Indian government was wary of direct relationships between donors and NGOs and sought to control the funds, indirectly, if not overtly, through requiring donors and NGOs to get permission. A third reason was that NGOs have limited spending capacity and donors had their own compulsions regarding size of grants. The high transaction costs involved meant that grants had to be large, and few Indian NGOs, it was claimed, and probably rightly, can handle

arrangement

2 Euros converted to dollars at 1:1.58610. 3 German Foundation for World Population (DSW) website, ‘Co-financing System (MFS) 2007–10’ at http://www.euroresources.org/guide_to_population_ assistance/netherlands/co_financing_system.html.

funds worth several millions of pounds which are the size of bilateral projects. Besides, it was argued, NGOs have limited capacity to fulfil the requirements for accounting, monitoring, and evaluation insisted on by donor governments, and their accountability is always suspect (van Diesen 1998: 16). After 1990, however, several changes led to more direct funding of NGOs by official donors. After the end of the Cold War, the New Policy Agenda for resource transfers made the assumption that market centred approaches applying to both economic development and social organizations had been vindicated by the demise of the Eastern Bloc. Rolling back the state was accompanied by pushing forward the private sector and NGOs. Markets were seen as the most efficient engine of development with NGOs providing relief where there is market failure. Hence there was a greater interest, on the part of bilateral donors, in direct funding of Indian NGOs, bypassing not only the government but also INGOs. NGOs began to be directly supported by donors to fit into areas earlier handled by the state, on the assumption that NGOs are both more effective and cost-effective than the state in reaching the poorest, and more innovative and flexible. A further paradigm shift in development thinking after 2000 strengthened the trend. The World Bank’s 2000 Development Report recognized the reality of growing poverty accompanying economic growth. Even as the private sector was given greater importance as an actor in economic development, it returned the development focus to issues of poverty, leading to calls for social safety nets, redistribution of wealth, and therefore for good governance. NGOs were recognized to have an important part to play in all these and were therefore supported directly The shift was facilitated by the fact that by the 1990s Indian NGOs had matured greatly. GTZ persuaded the government quite early to let it work directly with NGOs, and in 2002 was working directly with 35 NGOs through its Self Help Fund to deal with issues of local ownership, innovation in management and structure. A multidimensional approach was adopted to conceptualizing poverty and designing projects. Similarly, NORAD began supporting NGOs directly after 1995, and SIDA in 1996. Other donors too followed. At the same time, several bilateral donors recognized that funding NGOs was not enough to solve poverty problems; it had to be

organizational

combined with making the government itself more responsive to people’s problems. A 1987 evaluation of Norwegian Aid to India,

commissioned by NORAD, concluded unequivocally that though NORAD should continue to support NGOs, it cannot be ‘regarded as an alternative to government anti-poverty programmes, or as a way to circumvent government policies or bureaucracies.’ In their

view it was the government’s responsibility to implement

antipoverty programmes on a large scale and none of the NGOs were of

a size that can match government efforts. The evaluation, however, recommended continued support to Indian NGOs as a supplement to

its regular aid and in accordance with GOI policies and regulations. In addition, it recommended the development of better criteria and a better mechanism to assess and appraise the proposed NGO projects, to monitor the implementation and to disseminate the learnings

from experience. They further added that NORAD must ensure that NGOs do not become too dependent on NORAD and that the access to ‘easy money’ does not create other problems in or for the organization. At the same time, it accepted that financing over an

extended period of time may be necessary in certain cases, such as income generation projects or working with very deprived people (Hansen et al. 1987: 168–70). In March 2003, the GOI announced its new bilateral aid policy

according to which it would accept bilateral assistance only from the six large bilateral donors. But all bilateral donors could continue to make grants to NGOs directly, provided they met the government’s guidelines. The details of and reasons for the new policy are discussed

in Chapter 6. Though the government, in a review of its policy, in 2004 that bilateral assistance from all G-8 countries including Canada and the EU countries will be accepted, some donors

announced

have opted to withdraw bilateral aid. CIDA withdrew its bilateral

aid as of March 2006 but continues to fund NGOs through CFLI, administered by the High Commission and its Partnership Branch which funds directly from Canada. Similarly, DANIDA and SIDA are staying on to work with NGOs.

Though not required to leave, even USAID announced that it will exit in 2015 and will do only a holding operation till then. The reason cited by it is that India no longer needs official aid, that private aid is better, and that in the long term USAID envisions India’s civil

society working in partnership with American private partners to

solve development problems without the need for official economic assistance. Even the donors who have stayed on have cut back on budgets and professional staff. Now even if they are keen to fund NGOs they do not have the staff and infrastructure to deal with a large number of small NGOs. They would thus like to give large funds to a few mother NGOs and allow them to redistribute to smaller ones according to agreed guidelines, on the lines of DFID’s Poorest Areas Civil Society Initiative (PACS). But unless the smaller NGOs have FCRA permission or registration themselves they cannot avail of the money, since according to the new FCRA rules NGOs need registration or permission for accepting funds even from bilateral donors. NGO perceptions of different bilateral donors vary. Though the European donors — DANIDA, SIDA, NORAD, Swiss Agency for Development and Cooperation (SDC) and the Royal Netherlands Embassy, and CIDA — were never big donors, by common consent they were well regarded by NGOs for their trust in NGOs and longterm commitment to partners. They had the most interaction with, and therefore the most impact on, the NGO sector. Unfortunately, these are the very agencies that have either closed or downsized operations. By contrast the USAID approach has been considered as always top down, showing little respect for local capacities and more obedience to directives from Washington. Moreover, it was considered a more ad hoc and stop-go approach than that of others. USAID has also been criticized for being niggardly in giving official aid. Though it gives the greatest absolute amount, it comes last among the industrialized nations in terms of aid as a percentage of national income. However, apologists of US aid policy point out that this ignores the fact that the primary way in which Americans help others abroad is through the private sector. In the last decade, US official aid has been outstripped by private donations from American foundations, private voluntary organizations, corporations, churches, and individuals giving directly to the needy abroad. They argue, with some truth, that private giving offers Americans the choice of whom to give and for what, whereas with ODA, financed from taxes, contributors have no choice; that private giving is better than ODA because it is more efficient and ethical, and reaches the people; and, that charities empower poor people, whereas government aid only empowers bureaucracies (Adelman 2003: 9, Mercer 2005).

MULTILATERAL DONORS: THE WORLD BANK The multilateral sources include the World Bank, UNDP, UNICEF, WHO, UNFPA, FAO, and others, but since they fund NGOs through government they are not noticed here separately. The World Bank’s relationship with NGOs alone is discussed because of the Bank’s leadership of the development discourse, and because its relationship with NGOs has been more conflictual than that of other multilateral agencies like UNDP and UNICEF. It is an institution which NGOs love to hate because of its image as an anti-poor organization which is also pro the powerful North. The Bank does not fund NGOs directly, except through its Small Grants Programme (SGP), mostly used to support participation in international conferences, organization of conferences and seminars, special publications, and networking activities related to development of education or information for which NGOs do not have funds. The newly instituted global and country Development Marketplace competitions support innovative projects by NGOs. The support is one time and small ($10–15,000). More typically, NGOs receive project funds either as paid consultants to the Bank or as contractors to the borrowing government.4 The World Bank’s engagement with NGOs began much later than that of the bilateral donors and has been less significant in its impact on the sector. It would be difficult to say whether NGOs have had more impact on the Bank or the Bank on NGOs, but prima facie it would appear to be the former. Reform of the multilateral institutions, including the Bank, to secure economic justice for the South has become a central issue around which global civil society has formed alliances. Civil society organizations have had a profound impact on many aspects of the Bank’s business, especially since many

4 See World Bank (circa 2006). Following are some examples of Bank-NGO engagement in India. MYRADA prepared a scheme in co-operation with government agencies to develop a resettlement scheme in connection with the Upper Krishna II Irrigation Project; PRADAN was asked to oversee the work of nine NGOs in the Women’s Rural Administration and Poverty Project; Development Alternatives was contracted to train farmers in various districts in four states. See ‘The World Bank and NGOs’, in ‘The World Bank in India’, in the The Indian Economic Overview, 2 May 2007, at http://www.ieo.org/worldc11-p1.html.

of the Bank’s professional staff come from, and go back to, civil society. At the same time, the Bank has impacted on civil society because the Bank is not only a funding institution but also a think tank for developmental thinking and its intellectual outputs influence NGO discourse or action.

Before 1980 the Bank looked at NGOs as mere subcontractors in World Bank projects, engaged for project implementation, to reach the services to hard-to-reach groups. NGOs on their part gave little attention to the Bank. In the 1980s, the Bank started giving more attention to NGOs because of its new anti-poverty mandate.

In 1982, the Bank established the NGO-World Bank Committee to address the ways in which the Bank could increase the involvement

of NGOs in Bank-financed projects. Ironically, this extra interest in NGOs coincided with, and was perhaps the outcome of, the structural adjustment programme in many Third World countries which brought hardships to poor communities because of wage freezing, spiralling prices, and privatization of basic services as

well as cuts in social and welfare funding. This brought NGOs into confrontation with the Bank. The negative environmental and social impacts of some of the projects funded by it, such as big dams, added to the anger. Perhaps the best known instance of successful Indian NGO

lobbying with the World Bank on development policies was the cancellation in 1993 of the Bank loan for the Sardar Sarovar Dam and

Power Project on the Narmada river, at the request of the Indian government, which was forced to complete the project on its own. The NGO lobbying centred round the displacement of local tribal groups, the project’s environmental impact and the overall developmental model which emphasized big water projects in preference to small

local projects with less adverse environmental and social impact. In 1995, protests by civil society organizations worldwide and the leadership of its new president, James Wolfensohn, brought a more constructive strategy for Bank-civil society interaction, one important plank of which was more direct interaction with NGOs. As one

World Bank staffer put it, ‘When I joined the World Bank you could be sacked for talking with an NGO; now you can be sacked if you don’t’ (Clark 2002: 114). The new strategy had five strands: •

Operational collaboration and involvement of NGOs design stage;

at

project

•

•

•

•

•

reviews of

negative impact, and adoption of participatory development approaches; engaging civil society in country level strategy and policy formulation; public disclosure of many aspects of the Bank's programmes and analysis; taking the initiative for international structured dialogues on major topics and policy initiatives and ensuring Southern voices are represented; and, encouraging governments to give more space for civil society and including them in significant policy forums. (Clark 2002)

Following the new CSO strategy and the shift in development thinking mentioned earlier, the Bank claims to have involved national level and local NGOs from the project design stage itself, in drawing up Country Assistance Strategies (CAS) and in national level debates on policy issues such as gender, environment, forestry, and economic development. 5 However, both NGOs and informed observers claim that in practice it is mere tokenism. For instance, at the National Consultation held in Delhi on 7 August 2004, several CSOs rejected the CAS 2004 on the grounds of inadequate consultation process and lack of transparency while drafting.6 Analysts like Hulme, citing government officials, also contest the Bank’s claim to have changed its control-oriented behaviour (Hulme 2008). Though the Bank claims to have changed its style of operations and content of policies and programmes, the Bank continues to be a pet peeve of civil society for two reasons: one, the Bank is a convenient icon for market forces and unfriendly capitalism and two, NGOs claim there is a big gap between Bank speak and Bank action. They argue that by adopting the NGO language but without the spirit, it is in fact co-opting NGOs. 5 In FY 1997, of all approved projects involving NGOs globally, in 60 per cent of the projects NGOs were involved at the design stage. Of the 302 loans approved by the Board during 2006, 217 or 72 per cent had involvement by NGOs. See World Bank (2006). 6 See, ‘Civil Society Organizations Reject World Bank Country Assistance Strategy’, Focus on the Global South, 10 August 2004, http://www.focusweb. org/india/content/view/717/28.

An objective assessment is that probably change is less fast or deep than the Bank would like to believe. In the social sector fields of health, education and rural development, Bank staff have become more sensitive to CSO concerns but in other departments the staff are still cynical. Nevertheless, NGOs would do well to continue to engage in debate with the Bank on issues that NGOs hold dear because of the Bank’s intellectual capacity in development thinking, its leadership of the development aid field, and NGOs’ own lack of a broad perspective beyond their own narrow concerns. Each needs the strength of the other — the reality check that NGOs bring married to the intellectual theorizing of the Bank.

PRIVATE PHILANTHROPIC AID Private donors come from 73 countries, but collectively the bulk of the aid is given by those of 15 countries. They gave Rs 96,535.4 million or 78.55 per cent of the total in 2006–7. Table 4.2 shows the top 10 donor countries ranked according to their relative importance in giving to NGOs at periodic intervals. The top five donor countries — USA, Germany, UK, Italy, Switzerland and the Netherlands — have remained consistently at the top over the years, though their inter se ranking may have changed. In contrast to its showing as a bilateral donor, not only is USA the prime donor country for private giving, but the volume of its giving is way above all the others, including second-ranking Germany or UK, being almost double that of the number two nation. Japan, the only major Eastern donor, has remained at the bottom of the top 15 list of donor countries, though in bilateral aid it is one of the first five donors to India. The 2006–7 figures mark a departure from the past picture in that Grenada, a country with no previous track record of giving to India, has entered at the eighth position. UAE, which used to figure way down in the list of donors, has jumped to the 14th rank with Rs 856.5 million being donated. The real surprise is Grenada, a small island country in the Caribbean, with a population of only 100,000 and a GDP of USD 1.108 billion, and dependent mostly on tourism and spices. The development is all the more surprising because no donor organization from either Grenada or UAE figures in the top donor organizations for 2006–7. The FCRA Report offers no explanation

364.7

4

6

7

8

9

Netherlands Switzerland Canada

France

Spain

-

-

7

1.95

-

1.47 -

10 -

627.9

1,546.8

812.0

8

6

5

4

2

9

2.95

7.10 5.06

6.17

11.72

2.17

3

14,926.2 6,645.0 6,775.8 2,697.7 2,270.4 2,137.2 1,200.6

1

22.7:2

20.99

-

1.38

3.41 10

-

6

8 9

1.79

7

4.71 2.64

5

4

5.94 5.00

3

2

1

R

14.94

14.65

32.91

%

908.4

-

19,269.5 9,309.2 7,641.3 4,328.8 3,535.0 2,734.3 1,981.1 1,341.1 3,380.1

Total

2004-5

1.45

-

5.40

8

13

9

6

11

10

3.16 2.14

4

7

5

3

2

1

R

4.37

5.64

6.91

12.21

14.87

30.79

%

29,712.9 16,487.5 14,254.3 4,879.7 4,488.6 6,058.8 2,303.6 2,101.5 4,646.5 2,406.7 1,154.2 3,329.0

Total

2.7

1.00

2.0

3.8

1.7

1.9

4.9

3,7

3.9

11.6

13.4

24.2

%

(In Rs millions) 2006-7

Source'· Compiled from the Annual Reports of the FCRA Division, Ministry of Home Affairs, Government of India, New Delhi.

Australia Grenada

275.7

550.6

405.3

5

Italy

10

945.7

3

UK

Belgium

4,239.9 3,916.5 2,187.1 1,151.6 1,326.1

1

2

Germany

Total

R

%

Total

USA

R

Country

Countries, 1993-2007

Table 4.2

2000-1

10 Donor

1993—94

Top

for the entry of either country. One conjecture about Grenada is that it may be reflecting money laundering. From the FCRA 2006–7 Report it also appears that those countries

whose bilateral aid was stopped after the government’s change of policy in 2003, viz. Netherlands, Canada and Sweden, have increased their FCRA giving after that, indicating the new preference for giving directly to NGOs instead of through government. It is also clear that the top donor countries for private giving are not the same as the top bilateral donors to NGOs.

Since the actual face of private philanthropy are the donor organizations from the above countries, the top 10 donor organizations over the years are shown in Table 4.3. A majority of the top 10 donor agencies are from USA and Europe. They fall into two main categories: INGOs and foundations. In the early years of Independence, both were more important for NGOs

than official donors, but among them it is INGOs like the German Miseror, World Vision of USA, the Dutch CFAs ICCO and NOVIB, British Plan International and OXFAM, and Spanish Manos Unidas which figure in the top 10 givers. In 2006–7, new organizations like BKE Belgium, ASA. Switzerland, and the Liaison Office of the Dalai Lama for Japan, Japan, and the Bill and Melinda Gates Foundation

have entered the scene for the first time. Interestingly, the last named was only at number 15, with Rs 907.2 million, contributing less than the INGOs, because the bulk of its money was given to major government programmes. Bilateral donors like DFID have begun to figure among top donors to NGOs only in recent years indicating the shift to direct funding of NGOs.

Some INGOs like Plan International, World Vision, ActionAid, Gospel Fellowship Trust India, USA, and Gospel for Asia, USA, are among the largest donors as well as recipients of FCRA contributions. This is because they receive funds from their parent organizations, both for their own establishment purposes and for on-granting to other NGOs. Because of this the FCRA statistics give an incorrect

and inflated picture of the amounts received by Indian NGOs. The Ford Foundation, OXFAM, ActionAid, ICCO and HIVOS, among the top and the best known donors to NGOs till recently, as well as the most influential in the development sector, are gradually being eclipsed, at least in size of funds contributed, by ecumenical organizations and other agencies such as the Vincent E. Ferrer

Foundation, about whom little is known in India and whose impact on the sector cannot be determined.

Table 4.3

NOVIB, Netherlands

BKE, Belgium Dept. for International Development (DFID), UK

Miseror, Mozartstrasse, Germany

spellings

Dept. for International Development (DFID) ActionAid, UK

Compiled from the Annual Reports of the FCRA Division, Ministry of Home Affairs, Government of India, New Delhi. The of the organizations are as given in the reports.

CEBEMO, Netherlands

Ferrer, Madrid, Spain OXFAM, UK

Manos Unidas, Spain

USA Friends of Indian School of Business (FISB), USA

EZE, Germany

(ICCO), Netherlands OXFAM, UK

Foundacion Vicente

Population Service International, USA Christian Children Fund, Manos Unidas, Spain

International, USA ActionAid, UK

UK

Development Co-operation

Organisation for

World Vision

Japan Gospel for Asia, USA

OXFAM,

Miseror, Mozartstrasse, Germany

Liaison Office of the Dalai Lama for Japan,

Ferrer, Spain A.S.A., Switzerland

Miserar, Mozartstrasse, Germany

Inter Church

e

Ferrer, Alicante, Spain Christian Aid, UK

Foundation Vincent

Fundación Vicente

International,USA

World Vision

Misereor, Postfach, Germany

2006-7

Gospel for Asia, USA

Ferrer, Spain

Compassion International, USA

Plan International, USA

Plan International, UK

Gospel Fellowship Trust India, USA Gospel for Asia, USA

2005-6

Christian Children Fund, USA

Germany

Save the Children Fund, USA Evangelische Zentralstelle for Entwick (EZE),

Germany

Watch Tower Bible and Tract Society, USA Foundation Vincent e

International, USA Gospel for Asia, USA

Kinder Not Hilfe,

World Vision

Foster Parents Plan

International, USA ActionAid, UK

e

International, USA

International, USA Missio, Germany

Foundation Vincent

Ferrer, Spain

World Vision

Foster Parents Plan

2004-5

2000-1

10 Donor Agencies, 1993-2007

1993-94

Sources

No.

Top

Another interesting fact which emerges from the statistics is that whereas in 2005–6, of the top 10 donor organizations four were religious organizations (all Christian), the number had increased in 2006–7 to six religious organizations (all Christians). Similarly, while in 2005–6 six of the top 10 recipient were religious organizations (four Christian and two Hindu), in 2006–7 the number had gone up to nine religious organizations out of the top 10. Moreover, all of the first eight recipient organizations were Christian. Both sets of figures show that the importance of religion in international giving has gone up, as also an increase in religiously motivated development activity in India.

associations

INTERNATIONAL NGOs (INGOs) As channels for development aid, INGOs are an important part of the aid chain. Since the mid-1980s, aid flows originating from private agencies grew faster than bilateral aid disbursements globally. Between 1990 and 1994, when ODA increased only by 4 per cent, private aid showed an increase of 24 per cent.7 While official aid grew by only 0.6 per cent per year, INGO aid grew 2.2 per cent p.a. (four times ODA). 8 Currently over 15 per cent of total ODA is channelled through NGOs.9 Significantly, monies are concentrated in a few large INGOs. The largest 10 account for 21 per cent of aid channelled, and the largest 20 per cent account for 90.5 per cent of the total (Straaten n.d.). Typically, INGOs are NGOs located in Northern countries but who work either wholly or principally on international issues the developing countries. They were primarily founded on the humanitarian values of compassion and altruism to collect funds in the North for development aid delivery in the South. Their other tasks included development education, policy research and advocacy in their home societies to secure a fairer and more equitable world. There are wide variations in the global estimates of INGOs, ranging from 3,000 INGOs (DAC statistics, 1993) to 47,000, according to UNDP (2002) and Anheir and Themudo (2002).

involving

7 OECD (1995), quoted in Biekart (1999: 6). 8 DAC statistics, quoted in Straaten (n.d.). 9 ‘Non-Governmental Organizations and Civil Society: An Overview’, at http://wbln0018.worldbank.org/essd.nst/NGOs/home

The older INGOs like the Swiss International Committee of the Red Cross, Caritas, British Save the Children Fund, British Christian Aid and British OXFAM emerged during the Second World War to meet the needs of victims of German occupation in Greece. The geographical focus of these early agencies was largely Europe. The post-war years, decolonization and the beginning of the Cold War saw the geographical focus of European aid agencies shift to the former colonial areas in Africa and Asia, spurred by the UN and churches. The US agencies were founded first as war relief agencies and worked closely with the US government, often becoming instruments of US Cold War policies. Food aid, such as that offered by CARE and Catholic Relief Services, was an important part of US private aid (Biekart 1999: 66). Other Northern NGOs owe their origins to either the church, (ICCO, Evangelische Zentralistelle fur Entwicklungshilf e.v. or EZE, Bread for the World, Church’s Auxiliary for Social Action or CASA, and World Vision), to child sponsorship (Plan International and Save the Children Fund), or to public donations in response to a humanitarian crisis (ActionAid and OXFAM). However, now the boundaries are fluid. Many of the church organizations are partnered by their national governments for channelling aid to Southern NGOs and most of the large church INGOs fund both church-related and secular NGOs in India. Up to 1970, most INGOs derived almost 80 per cent of their income from private donations from the public and from charitable but after that their dependence on official funding has increased significantly. There are a number of INGOs based in India. Amongst these, CARE and OXFAM are the oldest. They came to India in 1950 and 1952 respectively, to assist in the government’s development plans and to provide relief. Both began as relief agencies and directly implemented the programmes, but then switched to long-term development through NGO partners. In the late 1960s, several other INGOs like EED, ICCO, ActionAid, Plan International and others came to India. Apart from the major ones mentioned, there are numbers of smaller INGOs such as CASA; the Karl Kubel Foundation (established by a German entrepreneur) which works largely in south India since 1974, to provide financial and professional assistance, especially in the field of human resource development through

foundations,

training; EMMAUS Community Welfare Fund India (ECOMWEL India), an arm of a Swiss funding agency which funds programmes in community health and economic development, and others too numerous to enumerate. While most of the bigger American and British agencies had, and continue to have, their own field offices in India, the European agencies like ICCO, EED and NOVIB prefer to operate from their headquarters, and have desk officers in charge of the India These and relevant specialists tour India as and when required. EED operates through the Financial Management Services Foundation (FMSF), which it helped to establish to enhance partner NGO capacity in financial management and reporting systems. As many of the agencies were initially relief agencies implementing programmes themselves they had large expatriate staffs. However, over time the number of expatriate staff declined, and instead local professionals and consultants began to be employed, especially after the government directed INGOs to work with Indian partners rather than to implement programmes themselves. Besides, their own funding became tighter from the 1990s onwards. Till the 1970s, INGOs were rather irrelevant in the international development chain, either in terms of resources channelled or policy influence. But by the beginning of the 1970s, many of the European INGOs funding Indian NGOs had taken up a more political and anti-imperialist development stance, influenced by radical student politics or progressive currents in the churches. Influenced by Third World intellectuals such as Ivan Illich and Paulo Freire, Gandhi and J.P. Narayan, and the need for development from the grass roots upwards, they questioned the top-down model of development promoted by development aid at the time and searched for alternate development strategies. From the mid-1970s to the late 1980s, considered the golden era of private foreign aid, INGOs became important actors in international development assistance, if not in quantitative terms (private aid was around only 12 per cent of total aid flows to the South) at least in terms of innovative development thinking and strengthening of civil societies with people centred strategies. Their ascendancy in the aid chain was due to the fact that official aid faced a crisis of legitimacy in the 1970s for being unable to tackle the root causes of poverty, or as Vietnam showed, to stop the march of Communism. By contrast, private aid agencies and their partner NGOs had shown some success

programmes.

in reaching the poorest at the grass roots with more participation by the poor themselves. Partly due to this and partly because INGOs were successful in their lobbying of Northern governments to increase aid budgets, official aid agencies increasingly routed growing amounts of development aid funds through INGOs. Private agencies further grew in the 1980s due to the massive public campaigns to collect private donations for relief operations for famines, civil wars, etc. in Africa and Eastern Europe. The higher profile of INGOs during this period was due to their stepping up of development education in their domestic constituencies to influence public thinking on development issues, fund-raising campaigns and policy-related research and lobbying. INGOs pointed out that poverty in developing countries required also a structural change in the industrialized countries and not only action in the poor countries themselves. The messages often contained critiques of capitalism and Western lifestyles. They also pressured their governments on a variety of official aid-related issues, including increasing aid and debt rescheduling, lobbying both at home and at international meetings such as Stockholm (1972) and Rome (1974), and later for the boycott of South African Apartheid. INGO growth was facilitated by the explosive growth of civil society organizations in the South, including in India, which they were credited as having nurtured. Unsurprisingly, the work of most INGOs in India was concentrated in the southern states, especially Tamil Nadu, and in the tribal areas. Not only does south India have a larger number of NGOs than the north, but also a large number of these were Christian mission organizations. The tribal areas offered more scope for evangelical work. Beginning with the last decade, however, many INGOs like Plan International, EED and OXFAM NOVIB are moving their work to the north and north-east. While INGOs wielded considerable influence over Indian NGOs prior to 1990, they have since faced a fall in incomes, and an identity crisis due to the following reasons. With the end of the Cold War and the rise of the new market fundamentalism, the comparative advantage of INGOs over local NGOs and government agencies began to be questioned. A number of independent evaluation studies concluded that they were neither cost-effective nor really innovative in dealing with anti-poverty work, nor were their interventions sustainable. Whistle blowing by insiders about poor performance, lack of efficiency, overblown salaries and

perks, and discriminatory and hierarchical HR and other internal policies added to INGOs’ troubles. Finally, a maturing voluntary sector in India and elsewhere indicated that what it wanted was the money and not advice from INGOs. Local NGOs demanded less

interference and paternalism, and were critical of INGOs for the inequality they represented among global civil society. They wanted INGOs to play a more activist role at home in the North where many of the structural problems to poverty lay, rather than to preach in

poor countries. The adverse fall out of all this was that it led to a fall in INGO incomes from both official donors and the public. The official donors demanded measurable results and efficiency, and began

asking why the high overheads of INGOs should be paid if they do not add value on the ground. Why should not donors fund NGOs directly? Official aid agencies thus began favouring direct funding of southern NGOs, a trend which had already started in the late 1980s

and which accelerated in the 1990s, in effect sidelining INGOs. The Northern private donors, as part of the new market orientation, expected INGOs to produce better results at lower costs. They were thus forced to take the same medicine that they prescribed to

their local partners — better project planning, evaluation methods, organizational efficiency, and accountability. It led to internal restructuring of many INGOs. Because of the funding crisis many INGOs themselves face, some

of them have begun raising resources within India in competition with Indian NGOs. For instance, Plan International and others have begun to relocate their own fund-raising experts in the aided countries to help local NGOs to mobilize local resources. Plan

International’s justification is that it is necessary to change the culture of ‘easy money’ that had pervaded its own organization and that of its partners (Straaten n.d.: 7). INGOs like Plan International, ActionAid, INTBAU, and others are setting up their own clones as

indigenous organizations, registered in India, or, as in the case of OXFAM NOVIB, OXFAM UK and OXFAM India Trust, merging to form a larger entity. The net result of all these developments is that the INGO role as

donor is in a state of flux. INGOs like OXFAM and ActionAid who were leaders among foreign donors in India, in terms of both thought and practice are now but a pale shadow of what

development

they were till the end of the decade. INGOs, and especially those who operate in India, have to reinvent themselves to fit the new context.

Most INGOs now accept that their comparative advantage in poverty alleviation does not lie in direct intervention at the grass roots, but are yet to figure out what their new role should be. They see as playing a necessary role not only in transfer of resources to the South, but also in building international solidarity, in education of the Northern governments and public, and in influencing national and international policies. Many of the largest and most respected INGOs (Save the Children, OXFAM) were born and raised in opposition to Northern government policy and vested interests of the time. But as they become more and more dependent on these governments for income, and as their income from the public dwindles there is doubt as to whether they can continue to play this role. Moreover, as Indian NGOs’ alliances and networks strengthen their capacities in project planning and implementation, and capacity building and policy lobbying, it would appear that the INGO and NGO relationship is becoming redundant, if it is to exclude resources, especially as Indian NGOs assert their primacy in influencing their own government policies. INGOs can however find comfort in that this is at least partly due to their own past contributions to strengthening NGO organizational capacity. Their best bet now appears to be to educate their own home constituencies on global issues which keep poor countries poor.

themselves

FOUNDATIONS Amongst private organized donors, endowed foundations have played as important a role in the growth of the Indian NGO sector as INGOs, American and German foundations being the most visible and influential. They, together with INGOs, have brought to India the idea of systems change philanthropy through grant making, that is using grants to change the way social systems operate because current systems are deemed unsatisfactory. Leaders in global philanthropy, American foundations have dominated the development scene in India throughout the period. Presently, not only are the number of American foundations but more foundations are becoming involved in international grant making so that giving for international purposes is now about 22 per cent of overall giving. Fields that experienced significant growth include health, international development and peace. Thanks to the unprecedented size of the Bill and Melinda Gates Foundation’s contributions, funding to overseas-based organizations was up to $1.9 billion (Foundation Center 2008).

increasing,

It is not only in America that foundations are growing. In Germany, for instance, their number has increased from 4,000 in 1997 to over

13,000 in 2006, and many have begun to have significant overseas interests. But European foundations though numerous are yet to become as visible or proactive overseas as the US foundations.

Reportedly there are one or two Italian foundations that are as big as

the Ford Foundation in their asset base, yet they are comparatively unknown. On the whole, private European philanthropy is smaller in scale, said to be less professionalized, and more regional in focus than US philanthropy. But the Europeans are said to be more dedicated

to strengthening global institutions to address issues of health, environment, peace and justice than are Americans. The number of foundations engaging with India and those

contemplating engagement are increasing due to a number of factors

such as increased wealth generation globally, greater awareness of the need to engage in international action, and India’s changed status as a future superpower. This last is particularly acting as a magnet for several international foundations to set up base in India, proving

yet once again that it is not economic need but demand expressed as opportunity to increase visibility and influence development action which drives international aid. The first foundations to come to India after Independence were

the Ford Foundation, the Rockefeller Foundation and the Asia Foundation. Some other non-resident American foundations — the Danforth, the Duke, the Cowles, the Hazen and the Watumull

foundations, and the Hopkins Fund — also gave aid in the early years

in the form of scholarships and ad hoc grants, especially to Indian colleges, universities and research institutes for equipment and research projects, and to Indian students to study abroad, though not to NGOs (Chandrashekhar 1965). A non-American foundation,

in operation since the 1960s, is the Aga Khan Foundation, an international development organization. Though set up by the head of the Ismaili sect it works as a secular foundation. It has concentrated its attention on supporting NGOs working on education, health,

rural development, and strengthening civil society. The Rockefeller Foundation began work in India soon after Independence. It pioneered the Green Revolution along with the Ford Foundation giving support to research and extension. Both

also contributed to the growth of population studies, nutrition and public health. But most of the grants of both foundations in the early

years were to government or government supported institutions and agencies or to other private institutions, and little of the aid went to civil society organizations. In the 1970s, the Rockefeller Foundation decided to leave India. The Asia Foundation too came to India in the 1960s. The story of its origin and exit from India in 1967 is covered in detail in Chapter 6, which is on government regulation of foreign aid. The foundation with the longest history and which has left the most indelible imprint on the NGO sector is undoubtedly the Ford Foundation (FF). In many ways it has also proved to be a model for Indian philanthropy. The only other foundation which can be said to have had as much influence is perhaps the Aga Khan Foundation. The FF was the largest international foundation in the world till the Gates Foundation came on the scene. It came to India in 1952. Its first representative, Douglas Ensminger, was in every way a New Age incarnation of the viceroys of old, and had easy access to Prime Minister Nehru. His style of operation, and therefore of the Foundation’s in India, was reminiscent of the Moghuls (he famously flew his own plane, a rare instance at the time). Led by him, FF professionals operated as quasi-official advisers to the Planning Commission, advising, financing and administering many of the development programmes — agriculture, health, education or strengthening of public administration. Few grants were made to NGOs. In 1972, FF’s style of functioning in India underwent a The India office was downsized and became a purely grant-making foundation, defining itself as ‘a resource for innovative people and institutions worldwide’.10 It also shifted the focus of its grants from government to non-governmental institutions and organizations including NGOs. In the case of the latter, the emphasis was on rural and especially natural resource development, NGO activism, and asset building for the poor. The last included a strategy for promoting micro finance, especially for women’s productive initiatives. Social justice, concern with gender issues and culture were added later. After the 1990s, promoting indigenous philanthropy and ‘strengthening civil society through the broad participation of

metamorphosis.

10 For the history of FF, especially the early years see Staples (1992).

individuals and civic organizations in charting the future’ became important goals. Currently, FF’s programmes are organized under three main categories: asset building and community development; peace and social justice; knowledge, creativity and freedom. Under these overarching themes, it supports initiatives in environment and development finance and economic security, local-global governance, civil society, sexuality, reproductive health and rights, higher education and scholarship, and arts and culture. Special attention is given to the disadvantaged groups such as Dalits, women, tribal or indigenous peoples, and environment. Certainly the breadth of its programmes is unequalled by any other donor organization. Over the period 1952–2002, the New Delhi office of the FF had distributed $450 million in grants, and its current average is around $17 million per annum.11 Grants have been provided for training, studies and reports, for innovative projects and strengthening of and networks, for logistical support, seminars, foreign trips, fellowships for advanced studies, and for publications (Staples 1992: 10). There are other American foundations currently giving to Indian NGOs though not all of them have established a base here. Of the top 15 US foundations ranked by international giving in 2004, only four have a local presence in India, the others, apart from the FF, being the McArthur Foundation, Bill and Melinda Gates Foundation and Packard Foundation. With assets of $31 billion the Bill and Melinda Gates Foundation is one of the richest in the world. It’s endowment is ten times the size of the Rockefeller Foundation and three times the size of FF. With the $37 billion donation by Warren Buffet, the world’s second richest man, the Gates Foundation will be the size of an MNC such as Disney, Dell or Honda. What’s more, foundations like the Gates and FF have an influence far beyond the size of their funds because they can leverage other monies and expertise. Other American foundations giving to India and presently based here include the American India Foundation, the Dell Foundation and the Clinton Foundation. Amongst those said to be contemplating an entry or re-entry into India are the Oak Foundation, and possibly the Rockefeller Foundation.

development,

institutions

11 Interview with Ganesan Balachander, Representative, Ford Foundation, India, 7 July 2006, and Ford Foundation’s Annual Reports.

Some others like the Van Leer Foundation have a history of grant making in India but have no offices here, though the German foundations like the Friedrich Neuman and the Friedrich Ebert Stiftung, and the Fondacion de Oriente of Portugal do, and have been operating for long. As pointed out earlier, a foundation hitherto unknown in India, but which has suddenly emerged to become one of the top private donors since the last few years is the Vincent St Ferrer Foundation from Spain. It is too premature to say what its impact is on the NGO sector. In conclusion it may be worthwhile to consider how foundations differ from INGOs as donors. Foreign foundations operating in India are all grant-making foundations whose goal is to bring about a systemic change rather than to engage in merely palliative action. Many INGOs, on the other hand, began as (and some continue to be) relief agencies, though the larger ones have switched over to longterm development work. Several were operating agencies, directly undertaking programme implementation, though later some switched over to become grant makers. Because of their origin in relief work many continue to be closer to the grass-roots NGOs than to national-level organizations. For instance, of the NGOs supported by OXFAM India Trust (GB), 40 per cent are district level, that is small NGOs, 40 per cent are at the state level, and only 20 per cent at the national level. Since the 1990s, however, the bigger INGOs like ActionAid, OXFAM and Plan International have begun to the policy advocacy role of NGOs and are therefore seeking more national partners. Because of their presence close to the grass roots and their own orientation as NGOs, INGOs have had a greater impact on smaller NGOs than have the large grant-making foundations like the Ford and McArthur Foundations who have wielded more influence at the national level. Typically, foundations operate out of one main national office, have no field offices, and have small numbers of professional staff who travel to visit grantees wherever necessary. Perforce the intensity of interaction with partner grantees not based in Delhi is low. Unlike INGOs, almost all foundations are secular, and do not engage either in religious or humanitarian work. Even the Aga Khan Foundation, which has been founded by an Ismaili Muslim, though it may extend support to Muslim organizations, does so because they are among the poorest in India and not because it is mandated

emphasize

to work along religious lines. Its chief executives have been nonMuslims. With the exception of the American India Foundation (AIF), which raises money annually and from multiple donors, most are endowed foundations with their own sources of income. This gives them an independence, especially from their national governments, not enjoyed by INGOs who have to raise their own resources and are increasingly dependent on official donors. This is not to say that foundations necessarily follow a line different from their government’s policies, but that they are not compelled to do so. In fact, they have, on the whole, played less of an adversarial role visà-vis the host government and their own than INGOs because of the fundamental difference in their nature. Foundations are fundamentally social change philanthropists whose main instrument for accomplishing this is through the nature of the grants they make, many of which are not for field-based projects but for research, documentation, training, and networking activities to enable cutting edge work to be done. Again, because they fund very selectively, the emphasis is on replicability of the models chosen for support. Foundations also tend to take a broader view of their role in social progress, and the Ford Foundation and some others like McArthur and Fondacion D’ Oriente also support work in the arts, culture and humanities, and not only anti-poverty work. Since their primary goal is not to work with poor communities or to make a difference in the conditions of chosen geographical locations, foundations typically spend a lot of effort in identifying niche areas which would support in leveraging social change. Thanks to their independent incomes, foundations similar to some official donors like NORAD, SIDA and DANIDA, and unlike INGOs, have been able to offer longer term support to NGOs, and consequently have played a major role in the institutionalization and growth of NGOs. Moreover, since the aim of foundations is to make a difference to an issue or to a field (and not necessarily to poverty alone), large resources are pumped towards that over a long period of time, though the beneficiary partner may not remain the same over time. For instance, the Rockefeller and the Ford Foundations made commitments of several millions of dollars over 10 and 20-year spans to make the Green Revolution possible, and to develop the nascent field of business management education in India. The Gates

communication,

therefore

Foundation has pledged $750 million to vaccinate children against deadly diseases, and distributed $1.36 million in grants in 2005. Its major emphasis so far has been on global health, especially fighting diseases like malaria and tuberculosis and AIDS. In India, the Gates Foundation has committed $200 million to prevent the spread of HIV through its India AIDS Initiative Avahan. The Gates Foundation support is bigger than any single government’s support for this programme. In 2005, it committed $84.3 million to 18 developing countries to help prevent infant mortality. Of this it has given a grant of $24.3 million for the Sure Start project for NGOs to fight infant mortality in India (the funds are to be released to the Health ministry), which would in turn give the funds to NGOs. The Gates and the other new foundations are new kids on the block and their impact on the NGO sector will take time to become apparent. With this background, the next chapter looks at the strategies adopted by donors in general, and the changes in them and in styles over the period under review.

operating

5 Of Strategies and Programmes ‘Recognizing what we have done in the past is a recognition of By conducting a dialogue with our past we are searching how

ourselves. to go forward.’1

The story of aid is essentially one of action, interaction and reaction. Each new development model or paradigm, and each new phase of development grew out of the experience of Indian NGOs and their interaction with foreign donors. NGO experience from the grass roots was refined through interaction with the funders of the projects who provided a wider perspective on the problems, brought in new ideas and methodologies from elsewhere, and through the grants influenced what was done and how. The successful models were disseminated with donor support and often adopted in mainstream government development programmes. Over the period under review, the objectives of aid changed in response to the different concerns of the time, and with them the strategies and practices adopted. Two main objectives have motivated aid givers, viz. removal of poverty in poor nations in order to reduce inequalities between nations; and, containment of communism or its converse, promotion of democracy. The strategies adopted for realizing these two goals varied depending on the paradigms of and conceptual debates then in vogue, the level of of the recipients, the ideologies and philosophies motivating particular donors, and the socio-political context of the time. Since donors shared the development rhetoric and language it is possible to discern broad patterns in the paradigms and strategies adopted by Western donors, both private and official. The strategies provided the framework for action. Over the period 1950–2008, three broad strategies can be In the first phase (up to the end of the 1960s), donor strategy

development development

discerned.

1 Kiyoko Takeda, Professor, International Christian University, Tokyo, in The International Thesaurus of Quotations,Penguin Reference Books, 1976.

Foreign Aid for Indian NGOs

was one of supporting relief and rehabilitation programmes. After the crisis was over, the rehabilitation activities were extended to

long-term development of communities. Some donors directly the programmes themselves. INGOs and church-related donors in particular financed and ran orphanages and hospitals, and

implemented

engaged in relief work themselves or worked in partnership with

NGOs right from the beginning. The approach was essentially welfare rather than a development approach. Foundations and bilateral agencies by contrast mainly supplemented the government’s plans for development.

After the 1960s, official donors as well as the Indian government started to include NGOs as partners in government implemented projects and programmes, especially in the social sector, due to their reported ability to reach the poorest better. The Ford and the Aga

Khan Foundations too began working with NGOs in a large way at the end of the 1960s. The end of the 1960s also saw a distinction emerge between

humanitarian aid (mainly responding to disasters) and development

aid. Development aid made funds available for a mix of anti-poverty measures and social activism. The geographical and programme adopted for extending support varied among aid agencies in

priorities

the details and over time, but the poverty reduction strategy had three

main components in common: promoting economic opportunities for the poor through asset acquisition, provision of micro finance and technology transfer, especially in agriculture and related fields; delivering social services for the poor (health, education, provision of

drinking water, and improved agricultural practices, etc.); and safety nets for the poor (for example, food subsidies). Few emphasized measures that attack the structural causes of poverty

providing

such as land reform, though some donors like Ford Foundation,

ActionAid, OXFAM and others went half way by supporting NGO efforts at conscientization, that is making the exploited aware of the inequities in the system. Also, as experience was gained, support was extended particularly for work with the poorest and socially

marginalized. Many donors organized or supported the organization of to bring NGOs together to discuss development issues. Out

workshops

of these gatherings surfaced the issues connected to gender, tribals

and Dalits, and drought prone area development, which were then

Of Strategies and Programmes

disseminated more broadly through donor support. Aid thus served as a two-way channel for transfer of know how in which donors learnt as much as they taught.2 The next phase of donor support grew out of the experience of the last. Since the funding of NGOs at that time was liberal without much scrutiny or evaluation, donors made many mistakes, for example, three donors funding one organization for the same project, especially since there was no inter donor co-operation. But soon enough NGOs learned to prepare proper proposals for donor consideration and donors learned to discriminate between proposals. Early experience showed that to catalyse development it was necessary to jolt people out of their apathy and make them aware of their condition, their entitlements. Without actually supporting the many social movements which arose out of the social and economic unrest witnessed in the 1960s, donors like Ford, ActionAid and others supported what was called ‘conscientization’ or awareness building. This included helping NGOs mobilize communities to form groups and spread development messages to them. During the 1970s, environmental issues also came to the fore as a result of people’s movements, like the Chipko Movement which started in the remote hills of Garhwal during this period. It attracted foreign donors and helped shape a discourse which showed that protection and sustainable livelihood were compatible objectives. Sustainable development became a much used and though first used in connection with environment was extended to all development. It led to large-scale foreign assistance in forestry and environmental regeneration as part of natural resource management. The Chipko Movement was largely a women’s movement because deforestation affected their supplies of fuel and fodder and gathering these from forests was women’s work. It served to focus attention on women’s roles in development. Gender issues thus came to be to the list of fields supported because it was realized that unless women participated in development, not merely as beneficiaries but as change agents themselves, development would not be sustainable. The pioneering work of women like Veena Mazumdar, Devaki Jain and Ela Bhat led to support not only for women’s innovative

community

environmental catchword

added

2 Interview with F. Stephen, Executive Director, SEARCH, Bangalore, 14 September 2006.

projects on the ground but also for advancing the theoretical

boundaries of the subject. The early women-in-development work, which

was largely focused on livelihood issues, naturally led to a broader concern with gender issues such as the low sex ratio, girls’ education, domestic violence and dowry deaths. Between 1970 and 1990, NORAD, SDC, SIDA, GTZ, and the Ford and Aga Khan Foundations, among others, gave funding support to NGOs in social forestry, waste land development, women’s issues, and innovative approaches to community health and education. The Ford Foundation funded women’s studies centres in several parts of the country, as well as the documentation and publication in the Anubhav series, of innovative health care delivery by NGOs such as the Child in Need Institute (CINI) in West Bengal, the Health and Development Project Pachod, and several others. The Foundation also gave grants to strengthen the work of like SEWA in Ahmedabad, Working Women’s Forum in Chennai, and ADITHI in Bihar for women’s income generating activities. The concern with environment led to support of new institutional initiatives such as the Society for Promotion of Wasteland (SPWD), Centre for Science and Environment (CSE), and The Energy Research Institute (TERI). SIDA and other bilateral donors supported innovative educational programmes such as Lok Jumbish and Siksha Karmi in Rajasthan, beginning the trend for creating institutional partnership arrangements between government and NGOs. By and large, the approach of European donors such as DANIDA and SIDA was to supplement government programmes and aid the partner NGOs for piloting innovative approaches and for demonstrating their feasibility. The donors then recommended their adoption by government and assisted in their replication. While these developments were taking place within India, international agencies like the UN and the World Bank, helped to cross-fertilize ideas and internationalize development issues such as women in development, and gender through several important conferences like the Beijing and Copenhagen conferences on Women in Development, in which Indian NGOs participated.

Comprehensive organizations

Development

international

One distinguishing feature of donor strategies of the period was

the stress that CIDA, DANIDA, Ford Foundation and others laid on participatory development, gender equality, and targeted to bring the poorest and scheduled castes and scheduled

programming

tribe populations into development though it must be admitted, not always very successfully. With the expansion of NGOs in the 1980s, there was a need for trained staff for NGOs. Donors responded by supporting training programmes and bringing in methodologies and approaches such as the participatory rural appraisal (PRA), and participatory then being successfully implemented outside India. As NGOs started forming people’s organizations called SHGs, they and the donors saw a need to train the staff of these organizations. Therefore, donors turned to supporting training of trainers. Since most SHGs were women’s SHGs, the gender perspective became important both in development programmes as well as training. In sum, the strategies of the second phase were to support delivery of development inputs and social activism, and included support to conferences and workshops, publications, international travel and the like in order to promote an exchange of ideas. One significant difference between support strategies at the beginning and end of the second phase was that in the 1970s and 1980s donors were supporting NGO oppositional activities vis-à-vis government but by the 1990s they had begun to advocate The present approach is to support both collaborative and confrontational action to ensure an enabling environment for sustainable development. As foreign funding increased, so too did the dependency syndrome — dependency of NGOs on foreign donors and of people on NGOs. Self help efforts, and especially efforts to raise funds locally, slowly began to decline. By the end of the 1980s, private aid was firmly established as an indispensable part of the system. The third phase of development aid began post-1990 and can be further subdivided into two: 1990–2000 and 2000–8. In the first part, donor support strategies were driven by five main factors. One, a focus on poverty replacing the containment of Communism as the main goal of aid. The US and its OECD allies let aid volumes decline and shifted their aid focus to the internal problems of poor countries. But the difference from the earlier approach was that poor governance and corruption were identified as causes of both poor progress and slow utilization of aid. The new focus on poverty was also credited to a new ‘moral vision’ evident in multilateral and in foreign policy of the aid donors as a result of pressure

development,

collaboration.

development

renewed

institutions

from civil society. This eschewed purely self-interested diplomatic or commercial goals in favour of development ones such as the adoption of the MDGs (Hulme 2008). The new moral vision was also more evident at the grass-roots level so that equity, social justice, respect for indigenous knowledge systems, decentralization and participation were to be the core values underlying development work. Two, there was an ideological shift in the broad donor community to market fundamentalism. Following the Washington Consensus among major development institutions in the early 1990s, the earlier state-centred model promoted and accepted by national INGOs and other donors was discredited, and neo economic liberal policies, liberal democracy and good governance became the new orthodoxy for development interventions. The new policy agenda of Northern donors prioritized market-led growth, a reduced and more efficient role for the state, and a prominent role for civil society in the implementation of this agenda (Biekart 1999, Riddell and Robinson 1995, Robinson 1996a). Three, there was a growing disillusionment with development practice so far, as project results showed a lack of sustainability built into the ways of working that often set up parallel structures that were not viable beyond the end of the project. It led to a search for new structures and mechanisms for ensuring poverty reduction. The fourth factor was the criticism that donors do not pay adequate attention to global issues such as unequal terms of trade, migrations, etc. in their aid support. Lastly, a concern with high transaction costs and accountability in utilizing grant funds led to a more managerial approach to even while participation, empowerment and local continued to be touted as values to be promoted (Wallace et al. 2006: 19–29). The third generation strategies have thus had three main empowerment of the poor and marginalized also known as the rights based approach, policy advocacy, and civil society building. In the late 1990s, even as support to service delivery activities such as providing health, education and livelihood generation on the part of many donors, especially smaller INGOs, several others like OXFAM, Ford Foundation and DANIDA, and the Dutch CFAs, followed three core strategies, namely direct poverty alleviation focusing on empowerment, civil society building and policy advocacy.

governments,

development, ownership

objectives:

continued

EMPOWERMENT AND PARTICIPATION They supported interventions which would empower the landless and marginal farmers to ask for their entitlement in land or other resources. One striking example of the donor shift to a rights based

approach is the support provided by DFID to voluntary organizations under PACS wherein DFID has committed Rs 170 million to help

organizations do rights based work in 100 poorest districts of the country. One aspect of the empowerment strategy is that the focus of many donors, for example ICCO, is now almost exclusively on marginalized groups — Dalits, tribals, and women, and on

crosscutting issues concerning these categories.

OXFAM NOVIB’s rights based approach presumes that promoting basic human rights to sustainable livelihood, basic social services, life and security, being heard or social and political participation and gender and diversity, will lead to the construction of pro poor, environmentally friendly, and just socio-political-economic systems,

policies, and practices (OXFAM NOVIB 2007: 12). Thus the adoption of an empowerment strategy logically led to

support for more networking and policy advocacy since collective action was necessary to secure entitlements. While some donors (the Danes, for example) viewed the poor implementation of the poverty reduction strategies as the major problem to be

government’s

addressed, others like the German and British bilateral organizations,

American foundations like Ford, and INGOs such as OXFAM and ActionAid felt that policy itself was flawed. They were in favour of involving NGOs, user groups and SHGs in the policy process itself. Instead of the usual approach of the government conceiving a project and getting an NGO to get the people to accept it, they wanted

people’s participation much earlier. The new strategies were

therefore geared at pursuing policy changes at government levels and increasing coordination between organizations involved at the micro

and macro level. Because local communities are not sustainable in the absence of regional, national, and even international supportive environments and policies, support was extended to help NGOs at the subnational level to link up with national and international

thinking and action. Several INGOs broadened their interpretation of anti-poverty work, to include more than implementation of development For instance, underlining OXFAM’s programmes during

projects.

this period was the belief that it is essential to be proactive about

redistributive justice, which does not simply accompany growth; that the watchdog role on national governments and global institutions such as the World Bank and WTO is as important as the

implementation of anti-poverty projects; and that research and advocacy were necessary for informed decisions.

Civil Society Building Civil society building was added as an explicit objective after 1990. Civil society building strategies were adopted for three reasons: to promote market-led development, to promote democracy, and to enhance impact (Biekart 1999: 94).

Official aid agencies started focusing on civil society building

because of their conviction that a strong civil society was a prerequisite

for an efficient market economy. USAID for instance believed that support for CSOs (that is, organizations including and other than

NGOs) would be an effective way to consolidate the transition from state-led to market-led economies. Support for civil society building in this neo liberal approach was synonymous with guaranteeing free markets, privatizing public services and meeting immediate

needs of the poor to prevent social unrest. This interpretation was at variance with that of social activists who see civil society as a way of halting the progress of unthinking marketization of

building

societies, of countering the effects of privatization and other free

market operations. Private aid agencies began to espouse civil society building as an agenda for one more reason. Poor performance of micro projects and the lack of an impact at the macro level made them examine the

structural causes of poverty. It was realised that merely enhancing organizational capacity at the grass-roots level and offering inputs would not lead to structural changes in power relations

development

if it was not combined with measures that changed national and

international policies which perpetuated these unequal relations. Hence there was a shift to interventions that would change power structures and policy reform. Civil society building was seen as a tool to pressure governments to become more accountable to the

marginalized and to increase citizen participation (Biekart 1999: 95).

Since different donors as well as social activists interpret ‘civil society’ differently, civil society building strategies also differ. The neo liberals support those organizations which work for service

provision to substitute for those functions vacated by the state. The pluralist approach aims to strengthen the efficiency and accountability

of the state and citizen participation to strengthen political society. The inclusive approach of civil society building, on the other hand, points to unequal power relations within society itself as the cause of poverty, and tries to promote strategic alliances among the most vulnerable sections of society to promote social and political change. Many donor agencies support all three strategies (Biekart 1999: 95). The initial strategy of official donors to build civil society consisted of improving governance by enhancing the efficiency of governments and making the state more accountable to civil society. Initially, such policies had a top-down approach and tended to strengthen the institutions of government and political society, as opposed to constituencies from within civil society. Later on, official aid documents explicitly recognized the need to build a pluralist civil society as a counterweight to government and as a means to further democratization. Most donor action is based on the assumption that working with NGOs, especially working with marginalized groups (women and tribals, for instance), automatically strengthens civil society, though a few, like the German Foundations Friedrich Neuman Stiftung and the Friedrich Ebert Stiftung, work with other components of civil society such as journalists, lawyers, trade unions or research centres. But mostly ‘civil society building’ is interpreted as support for capacity building for service delivery and empowerment (see Chapter 8 for more on capacity building).

building

organizational Networking and Linkages

Another method adopted for building civil society is to encourage and enable the establishment of vertical and horizontal linkages between different social actors. Networking has been encouraged by financing meetings, conferences, and funding the establishment of coordinating offices. The Ford Foundation has brought together NGOs, government departments and the community working on joint forestry management into dialogues, collaborative agreements and action projects to preserve the commons and the environment for mutual benefit. It has complemented such projects with supportive action of working groups to bring together different stakeholders to change government policies and mindsets of all the different stakeholders. Similarly, OXFAM India Trust (GB) has networked 50 NGOs around agricultural issues, to provide them mutual learning and

to participate in advocacy and policy work, and is also involving Indian NGOs in global campaigns.3 Water Aid has linked NGOs in the water sector into a network. The good news is that building broader alliances within civil society is now not limited to foreign donors and their partners. There are growing instances of civil society alliances promoted indigenously such as the NGO-media-corporate sector partnership between TERI, Times of India, and CSE and JSW, for the Earth Award for Excellence in Climate Change, Mitigation and Adaptation, and between National Foundation for India (NFI), Tehelka and Hindu for the NGO Leadership Award. In fact, to strengthen civil society, multiple strategies such as policy advocacy, bringing about political change, and interventions at geographical levels are needed. Donors need a great deal of sophistication if they are to make appropriate choices to strengthen civil societies (Biekart 1999: 95–100). The civil society building objective of official donors and private aid agencies sometimes diverges. USAID for instance will support NGOs as long as they do not oppose their governments. Democracy promotion thus means achieving political and economic stability. On the other hand, private aid agencies, especially INGOs, prefer to make civil society more inclusive though this may make society more unstable in the short run (Biekart 1999: 103). In terms of issues supported, the focus in the early years was on rural development, natural resource development, and micro finance; post-1990 the themes and issues supported are the girl child, HIV AIDS, disaster preparedness and disaster management, water harvesting, micro finance, genetic modification of food products, portection of intellectual property rights, energy security, and climate change.4 In fact, support to the last two along with HIV AIDS has become the new global funding fashion.

different

CHANGES IN DONOR ATTITUDES AND PRACTICE Several changes are noticeable in donor attitudes and operations over the years. One change that has been underway for some time 3 Interview with Biranchi Upadhyaya, Director, OXFAM (GB), New Delhi, 9 October 2006. 4 CARE (2004). Also, interview with Steve Hollingworth, Country Director, CARE, New Delhi, 27 September 2006.

but is more pronounced now is the shift of church-based donor organizations like ICCO, EED and others from supporting only

church-related groups to secular giving. Reportedly, only about 30 per cent of ICCO’s partners are now Christian and 70 per cent are secular NGOs. Initially, since the aim of faith-based donors was solidarity building, they sought and assessed partners according to

whether the NGOs shared agendas, backgrounds and thought with the donor, rather than on the basis of their achievements or impact on the communities. Since the last decade, however, the proposals are more professionally assessed in terms of the capabilities of the NGO

and its ability to show results and impact. A second change is that management of official aid has improved in quality, or so donors maintain. One improvement is said to be to give greater ownership to recipients over the use of aid. The Paris

Declaration of 2005 commits all major donors to coordinate their aid programmes in ways that will make aid flows more predictable and administratively less costly for recipient countries. They have also put in place general budgetary support (GBS) in which donors put

their money straight into the recipient nation’s national budget thus allowing them freedom to use the money as they consider best. There is of course disagreement over whether in fact the donor claims are valid and critics maintain that donors are still hesitant to relinquish

control (Hulme 2008). Another noticeable change is that the donor euphoria over NGOs has begun to wane. Familiarity has bred, if not contempt, at least a certain cynicism about working with NGOs. A number of books and

articles have pointed to the lack of impact by NGOs and the

difficulties of working through them, as also the difficulties of identifying

good NGO projects. Donors claim that NGOs have limited insight into internal dynamics, weak management, lack of business plans and

measurable targets, and high transaction costs. There are also deficits, with strong authoritarian leaders and a weak second line of leadership. Few have open memberships and freely elected

democratic boards. Their capacity to plan, design, implement, and monitor

projects is very variable, as is their capacity to take up technically challenging projects due to their small size, lack of infrastructure, and

qualified technical staff.

Donors further point out that NGOs lack alternative resources

to scale up, or to ensure sustainability of projects or organizations

after donors withdraw due to lack of enough effort to secure alternative funding.5

The connection of NGOs to the rest of Indian development and to the world is said to be weak, and they are said to be unable to

engage with peers in a meaningful constructive way, going beyond mere dialogue and outside the funding process. 6 Getting NGOs to see the impact of their work on the larger development picture, not only in terms of output but outcome is another challenge according to donors. They aver that NGOs need to have a larger vision.7 Finally, misuse and mismanagement of funds by NGOs have added to the disillusionment. Donors claim that there are some among NGOs who know how to play the system, to window dress their work, and who are specialists in creative accounting. Lack of coordination among donors allows them to corner funds from

several donors for the same project, and use them for personal benefit.

Because financial accountability and NGO reporting systems are

very poor, and reminders are needed before NGOs report, donors cannot always be sure that all the money is well utilized for the given. Though accounts are audited, even this lacks rigour and quality, and getting NGOs to become more compliant with is a challenge.8 Consequently, many donors are reportedly withdrawing from NGO funding (Kayser 2008). This disillusionment has coincided with the rise of ‘philanthrocapitalism’ or ‘new’ philanthropy, described in Chapter 1. It has also impacted on donor practice. Goal-oriented, results driven,

purposes regulations

entrepreneurial, and impact-oriented strategic approaches are demanded of

their partners by many of the newcomers into philanthropy. The

‘new’ philanthropy’s answer to lack of results in anti-poverty

programmes and unsustainable development is to put increased faith in market-based solutions, top-down planning, technocracy, increased management control, insistence on measurable results, and standardization. There is said to be little scope for inputs by the recipients. 5 ‘Direct Support to NGOs in India’, India-NGO Position Paper, undated Mimeo, NORAD document, The Royal Norwegian Embassy in India, New Delhi. 6 Interview with a Delhi-based donor, 13 October 2006. 7 Interview with a donor, 26 August 2006. 8 Interviews with representatives of three donor organizations on 4 October 2006, 13 September 2006, and 10 September 2006.

The newer foundations, like the American India Foundation (AIF) and the Bill and Melinda Gates Foundation, take a more and business approach to grant making than had the Ford and the Aga Khan Foundations in an earlier period. AIF emphasizes scale of outreach, especially in livelihoods projects, where they support projects only if they are likely to yield large incomes and A second important criterion is replicability. AIF usually funds similar work in three to four different locations of a different nature to ensure that the initiative is replicable in every situation.9 The goal of the Bill and Melinda Gates Foundation is to the market failure afflicting poor consumers of health care by using their money to supply the drugs and treatments they need. The Foundation’s money provides market incentives for drug companies to put some of their resources to work for the needy. The new philanthropy styles itself as ‘strategic’ philanthropy in which the donor focuses own resources and seeks to ‘leverage’ funds from other sources to achieve a common goal. While the early donor style was to respond to requests for assistance without being as to whether the pieces fitted into a coherent whole, post1990, and especially post-2000, donors are aligning giving with the recipient country’s strategies and programme objectives, as they strive for impact. Also in search of impact, many donors, bilateral INGOs and foundations are choosing to fund fewer NGO projects, to reduce the locations worked in, and especially to work with large, well established NGOs. Several are also shifting from project to longer term institutional support. In fact, it is a trend which had started even earlier among bilateral donors. They changed their programme strategies, priorities and locations for extending support on the basis of the experience gained as well as recommendations of internal and independent evaluations.10 By the 1990s, many of the evaluations showed that impact had been less than anticipated because resources were spread too thin over too many locations, issues and organizations. As a result, many of the donors phased out of the initial locations, or chose to focus on

management

employment.

overcome

particular

support

9 Interview with Shankar Venkateswaran, Chief Executive, American India Foundation, New Delhi, 27 September 2006. 10 For instance, evaluation of DFID by Christian Aid in 1998; NORAD’s 1987 evaluation by independent consultants Stein Hansen et al.; CIDA’s 2005b evaluation by its Evaluation Division.

fewer areas or issues so that geographical and sectoral emphasis too changed over time. The GOI’s new aid policy further strengthened

this trend. The current funding priorities and geographical focus of some of the major bilateral donors to NGOs is given in Table 5.1. Many INGOs like Plan International and OXFAM NOVIB have also started to work in northern states like Orissa, Jharkhand, Uttar

Pradesh and Bihar after 2000. This is reflected in the FCRA statistics, which show a sudden surge in contributions to these states. Ironically, even as current donor practices enhance donor control over NGOs, there is also a great deal of talk about partnership. In

fact, the term ‘partner’ has replaced the earlier, commonly used term ‘grantee’. While previously the relationship of donors to their partners was largely a funding relationship, now the emphasis of donors like ICCO and OXFAM is said to be equally on providing non-

financial support, such as ensuring NGO access to the right sources of support and information, and on partnership building for advocacy.

international

Partnerships of a different nature are being forged now with

other donors and with government. Though they are by themselves big enough to pursue projects on their own, the Gates and the Ford Foundations are big on partnership in the belief that it leads to wider and better impact.

One other visible change in practice is that some donors, especially foundations (the Ford Foundation, for example) and bilateral donors are said to be shifting their funding away from NGOs in metro towns to NGOs at the district headquarters. If at all given, the

grants to big metro NGOs are to train the smaller and newer NGOs in the use of the grants. Big metro-based NGOs feel these changes are regressive. They argue that NGOs at the district level can

replicate projects horizontally to other villages, towns, etc., but for

innovation — new ideas, technologies, methodologies — big NGOs have an edge because they have access to several funding sources and better human resources. The same goes for policy advocacy. They believe donors should fund those big NGOs in metros who have

close links with the grass roots. Some donors (for example, OXFAM NOVIB) fund big national NGOs precisely for these reasons. One final change in practice that is evident is that many big donor agencies are reportedly becoming less responsive and more proactive

in their funding. Responsive grant making is one where the donor

Table 5.1 Table 5.1 Bilateral Aid Indian NGOs NGOs Bilateral Aid to to Indian

Priorities

Anti-poverty

programmes,

Locations

ContlExit

Madhya Pradesh,

Cont.

HIV AIDS, community health, Himachal Pradesh, North-east (since 1998) women, governance.

Anti-poverty

programmes,

sustainable livelihoods, social

Uttar

Pradesh, Madhya Pradesh, Chhattisgarh

Exit 2006

Orissa, Madhya Pradesh, Karnataka, Tamil Nadu, North-east, Chhattisgarh Gujarat, Kerala, Madhya

Exit

development, environment, gender, health, education, water, sanitation, and

agricultural improvement Women, environment, water

Drinking water, primary education, gender, environment, mental health Education, environment, culture, natural resource management, child labour, institutional co-operation Energy sector, health, population, education, water and sanitation, rural

development,

Exit

Pradesh

Rajasthan, Himachal Pradesh, Orissa,

Phased exit

Karnataka Andhra Pradesh, Orissa, West Bengal, Madhya Pradesh

Cont.

Rajasthan, Orissa, Tamil Nadu, Gujarat

Exit

Karnataka, Kerala, Andhra Pradesh, Rajasthan.

Phasing

N.A.

Phasing

urban poverty

reduction, forestry, urban

development Primary education, environment, primary health care, energy

Anti-poverty programmes, promotion of civil society, human

rights

AIDS, reform programmes,

population growth, child survival, environment, women Anti-poverty programmes, education, vocational training, health, environment, promotion of small enterprises HIV AIDS, environment, rural

out

out

Maharashtra, Himachal Cont. Pradesh, Karnataka, Madhya Pradesh, Orissa, Rajasthan, West Bengal Cont Open

development, food aid Livelihoods, rural

development, environment

Nationwide

Cont.

responds to requests for funding from NGOs and accepts unsolicited proposals, whereas in proactive grant making donors seek to set the agenda themselves. They have a vision of what change they want to see happen and seek NGOs partners who share that vision and can bring it about. Many donors are now said to be less open to ideas and projects emanating from NGOs and are instead pushing their own list of projects. They are drawing up their own list of priorities and under these priorities, using their own consultants. They then advertise these interests and call for proposals or ask NGOs to bid for projects under these broad themes in an open competition. Philanthrocapitalism or ‘new’ philanthropy in particular is said to be proactive. This change has sparked an international debate on the merits of reactive vs. proactive philanthropy, particularly in the context of who drives the development agendas.11 Critics disparage this tendency proactive grant making as being more control oriented, leaving little ownership in aided projects to the NGO partner. They favour traditional philanthropy, which was said to be responsive and more grantee friendly. But it is difficult to draw the line between the two modes very firmly. The Ford Foundation, for instance, has always been more proactive than responsive, sometimes for the better and sometimes for the worse. Usually a foundation defines for itself what is to be addressed, but within this broad framework allows latitude to NGOs working in that area to suggest what needs to be done and how. It assumes that those close to an issue know more about it than a funder does and does not display the arrogance of power. The downside of responsive or reactive grant making is that it may lead to a funder losing focus in its portfolio, thereby running the risk of making less impact on a field. Proactive giving may be better at bringing about social change than reactive or responsive grant making, but it can be more directive and control oriented. The donor may not have sufficient understanding of situations and actors to achieve its goals, nor enough humility to accept that others know better. It can therefore lay itself open to

projects

towards

11 See the symposium on ‘Who’s setting the agenda?’ in September 2008 issue of Alliance Magazine; in particular see Peter Laugharn, ‘Proactive vs. Responsive Philanthropy’.

charges of donor driven philanthropy. On the other hand, Indian philanthropy has been mostly responsive, giving donations on or has preferred a direct hands-on role, operating its own projects. If the former it has had less value for transformative change. The latter has starved those with their own new ideas, but no funds, of funds. Clearly, what is needed is a mix of both types to allow for greater local knowledge and a greater say and ownership over their projects to NGOs, as well as to ensure that innovative ideas from elsewhere get their due. The mix must suit local conditions and issues, with one mode being used to address one kind of need, say at the community level, and another to address other needs such as policy advocacy at the national or international level. Donor practices depend not only on field offices but are influenced by the management practices and policies of the parent organizations or donor nations. An insider of one donor agency mentions that donor organizations — like their back donors (that is those who fund donor agencies in India) — are entrapped in highly bureaucratic modes and regulations and the level of bureaucracy has grown over the years with much emphasis on systems and procedures. The learning capacity is limited and internal links (like between policy and regional departments) are rather weak. Their balancing act is to please the back donors but at the same time to be critical and independent. Often, there is an inclination to transfer the demands of the back donors to the NGOs.

request,

Box 5.1 Proactive vs. Responsive Philanthropy A donor agency was convinced that what India needed to promote local community philanthropy were community foundations, the fastest growing philanthropic model globally. It tried to promote a community

foundation movement in India by first exposing local leaders to the idea, and then funding groups of elite leaders of some communities to establish community foundations. Unfortunately, not being an organic demand the idea did not ignite. On the other hand, several indigenous NGOs, quite unaware of the global concept or developments, had initiated several rural

community funds, which shared several features of the global model

without being called by the name. A responsive donor strategy would have

been to seek out such groups and advertise their interest in supporting the initiative to expand what was already on the ground.

In their own defence, donors claim that they engage in a wideranging consultation process to meet the needs of the countries they work in rather than impose one-size-fits-all solutions drawn up in the parent country. The Danes, the Swedes, and the Dutch, in particular, claim that they have in recent years begun to involve some of their partners and others in the research and consultancy community, in preparing the background sector, state and other studies. Donors like ICCO maintain that the intensity of communication and exchange has also tremendously intensified and increased, partly due to communication technology, but also through participation in joint campaigns and lobby and advocacy actions.12 While this may be true in their case, several evaluations of donors,13 as well as discussions with NGOs and other informed reveal that for all the talk of participatory development, and avoiding a top-down approach, the development of donor strategies is still a donor-driven affair, with minimal consultation outside of donor agencies. Only lip service is paid to local consultation, even though it is important that donors should involve NGOs at every important stage, from drawing up the country strategy to deciding on funding practices. Else, as a thoughtful African commentator on aid observed in relation to Africa, ‘You give the aid which you think we need, but you do not give us the help which we want.’14

improved

persons

12 Interview with Leonard Roubos, ICCO, Delhi, 26 August 2006. 13 Such as those done by Diesen of DFID in 1998; by Cox et al. of six European bilateral donors in 2002; and OXFAM NOVIB’s 2007 CCPE evaluation for India. 14 Buchi Emecheta quoted in Van Der Velden (1997: 113).

6 The Government vs. NGOs and Donors ‘Third World governments have become sensitive to the usurpation of domestic development options by aid-financed foreign and local

NGOs…Many governments have now started to take action towards gaining control and coordinating authority over NGO activities… .’ Eberhard (2001: 18–20)

Foreign aid has a potential for influencing the government–NGO relationship for better or worse. Unrestricted inflow of foreign funds can lead, in extreme cases, to NGOs becoming all-powerful and the state, as has happened in some developing countries. After the collapse of the Soviet Union in particular, large amounts of money poured into NGOs in the developing world to promote and sponsor areas of free association or ‘civil society’. In some countries this foreign funding of NGOs accompanied a process whereby the state has been replaced by a virtual parallel state, amenable to foreign influence and foreign aid. In Mozambique, for instance, it is reported that 170 foreign NGOs were running programmes in complete isolation from the state in 1990. These ‘new missionaries’ divided the country into ‘mini kingdoms’ (Hancock 1989). Similarly, Terje Tvedt (1998) describes a situation in Sudan where INGOs, in order to meet goals and to report success stories to the back donors, sought to circumvent inefficient state institutions and to work directly with the beneficiaries. The better they did it the more the authority and of the local government structures was eroded. The biggest NGO in the region, Norwegian Church Aid (NCA), reportedly not only a state within a state, but ‘The state’. Tvedt terms the process as a privatization and an externalization of the state.

subverting

legitimacy became Equally, the government can influence the donor-NGO

relationship in one of three principal ways: one, by the freedom it allows or

does not allow NGOs to function freely; two, through the resources it provides or does not provide to them, directly, or indirectly; and three, by the controls and regulations it imposes on NGOs in their interface with their donors, especially foreign donors.

Foreign Aid for Indian NGOs

That India did not go the way of some of the African and Asian nations may have been because the inflow of funds was insignificant, relative to India’s size and diversity. The voluntary sector’s Gandhian past, and its strong tradition of home grown voluntary action too were responsible for the fact that India did not capitulate wholesale to foreign aid. But some credit must also go to the Indian government whose strong policies, though considered irksome by the NGO sector, may nevertheless have saved India from becoming an appendage of the West or the Communist Bloc. The Indian government, like that of China and Malaysia, was circumspect about allowing acceptance of foreign aid by unknown NGOs. In particular, India was careful not to allow foreign funds for NGOs to enter into issues that affect her sovereignty. This, according to Goonatilake (2006), may have saved India’s tradition of voluntarism and its strong commitment to democracy in contrast to countries like Sri Lanka, which once had a vibrant democratic tradition and a functioning civil society on many associational fronts but which became ‘recolonized’ under the twin influence of an authoritarian state suppressing the existing organic civil society and the deep penetration of foreign funds into the NGO sector (ibid.: 10, 24, 286). In fact, the Indian government’s attitude and policy to both foreign donors and Indian NGOs has been somewhat ambivalent, particularly in their interface with each other. The following describes the NGO-GovernmentDonor relationship in India since Independence.

unconditional

GOVERNMENT AND NGOS Whatever the political colour of the government in power, and in keeping with the nation’s faith in democracy, the government has been supportive of civil society, allowing it freedom of association for common action for the most part without let or hindrance. The legal framework which formalizes this space and the rights and obligations of NGOs towards the state and citizens is represented by the Registration of Societies Act, 1860, the Indian Trusts Act, 1882, the Bombay Public Charitable Trusts Act, 1950, Section 25 of the Companies Act, 1956, and the Income Tax Act of 1961. Though somewhat antiquated and in need of fine-tuning to meet modern needs and conditions, the framework is, on the whole, not if not positively facilitating. It also provides for the checks and balances necessary for good governance and performance by NGOs, requiring NGOs to do annual audits, to annually report to

restrictive,

The Government vs. NGOs and Donors

authorities the names of trustees of the organization, and to seek permission for alienation of trust property. Where it can be faulted is in the tardy or unfriendly implementation of the regulations.

The government has also provided increasing financial support to NGOs and created separate government agencies such as CSWB and CAPART for routing the resources. Even in the post-Emergency period of the 1980s, when the Congress in power is said to have been harsh with sections of civil society and instituted some controls on their activities, the Plans contained provisions for funding of NGOs.

Finally, the government has encouraged others to donate to NGOs by providing a variety of fiscal incentives such as tax and deductions under Sections 12, 12A, 35AC and 80 G of the Income Tax Act. They either exempt NGO income from income tax, provided it is used for charitable purposes (as defined under the

exemptions

Act), or allow donors to NGOs tax deductions ranging from 50

per cent to 100 per cent of the contribution. Both the main parties, the Congress and the Bharatiya Janata Party (BJP) have been of NGOs so long as they engaged in only development work, including empowerment, and did not create social instability, though the interpretation of the term ‘development work’ and what

supportive contributed to instability, has sometimes been arbitrary.

Co-existing with a supportive attitude was also some hostility towards NGOs, which manifested itself particularly in the area of foreign aid. In the early days of official aid, when NGOs began to be associated in government programmes at the behest of donors, many bureaucrats did not welcome what they regarded as NGO competition in development work. Government officials considered

them a nuisance, to be tolerated only to humour donors. Later, when their good track record had made the government itself rely on NGOs for supplementing its own social sector work, there was toleration of the donor-NGO nexus. Government recognized that donor funding of NGO activity leads to additional funds for

greater

development. Nevertheless, some aloofness remained because NGO

activity, by substituting for state provision, reduced the state’s over resources, services and patronage, and also led to demands for government reform. By seeking empowerment for the poor and the marginalized, NGOs, not infrequently, also upset local power structures and vested interests (local moneylenders who lost business,

control

politicians who lost vote banks, landlords who lost their bonded

labour, etc.), and by thus destabilizing the status quo created law and order problems for the government.

But more importantly, the government regarded NGOs with suspicion for political reasons. They were accused of using foreign funds for political activities, and their foreign ties were considered detrimental to national interest (read: to the party in power). governments of all political persuasions have sought to control unrestricted flow of funds to NGOs from foreign donors. The government’s efforts at keeping out unwanted foreign influences coming in with aid money were two-pronged. One was legislation to restrict or regulate NGO access to donor funds, as also abuse of donor funds; the other was policy action to disallow unrestricted donor access to NGOs by means of the bilateral aid policy, and directions to donors from time to time.

Accordingly,

Legislation There was no regulation of NGO access to foreign aid in the early decades of Independence. From the 1970s onwards, however, the sought to regulate (or in the exceptional case to encourage) 1 NGOs’ access to donors, whether for reasons of national security, political ideology, or to regain control over authority and space taken over by NGOs. Voluntarism by politically connected NGOs or NGOs posing as fronts for political parties found disapproval, especially if funded by external sources. It is principally through FCRA 1976 (discussed ahead) that the state has attempted to exercise control over NGOs, and which has irked NGOs the most. Though the Emergency is cited as the proximate cause for the enactment of the FCRA, its history goes back to the 1950s.2 Several Indian leaders, including Sardar Patel and Mahatma Gandhi, had been critical of activities of foreigners even before Independence. After Independence, the murmurs from the anti-foreign aid lobby became louder. In April 1954, the Madhya Pradesh government set up an enquiry committee called the Niyogi Committee to look into

government

1 It is alleged that while regulating NGO access to foreign funds, the BJP

government also actively encouraged NRI donors to give to Hindu fundamentalist

organizations. 2 AccountAid’s bulletins — AccountAble (Nos 116, 122–26, 127–28) and AccountAid Capsule (Nos 229, 232) — have pieced together the entire history of the events leading to the enactment of the law in 1976. It makes fascinating reading. This section on the history of FCRA is based on these bulletins. They are available at http://www.accountaid.net.

the activities of missionaries in the state (Niyogi Committee 1956). It made several recommendations at the time of submitting its final report in April 1956. This included a recommendation that ‘no nonofficial agency should be permitted to secure foreign assistance except through Government channels’.3 Around the time when the Congress came back to power, with a

thinner margin after the elections of 1967, some reports were in the American press regarding their Central Intelligence Agency (CIA) activities in India.4 There was a debate in the Lok Sabha, or the People’s House in Parliament, in March 1967, on these reports, and some members claimed that there was an attempt (with foreign funds) to defeat 44 progressive candidates in the 1967 elections. They demanded a statement from the home minister.5 In May 1969, the home minister, Shri Y.B. Chavan, in a detailed statement in the Lok Sabha mentioned that there had been concern about receipt of foreign funds by individuals and organizations working in political, social or economic fields. Though the money could not be properly quantified, it appeared to be He confirmed that foreign funds were used in the 1967 General Elections. Foreign intelligence agencies had also financed some academic and research institutions in India. Money was also channelized through inflated commissions, advertisement charges, translation fees, and through illicit remittances.6 The government therefore proposed to bring a comprehensive legislation to impose

published

widespread

significant.

3 Vol. I, Part IV, Chapter III, Para 17. Quoted in AccountAble, No. 116, August 2005 (http://www.accountaid.net). 4 The reports were published in New York Times and Newsweek. The Newsweek report had listed 17 alleged front organizations of CIA. These 17 organizations would funnel the funds into seven foundations (conduits). The conduits then pass on the money to 12 international organizations. 5 In a subsequent development, similar allegations have emerged regarding KGB activities in India. See Andrew and Mitrokhin (2005), Chapters 17 and 18. Quoted from AccountAble, No. 116, August 2005 (http://www.accountaid.net). 6 The statement was based on the investigation reports of the Intelligence Bureau; see AccountAble, No. 116, August 2005 (http://www.accountaid.net). See also report prepared by the ACE Project on Administration and Cost of Elections (a joint endeavour of IFES, UN-DESA and IDEA) in April 1999. Such payments have a long history. The USSR provided regular funds to foreign Communist parties and to pro-Communist organizations. See http://www. aceproject.org/main/english/pc/pcd02h.htm reproduced in AcountAid Capsule 68 and 69, 19 February 2002.

suitable restrictions on the receipt of funds from foreign sources, except those in the ordinary course of business. Political developments which precipitated it included the launching

by Lok Nayak Jayaprakash Narayan of the ‘Citizens for Democracy’ movement on 18 May 1974. When the Allahabad High Court gave its judgement against Indira Gandhi’s election on 12 June 1975, Emergency was imposed on 25 June 1975. With the imposition of the Emergency, receipt of foreign contributions became a stick with which to beat anti-establishment NGOs into submission. The ‘foreign

hand’ became a bogey phrase as Prime Minister Indira Gandhi began to see in it conspiracies to destabilize India. Consequently, the FCRA was enacted in 1976. The primary purpose of FCRA 1976 was to ensure that the foreign contribution that is received for specific tasks is not misused for activities detrimental to national interest. NGO recipients of foreign

contributions were required to report to the Ministry of Home Affairs (MHA) within four months of the close of the financial year, in the prescribed formats. Under the Act, ‘foreign source’ includes the government of any foreign country or territory and any agency of such government, the only agencies being exempted being the United Nations or any

of its specialized agencies such as the World Bank, and such other agency as the Central Government may, by notification, specify in this behalf. It includes foreign companies, a corporation incorporated in a foreign country or territory; an MNC, a trade union in any country or territory, whether or not registered in such foreign

foreign

country or territory; a foreign trust or a foreign foundation, by

whatever name called, or such trust or foundation mainly financed by a foreign country or territory; a society, club or other association of individuals formed or registered outside India; and a citizen of a foreign country. It does not apply to donations by NRIs settled abroad, provided they continue to be Indian citizens. The Act envisages the following four broad categories of

restrictions on the receipt of foreign contributions: • Thefirst category, defined by Section 4, prescribes the people who are prohibited from accepting foreign contributions viz. candidates for election, media persons, judges,

absolutely, corporation, members of any legislature, and political parties or officegovernment servants or employees of any government

bearers thereof.

• The second category of restrictions, that is qualified restrictions, is described by Section 5 of the Act. It provides that no of a political nature shall accept any foreign without the prior permission of the central government. Such organizations are not permitted to receive any foreign funds since they are essentially involved in political activities. However, these organizations, notified in the official Gazette of the GOI, can receive foreign contribution with the prior of the central government. • Into the third category fall the bulk of NGOs, defined by Section 6 which provides that no association having a definite cultural, economic, educational, religious or social programme can foreign contribution without seeking prior permission or getting registration from the central government. Any association involved in definite programmes for carrying out specific activities, which may fall in the generic categories as mentioned above, may apply for obtaining prior permission or registration for receipt of foreign contribution. After grant of registration or prior permission under the Act, the association is permitted to receive the foreign contribution only through one of the branches of the bank as specified in the application and is required to intimate the central government as to the amount of each foreign contribution received by it, the sources and the manner in which such foreign contribution is received and also the purpose for which the foreign contribution is utilized by it. • Thefinal category of restrictions, governed by Section 10, any individual or association not specified in Section 4 from accepting any foreign contribution, or requires any specified in Section 6 to receive the foreign contribution only after obtaining prior permission of the central Such prohibition or requirement for prior permission is made only after the central government is satisfied that the of foreign contribution by such association or person or class of persons, as the case may be, is unlikely to prejudicially affect either national security, the public interest; fair election to any legislature; friendly relation with any foreign nation; or communal harmony.7

organization contribution

approval

receive

prohibits association government. receipt

7 Annual Report 2005–6, FCRA Division, Ministry of Home Affairs, Government of India, New Delhi, 2007, p. 10.

The Act also regulates receipt and utilization of foreign hospitality by certain individuals, which includes members of legislature, officebearers of a political party, judges, government servants, employees of a corporation, while visiting foreign countries, with certain exceptions.8 When mid-term elections were held in 1980 and the Congress came to power again, it ordered a Commission of Enquiry, the Kudal Commission, into the foreign funding of certain NGOs, reputedly close to Jayaprakash Narayan. The Commission was to look into the activities, sources of funds and their utilization of four NGOs, viz. Gandhi Peace Foundation, Gandhi Smarak Nidhi, All India Sarva Seva Sangh, and Association of Voluntary Agencies for Rural Development (AVARD), and any other organization connected with these four. The commission was to submit a report within five months.9 As it turned out, the enquiry ended up covering hundreds of NGOs and took five years. The first interim report was released on 25 October 1984, and the final report was dated 30 January 1987. Though eventually nothing irregular was found against the the government promulgated an ordinance in 1984 certain restrictions on receipt of foreign contributions. The Act itself was amended with retrospective effect (from 20 October 1984) in 1985. The amendments resulted in two important changes for the NGOs. Under the new law, NGOs could not receive foreign funds unless they registered themselves under FCRA. The associations registered under FCRA and those granted prior permission, are required to submit audited returns to the MHA in prescribed formats. Over 34,035 associations have been registered under FCRA as on 28 February 2007 to receive and utilize foreign contribution. A second change was the concept of second or subsequent receiver. This created a chain of FCRA receivers. Henceforth, foreign would still remain foreign, no matter how many Indian hands it passed through. During the 1990s, no changes were made to the FCRA law itself. However, the rules were amended several times. Perhaps no Act has been so reviled by civil society in recent times as the FCRA. The main ground on which NGOs criticize the

organizations, introducing

contribution

8 Ibid. 9 AccountAble, No. 116, August 2005, p. 3 (http://www.accountaid.net).

Act is that in the three decades since the Act was enacted, the basic premise that if voluntary organizations accept foreign money it will lead to increased security risks has been proved wrong. They have also pointed out that conversely, in spite of having the FCRA on the statute book, instances of terrorism, anti-national activities and separatist outfits have substantially increased and none of these have been financed by funds received under FCRA. It has, instead, led to undue restrictions on the voluntary sector’s access to foreign funds. They maintain that the voluntary sector is not opposed to scrutiny from the government, but to the manner in which this is being done. The Act being ill-defined in many of the clauses has left a lot of space for arbitrary decisions by the government. Besides, the rules and under it have proved very cumbersome, and caused especially for the small NGO. They are reported to have to bribe officials to get registration or to prevent an unfavourable report from the investigating agencies. If there is truth in the argument that the FCRA has restricted flow of funds to NGOs then the amount of foreign money flowing into the sector should have been reduced after the enactment of the Act. In fact, as was seen in a previous chapter, the amount of foreign contributions has been increasing year after year. Therefore, while conceding that the FCRA may have made it more irksome, and more costly (due to the corruption and transaction costs to access foreign funds, it does not appear to have put a brake on the inflow. It also begs the question whether, if there had been no FCRA, more foreign funds would have come in. An objective assessment is that perhaps the inflow would have been marginally more but not that much more, since the primary determinant of giving is not whether the recipient can easily access the funds, but how much the donor wants to give, or can afford to give, and in recent times, the restrictions imposed on the donor by the home government. What the FCRA has probably done is to prevent a better of funds, to the detriment of the sector, disadvantaging the smaller NGOs, since the bigger NGOs know how to work the system better than they; and to introduce delays in the system. Again, it is a moot question whether the major organized donors in fact want to give to numbers of small NGOs. It would appear that they do not (see Chapter 5 and the next chapter); at any rate not enough to make a significant difference to the numbers aided.

procedures harassment,

perhaps involved), international

distribution

Apart from the question of access to foreign donors, the NGO sector has four fundamental objections to the Act: one, they feel it

is discriminatory treatment of one segment of society. When the government is liberalizing the economy and has repealed many restrictive practices relating to the corporate sector, such as the Foreign Exchange Regulation Act (FERA), to put in place a friendly

and liberal regime it has acted retrogressively for the voluntary sector which is working with the poor and deprived sections of society. This, the sector feels, is inconsistent with the spirit of democracy and pluralism. It shows a basic mistrust and fear of criticism and

dissent. In the words of John Samuel, There is no problem if a large part of the government machinery is run on foreign funds from the World Bank, IMF, UN establishments and other multilateral and bilateral agencies. There is no problem if trade unions and institutions affiliated to established political partiesleftist, rightist and centrist – receive funds from all sorts of sources, including foreign sources. … But if a development organization receives a couple of lakhs or a million rupees to advance health, education, awareness or employment opportunities among the rural or urban poor, it becomes an international conspiracy. (Samuel 2000c: 142)

Two, the implementation of the Act has been placed in the MHA, with all the law enforcement agencies being the investigating authorities, rather than in the finance ministry which could have scrutinized financial irregularities better than the MHA. This is the

result of confused thinking about objectives The original intention was to use it for national security, and not to enforce financial but in practice it is being used for the latter purpose.

accountability,

This cannot be done with police and intelligence surveillance. These

agencies are not competent to decide on financial propriety, and it should be the responsibility of the income tax department and/or the charities commissioners or their equivalents. Three, it has increased corruption among government agencies

as well as NGOs. The premium on foreign funds is such that it has led to a lot of corrupt practices. The scrutinizing authorities know that NGOs stand to lose a lot of money if they do not get clearance and so demand their cut. NGOs themselves are not above obliging

other NGOs, who do not have an FCRA registration, for a though it is not permitted under law.

consideration,

Finally, while the government does not cease to pay lip service to the important role NGOs have to play in development, it has done nothing to improve the sector’s access to funding. The funding it itself can provide is inadequate and inaccessible due to red tape, and it has not amended the fiscal framework to promote indigenous philanthropy. At the same time it wants to stifle and prevent NGOs from accessing the one source of funding which is both liberal, and qualitatively important for them in their work. In addition to these objections in principle, practical difficulties are also cited: • Getting registration is difficult and there are long delays. The initial scrutiny is done by police officers who know nothing about voluntary action, and who unnecessarily harass NGOs. • It is well known that those putting funds into terrorist activity are unlikely to get funds through the legal banking channels and use instead the illegal hawala channels. Besides, there are other laws such as the National Security Act, etc. under which those destabilizing the government can be prosecuted. • There are no published guidelines of the criteria for getting registration, and no reasons given for refusal. The decision making is arbitrary. It is true that in practice the scrutiny of a majority of NGOs is a financial scrutiny of use of funds, and that the law enforcement agencies who do the scrutiny have no knowledge of NGOs But it is equally true that the Act continues because of security concerns and to verify these the scrutiny of intelligence and law enforcement agencies is equally necessary. What is essential is to eliminate the delays and make the process user-friendly. NGOs have been campaigning since 1996 for the repeal or of the FCRA. Due to NGO pressure some of the clauses and rules were changed, and in early 2005 the government announced its intention to repeal the FCRA. Instead, it introduced an even more draconian replacement, the Foreign Contribution (Management and Control) Bill or the FCMC Bill 2005. After vocal opposition from NGOs, that Bill was dropped. But that was not the end of the matter. In late 2006, the reintroduced what was essentially the same FCMC Bill, but now called the Foreign Contribution Regulation Bill 2006

operations.

modification

government

(FCR Bill). It was, in fact, even more stringent than the proposed FCMC Bill. The FCR Bill prohibits the acceptance and utilization of foreign contributions for ‘any activities detrimental to the national interest’ — a vague standard, all but inviting politicization of such contributions. The Bill enlarges the categories of persons and that are prohibited from receiving foreign contributions. It also imposes enhanced penalties for violations of its provisions while failing to provide a mechanism for redressal of grievances. With the amendment of the government’s bilateral aid policy in 2003, grants to NGOs even from bilateral and multilateral donors were made subject to the FCRA, whereas these had been exempt earlier. Now they could give only to NGOs who had either prior or registration. Informed observers feel that the new FCR Bill has been for two main reasons:

organizations

permission introduced

• The bureaucracy feels threatened by NGOs because they ask difficult questions, and can mobilize mass opinion against the government • The funding from Islamic countries and from NRI Hindu organizations has lately exacerbated communal tensions, terrorism, and secessionist movements.

fundamentalist

On its introduction not only NGOs but other eminent persons like Bimal Jalan, former civil servant and Rajya Sabha MP, protested the Bill on the grounds that it gives authoritarian powers to the home ministry to inspect, raid, or seize any NGO, even the Red Cross. They asked why, when anti-terror laws and the Foreign Exchange Management Act (FEMA) already existed, penal action could not be taken under those laws. They also argued that the Bill’s provisions for detailed administrative controls, licensing and inspections run counter to the priority given by government to reduce such controls on the corporate and other sectors of the economy.10 They feel the proposed law is objectionable because it gives the government too much bureaucratic discretion to determine who will get the funds, and there are no transparent criteria; selection is very arbitrary and is likely to be coloured by political ideology and interpretation, not 10 Indian Express, ‘Jalan Urges Patil to Review ‘Authoritarian’ FCR Bill’, New Delhi, 24 January 2007.

to mention the arbitrariness introduced by giving discretion to an ‘authorized officer’.

NGOs find its provisions for renewal of registration every five years, and introduction of fees for registration, renewal and prior

approval irksome and an invitation to increased corruption. the Bill limits the maximum amount of foreign contributions that NGOs may spend on administrative expenses to 50 per cent, and the NGO objection is that this is difficult to classify. But the

Moreover,

most basic objection to the Bill is that it will curb the growth of civil

society (interpreted in its broader sense, and not limited to NGOs alone) by prohibiting funding of activities of a political nature, with ‘political nature’ being left to the discretion of government. It will thus prevent civil society from playing its valuable role of a watchdog on abuse of power by the government. What is needed, they argue,

is not more control but transparency, for more control will keep away the legitimate players and the illegal ones will find loopholes

and continue their mischief. Transparency must mean NGOs make public their funding sources and how much they receive from them, and an independent Charities Regulator should set standards of governance, auditing, accounting, etc., as was recommended by Sampradaan Indian Centre for Philanthropy’s Review of Charities

Administration in India (SICP 2004). That way it will be easier for the public to know who is calling the shots in the NGO world and whether the foreign hand is indeed dictating the agendas.11 As a foretaste of the stronger regulation of the voluntary sector in the offing, the Indian Express of 4 February 2006 reported that

the MHA had barred 8,673 voluntary organizations from seeking foreign funds under FCRA. Among these were Madras University,

Jamia Millia Islamia, Indira Gandhi National Open University, Escorts Heart Institute and Research Centre, as well as smaller NGOs like Sakshi, Khoj, and Aasra. Their registration under FCRA was revoked for not furnishing details of acceptance, source and manner of utilization of foreign funds for the years 2001–2, 2002–3, and

2003–4. These organizations will now have to get prior approval of 11 For detailed criticism of FCMC 2005, see proceedings of the meeting jointly convened by SOCO Trust, Madurai, the Human Rights Law Network, Chennai, and People’s Watch, Tamil Nadu, Chennai, 12 July 2005. For criticism of FCRA 2006, see ‘Critique of FCRA Bill 2006’, VANI, New Delhi, undated mimeo and also put on the VANI website at www.vaniindia.org.

the government before receiving foreign funds. The notification was issued in November but not despatched to the organizations by the

time the newspapers reported it in February. The last time such a notification was issued was in 1997 when several organizations were

denied permanent numbers. For the past 10–12 years the percentage of those not reporting as required has been around 30 per cent.12 From the report three things stand out: it is obvious that there is some confusion over the purpose of the FCRA, and that security concerns are not the only ones which govern implementation, since

well known statutory bodies as well as small NGOs have been equally dealt with. Clearly, it is an effort to regulate the financial of non-profit organizations, and this should be the realm of a financial regulatory body such as the finance ministry, the revenue

accountability

department, or the charities administration. Two, that there is fiscal

indiscipline which needs to be rectified is clear from the high figure of 30 per cent non-compliance with reporting rules; big organizations

appear as guilty as the small ones who at least would have the excuse of lack of skills or information. It is clearly symptomatic of the wider malaise of disregard for the rule of law. Three, though both big and small non-profit organizations are hit, it is the smaller ones who will suffer the most in getting renewed registration.

The sector’s campaign against this new Bill has been successful in halting the enactment and getting a review accepted in the National Policy on the Voluntary Sector but in view of the stepping up of terrorist activity it is almost certain to be enacted by the new government. Those who were canvassed for this book on whether they felt there

was a need for FCRA at all had varied views on it. Given the higher level of terrorism being witnessed in the country today, most felt that

there was a need for some regulation. Some were more strongly in favour than others.13 One of the respondents quoted the saying from the Koran — ‘Trust in God, but don’t forget to tie the camel’ — to support pre-emptive action. Another felt that some regulation was 12 ‘MHA Bars 8,000 NGOs from Seeking Foreign Funds’, Indian Express, New Delhi, 4 February 2006. 13 Opinions expressed in author’s interviews with Mr Panchaksharam, Secretary, South India Producers’ Association, (SIPA); Andal Damodaran, ICCR; Sanjay Patra, FSMS; and P.M. Tripathi, AVARD. Also, responses to questionnaires from Divya Chaya, The Banyan, CYDA, ERDS, Manav Kalyan Trust, Pratham and SVYM. Individual quotes not attributed for obvious reasons.

needed, not only for security but to weed out bogus NGOs. Foreign money, he felt, had spawned a whole profession of proposal writers in Andhra Pradesh, Orissa and elsewhere who could manufacture convincing proposals out of thin air. However, all were unanimous that regulation, though necessary, should be compliance and not control oriented, and must be free and user-friendly. According to one respondent, what was most alarming about the FCRA was that it had corrupted Indian intelligence agencies, much more than NGOs. Starting with bribes of only Rs 1,000 to get an Intelligence Bureau clearance now apparently it takes Rs 10,000 to get one. He feels the implications of such are troubling for national security. An anti-national has only to give a large bribe to get a clearance and a registration, whereas bona fide NGOs who cannot pay the bribe are denied registration. Therefore, for the sake of national security, it is important that NGO verification be done by an agency other than the intelligence agencies. He has no doubt that the CIA was active in India, but argues that so are Indian intelligence agencies abroad or at least they should be if they are doing their job. He strongly discredits the idea that the CIA had infiltrated into the voluntary sector. Both terrorist and political funds do not come through legal channels, he stated. India’s FCRA has to be seen as part of a global tightening of controls on non-profit organizations. In the wake of the 9/11 terrorist attack on the World Trade Centre in New York, more than 100 countries have introduced legislation to fight terrorist financing, including the US, Canada and France. Developing countries have tightened control for other reasons. Worried about being pressured by unaccountable NGOs that pull donor strings to change particular actions of the government, they too have begun changing laws under which NGOs operate. Among these are Brazil, Egypt, Pakistan, Uganda and Russia (Goonatilake 2006: 289). In April 2006, the Russian government passed a tough law to regulate the funding and activities of foreign charities in Russia, despite strong protests from Europe and USA. At the same time, the laws are recognition of the growing influence of NGOs across the world. Ideally, in order to prevent abuse of foreign or other funds, the government needs to move on fronts other than FCRA, for example, by encouraging the move for certification or validation which had been begun by the Planning Commission, and which is now being carried forward by the Credibility Alliance, a network of

corruption

corruption

organizations formed to enhance credibility and good governance. But more than self-regulation is needed to ensure transparency

and good governance in the sector. It needs to be accompanied by positive measures on the part of the government on the lines of the

recommendations of the Sampradaan report on charities (SICP 2004). Amongst other measures the report had the strengthening of the infrastructure and resources of the existing agencies involved in the regulation of NGOs, such

administration recommended as the Registrar of Societies, the Charities Commissioner, the

Company Law Department, and the IT Department; simplification of

procedures; more effective and proactive monitoring; a complaints mechanism coupled with a simple process for redressing grievances; better information dissemination and education regarding rules and laws; setting up a Public Register of Charities, open to the public; a

comprehensive central incorporation law; and Charities Directorates at the national and state levels (ibid.). If these steps are carried out

along with a more user-friendly FCRA then donors, the government and NGOs could all perform better and rest easier.

Policy Action: The National Policy on the Voluntary Sector The hue and cry over the FCRA amendment and the increasing of NGOs has compelled the government to spell out its intentions towards NGOs. The National Policy for the Voluntary Sector, notified in the official Gazette of the GOI in July 2007, 14 is the first such effort to make a public commitment. It commits the

importance

government to ‘encourage, enable and empower an independent, creative and effective voluntary sector with diversity in form and function, to contribute to the development of India.’

It was formulated in consultation with leaders of the voluntary

sector, and takes care of most of the demands of the voluntary sector. It recognizes the broad scope of the voluntary sector, and its main

objectives are: to create an enabling environment for NGOs; to enable them to mobilize necessary financial resources; to enable the sector to collaborate with the government effectively and on terms of mutual trust and respect; and, to encourage good governance in 14 The National Policy on the Voluntary Sector, The Gazette of IndiaExtraordinary, Part II, Section 3, Subsection ii, No. 945, 31 July 2007.

the sector. To achieve these objectives it has made the following recommendations. • A detailed review at the state level of the incorporation laws, as well as the feasibility of a new central law, offering a choice to VOs to choose the one best suited for them; • encouragement to the sector to evolve a suitable self-regulation mechanism such as a national-level self-regulatory agency; • development of databases on NGOs accessible on the internet; • encouragement to private giving by considering the option for tax rebates on donation of stocks and shares; and a review of FCRA to simplify its provisions in consultation with a joint consultative group to be set up by the home ministry; • simplification of the system for allowing NGOs to access funds from bilateral agencies; • making it easier to form partnerships with government on mutually acceptable terms; • setting up permanent consultative forums for GO-NGO at local, central and state levels, and review of funding procedures for financial assistance to NGOs. (Planning Commission 2007)

consultations government

There are doubts in the sector whether the good intentions behind the pledge will be implemented. Nevertheless, the policy has been welcomed as a step forward in the right direction. Where the actions will be watched most of all is in the area of foreign funding of NGOs, one of the most contentious issues, for both donors and NGOs.

government’s GOVERNMENT AND DONORS

Though for the most part private foreign donor organizations have been left free to operate as they wish, the government has nevertheless intervened when it so wished. For instance, the Ford Foundation has had full freedom to decide on priority programmes and projects and to give grants as they wished. However, through an agreement signed with the government right at the beginning, clearance from government is required for every grant to be made by the Ford Foundation once all the finalities have been decided on between the Foundation and the prospective grantee. By and large, there has seldom been any conflict because both sides have been

careful to avoid confrontation. Sometimes the Foundation has tried to accommodate government’s wishes (one might even say made peace offerings in the form of fellowships to named officers, and so on); at others the government has given in and accepted the arguments. Only rarely has the government intervened to ask a donor to actually cease operations and leave India. The only known instance is that of the Asia Foundation, a California-based foundation established in 1954 at the behest of the CIA which in the 1950s a group of private US citizens to form such a foundation to advance American interests in Asia. ‘The emphasis was on a private instrumentality that would be privately governed and would have the freedom and flexibility to do things the Government would like to see done but which it chose not to do directly.’ 15 The foundation was funded from the beginning by and through several trusts and some of which were organized to transfer CIA funds to private American organizations. The foundation did not engage in covert intelligence operations, though from the very beginning its board ‘took the position that the foundation was created for one purpose only; namely to serve American interests in Asia as a and supplement to official government programmes and initiatives.’ Its programme activity was heavily directed towards strengthening the commitment of national elites — in government, in the universities, and in the media — to democratic forms of and to a liberal economic system. It began its India functioning in 1962. It encouraged voluntary activity, offered scholarships and fellowships for further education, and operated a programme of book publication and distribution for students in schools and colleges in India. In 1967, during the Vietnam War, when it became public knowledge that it was CIA funded, it led to protests by American and Asian scholars alike and the Government of India asked the foundation to leave India (Ruttan 1996: 237). In most other cases, the government was content to give as it did in the case of Plan International. Typically, Plan operated its own projects directly wherever it worked. But

Foundations’

encouraged foundations,

complement government

directions, International

15 US Congress Senate Committee on Foreign Relations, The Asia Foundation: Past, Present and Future (Committee print), 98th Congress, 1st Session, Washington, USA, quoted in Ruttan (1996: 236).

in India, in 1979, the government required them to work through local partners. In retrospect it appears to have been a wise decision in that it built local NGO capacity and also lessened chances of inappropriate models of development.

importing The New Bilateral Aid Policy

Perhaps the landmark event in recent times is the new bilateral aid policy announced by the government in 2003. That has really set the cat among the pigeons. The donors were less exercised about the FCRA since the onus to get access is on the seeking NGOs. But the government’s new bilateral aid policy upset both donors and NGOs. In March 2003, the Government of India announced that it would no longer accept bilateral assistance from donor countries with ‘smaller aid packages’. This applied to about 14 smaller donor countries. In June 2003, it announced that only six bilateral donors could continue to work with the Indian government, these being Japan, UK, Germany, USA, EC and the Russian Federation. The new policy also mentioned that EU countries outside the G-8 can also contribute provided they commit a minimum annual development assistance of USD 25 million to India. The policy further announced that India would not accept any tied aid from any source. In September 2003 it announced some guidelines for bilateral assistance. According to these guidelines, which do not apply to bilateral assistance from the specified six donors, bilateral donors can directly fund NGOs and need not go through government. But grants would be permitted only for projects of ‘economic and social importance’, and the selected NGOs must have FCRA registration or prior permission. Even multilateral donors who were so far exempt from FCRA restrictions were asked to give only to FCRA registered organizations. Autonomous bodies, which are largely funded by the Indian government, cannot accept these funds. Moreover, the donors will have to follow a certain procedure for giving direct assistance to NGOs according to which they should submit a list of NGOs to be funded twice a year to the Department of Economic Affairs (DEA) in the prescribed proforma. The DEA has the right to suggest modifications in the list and the donor should modify it accordingly. Monitoring will be done directly by the donor agency. These guidelines do not apply to grants made by embassies out of other non-bilateral funds. The guidelines also do not apply to

non-bilateral international donors. In May 2004, the Government of India increased the number of countries eligible to provide aid, to include the G-8 and EU countries. The ostensible reason given for stopping bilateral aid was that India is growing rapidly, with burgeoning foreign exchange reserves, and no longer needs concessional finance. In fact, it itself to give aid to some smaller countries. During 2006–7, India made a commitment of $1 billion (Rs 40,000 million) for bilateral aid, out of which it disbursed $500 million (Rs 20,000 million) (Sharma 2008). But in fact the policy was the culmination of other developments beginning in 1998 and makes it clear that official aid is very much a function of the state of political relations between the countries. For instance, USA stopped its non-food aid during India’s war with Pakistan in 1971; Norway, Japan and the Netherlands similarly froze their general aid after India’s nuclear testing, though they continued the aid to NGOs. India’s nuclear test in 1998 changed Danish perception too about India’s need for aid and the Danish decided to phase out aid in 10 years. This action was not viewed kindly by the Indian government, whereas those NGOs who opposed India’s nuclear testing supported the Danish action, even though they felt that withdrawal of Danish aid would adversely impact poverty-oriented work. Among donors Denmark gave the highest proportion of its GNP (1.02 per cent) as ODA. Japan too suspended new yen loans, grant aid, etc., and kept only its tiny grant assistance facility to NGOs. Similarly, Sweden, and Norway froze its aid except that directed towards poverty alleviation programmes. Finally, Germany cancelled its 1998 aid negotiations. Only UK, France, Italy, and Belgium maintained a status quo, and aid was later resumed by the other donors. The 2003 bilateral policy of the Government of India has to be seen against this backdrop of a diplomatic offensive. When DANIDA renewed its aid package with the government in 2000, it announced a change in the focus of its aid which would be for the private sector, health, human rights and research information, and increased support through Danish NGOs. The Indian government’s response was that India would not accept any tied aid in future; nor would it accept any aid in the field of human rights and democracy. The Indian government made it clear that India already had constitutional, administrative

proposed

government

henceforth democracy,

and financial mechanisms to deal with situations in these areas and therefore would not like aid in these areas. Though it is true that NGOs working in such areas find it difficult to get support from government, it is equally true that the space for dissent exists in India and funding can be mobilized either from the public or from the personal pockets of the activists in cases where people are convinced that human rights are being violated, as in the campaign against Salwa Judum in Chhattisgarh, several cases of action in Jammu & Kashmir, and in the Gujarat riots cases, among others. In these cases, foreign money was neither necessary nor used on principle. The policy created much unhappiness, both among those donors told to go home and among NGOs. The donors told to go home saw a lessening of their diplomatic clout. As for the NGOs, they argued that some of the donors asked to cease giving aid like the Netherlands were not really ‘small’ according to their reckoning, putting in nearly Rs 3,000 million annually in a range of programmes in the social sector, including women’s education and empowerment (Mahila Samakhya), social science research (Indo-Dutch Programme for Alternatives in Development), and local governance in Kerala. They were also some of the more progressive donors who had funded some very interesting development models in the areas of fishery, social forestry, child labour, and education (Lok Jumbish and Siksha Karmi programmes in Rajasthan being examples of the last). According to the affected donors, the new policy had been without any prior consultation with them, and it was this unilateral decision that upset them. As mentioned, some donors, viz. Canada, and SIDA, decided to withdraw from India. Some decided to stay on and route funds to NGOs, though all reduced the scale of their assistance. Though donors were increasingly funding NGOs directly even before this, and were now allowed to do this officially, they were not happy about this. They felt politically emasculated by their to influence government through aid, and also resented the government’s cumbersome procedures for their access to NGOs. NGOs were upset and so were the many related consultants, researchers, trainers, communication experts and other camp of the donors, because they saw a reduction in income and opportunities. As a result, many consultations were organized by donors and NGOs to protest the policy. One such was organized

terrorist

announced

inability

followers

by SIDA on 6–7 October 2003, which was attended by several representatives of donor agencies and NGOs. In the background document for the consultation titled, ‘The

New Government Policy on Bilateral Assistance to India’, N.C. Saxena, retired secretary to the Government of India, voiced the view that the new policy was a mistake and some amendments were needed. He pointed out that though the total annual of ODA (loans and grants) to India is only $3.5 billion from

disbursement

bilateral, multilateral and international CFAs, that is only about

$3.5 per capita or 5 per cent of what Egypt receives, nevertheless, it was a valuable addition of resources. For the donors, India was an important recipient country. A survey of 14 donor agencies showed that their annual disbursement (as of 2003) was Rs 27,290 million ($ 600 million), and this did not include large donors like Germany and USA. The small bilateral donors affected by the policy may be

contributing some Rs 7,000 million annually to India’s This external assistance was of value because it brought new ideas, technologies and approaches. The advantages spread well beyond the projects to which they were directly applied. The of the projects triggered a change, which spread beyond the

development. replication

projects and sectors. Moreover, though a large part of the assistance

flowed through government departments there was

considerable involvement of civil society in such projects through GO-NGO

collaboration. Such collaborative institutional arrangements will no longer be possible under the new guidelines (Saxena 2003: 3–4). Saxena welcomed the new policy of routing funds directly to NGOs as it might lead to professionalization of the sector, provide

NGOs with multiple sources of funds, and reduce dependence on government funding. Since the government is not able to monitor usage properly, too much dependence on government funding has led to the mushrooming of the wrong kind of NGOs. However, he doubted that the new guidelines would help NGOs access aid money; in fact, for reasons listed by him, he felt that they would make

access more difficult. To overcome these drawbacks he suggested a number of amendments to the guidelines (Saxena 2003: 5–6). The new policy unleashed a debate in print as well as in conclaves organized by VANI and others.16 The critics of the policy, among 16 One such was the workshop on ‘Future Development Assistance from Smaller Bilateral Donors’, 6–7 October 2003, organized by VANI, New Delhi. Undated mimeo, VANI website.

them Harsh Sethi and Rajesh Tandon, observed that India may be growing fast but the benefits are not reaching the poorest. In fact, there is a deepening divide between globalized India and Indians, and marginalized India and Indians or what is referred to as between traditional India called ‘Bharat’ and the modern sector embodied by ‘India’. Since the state has failed to fulfil or effectively fulfil its basic obligations in providing social security and socials services there is a tendency to look for private solutions to essentially public However, commercial solutions for providing education, health care and drinking water cannot be accessed by poor Indians residing in Bharat. It is provision for this segment, left out of the safety net, which was met by external aid, and aid should therefore not be rejected. Tandon further argued that there was neo liberal pressure on the government to achieve rapid economic growth through market interventions, regardless of the implications for the environment, human rights or social justice considerations.17 Though lending or FDI will provide additional resources for growth it will not address the social and environmental justice issues such as women’s rights, human rights, environmental justice, child labour, Dalit mobilization, tribal rights, etc., which have hitherto been addressed by bilateral assistance. It is the smaller voluntary he said, which have contributed to social mobilization and policy advocacy with bilateral assistance that will suffer the most. Tandon was also against the new procedure as being too restrictive, time consuming and likely to broaden government’s control over the sector. Allowing the DEA to select NGOs, he said, is likely to partisanship, patronage and corruption (ibid.). It can, however, be counter argued that the kinds of issues mentioned by Tandon as incapable of being addressed by FDI are precisely the kinds of issues which are best funded from domestic resources to avoid charges of external manipulation for political mileage. Unfortunately, it is also true that hitherto private domestic resources of the quantity needed have not been forthcoming for these issues, neither corporate nor public contributions, the issues can generate controversy and conflict and do not show immediate tangible benefits to the donor. Nevertheless, these are issues which should be internally funded whether by government

problems.

international

organizations,

promote

precisely because 17 Rajesh Tandon at the workshop mentioned in note 16.

or by Indian philanthropic institutions. Civil society needs to press for this. That smaller NGOs will get left out in future is very likely, but as much due to donor policy — wanting to avoid high administrative costs and other reasons — as to government procedures. The only say the government may modify the list but does not necessarily say it will entirely select the list to suit itself. If an NGO is recognized to have done good work there is no reason why should debar it from receiving funds any more than a big NGO. Besides, it would be naïve to deny that there is patronage, and cronyism among donors as well. It is only a question of substituting patronage of one set of givers over another. A further objection against the policy was that donors like the Scandinavians, who give substantial funds to multilateral like the World Bank, may now not feel like supporting India’s claims for resources or seats on boards of these bodies. They are the ones who have a presence in various important international fora like the Human Rights Commission, Commission for Sustainable Development and others where NGOs and governments work The new policy is likely to adversely affect India’s interaction at these fora. However, this argument places too much importance on aid as a determinant of political relations between nations. Trade is becoming far more important than aid and nations may not act precipitately if they feel their economic interests may become jeopardized. The policy it was believed would also increase dependence of state governments on the central government in the absence of external funds. The discriminatory treatment implied in the policy also came in for comment. It was pointed out that the dominant route for external support to NGOs is via international CFAs not bilateral agencies. They are currently free to operate without DEA scrutiny, provided they give to those NGOs who have FCRA registration. Why then, it was asked, was there a need for this extra layer of scrutiny only for bilateral aid (Sethi 2003)? The answer to this appears to be that international NGOs or other private donors are different from bilateral donors in that the latter directly implement their political agendas through their aid policies, whereas in the case of the former, though the political motive is not entirely absent, it is secondary and indirect at best.

guidelines

government partisanship

institutions

together.

government’s

NGOs also objected to the new procedures for accepting aid directly from bilaterals on the ground that it led to delays in release of funds, since each project proposal submitted by an NGO had to be cleared by the DEA after clearance from substantive ministries. The critics of the new policy pointed out that where clearance for each grant was required from the DEA, as in the case of the Ford Foundation, there were sometimes delays of more than six months and sometimes grants were rejected without assigning any reason. They demanded that the procedure be reviewed and made less cumbersome and time consuming. Finally it was pointed out that instead of encouraging more plural sources of funds for NGOs, the new policy has reduced them and in fact made India and NGOs more dependent on a few Western nations. It should instead attempt to encourage more secular flows to NGOs from Japan and the oil rich Eastern countries. In defence of the policy, government spokesmen pointed out

that they take only 42 days on an average to clear the grant which is often much less than what donors themselves take to approve the grant. Experience of donor funding indicates that this is indeed true in some cases. The government spokesmen also pointed out that donors like Japan or Australia who also had to submit each project proposal to government, reported no delay. Figures were quoted to show that of the 151 NGO projects submitted to the DEA in 2005, only 11 were refused permission. Moreover, some of those rejected included some who had no FCRA clearance or had submitted the same project to more than one donor. It was also mentioned by some that reduced dependence on aid can only be welcomed, especially since the availability of easy aid made people avoid taking the harder steps of raising internal resources and improving efficiency in use. It was further pointed out that while most NGOs see the new policy solely in terms of the reduction of resources for their work, they overlook the fact that the smaller donors like the Dutch did not pull out of India solely because of the government’s new policy. It was a move which was in the offing because of changes in their own with parties to the right of centre coming to power. As an Indian government spokesperson remarked, bilateral aid is not charity but politics by another name, and if donors play the game by their rules, so equally will the Indian government have to keep its own national interest in mind.

external alternative government,

While many bilateral donors were open and transparent not all were. Besides, though Norway, Sweden and the Dutch reached the

UN target of 0.7 per cent of GDP not many other donors had.

Moreover, the government was becoming concerned that more bilateral aid was beginning to concentrate on infrastructure building rather than on building capacity in society or community.

Clearly, there is a mismatch of views on what constitutes national interest, and the perspectives of government, NGOs and donors do not always converge. As always there is much truth on all sides, and a need to reach consensus through dialogue.

Whatever the pros and cons of the new policy from the point of view of NGOs, it became clear that bilateral donors do not really want the primary development relationship to be with NGOs. The new aid policy while declining aid on official account had left

the bilateral donors free to give aid directly to NGOs with some monitoring by government. But many of the donors have chosen to withdraw rather than stay on to work with NGOs. While this is understandable in that, as has been pointed out already, the motive

behind official aid is not primarily philanthropic, there are other good reasons why official donors prefer to work with government as the primary contact in the social sector, rather than with NGOs. One, working through government can itself contribute to a

strengthening and improvement in the capacity of government. Two, it gives better opportunities for replication and scaling up interventions. Three, there is a reluctance on the part of donors

successful to begin generating parallel organizational and management structures because their problems can outweigh the advantages of bypassing government. And four, for reasons mentioned earlier, some

disillusionment with NGOs as the best agency for social change has

set in (Cox et al. 2002: 300).

Additionally, it is mentioned that while aid may enter and exit at will, the government has continuing responsibility and therefore development aid’s foremost objective should be to strengthen

government’s capacity to rule for the common man and common good,

and NGOs’ best role is to ensure this. Hence, as mentioned earlier, instead of bypassing NGOs altogether, donors are turning to funding policy analysis and capacity building of NGOs for advocacy and empowerment initiatives to make government more responsive to

the people, rather than funding development services alone.

IMPROVING THE TRIPARTITE RELATIONSHIP For a more effective tripartite relationship in future, one suggestion is that a Bilateral Assistance Informational Memorandum (BAIM)

should be submitted by bilateral donors once a year to the DEA. This would indicate their programmes, likely partner agencies, likely level of funding, expected outcomes, and process to be used to measure impact and share learning with governments, both state and central, and be approved within an agreed time period (Mahajan and

Parthasarathy 2005: 3). At some of the conclaves it was also suggested that donors

should pressure the Government of India to liberalize the guidelines. But clearly this would be unwise. However unhappy NGOs may be about the new aid regime, if Indians have a problem with their it is up to Indians and not donors to put pressure on the

government

government for change (Sethi 2003).

A suggestion worth adopting is that a large Indian CFA should be created into which donors can pool resources to be given without FCRA to Indian NGOs. It is also one of the steps recommended by the UN Aid Harmonization advocates. Tandon, though a leading critic of the new policy, rightly

suggests that instead of crying over spilt milk, NGOs and government

should see opportunities in the new dispensation. For instance, the

new resources now directly available to NGOs could be used by coalitions of NGOs, educational bodies and local bodies to deliver basic education to the poor in difficult and remote areas of the BIMARU states; for housing for the poor, especially in tribal and rural areas, which would create both assets for livelihoods and

employment; to fund local bodies such as PRIs and municipalities who

have been given responsibilities but not the matching resources; and, by coalitions of civil society, PRIs and municipalities, to tackle some of the basic deficiencies in primary healthcare, sanitation and drinking water. They could also be used to contribute to a national

disaster fund to be managed by an autonomous body comprising eminent citizens and NGOs; to fund research on issues of

entitlements, citizenship, governance, and institution building in such a

way as to bridge the gap between academic bodies and activists at the ground level; and, to strengthen indigenous civil society to its professionalism, impact and outreach (Tandon 2003). In

improve

short, there is much that bilateral aid can still do within the new

permitted framework.

As the saying goes, there is a silver lining to every cloud and for the new aid policy it is that the regulation may bring more discipline to both the donors and to the NGOs who are now forced to think through all the angles, and scrutinize/prepare NGO proposals more carefully before submitting them to government.

Part II Aid in Action

7 An Unequal Music: The NGO-Donor Interface ‘The desire to help so easily becomes the desire for power.’ 1

The resource transfer process should bond NGOs with donors in a close relationship for achievement of their common objectives, but does not always do so. Though NGOs are generally happy with their foreign donors, nevertheless there is latent rather than open at the condescending attitudes and practices of the donor. NGOs allege that because the donors hold the purse strings, it is they who debate the dominant ideologies, make aid policy and set the conditions and procedures for funding and accountability, though they may claim to have consulted with them. Interestingly, even if a common front may be presented by a donor organization vis-à-vis NGOs, not infrequently there are differences of opinion between the various levels of the donor hierarchy itself, especially between the field personnel and headquarters. The former consider the latter to be bureaucratic and less sensitive to recipients than themselves, while the latter feel the field staff is ‘soft’ on the partners at the cost of the donor agency’s interests. It is also mentioned that donor representatives often stay only two or three years in the country, some even shorter, but feel they know enough about local conditions to expect the locals to submit to their judgement. Power privileges the donors to choose who shall be aided, for what and how. They have the power to control what NGOs do and how they do it. Donor practices shape the way recipient NGOs conceptualize, implement and account for their development work. NGOs complain of highhandedness and top-down approaches on the part of donors. Donors, they say, act on the basis of information, pass faulty judgement, or show insensitivity or

resentment

insufficient

1 Tony Vaugh cited in ‘Stark Relief’, The Guardian, 16 May 2001, and by Sogge (2002).

Foreign Aid for Indian NGOs

ignorance of local conditions without fear of contradiction because they control the funds. Donors too have their own set of against NGOs, as we saw in Chapter 5. They allege weak management, difficulties in identifying good NGO projects, and lack of measurable outcomes. Difficulties in the relationship stem largely from the fact that it is fundamentally between unequals, the recent practice of referring to the aid recipient as ‘partner’ not withstanding. The paternalistic and patronizing attitude is embedded in the humanitarian ethic itself. Aid is something that the rich compassionately bestow upon the poor to save them from themselves.2 According to anthropologists, while reciprocal giving creates solidarity and affirms relationships, charity does not. With little potential for reciprocity, it does not foster solidarity but reinforces divisions, and can create resentment because the recipient becomes a material and moral debtor of the donor, not willingly, but often out of compulsion. Charity has the power to wound (Kidd 1996). This chapter describes aid in action at the micro level, as seen in the one-on-one relationship between donors and NGOs in the process of resource transfers, because the quality of development depends to a great extent on the quality of this relationship. It seeks to deconstruct the process of resource transfer to see whether friction or tension are inherent in the process itself, and to identify the areas where these arise, in order to see how they can be reduced and the relationship can be improved. This is necessary because though NGOs may vociferously criticize the development paradigms recommended by the World Bank and other donors, they will not publicly air their criticisms for fear of incurring donor displeasure and jeopardizing their own funding. They will voice their problems only at conclaves like the CIVICUS World Assembly 2006 or the NGO-Donor Dialogue organized by Sampradaan Indian Centre for Philanthropy in Delhi in July 2001 because the collective voice affords anonymity to the individual. Unfortunately, such occasions are rare. At the same time, it is important to recognize that if NGOs have needs, donors too have their own dilemmas. Therefore, in the the perspectives of both NGOs and donors are kept in mind.

complaints

outcomes

following 2 Burnell (1997), Cox et al. (2002), Goonatilake (2006), Hancock (1989), among others.

NGO-Donor Interface

THE RESOURCE TRANSFER PROCESS Typically, resources are transferred from the donor to the NGO by means of grants which are broadly of three types: • Anindividual grant awarded to an individual for travel, study and other purposes, and not considered here; • the most typical, a project grant given to an organization for a particular project, with defined boundaries and goals to be accomplished; and, • a core support grant, sometimes referred to as an institutional grant, which is financial assistance for the purpose of covering core operating costs of an institution such as personnel the purchase, rent or maintenance of office facilities, fund-raising activities, and other establishment costs.

expenses,

Sometimes matching grants are given wherein the donor pledges a certain amount of money on the condition that a grantee raises the rest (in most cases the ratio of the donor grant to the rest is determined in advance, such as 1:1 or 1:2) Finally, a donor may offer an grant which is cash, stock or other forms of assets granted to an institution for capitalization, on the condition that only the income from it is to be used for the sustenance and advancement of the institution. This type of grant signals a donor’s confidence in the and longer-term utility of the institution, and is typically offered as a parting gift, ending an episodic relationship. It helps an institution to build its independence by securing its financial base. The grant-making process itself consists of several distinct stages. The first stage, after a donor has decided its overall strategy and is identification, selection and appraisal of the partner NGO and its project proposal. The second stage is approval of the grant after negotiating the grant details, including the exact size and period of grant, the items on which the grant may be spent, and the instalments over which the money would be released. After approval of the grant and release of the monies, usage of the grant is monitored by the donor, either by on-site field visits or requesting reports from the recipient. The donor may suggest mid-course corrections at this stage and/or the recipient may request modification of the terms if needed. The final stage of the grant is the evaluation of the grant to see whether it has achieved its objectives and to provide lessons to both sides.

endowment capability approach,

In theory, the donor recognizes the autonomy of the grantee regarding management of grant funds, though terms and conditions are set forth in a grant letter. In practice, there is some micro by the donor, the amount of control and how it is exercised varying from donor to donor. Again, in theory, NGOs can negotiate or protest about conditions they don’t like, but in practice they seldom do, for dissent is not taken kindly (Tvedt 1998: 75, Wallace et al. 2006: 2–4). It is this asymmetry in the relationship and the of helplessness it creates in the recipient which is at the root of the problem in the relationship.

management feeling SOURCES OF CONFLICT Problems arise in the main from two Ps: people and practices.

People Of the many expressions of asymmetry in the aid relationship, perhaps none are so resented by NGOs and others involved in the as the arrogant and patronizing attitudes of donor agency staff and the discriminatory practices between expatriates and Indians. Within donor organizations it is the Programme Officer (PO) who is the face of the donor for most NGOs. The state of donor/NGO relations depends greatly on the qualities of the PO. There was near unanimity among the respondents canvassed for this book that while in the early years many POs had humility, creative imagination, and compassionate empathy, these virtues seem to be in short supply now, especially with the market philosophy bringing its values into philanthropy. Reminiscing on the early days of foreign aid, several NGO leaders recalled how an informal and relaxed style of grant making was a common characteristic of donor organizations in the 1960s and 1970s. They also mentioned names of some very committed and people such as Badal Sengupta of EZE, Raine Kruso of Bread for the World, Mr Braun of ICCO, and Robert Chambers of Ford Foundation. All were very committed to the poor and some, like Badal Sengupta and Robert Chambers, were also deep thinkers whose ideas left a deep impression on NGO minds. They came with a desire for long-term change and wanted to build institutions for that purpose. NGOs valued their donor contacts not only for the money but also for the ideas and technical assistance they received from the POs.

system

dedication

remarkable

The donor world, according to NGOs, has changed considerably since then. While the early POs were more mature and built warm personal relationships, today’s POs are said to be younger, professional, less idealistic, and more arrogant. They want to own the process and to lead the change, and they expect NGOs to follow their dictates. The perception of a few NGO leaders is that a majority of the foreign donors are getting people who are neither as professionally experienced nor as empathetic, possibly because of brighter opportunities elsewhere, and because humanitarian zeal is less in evidence globally than was the case in the 1970s and 1980s. 3 Further, the programme staff today mostly have either a social science or management degree and come from the academic or world, unlike in earlier years when they came from the peace corps or NGO backgrounds. NGO perception is that few have or run a non-profit organization themselves and so know only the theory of building social institutions, but not the Nor do they have the humility or courage to acknowledge that they may not have the capacity or courage to become social change agents themselves. In the case of endowed foundations, POs are accused of wanting to develop their own interests and fiefdoms with an eye on their career because typically they are on short-term contracts.4 Those who are posted overseas are interested in building their own curriculum vitae and raising their profile for the time they return home or move on to other careers. Therefore, many do not have a great deal of sustained commitment to the development of the poor, much like many of the professionals in Indian NGOs today, for whom too it is just a job. Part of the difficulty is that the foreign POs are distanced (and in some cases physically) from what’s really going on and are therefore unable to grapple with it. Sometimes, when a donor has no field office, the POs do not stay in India at all but visit it Where there is a field office, POs come for short terms of duty staying for two to three years of which the first year is spent in

impersonal,

business established practice.

furthering

culturally

periodically.

3 Interviews with NGO leaders in Bangalore, 14 September 2006, and Bombay, 13 July 2006. 4 Joel Fleischman, former head of the Atlantic Philanthropies, quoted in ‘The Business of Giving’, Survey of Wealth and Philanthropy, The Economist, 25 February 2006.

settling down and familiarizing themselves with India and ground realities, and the last in winding up. There has been a steady Indianization of the professional staff of donor agencies since the 1980s (support staff were almost always local), and at least 50 per cent of the professional staff of donor

agencies today are Indian, partly out of a need to cut costs. But since many of the donor agencies typically have only one national office they too are unable to keep in touch with the grass-roots development spread across India because of the extensive travel involved. The changed attitudes cannot be put down entirely to Western

feelings of superiority, cultural differences or misunderstandings, though

some of that no doubt exists. Ultimately, the real problem, whether the PO is expatriate or Indian, is that their position as a donor overtakes them, even though they know that donors need NGOs as much as the latter need donors. In the early decades, POs were to constantly update their knowledge and expertise to be at

expected

the cutting edge of a field. But increasingly, the know-it-all attitude of

the new wave of POs ensures that donor organizations are not always learning organizations as far as organizational development is As one expatriate development professional candidly admits:

concerned. Usually our tours as development practitioners consist of rather haphazard project-hopping, without proper time to look into

contextual matters, internal development or intra- or inter-organizational

undercurrents. We largely work on a case by case basis. Cross learning

remains an accidental phenomenon. Larger trends or central issues usually remain largely undiscovered and arenas for exploration grossly untapped. (Roubos 2006b)

The result is shallow grant making without any lasting impact, and sometimes even an adverse impact on an organization.

In general, PO attitudes are the product of the overall ethos of a donor organization which may vary from agency to agency and over time. In the 1970s and early 1980s there was an unwritten in the Ford Foundation that all letters must be that even when requests have to be turned down it be done so

understanding acknowledged;

sympathetically, and efforts made, if possible, to direct the seeker to

other sources; and, that POs are facilitators, there to help the grantees, and not NGO overlords. It is no longer said to be the case.

Three factors appear to have contributed to the change in the nature/quality of staff and their attitudes. One, after 1990, due to policy changes in their own countries and the funding pressures faced by INGOs, there were attempts at internal reorganization and cost cutting. Even some endowed foundations faced such pressures at one time due to fluctuations in the stock market which reduced the value of their assets. Therefore, younger, less experienced and more moderately paid staff were recruited. Two, the acceptance of market fundamentalism as a guiding with its greater insistence on measurable outcomes meant a greater reliance began to be placed on bureaucratic structures, techniques and approaches, and emphasis on efficiency rather than empathy. The new professionals treat intensely political choices as technical and managerial ones and thus depoliticize the development process, which in essence is about changing the structure of power and privilege, both at the local and at the international level. Managerial models while privileging the modern, scientific and rational, devalue the local, indigenous and intuitive knowledge, thus pushing its practitioners, whether local NGOs or communities, into a subordinate position, thus reinforcing the existing structures of power. Shallow grant making is the result both of immaturity as well as vested interests and contacts developed by POs so that they consciously or unconsciously want to favour certain organizations, projects or persons. Three, it is possible that founders of NGOs have grown older, more mature, and more experienced themselves and therefore find the new POs less knowledgeable or lacking in vision, depth of understanding, or development experience. Though donors complain of staff turnover in NGOs and NGOs find the same situation in donor agencies. POs of donor agencies also change every two years or more frequently and do not get replaced quickly resulting in lack of continuity. Sometimes it can take up to a year to get someone in place and there is no one with whom to discuss a proposal. Or, after having built up a relationship with one PO, they have to start over again with a new one who may not have the same appreciation. The delay in approval or processing affects projects/institutional development adversely, especially when repeat grants are needed. A second, people-related cause of unhappiness in the Indian development sector is the perceived discrimination within donor

philosophy management

government,

organizations between expatriates and national staff of the donor agencies themselves; and between consultants hired locally and those

from the donor countries. Every donor office which has a mixed staff and a dual salary and benefit structure has faced problems in this regard at some time. There is also discrimination by donors between expatriate and

local consultants. Colin Ball, then director of the Commonwealth Foundation, narrates how a donor agency had asked him and a local Sudanese consultant to study a micro finance project in Sudan and to make recommendations to put the project on a sound economic

footing. When it came to presenting the report to the donor agency in London, only he was asked to present it because ‘it is legitimate to pay my fare to go out there but not to pay Hashim’s to go the other way, evidently’ (Ball 2002). Such things have been known to happen in India as well. In one

instance, a foundation retained the services of a distinguished Indian American citizen, a fully tenured professor in one of the top league universities in the USA and an eminent writer, to advise them on

some work in India. The consultancy fee that was offered to him was much less than that offered to other US consultants of much less eminence, just because he was of Indian origin and therefore ‘should be happy to have a chance to go to India’. The reality is that itineraries

of outside consultants are invariably managed in such a way as to enable them to do sightseeing in India. Finally, donors frequently do not connect to the local NGO scene unless the meetings or events have been organized by them or involve

their partners. There is a vertical connect between donors and their partners but a horizontal disconnect between other donors or with the local NGO sector in general. Incidentally, donors always plead inordinate work, the implicit assumption being that NGOs either do

not work as hard or that their work is of less importance. Donors like ICCO and OXFAM claim that they have made efforts at a two-way process and do not see the funding relationship as the sole dimension of co-operation between donor and receiver. Instead,

the effort is for the two parties to jointly take part in campaigns, lobby efforts and international forums. But by and large, there is still a long way to go to achieve a genuine partnership. With the change in global perceptions of India and Indian

capabilities in many fields, coupled with the self-confidence of younger

NGO leaders, both the scope for arrogance and discrimination on the part of donors, and tolerance of it by Indians, has diminished.5 This is a hopeful sign.

Practices The specific operational areas where friction arises during the grantmaking process are discussed below under the following broad heads: • Selection of NGO partners. • The quality of aid in terms of size, type and period of grants, and flexibility to meet changing needs and circumstances. • Accountability or ensuring proper use of funds through monitoring and evaluation of performance.

Selection NGOs face hurdles at three stages before they can be assured of funds for their projects or organization. The first hurdle is the identification of donors whose interests and priorities match their own. The second hurdle is in getting a foot in the door; and, the final hurdle comes when the proposal is appraised. Getting access to a donor in terms of getting donor information and meeting funding agency staff is not easy, especially for NGOs in non-metro areas. There are few directories with information on donors and the typical practice is for NGOs to locate appropriate donors through contacts and hearsay. Most donors (exceptions being church-related INGOS) are concentrated in the capital city or other metros because of easier living and conditions for expatriates, who look for comfort or some other compensation such as a ‘hardship’ allowance, or a critical mass of like-minded expatriates. Consequently, distance from the metros disadvantages organizations based in remote areas. Modern means of communication such as the Internet have helped facilitate the links, but such technologies are still not widely available to all, especially in interior areas, and trained manpower to use them is still a problem. That NGOs face difficulties in accessing donors is borne out by a 1998 evaluation of DFID by Christian Aid. It found that DFID

comprehensive

working

5 Interview with Pushpa Singh, COO, Give Foundation, Mumbai, 27 June 2006.

had a weak interface with Indian civil society and that NGOs were unhappy with it for lack of transparency about funding detailswhat, where, who, how etc., as well as non-responsiveness to submitted for funding. NGOs in several states were unaware of DFID’s activities in their area, and one criticism was that DFID only interacted with a few prominent NGOs in Delhi. For the vast majority of NGOs, academics and other interested parties, DFID was still difficult to approach. The evaluation concluded that because of this DFID was closing itself to a wealth of local knowledge and experience, thus increasing risk of project failure.6 Clearly, better dissemination of information on donors is necessary. After a project proposal is submitted by an NGO, whether it will be funded does not always depend on the NGO’s past performance or the intrinsic value of its proposal. The vision, mission and priorities of some donor agencies automatically restrict their universe to a select group. For instance, ICCO’s initial mission was to build solidarity among Christian NGOs for social justice and development. It therefore sought partners with common philosophies rather than how effective or efficient they were in their impact on the communities. Since the last decade, however, ICCO’s approach has changed. Selection of partners is done on the basis of a professional assessment of the performance, capabilities and ability to show results and Again, their objective of promoting inclusive growth, that is focusing on marginalized groups — Dalits, tribals, and womenclearly defines/limits which NGOs will be considered. Similarly, endowed foundations whose mission is to catalyse change automatically select those NGOs that can leverage change through some innovation, rather than any NGO with a good Few NGOs understand or appreciate this donor obsession with ‘innovative’ projects. It is difficult for a majority of NGOs to keep thinking of ‘innovative’ projects when what they really need is money for their regular operations. Besides, very few projects are really innovative. Since few donors themselves implement anti-poverty or other aided programmes and projects now, it is important for them that the chosen NGO partners have the required capabilities and speak

proposals

impact.

project.

6 Arthur van Diesen, on behalf of Christian Aid, did the 1998 evaluation for DFID.

the same ‘language’ as they do, both literally and in terms of the development discourse (donor speak). In English-speaking countries this favours the more elite NGOs who speak and write English well and can couch their proposals in donor speak. Though selection criteria are laid out and in some cases even well publicized, it is that a crony system, strengthened through conferences and social events, operates in the aid chain as much as it does in government and business. Frequently, donor assessment of the likely efficient use of funds is linked less to an NGOs past achievements than to its mastery of the development jargon and its management of its image. Therefore, as borne out by the FCRA figures, a large chunk of foreign funds go to a few large NGOs, most of whom are based in urban centres with easy access to donors. In a donor organization, historical legacies also tend to maintain a profile of the past, with POs handing over a list of their favourite NGOs to their successors, or conversely a list of NGOs informally blacklisted by them. It also happens that an NGO that has fallen out of favour with one donor will, through the informal system of the aid chain, become an untouchable with other donors, though the disfavour may in the first place have had nothing to do with the NGO’s performance and everything to do with equations. Administrative convenience and other compulsions reinforce the tendency to select the bigger and better known NGOs. For one, many funding agencies have a limited capacity to administer large numbers of grants. Some do not even have offices in India and work through a consultant or through some other agency for identification of partner NGOs. The transaction costs involved in processing of small grants, plus the overload it puts on the professional staff, generates a tendency to fund fewer and larger grants. Since these cannot be absorbed by smaller NGOs with limited capabilities, it automatically favours big NGOs. Additionally, the bigger and well known names win over the NGOs because funding service delivery has had little impact on poverty, and donors believe that routine funding of small NGOs is therefore best done by national or local governments. In recent years, as mentioned earlier, the practice is to concentrate their limited resources on changing government policy and through advocacy and innovative ideas for making systemic changes. Advocacy or experimental work requires more

undeniable

communication

interpersonal

numbers

grassroots grassroots

implementation

sophisticated NGOs and networks located in national and state but in touch with grass-roots realities. Hence the preference for the bigger and more mature NGOs. The final reason why the bigger and more elite NGOs are favoured by foreign donors is that donors need to showcase success stories to their home constituencies including the public, government funders, as well as their own boards. The chances of making a visible impact with the grants counts in the selection of locations and organizations. This explains why several donors vie to fund the favoured few who have made a name for themselves or, equally, regions which are well developed. Success begets success and more funds.

capitals,

already

As a result of their inability to understand the worldview of small

players the donors end up talking only to like-minded NGOs and make a lesser effort to reach out to smaller numbers of NGOs in the interiors, who are also not articulate themselves. Conversely, small NGOs who do not understand donor worldviews or criteria end up feeling frustrated or bitter. The result is that islands of affluence are created and civil society also gets divided by politics, rivalries and jealousies within it as NGOs try to protect their own funding. It cannot be denied that donors have the prerogative to give aid to whomsoever they choose, but there must be transparency about the criteria and wide dissemination of information about these to avoid wastage of effort, money and petty politicking on the part of NGOs.

selection

At the stage of appraisal of the proposal, several other filters

apply. Whether an NGO’s and a donor’s assessment of what is needed by the community and how it can be met intersects at all depends on the political, religious and economic goals of the assessors. few donor agencies have staff at field level, and the few staff of even those with a country presence are either overworked or do not have opportunities to get to know the situation on the ground where the project is actually located. They take the word, at the most, of a local consultant appointed to do the appraisal. The needs are then assessed according to general policy guidelines — gender parity, preservation of the environment, how they will contribute to or human rights, etc. — apart from the agency’s own requirements or guidelines such as no funding of capital assets, or research and so on. The current funding fashions influence the decision to fund or

Typically,

democracy administrative

not in no small way. Donors follow global changes and the aid they

give generally follows the prevailing dominant ideology. At one point of time, everyone was funding livelihood projects; at another,

projects concerned with the girl child or empowerment of women. Sometimes micro finance is in fashion, at others, environment or HIV AIDS, or as of now, climate change. Within a theme, money is offered sometimes for ‘empowerment’, at others for ‘capacity

building’, or ‘strengthening of civil society’. Funding fashions matter less to an NGO if the proposal is for a new project. If an NGO is savvy (and now many NGOs are), it will find out what the current

fashions in funding are and then present the needs of its community in

these terms. Tension arises when continued funding is sought and the donor informs them that current priorities have changed. Since a donor may stay with an issue for only five years or so, it means that an NGO

that has been funded for a project addressing a particular issue is left high and dry when the donor changes his priorities by the time the first grant ends. Not only does that particular donor agency change its agenda but others follow suit so that NGOs find it difficult to

sustain the work that had been started under one donor. Not NGOs too shift agendas as quickly as changes in funding fashions. Many of them make the excuse that they are doing

surprisingly, integrated development which is a convenient catch all category.

A proposal may be rejected if it is controversial in some way, though otherwise suitable. There is a common interest in keeping controversial issues, hidden agendas and project failures in the

background, on the part of both NGOs and donors.

Finally, whether a particular proposal or NGO will get funded or not also depends on how desperate the donor is to spend the money allocated under that theme and how fast. To paraphrase Tvedt (1998), it is unlikely that the NGOs that get the most money

in the donor countries and in the co-operating countries are those with the best projects. What is considered best changes according to ideological trends. The donor does not have the capacity or the competence to assess. A number of other considerations will always

intervene in the assessment process. Nor does it imply that the NGOs that get the most money are those with the worst ‘Systemic characteristics of the NGO channel do not give the

projects.

present donor-NGO funding-assessment profile legitimacy based on

evidence’ (ibid.: 86).

Donors have their own take on the charges outlined above. Their response is that given their limited resources they have to be selective and cannot, like government, fund every NGO who needs money.

Their mandate is to provide aid which will make the maximum on poverty or social change, and therefore they have to select only those regions or organizations which can catalyse development in wider society, even though it may lead to a process of and impede the functioning of smaller and medium-sized

impact monopolization organizations.

They also believe that for greater impact, resources must be used strategically. Impact requires NGOs to reach a scale and size, both in terms of being able to spend large amounts for large projects (in terms of numbers to be reached or geographic coverage) and to be able to utilize donor money efficiently. Moreover, only larger organizations have the resources to develop the professional systems required by

donors in terms of accounting for the proper utilization of funds. Though small organizations are supposed to be more responsive to local grass-roots needs, they quite often lack management and are more dominated by local elites than the bigger NGOs. Finally, ongoing dialogue with small NGOs is resource intensive and

capacity it is not practical to work with too many NGOs.

Therefore, as noticed in the last chapter, more donors have moved to provide longer term institutional support to fewer NGOs. However, analysts point out that though efficiencies of scale might be achieved if NGOs grow big, they also run the risk of becoming corporate or bureaucratic bodies with consequent loss of flexibility and activism. The jury is still out on the optimum size for an NGO.

It is a question that will have to be faced and solved by the voluntary sector itself. Over time, donors have learnt how to appraise NGO proposals better, to overcome some of the negative tendencies that were there earlier on the part of both NGOs and donors. Most donors have become wise to the well written but uniform proposals of professional

proposal writers and have become more rigorous about appraisals. ICCO, for instance, no longer takes decisions about support by looking only at the merits of the particular project. It feels that NGO understanding of its own sector and the larger picture is limited, it therefore scrutinizes, apart from the intervention proposed by an NGO, their position in society, their role in networks and their

activities

in the field of lobbying and policy advocacy, as also their contribution to civil society building.

Quality of Aid The quality of funds depends on how adequate they are relative to an NGO’s need, in terms of volume, period of the grant and the purpose for which they may be used as well as flexibility allowed to change use according to need. Unlike in government funding, each donor grant is individually negotiated between the donor and NGO, taking into account the needs of the project/institution, the of the NGO to utilize the grant and the donor’s budget. In general, NGOs are happy with the quality of aid offered by donors in terms of size because the grants are more liberal (and more sought after) than those given by the government or Indian donors. They are also alive to the dangers of receiving very large sums of money such as loss of independence, flexibility or creativity; an increase in competition and unhealthy rivalry between NGOs; and, an uneconomical use of the money under pressure to spend. There is also the fear on the part of the NGO community as a whole that very large sized grants will lead to the creation of large and powerful NGOs (small in comparison with companies), which in the sector can have the same effect of stifling competition as in the corporate sector (van Diesen 1998: 16). By and large NGOs are also happy about the flexibility offered by donors for changing within agreed limits the inter se allocation of money for different items, especially after the experience of in government funding. When donors are rigid about spending within the grant period it often leads to a frenzy of unproductive spending and hasty decisions. But much more important to NGOs is the fact that donors do not have preconceived notions on what money must be spent. They are willing to give grants for untested ideas and experimental work of all kinds including testing new methodologies, provided the NGO can make a convincing case about the benefits likely to accrue. It is for this flexibility that NGOs value foreign aid most of all. What really irks NGOs is the nature of the grants most typically on offer, and the short period of support with no guarantee of further aid. For the most part, donors offer only project grants to be spent over a period of two to three years, and not institutional or general budgetary support. This is so especially for new organizations, or organizations that donors are funding for the first time in order that they can test the capabilities and staying power of the organization. The project grant may be repeated either for the same project or for

capability therefore

monopolies rigidities

generally

another proposed by the same NGO, depending not only on

performance, but also current priorities of the donor, their budgetary

situation and so on. Though some grants are repeated, rarely do donors continue to support an organization beyond 10 years. By that time the grantee is expected to become either self-sufficient or look for funds from other sources.

Not only is a project grant of short duration with no guarantee of continued funding in spite of good performance, but the costs covered are those immediately connected to the execution of the project and only a portion of institutional overheads such as rent

and core staff costs. Typically, the support offered for

administrative overheads seldom exceeds 10 per cent of total project costs.

Most donors do not offer support for structures and asset creation (buildings, costly equipment, vehicles), or fund travel for higher

education, training or conferences abroad. In fact, it is to meet the core costs and asset creation that NGOs find it most difficult to raise funds. Certain issues, which are deemed politically sensitive or controversial, are generally not funded.

Very few donors, beyond a few exceptions, offer core or

institutional support, especially in the initial years. Once an NGO is accepted as a good partner and the type of work it is doing is a current priority for the donor, then it may become one of the long-term

partners who are offered long-term support. NGOs argue that short-term project funding is at the crux of the problem they have with foreign aid, and that it has been harmful to long-term development of both communities and organizations.

Even when some overhead costs are included in a project grant, the fact is that even with several projects funded by different donors the total institutional costs do not always get covered, and leave a large gap to be met from other funds which are difficult to mobilize.

The general reluctance of donors to support major asset creation such as buildings also means that these assets cannot be used to generate long-term income, though some donors have allowed NGOs to create assets and to use them for raising income. The only solution

left to an NGO to ensure sustainability is to raise its own resources from effective local resource mobilization from the beginning. Many NGOs had abandoned this effort but are being forced to resort to it again. But local fund raising is difficult for certain types of NGO

work such as research and policy advocacy.

With short-term project grants, with no guarantee of continued funding, NGOs are unable to put good HR policies in place, with good salaries, long-term contracts and benefits, even though the latter may be mandatory. This means they are neither able to attract good staff nor retain them; nor are they able to spend on their training, or enhance institutional capacity by putting in place proper systems and facilities. Without competent people and other facilities, the quality of NGO work suffers, and scaling up or diversifying their work becomes difficult. Sustainability and capacity building are linked to the nature of funding and yet donors offer discrete for capacity building or fund raising without looking at funding as a whole.

support institutional Moreover, having to present discrete projects for funding prevents an organization from developing a coherent programme

which genuinely meets the needs of its constituency. The necessity of presenting those proposals which will attract donor funds often means that the work of the organization ceases to have a close fit with its vision and mission and consists instead of an assortment of ill-fitting projects. Further, having to constantly raise funds from project or programme implementation, especially since typical NGOs do not have enough staff to undertake specialized functions such as HR and fund raising, and the CEO has to be the jack-of-all-trades. In the absence of institutional grants or general budgetary it also becomes easier for donors to impose their own conditions or agendas on the NGO, especially if the grant is a significant of the overall income. It becomes harder for donors to insist on their own agendas when their support is part of a larger pool made up of other donor money as well as owned funds. Most importantly, however, social processes are time consuming and require intense effort over a long period. Results are not visible in the short period of two to three years, and donor impatience for results leads either to hasty decisions or dissembling over achievements. So, if donors are really serious about bringing about social change, as distinct from showcasing a few schools, check dams or SHGs, then they must be prepared to stay in for the long haul and provide stable and institutional funding. Donors counter these arguments by saying that they cannot take chances with new untested organizations since they are also to their own funders or constituencies for the good use of the

distracts

support proportion

answerable

donated monies. Besides, many donors, especially INGOs,

themselves depend on annual grants from their back donors or on public

fund raising and therefore face the same uncertainty, as do NGOs. However, when organizations have proved to be trustworthy and effective they have built long-term relationships with them. For instance, Plan International, SIDA, ICCO and Ford Foundation all

have some long-term partners who have benefited from 10–15 or more years of support. ICCO has now almost phased out short-term funding and is funding only a few NGOs, but for long periods. As mentioned earlier, more donors are following suit.

As for NGOs not being able to meet mandatory legal

requirements of staff benefits from project grants, some donors have argued

that when NGOs present the budget to donors, they should include all the mandatory benefits including Provident Fund, Employees

State Insurance and the like in the staff costs shown. Certainly, foreign donors are more liberal in this respect than the government for staff costs. However, it still does not solve the problem of

allocation how to pay and retain staff that has been hired at a higher cost, once

a grant ceases after two to three years and is not replaced. As for funding asset creation, the donor response is that it creates ownership problems, especially legal ones, if the NGO was to cease to function. A second reason quoted for refusing such funding

is that donors find it difficult to monitor proper usage of assets for the purpose intended. It should be possible to resolve these difficulties through dialogue. An option, which a few donors are now exploring, to solve the

problems of short-term project funding is that of making an grant, either right from the beginning or, more likely, at the end of a relationship, when the donor wishes to exit. This may also

endowment

ease the stress of fund raising and the organization may be able to

devote more energy towards programme implementation. It could also take care of the issues of core funding, assets creation, funding of controversial projects, etc. The Ford Foundation has used this type of funding more frequently than have other donors, but very

selectively and mostly as a farewell gift to signal the end of repeated short-

term funding. Several endowment grants were made to Indian NGOs to celebrate the Foundation’s completion of 50 years in India. More typically, funding agencies consider this as blocking of

precious funds with no immediate results to be seen. They also argue

that such a fund makes an NGO complacent and less proactive in seeking local funds, apart from the fact that it gets eroded under inflationary conditions. Therefore, some donors have preferred a conditional endowment fund where the amount is given only if the NGO raises a matching fund. Giving an endowment fund the bond between the funding agency and its partner, since the NGO feels that the donor is reposing full confidence in it. Lately, official donors for purposes of government-to-government funding have adopted the practice of general budgetary support (GBS) in which they put their funding straight into a country’s national budget so that the country has full latitude to spend it on its own priorities. This reduces fragmentation into discrete projects or programmes, and enables both the donor and the recipient to see the big picture. Unfortunately, this exemplary move has not been picked up either by private donors or by bilateral donors for funding NGOs.

strengthens

Accountability Accountability of partner NGOs is generally assured by laying down conditions in the grant itself and later through monitoring the progress. Accountability implies not only proper financial of grant funds, but also their utilization in terms of the NGO’s mission and objectives of the grant. NGOs do not contest that they must be accountable for the use of grant funds, but they are not happy with the way they are monitored. The early donor style, even up to 1990, was more relaxed and informal. It could have been due to more trust in the NGO or to lack of experience in donors. Many donors did not insist on proper reporting, being content with the occasional visit. This encouraged a certain laxity in the sector and earned it a bad name as reports started coming in of misuse of money and lack of development impact. The pendulum since then has swung to the other extreme, especially after market fundamentalism led to a more managerial view of development. A perceived lack of transparency and financial accountability in particular has led to a tightening of monitoring procedures and practices, with a stress on cost-benefit ratios and measurable outcomes within tight timelines. This new donor approach is the result of several factors. One, the new philanthropists come from business backgrounds and

accounting

want to see more metrics and adoption of business methods. Two, even among traditional donors, especially INGOs, tight financial

conditions had made it necessary for them to adopt more rational management practices and they insist on the same for their partners. And three, many of the new POs come from a business orientation and find it easier to cope with numbers, graphs and logframes, rather

than nebulous and unquantifiable achievements when it comes to reporting to their back donors like governments or boards. In short, ‘The dominant discourse and associated procedures of

development aid currently are rooted in a paradigm of controlled, predictable changes, that can be managed according to clear rules and

accounted for in standard documents’ (van Diesen 1998: 16). Donor managements now want quick results and therefore

more control over how the money is allocated and used, and more

tangible, measurable outcomes. Though most donors do not

interfere in the routine organizational matters such as recruitment of personnel and fixing of remunerations, there have been some instances where donors have specified which consultants to hire, and how

much they should be paid, etc. There are also instances where donors have listened to the grievances of disgruntled staff and come to a conclusion of poor management without checking its veracity with the NGO head.

Increasingly, donors are willing to pay for products and outputs but not processes because the latter may take longer to manifest than the stipulated grant period of two to three years. The result is continuation of short grant periods, a few large grants instead

of many small ones, and more stress on planning and design, tight timelines for outcomes, and metrics. NGOs believe that this new impacts adversely NGO missions and performance because it

approach

gives short shrift to process. In order to fulfil donor dictates, NGOs

now tend to concentrate on projects and events rather than processes of change, even though they know that processes are more important for lasting change. Instead of encouraging a bottom-up process where funding

priorities are set in collaboration with local NGOs and involve the participation of local beneficiaries, this is leading to centralized decision making. Local knowledge and empowerment of

beneficiaries to achieve social transformation is at a discount. Long timelines and flexibility to respond to change as it arises are necessary

to change social attitudes or social structures. A solidarity and approach is difficult to combine with the administrative and control functions implicit in the management approach because the former is unpredictable and non-amenable to targets. The problems of failed development lie not only in poor planning and weak capacity of NGOs but also in the world external to the NGOs where group dynamics and structural inequities exist. With greater demands by donors for reports, documentation and standardized procedures, less time and initiative goes to changing the dynamics at ground level through consultations with the community, all of which take time and are moreover unpredictable. Besides, donors expect things to happen at the speed at which they are used to in their own countries, but in India this is not possible due to lack of infrastructure and the same level of development. According to Sheela Patel, executive director of SPARC, the new approach reduces NGOs to the role of subcontractors carrying out donor wishes instead of supporting the vision of the leaders of poor communities for their own transformation (Patel 2008). Though the new official aid regime boasts of having improved aid management by giving more ownership over the aid process to the recipients, reports from the ground suggest that not much has changed. Cox et al. (2002), in their evaluative study of European bilateral donors, quote a Government of India official as saying that while the recent high profile document ‘Shaping the 21st Century’ is full of confidence in recipients to manage affairs, on the ground the of most donors was patronizing. Government capacities were underrated and cited for justifying more control as the only means of guaranteeing results, though the tendency to want control was not uniform across donors. While some donor agencies such as those of Denmark, UK, Germany and the EC tended to be more hands on and wanted more control, this was not the case across the board (Cox et al. 2002: 68). Though donors talk of capacity building, because of a superficial understanding of development they suggest superficial remedies like getting a consultant to analyse organizational deficits. The hired consultant produces a report in a month or so, but is not always able to understand the dynamics of the organization, nor its compulsions, many of which are in fact to do with insecure funding. Consequently, only superficial recommendations are made without any real impact on institution building. In fact, paying for a consultant for each

participatory

attitude

and every problem has become a quick and popular remedy with donors. It benefits mostly the consultant and not the organization. As a satirical verse observes, We bring in consultants whose circumlocution Raises difficulties for every solution… Thus guaranteeing continued good eating By showing the need for another meeting.7 NGOs accept that foreign donors need to explain, either to their boards or to the taxpayers of their respective countries, how the grant money is being spent. Moreover, monitoring of projects and of outcomes against objectives are acknowledged by the NGO community as one of the good ideas brought in by foreign donors to improve performance of NGOs. However, NGOs feel that donor agencies should not look at it as a unilateral mechanism for exerting control. Monitoring should not remain only a donor need but both sides must own a stake in it and the process should be participatory and based on a mutually agreed upon system. NGOs claim that typically donors expect quick solutions to and mistakes and setbacks are not tolerated. Because of donor eagerness to hear success stories, and because an honest appraisal can attract displeasure, NGOs often make excessive and claims. Sometimes such donor impatience and pressure for performance is due to immaturity, inexperience or cultural ignorance of donor programme staff who may be well versed in the language of development and in management jargon but are novices at the task of development. They do more damage than good. A monitoring process purely based on an input-output analysis is narrow in focus and misses the qualitative dimension of the process. Though quantitative outcomes are important, a sound monitoring policy also needs to take into account the impacts, that is the qualitative changes the developmental initiative has brought about in the community and how sustainable these are once the initiative is withdrawn. Moreover, it should be a two-way communication mechanism where the voluntary sector can also voice its concerns about donor policies and functioning which affect programme implementation. Donors need to encourage

evaluation

problems,

unsubstantiated

developmental qualitative

7 From ‘The Development Set’, Anon, The Diary of OXFAM, undated mimeo.

partner institutions to be analytical and self-critical but not ‘punish’ by withdrawing funding. Efforts need to be made by both sides to address the weaknesses. NGOs further argue that reporting procedures need to be broad based and not just fulfil a few set requirements. Often donor look at these reports as documents to ensure compliance of the terms and conditions of the grant, or worse, do not read them while NGOs treat these reports as the inevitable end product of the programme/project to be got over with quickly. An important aspect that is often missing is how to use these reports as ‘learning tools’ for both the donor agencies and the voluntary sector. Some donors do very detailed monitoring and evaluation, financial monitoring, for example, Aid Et Action has audit firm KPMG do the audit for them as also the inspection of the NGO by their local office. Each donor has their own formats, and requires reports at different periods. Since NGOs have to comply with Indian legal requirements in a different format, as well as different donors’ different reporting requirements, complying with reporting is very time consuming and adds to the workload, especially of small organizations. 8 Typically, NGOs are better at working directly with their constituencies rather than being analytical about their work, and documentation is regarded primarily as a donor requirement. They know what is happening on the ground, but are unable to document the processes or explain to donors how and why they have done what they have done. It is not only monitoring reports which are time consuming but arranging for missions and field visits by POs of the donor agency. While a big NGO may be able to take visits by many donors the year in its stride, a small NGO may spend more time being accountable to its donors than to its constituency.9 While accepting that documentation of the process is perhaps even more helpful to the NGO than the donor, NGOs argue that the difficulties involved should be understood and donors need to help NGOs to develop capacity to document and evaluate their efforts. Reporting procedures also need to be simplified. It would be

agencies carefully,

especially

requirements

throughout

8 Author’s interview with the Chairperson of a Chennai based NGO working for child welfare. 16 August 2006. 9 This is also mentioned by ActionAid International’s report, Real Aid; see ActionAid International (2005).

very useful if some common reporting formats, both narrative and financial, can be worked out through donor and NGO consultation. Shared monitoring and evaluation processes could greatly reduce the volume of paperwork; and an agreement on some minimum such as frequency of reporting, documentation of achievements and problems in terms of intended objectives and discussion of work plans in relation to available resources would also help. Printing of annual reports is another way to ensure and donors can insist that the organizations they fund publish annual accounts giving details of work done under the programmes/ projects undertaken by an organization and how far these have been able to meet the organizational goals and societal aspirations. Since writing comprehensive annual reports may pose both and technical problems for a number of organizations it might be necessary for donor agencies to share such expertise with organizations, and set aside some money as a part of the overall budget for the publication of annual reports. With regard to evaluation, most donors require NGOs to projects and programmes. In practice, however, either such evaluations are not always done or are not rigorous enough due to lack of expertise within the NGO and the time and expense involved. Besides, the short nature of funding, and the impatience of donors for success stories, puts pressure on NGOs to claim successes when really they are only niche successes and not generic. Time and space must be provided by NGOs and donors for sharing of mistakes and failures within the sector, with a view to learning from them. Not all in the voluntary sector disparage the new business to giving. Though the pendulum may have swung too far in some cases, many NGO leaders feel that the earlier laxity on the part of donors was responsible for the many abuses that have crept into the sector. They believe that the onus for NGO transparency and accountability is as much on donors as on NGOs. Often, they do not publicize or pull up the black sheep for political reasons or to hide their own mistakes. It is also argued that when one is engaging in philanthropy with someone else’s money one must be prepared to show results. Use of metrics is excessive only when the implementation loses its sense of mission or passion due to too much emphasis on quantification or if the evaluation of outcomes is according to criteria developed purely by the donor. But good donors have now learned to draw up

requirements accountability,

financial voluntary

evaluate

approach

evaluation criteria either jointly with NGOs or by letting them decide how they will be evaluated. NGOs, they say, must voluntarily accept accountability rather than have a donor impose it.10 Several donors like the Ford Foundation, EED, OXFAM and others are trying to remedy the lack of effective financial management systems in NGOs by giving their partners training in financial This is undoubtedly the way to go. At the same time, NGOs feel that donors must themselves take the medicine they prescribe to NGOs. Not all donors are accountable or transparent, and offer very little information that would allow them to be judged. A few publish annual reports but not all. They are never held responsible for failures, while they themselves press for quick, demonstrable results from countries and NGOs. The within philanthropy is not to talk openly about mistakes, bad funding decisions or bad foundation practices (there are only bad grantees). There is a conspiracy and a victimization of the whistleblowers. This applies as much to donors vis-à-vis NGOs in their own countries, as well as in the developing world (Tuan 2004). The administrative costs of aid agencies are much higher than what they themselves allow for NGOs because the salary and structure in donor agencies is typically very generous (DFID’s administrative costs are 11.5 per cent while it allows NGOs only 8 per cent) (ActionAid International 2005: 28). Their overheads are 40–50 per cent much higher than in Indian donor organizations like SDTT, etc., whose staff costs and overheads are more in line with Indian conditions. The foreign individual donor who pays first to foreign donor agencies pays for this inefficiency and is in fact subsidizing the high cost of living of the agency staff. Because of lack of full disclosure the foreign donating public is unaware of these subsidies and that too little of the donated aid reaches the end user.11 Nor do foreign donors always honour their money commitments, as can be seen from the case given in Box 7.1. Donors are the sole judges of their performance. Though they do occasionally commission outside evaluations, there are no concrete examples of self-evaluation, of donors examining performance

management.

culture

benefits

10 Interview with N. Venkat Krishnan, Founder and Director, Give Foundation and Give India Portal, Mumbai, 13 June 2006. 11 Interview with N. Venkat Krishnan, Mumbai, 13 June 2006.

Box 7.1 Defaulting on Commitments In July 2002, Donor Y, a private donor agency commissioned Nisarg,

a national environmental NGO to prepare a report on water harvesting initiatives in India, for which it sanctioned a grant of $40,000 to it. The donor was to review the first draft of the report and give comments to Nisarg for incorporation in the final report. An initial instalment of half the amount ($20,000) was released for the first stage. The grant was to end in January 2003.

Nisarg submitted its draft report on time, having spent an amount in excess of the first instalment. But Donor Y never did the review. In spite of several reminders from Nisarg, Donor Y did not give comments; nor was the second instalment released. The answer given by Donor Y in reply was that the PO responsible for the project had left the organization, though clearly it is the organization and not an individual

who is responsible for a commitment/contract. Till 2008, Nisarg had not received the committed money and has had to write off the excess expenditure. It preferred not to pressure Donor Y so as not to incur the displeasure of a donor, and to keep its relationship with the donor open.

(Names changed.)

against objectives outlined in strategy papers. For this to be effective there should be clear indicators set out by which poverty could be assessed, as well as who within the agency is for collecting and collating such data. Cox et al. (2002) who evaluated six European donors found that none of the country papers had such indicators, nor do agencies have country level accountability systems in place. They also found that the donor rarely referred to the documents suggesting that these were not very relevant in practice to guide implementation. Finally, conceptualization of poverty is inadequate in donor agencies as well as NGOs and therefore assessment of impact is limited; post-project assessment too is neglected, no attempt being made to return after five years or so to assess the longer term impact of a project which is over (Cox et al. 2002). In short, donors need to be accountable for the results of their philanthropy and not just praised for their generosity. It has been suggested that competition between donors is necessary to exert peer pressure, and also that they should be rated by recipients, in the same way as recipients are evaluated by donors (Hulme 2008, Kayser 2008).

performance responsible strategy officials

In their defence donors point out that they have a mandate to

disburse funds within the stipulated periods, and performance is often

judged by how much money has been disbursed, and how quickly. At the same time, their funds are finite and they are accountable to their constituencies who expect to see some tangible results from their use. Their boards and ultimate donating constituencies often come from very different socio-cultural backgrounds and levels of economic development than the NGOs operating in India and have unrealistic expectations about NGO performance. They expect them to follow the models and operating methods of Western countries and to show results at a pace that is not possible given the relatively undeveloped infrastructure. They are disappointed or critical when they don’t. They point to misuse and mismanagement of funds by NGOs and other deficiencies as a reason why they sometimes end up micromanaging them.12 Undoubtedly, both sides have a point but there is no problem which is so intractable as cannot be solved if there is good will and intention on both sides.

12 Based on interviews with Solveig Shuster, Counsellor Development, CIDA, Delhi, 4 September 2006; Michael Hjortso, Minister Counsellor, Deputy Head of Mission, Royal Danish Embassy (DANIDA), New Delhi, 13 September 2006; and, Shaheen Niloufer, Regional Programme Development Co-ordinator, OXFAM India Trust (GB), New Delhi. See also, ‘Direct Support to NGOs in India’, NORAD internal document, undated, The Royal Norwegian Embassy in India, New Delhi.

8 Sustainability and Other Fairy Tales ‘After several decades of building institutions dependent on donor financing, neither the donor nor the recipient seems to be able to envision

institutions which can be financially sustained by domestic resources.’1

If there is one word which figures frequently in the development discourse, it is sustainability, and rightly so. Rightly, because if the impact of aid on development is short-lived or dependent on of external support, then the very purpose of aid, viz. to bring about lasting economic and social change, is defeated. Aid is supposed to foster self-reliance in the communities and organizations it aids and put itself out of a job. ‘Sustainable development’ became one of the most widely known and used phrases following the publication of the Brundtland Report in 1987, linking development with environment. 2 Though first used in connection with the environment, the concept of sustainable development was broadened to include also social, political and economic processes which shape development. The Johannesburg Declaration on Sustainable Development in 2002 called on the world community to take collective responsibility to advance and strengthen the interdependent and mutually reinforcing pillars of sustainable development — economic development, social development and environment protection — at the local, national and global levels. ‘Sustainable development’ has three different meanings at three different conceptual and spatial levels. At its broadest, that is applied to global and longitudinal development, it implies ‘development

continuation

1 G. Edgren (2000) quoted by Sogge (2002: 87). 2 In 1987, the Brundtland Report, also known as Our Common Future, alerted the world to the urgency of making progress towards economic development that could be sustained without depleting natural resources or harming the environment. Published by an international group of politicians, civil servants and experts on the environment and development, the report provided a key statement on sustainable development. The report also recognized that achieving this equity and sustainable growth would require technological and social change.

Sustainability and Other Fairy Tales

that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (WCED 1987). It also

refers to ‘development which is environmentally non-degrading, technically appropriate, economically viable and socially acceptable.’

(FAO 1988) A second, somewhat narrower meaning applies to local development. As used in aid discourse, sustainability in this narrower sense implies continued benefits to a community from

community

specific developmental interventions. It refers to the extent to which

development activities can be maintained and are able to deliver benefits for an extended period of time once the financial, technical and managerial assistance from an external agent (donor or NGO) has been terminated. Finally, there is the use of the term in connection with

sustainability of the organizations mediating in the development process, viz. NGOs or community-based organizations (CBOs). The question of

organizational sustainability arises because NGO funding, by its very nature, is uncertain, sporadic and unpredictable. It makes planning, whether for organizational growth or for developmental activities, essentially a short-term exercise, with a certain horizon of at the most three to five years, with no guarantee of either organizational survival

or of lasting change to communities due to aid interventions. Sustainability is determined by several factors, among them the host government’s policies (for example, commitment of the host government to a programme and its ability to provide the counterpart funding if necessary); management, organization and local

participation; financial factors (flow of funds to cover operations and maintenance); technological factors (appropriate technology to suit the financial and institutional capabilities of the country, and mechanisms for maintenance and renewal); socio-cultural factors (behaviour

patterns of people, women’s status); environment and ecological factors (behaviour which impacts the environment); and, external (political and economic instability and natural disasters).3 But without doubt, sustainable development is possible only if there is financial stability for the organization catalysing the change. One of the main charges against aid, private or official, is that it has not ensured sustainability of either interventions or organizational

factors

3 A 1989 OECD study, quoted by Cox et al. (2002: 55).

Foreign Aid for Indian NGOs

sustainability after withdrawal of support. Aid is supposed to foster self-reliance and put itself out of a job. But it seldom does. A number

of studies indicate that donors have failed on this count. This chapter examines why donors have not been able to achieve organizational sustainability of NGOs — and because of that of NGO interventions — once donor support is withdrawn. In particular, it

considers how withdrawal affects an NGO; whether the for ensuring sustainability is only that of the NGO or whether donors too are responsible; what donors have or have not done to

responsibility

make NGOs sustainable; and, what coping strategies have been

put in place by NGOs. It also analyses capacity building as a donor strategy and whether this has helped ensure sustainability.

LACK OF AID IMPACT Since the 1990s in particular, both NGOs and donors became

preoccupied with organizational sustainability. Donors became concerned when evaluation studies — among them Riddell (1990: 57) and Riddell and Robinson (1995) for the British ODI, and Surr (1995) for the British ODA — showed that none of the agencies evaluated had managed either community or NGO sustainability, and that none

of the NGOs evaluated in the studies would be able to survive foreign aid resources. The problem of sustainability was acute in projects delivering social services to the poor, who are

without particularly unable to pay for these services (Biekart 1999: 112–13).

Fowler’s examination of Ford Foundation’s experience with

income generating projects for 10 years concluded that there are very few successes, especially if one looks at post-intervention sustainability.4

An impact evaluation study of Finnish private aid agencies by

Riddell et al. (1994) blames them for not seriously anticipating how to sustain processes they had been supporting until the end of the projects, when shifting to sustainability was obviously difficult. NGO projects invariably flounder once outside support is

terminated,

unless inputs are locally available, beneficiaries are strongly motivated, and the project is compatible with existing social and economic structures.5 4 Fowler (1989) quoted in Chandra (2001: 286). 5 Finnish study quoted by Biekart (1999: 112–18).

A British ODA study (1995) puts the lack of sustainability down to the inability of the national governments to take over project financing and the lack of local resources to replace foreign assistance.6 Actually, the problem is not really one of absolute unavailability of government funds, but their smaller size, forcing most to downsize their scale of operations. In a comparative study of European aid for poverty reduction in India, Cox et al. (2002) compared several projects to gauge using three criteria:

sustainability

• Understanding of the different elements of sustainability. • A strategy for sustainability built into the programme design from the inception. • The organizational, institutional and financial capacities to continue the project benefits.

developed

Their finding was that it could not be concluded unequivocally that donor policies were successful in building sustainability in the projects/ programmes funded. They concluded that ‘lack of sustainability has been (and still is) the biggest failing of externally aided projects. The lack of sustainability is many times due to an over concentration on providing inputs rather than improving the policy environment, strengthening the delivery or maintenance institutions or ensuring participation and ownership’ (Cox et al. 2002: 55). According to the evaluation, the NGO partners of the six donors evaluated had themselves not made local organizations or sustainable due to a number of reasons, some of which are listed below:

empowered •

Under the GTZ-SHF

projects, the SHG had not been independent institution and this had led to a high level of dependency of the group on the supporting NGO partner. Though this is unavoidable in the short run, in the longer run, the NGO should be able to withdraw from the day-to-day management and organization of the group and its activities savings and credit, forestry management, production centres, etc. According to the study this does not

conceptualized as an

—

seem

to

be the

case as

yet.

6 British ODA impact study by Surr (1995), quoted in Biekart (1999: 117).

•

The short duration of funding for most projects does not help the NGOs to build the necessary linkages with other both governmental and non-governmental, to secure the rights of the beneficiaries and their organization because this takes time. Also, NGOs are both individualistic or insular and unwilling to collaborate with other civil society actors. Regarding economic and technological sustainability, there is little evidence that the micro credit groups can become sustainable. Some NGOs are trying to make them economically sustainable by seeking government funding to carry out particular activities, but it is not the case with NGOs being funded by the donors. With regard to technological sustainability, they find that in the case of NIRPHAD, the sinking of wells as part of the project to improve cultivation of commercial crops has only worsened the water situation depleting the water table further. With wells beginning to fail and little watershed management the beneficiaries are facing greater vulnerability. And it is often the case that the donors are not around with the NGO or projects to face the downstream fallout of activities started with foreign funding. Though the GTZ-SHF partner NGOs are being encouraged to diversify strategies, similar problems of sustainability are present with projects that are too dependent on one specific activity, approached in a particular way.

institutions,

•

economically

•

•

Finally, a whistleblower from ActionAid India puts down the lack of sustainability in NGOs down to spending by the donor on itself, and less on NGOs, as well as lack of attention and time to their needs. He accused ActionAid India of high overheads, of mindlessly opening new regional offices, of management spending on itself in the name of helping the poor, and a great deal of energy spent on meetings, workshops, retreats and conferences, which did little to ensure sustainability at the ground level. He quoted from an internal document — the Taking Stock Report — commissioned by the parent organization but not made public, to show that sustainability had not been achieved. The report stated, In visits to women’s groups, S.C. groups, umbrella organizations, village sangathans (organizations) in India etc., we found signs not

just of material dependency but of institutional dependency. There was little evidence of the build up of inner strength and self management capacity needed to keep such local organizations intact once a donor or its partners withdraw.7 It is not surprising that the report was not made public or even internally discussed. Such adverse evaluations made donors sit up. Donors started asking NGOs for a sustainability plan and urging them to mobilize resources domestically. NGOs too became worried about their survival once bilateral and INGO aid started showing a declining trend. It was feared that private aid would follow suit and withdraw aid from their organization.

WITHDRAWAL OF SUPPORT Donors withdraw support for a variety of reasons, and not only lack of resources. In the best case scenario, an NGO decides that it no longer needs external support, either for ideological reasons or because the community has created a resource base that can support the NGO and its work. An NGO may also exit an area because the work there is complete and local people’s organizations can carry on the process. Donor aid is therefore not needed and the donor by mutual consent. But both these cases are very rare. One of the few instances of the first is that of NINASAM, an organization promoting rural awakening through the arts including cinema, theatre and publishing in rural Karnataka. They received a grant from the Ford Foundation to conduct cinema appreciation courses, to build up the rural theatre repertory, and to disseminate their work through workshops and the like. A very unique experiment, its founder and director received the Magasaysay Award for community leadership. Right at the outset, NINASAM decided that they needed only one grant for very specific purposes and that after that their work had to be supported by the local community. They stuck to their stand even though the donor was willing to renew the grant. More typically, donors withdraw because their horizons are limited to one to three years. As discussed in the earlier chapter,

withdraws

7 Binu Thomas, ‘Re Response to Issues Raised Regarding ActionAid India’, open letter to ActionAid India, posted on the Internet, 4 March 2003. From Binu Thomas ([email protected]) to ActionAid India.

short-term funding is the norm and long and continued funding the exception because donors want to rotate funds or have other compulsions. They also withdraw if the NGO performance has not come up to donor expectations. This is especially so when the donor NGO relationship is new and the donor is testing out either the proposed intervention/innovation or the grantee NGO. There have been a few extreme cases, when donors have withdrawn support from a mature relationship due to malpractices by an NGO, as in the case of AWARE, a well established NGO located in Hyderabad. Thanks to its charismatic leader, the NGO had been favoured by many donors and had grown very fast. When the malpractices began to come to light donors suspended all aid to it. Mostly, donors withdraw support due to changing priorities. As has been remarked on earlier, there are fashions in funding and donors keep shifting their priorities, both geographic and sectoral, and so stop support to non-priority areas. While donor withdrawal from a region to concentrate limited resources on a few areas is understandable, it nevertheless poses problems for the NGOs in that region. Ideally, donor agencies should, from the very beginning, make it clear to NGOs how long they expect to fund in a particular region. In practice, this is very difficult since donors are themselves driven by changes in policies in their parent organizations or home country. A planned withdrawal can occur with agreement between the donor and the NGO. In such cases either a corpus fund or physical assets that can be used to generate income is agreed upon. It is also facilitated by a planned scaling down of the size and work of an NGO while the community takes over a significant part of the or the community raises funds for the NGO to continue its work. In practice, planned withdrawal is also rare, and the process is involuntary. At the most, some donors give notice of one or two years for no further support, but usually that is too short a lead time to find alternative sources to carry on work that is underway.8 In an ideal situation withdrawal should signal the maturing of an organization and its work and the ending of a culture of If the programme of the NGO is not donor driven but of organic growth, then the NGO and its work would be supported

activities,

dependency.

8 This paragraph and the following draw heavily on Bhat et al. (1999: 43–64).

by the community. The move for independence should come from the NGO and not the donor, and must be part of a well thought out strategy. In fact, it is usually a unilateral decision on the part of the donor to which the NGO adjusts in the best way it can, usually by looking for another donor. What the withdrawal does to an has been well documented by Bhat et al. (1999) in Life Goes On. No wonder then, that some NGOs see withdrawal or exit by a funding agency as a calamity of the worst order. Frequently, donor withdrawal comes before a programme, say preventive health education, is complete, though a particular project covering a particular intervention such as polio vaccination in a defined area may be. In such a case, NGO work is left incomplete and institutional survival is also at stake. Even if the withdrawal is after the completion of a particular project it does not mean that the has absorbed the principles or values underlying the project or is able to pay for continuing the work. The project itself may have been only the first phase of a longer programme. For example, the aided project may have been to construct a building for a school, but this is only the first part of a programme of education in the community. The other pieces may be to enrol and retain more in school by offering midday meals, scholarships, and training teachers. And all the pieces have to be in place before it makes a real difference to the community. It also happens that an NGO takes up a particular project only because money for that kind of project is available from a donor, even though the project or programme is not high on the agenda of the grantee organization. In such cases, once the funding agency withdraws support, the programme may get dumped by the NGO to the detriment of the community. For the NGO itself, withdrawal of aid may mean laying off staff, and, in extreme cases, disbanding the NGO itself, though in few NGOs wind up their work in a particular area or stop the programme. There are a few exceptions though. Bhat et al. (1999) mention that there are some instances, like that of PREPARE in Orissa, of an NGO transferring its assets to a local NGO and training local staff to take over (p. 57). Mostly, the smaller organizations to survive at a lower level of operations on government grants. Most often NGOs seek to keep the programme alive by finding another donor to step in. Such ‘pseudo withdrawals’, whereby one donor stops funding a programme and another enters, may ensure

organization

community

children

practice

manage

continuation of a programme, but it may affect the nature and direction of the programme. The new funding agency may have its own ideas of how the programme should be run, which may not be exactly in tandem with the way it was designed. Or, the old may need to be abandoned and a completely new project started. In the event, there is a waste of the original donor funds, as well as stranding of the beneficiaries of the original project. The NGO also loses credibility in the eyes of the community, which feels abandoned by it. Another problem which arises due to donor withdrawal of is that an organization, when it seeks alternative support for continuation of a programme, may be looked on askance by other donors. Either its integrity or efficiency or the quality of the may be doubted, unless the withdrawing donor makes it clear to other donors in the field the reasons for not continuing support, and if possible, builds interest among other donors about the NGO’s work. Even if other donors do not become wary they may have different agendas and the process of negotiation is long. Any attempts to pull together other funders may therefore not be a quick or painless process and the assistance may not materialize before the exit date of the original donor. The long-term effect on an organization goes beyond interruption or abandoning of a project or programme. It means the NGO, in anticipation of donor withdrawal, does not invest in building up the capacity of the staff or in offering benefits which would retain trained staff. One criticism levelled against NGOs as prime actors is that their success is limited to micro projects and that they are unable to scale up their successful models to achieve either geographical or numerical coverage. Inability to achieve scale is bound to the sustainability of organizations. To scale up successful experiments from the micro to the macro level requires assured and a large and skilled staff with well-developed managerial capabilities. In fact, most NGOs suffer from a large turnover of staff because they are neither able to pay them competitive remuneration nor assure them upward mobility or security of tenure, given the episodic nature of the funding.

programme support programme

development

resources

If one looks at some of the large well known NGOs who

have expanded their coverage and scope — DHAN Foundation, PRADAN, Gram Vikas, MYRADA, AKRSP, TERI, CSE, and

Winrock International India, to name but a few — it is because they have either had multiple donors or donors who have supported them over a long period. But even for them the question of how long they will be able to sustain their operations on the same scale and at the same level of efficiency once foreign money is no longer available is ever present. How much an organization is affected by donor withdrawal depends on its degree of dependence on a donor or donors. High on aid makes the NGO more vulnerable to external events affecting aid and highly vulnerable NGOs will not be able to cope with changes in donor policy, while the less vulnerable ones are relatively unaffected. A second factor is how vulnerable an NGO is to change. If it is flexible and able to adapt to change it will be less affected. will also depend on how critical the external source is in its scheme of things, not only in terms of financial dependency, but whether the programme funded by the donor was its main programme, and whether that programme can be easily replaced by another, funded either from internal sources or support from another donor. Similarly, an NGO will be more affected if its autonomy has been eroded greatly and it cannot refuse alternative aid offered even if it does not suit it (Fowler 2000a: 61–62).

dependence Sustainability

WHOSE RESPONSIBILITY? Assuming that both donors and NGOs want sustainability, two questions arise: One, is it the responsibility of the donor to try and find other funders for the organization or is it solely the problem of the organization? Two, when is the right time to withdraw? NGOs argue that donors need to be aware of the responsibility

they take on when they enter into a funding agreement. Based on expectations of continued funding, organizations hire and train staff and develop skills, and engage in various development activities with groups of beneficiaries. When donors terminate a funding they must understand the possible negative repercussions and make the exit as painless as possible. In fact, they treat sustainability as really the NGO’s problem. Interviews conducted for this book confirm this.

relationship Very few donors have put in proper withdrawal strategies. They merely tell the NGO they will leave in a year’s time or so, but that

does not help to make the NGO self sufficient. What is needed and valuable about aid is not only money but the nurturing and close interaction with donors, which is more important than even money, and should continue.9 Another comment was, ‘eventually all foreign donors will leave but they must think about their withdrawal 5–10 years before they do, and must aim to make Indian philanthropy responsive.’ 10 Another observation was that all that the donor homily amounts to is that one should have a basket of donors instead of only one.11 The unfortunate fact is that many Indian NGOs began as foreign funded projects which were later spun off to become independent NGOs. Most never gave a thought to becoming independent from foreign funding. They thought the halcyon days of aid would never end, only to suddenly find they did. Many NGOs then had to face the prospect of raising their entire budget by themselves within a short period. Generally, NGOs treat sustainability as getting 100 per cent donor support and if they have that they feel they are sustainable. Alternatively, NGOs feel that by replacing funds from one donor by those from another they have become sustainable or are ‘fund raising’. But as Michael Norton has observed, ‘Very few NGOs have conceptualized and designed instruments whereby they will fund the institutional self-reliance of the organization, which includes, most importantly, its financial self-reliance.’12 This is now beginning to happen but it is yet to become widespread. Donors on their part think finding alternate funds is largely an NGO responsibility. They maintain that grantees are generally told right at the beginning that they will get a grant only for a limited period and that they should mobilize other resources, but most wait till the grant period is over. Besides, many donor agencies, especially INGOs, depend on government funding from their governments or the public, and are also subject to policies and developments in the 9 Interview with Mr Panchakshran, Secretary, South India Producers’ Association, (SIPA), Chennai, 16 August 2006. 10 Interview with Anmol Velani, India Foundation for the Arts, Bangalore, September 2006. 11 Interviews with Lysa John, Co-ordinator, Vada Na Todo Piya Abhiyan, New Delhi, 17 July 2006, and with P.C. Pande, VANI, New Delhi, 3 July 2006. 12 Quoted in Bhat et al. (1999: 59).

parent country. For instance, once the Swiss government started taxing the sale of second-hand goods, EMMAUS, an INGO which used donations of second-hand goods to raise funds for NGOs, found its funds considerably reduced and had to correspondingly reduce aid to its partners.13 The American India Foundation also raises its own funds annually and therefore cannot take too long a view. Thus, Indian NGOs can become victims of policies not only of their own government, but also of external governments and other exigencies. Therefore, to survive over time, NGOs must ensure from day one that they have the strength to carry on irrespective of grants. Many donors admit that they have not really given sustainability the priority it deserves. According to a DANIDA representative,

organizational We did not really address this question, but then we did not work with NGOs who were totally dependent on our aid. We talked about sustainability only in our ODA where the aid was bigger. In our work with NGOs there was more ad hocism.14

SIDA, CARE, NORAD and CIDA also admitted that they had not done much to address the issue of organizational sustainability.15 Plan International, while admitting that in the past its phase out of support to partners was not always well thought out and may have left partners struggling to continue their activities, 16 argued that they did not think it was one of their mandates.17 In the future, however, it plans to put in place clear-cut community phase-out 13 Interview with Kartik Venkatesh, Civic Craft, independent consultants, Chennai, 16 August 2006. 14 Michael Hjortso, Minister Counsellor, Deputy Head of Mission, Royal Danish Embassy, (DANIDA), New Delhi, 13 September 2006. 15 Interviews with Steve Hollingworth, Country Director, CARE, 27 September 2006); Solveig Schuster, Counsellor Development, CIDA, 4 October 2006; Ramesh Mukkala, Programme Officer, SIDA, Embassy of Sweden Development Co-operation, 25 September 2006; Renu Wadhera, Advisor, Royal Norwegian Embassy, NORAD, 11 October 2006. Also see, ‘Direct Support to Local NGOs in India’, undated NORAD document, The Royal Norwegian Embassy in India, New Delhi. 16 Country Strategic Plan, 2005–10, Plan International (India). 17 Interview with Roland Angerer, Director, and Verity Corbett, Programme Support Manager, Plan International (India), New Delhi, 13 October 2006.

criteria and agree on long-term collaboration strategies with partners, based on extensive community consultations in order to ensure that children, communities and partner NGOs are prepared for withdrawal. In the meantime, partner capacities are to be strengthened.18 In truth, what most donors have done so far to ensure sustainability is very limited. Some have allowed grantees to build capital assets like training centres, guest houses, etc., out of grant funds which are then used for generating income by way of rent. Others like OXFAM (GB) have tried to link the partners to other donors or given them other contacts. Some donors like CARE, IDRC and AKF have occasionally sponsored their partners for workshops offering training in fund raising to improve skills in local resource mobilization. DANIDA claims it contributed to sustainability of the supported by it to build the capacity of community and their members. An instance given is that in the Rural Drinking Water Supply Interventions in Karnataka and Tamil Nadu, the management of water supply systems was given to gram panchayats (elected village councils). This, it is argued, involved communities through their democratically elected institutions and thereby lessened the burden on state governments. But this can be contested as a sustainability gesture because the gram panchayats are notoriously unable to raise their own funds and are very on state funding.

individual

organizational

interventions organizations

dependent A second instance quoted by DANIDA is that building capacities of institutions and their members led to good management

systems and practices and thereby ensured that changes were long lasting. DANIDA quotes the creation of bylaws within water projects in south India for enabling regular maintenance and financial sustainability of those projects. Another instance given was that women were trained as masons and hand pump mechanics so that they would be able to earn a living. They also mentioned that DANIDA made certain that governments would pick up the financial burden when DANIDA’s support ceased.19 Even assuming that

supply

18 Country Strategic Plan, July 2005–June 2010, Plan International (India), New Delhi, p. 12. 19 ‘Innovations: Learning from Danida Supported Activities in India’, Royal Danish Embassy/DANIDA, New Delhi (undated), pp. xix–xx.

these ensured sustainability of interventions at the community level, it does not answer the question of organizational sustainability. Very few donors have offered endowment grants to NGOs to ensure financial sustainability, a major exception being the Ford Foundation. It made endowment grants to a few long-term partner NGOs as a farewell gesture, especially to celebrate its 50th year in India. An alternative measure adopted was to help set up local foundations such as the National Foundation for India, the South Asian Fund for Women and the Dalit Foundation. These in turn make grants to smaller NGOs, something which Ford Foundation itself was finding difficult. As a proportion of the Foundation’s total grant portfolio, however, endowment grants have been few and far between. Few other donors have really with creating independent Social Funds, fully controlled by local citizens and to which local NGOs would have access. Typically, donors do not see endowment funds alone as a to sustainability because they feel it makes NGOs complacent; the funds are subject to erosion due to inflation, and large funds also lead to organizational infighting to control funds. Most of the measures taken by donors so far have cosmetic value and do not address the real problem, which arises essentially due to three reasons: short-term support by donors, lack of a well defined withdrawal policy accepted by both sides, and undue emphasis on outcomes rather than on the process of development. Firstly, institutional development needs lengthy time scales, great flexibility and high levels of coordination among donors. Instead, the greatest part of aid goes to projects that are narrowly conceived, time bound, stereotyped, but highly profitable in visible physical outputs. The projects have limited, three to four year time frames, which are meaningless for ensuring sustainability of or capacity building. To make people truly economically selfsufficient through economic programmes takes time especially since the managerial skills of the first generation of beneficiaries are poor. Therefore, enterprises of the people are likely to fail in the first round. Only after the first generation of supplementary income generation programmes are stable will the community acquire managerial experience (Bhat et al. 1999: 152). This applies equally to NGOs as organizations, but donors typically lack patience and if an NGO is not successful in the first three-year grant period, they write it off as having failed in its efforts.

foundations experimented

solution

processes

Colin Ball, former director of the Commonwealth Foundation, London, argues that withdrawing aid on the basis that a project/ institution must become sustainable within a defined period (usually as short as three years) is a way of disowning any continuing of the rich to the poor. In his opinion it is an immoral view, especially since the donors come from countries that were responsible for the poverty in the first place through colonialism and imperialism. Moreover, the same process of dispossessing the poor is continuing with globalization (Ball 2002: 3). The fact is neither donors nor NGOs think about sustainability of either interventions or organization because donors need to give and NGOs need to receive that money. What happens after one grant is not given any thought by either. Both NGOs and donors play a game of self-deception. Withdrawal is inevitable at some time, and recipients should not want to be dependent on external sources all the time, even if it were possible. The best that can be hoped for then is that the process and timelines are mutually agreed upon. According to Bhat et al. (1999), withdrawal with sustainability is possible if, from day one, the donors (internal and external) and the NGOs have a clear based on a long-term withdrawal strategy (pp. 58–59). However, few donors have an explicitly stated withdrawal policy in place. It is important that a donor intimate a grantee well in time if and when the funding will cease. While some donors do — for Plan International claims to give five years’ notice to a partner about cessation of funding, and ICCO two years — many otherwise well meaning foreign donors fail to inform an organization well in time if a grant will be repeated or not. Many a time the decision to renew is communicated almost at the expiry of the grant. the NGO cannot make alternate plans for fund raising, or make decisions about budgets, staffing, etc., because an organization needs to draw up its annual budget and take decisions about staff recruitment/continuation before the beginning of the Indian fiscal year, which may be well before a decision is taken on renewal or amount of the new grant. Before withdrawing, both NGOs and donors should ask some questions:

obligation

perspective

example, Consequently,

themselves • Why do donors want to withdraw? • Whynow?

• Will the development process initiated continue after and how? • Is the organization strong enough to warrant withdrawal? • Have the appropriate linkages been made? (Bhat et al. 1999: 218–22)

withdrawal,

Before a donor withdraws support, both NGO and donor should together draw up a long-term strategy which should consider the changing and diminishing role of the donor in the long run, and the approach to development issues till then and after. Both could then start working towards either transferring the work and to local people’s organizations or begin wider mobilization of resources by networking with other NGOs and donors. Though many funding agencies do bring their partners together for discussions about sustainability after withdrawal, and in cases donors ask their potential grantees for a sustainability plan at the outset, in practice it mostly consists of NGOs assuring donors that they will diversify their sources and resort to local fund raising. The NGO is well aware that the plan will not work in the limited time at their disposal but the donor accepts their plan at face value for the sake of form, knowing well that it would not happen. What’s more the donor is not really bothered — so long as the have been met with, and the grant money can be shown as spent. They do not do the kind of hardnosed appraisal that is looking at cash flows and income streams in the future. Few NGOs have the capacity to do this kind of work and need guidance and help from donors or experts nominated by them. But this is seldom forthcoming. Few are the donors who really take the trouble of actually working with a partner to put in place a truly workable plan, providing costs, or giving introductions or contacts or being willing to take the risk of experimenting with creative models for creating sustainability. The result is that real sustainability is not achieved. The least that donors should do when phasing out becomes inevitable, is to inform well in advance; give reasons for the decision; continue support for a minimum mutually agreed period so that alternate arrangements can be made; and, help the NGO to the extent possible to locate alternate funding, in order to make the pain of parting less. Instead, all that happens is a curt and abrupt letter support (Bhat et al. 1999: 220).

responsibility

individual

procedures necessary, fundraising

withdrawing

The subject of an exit policy has formed the agenda of some meetings of donors such as that of the short-lived donor consortium that HIVOS, NOVIB and ActionAid tried to establish in Bangalore in the 1990s. But very little came out of it and an explicit withdrawal policy is still rare. The period of support is determined by concentrating on output rather than process and capacity. The expected outcome itself is unrealistic because project selection and project design criteria are often developed in donor headquarters quite divorced from the changing ground realities. Foreign donors have, in the past, treated institutions in developing countries as instruments to deliver predefined objectives instead of decision-making agents in their own right. Where aid intensity and pressure to spend are high, the authenticity of local initiatives tends to be low. Sustainability should be seen in terms of a process in which the primary stakeholders, through training, learning and organization, can generate an impact that outlasts exit of donors, and the period of support fixed (Khosla 1993: 2). Sustainability can be achieved only when there is real that is primary stakeholders are empowered to manage the relationships with the government, with the market and their resources on their own. What goes in the name of is really only the first stage — building awareness of rights and mobilization of unorganized people. For sustainability, training programmes must build cohesion in the group, and develop capacity and consciousness to take independent action to secure resources for itself without having to depend on NGOs, and NGOs on donors. The impact study of Dutch foreign aid conducted by Stuurgroep (1991) and quoted in Biekart (1999: 119) found no or limited evidence of any fundamental changes in power relations, or participation of beneficiaries in project design, planning and implementation, or evaluation of outcomes. Certainly on the question of resources each recipient in the chain looks at its immediate donor. One of the most telling quotes on the limited effectiveness of both NGOs and donors in poverty removal is that of an Adivasi leader in Rajasthan, quoted by Bhat et al. (1999: 111): ‘You have given me awareness for the past 20 years. My stomach is still empty.’ It illustrates the dependency syndrome of the community as well as the failure of the much-touted ‘empowerment’ of the people. Had there been true empowerment, the people would have taken the

constantly

accordingly empowerment, community empowerment

initiative to organize themselves to secure the needed resources, instead of looking to NGOs to feed them or lead them.

Invariably, the NGO-donor relationship is seen as a purely funding relationship, limited to the utilization of the current grant, instead of being seen as a long-term bond, which continues in the post-funding period as well. Both donors and NGOs need to ensure that at least

a non-financial relationship endures which gives NGOs continued access to donor information, contacts, training programmes and of a donor, and helps them to expand alliances beyond donors

networks (Bhat et al. 1999: 59).

The challenge of sustainability poses a dilemma for Indian NGOs parallel to that faced by many international NGOs who are similarly facing a difficult funding situation. The dilemma for INGOs,

according to Biekart (1999), lies in having to choose between the

institutional and the development imperative. The development imperative requires them to contribute to the empowerment of the marginalized and to make sure that the development interventions are viable and sustainable in the long run, to avoid external

dependence and loss of autonomy. The institutional imperative is essentially to survive as an institution, to guarantee a constant source of income for themselves and to ensure their own visibility. It demands competition, short-term results,

hierarchy, secrecy, and a bias towards the donors, whereas

developmental imperatives generally demand the opposite — co-ordination,

longer term results, partnership, transparency, and a local bias.

The initial goals of Indian NGOs, like those of INGOs, were not

based on power or profit but on humanitarian values or altruism. Now the problem for both is how to maximize their income without compromising their altruistic and ideological principles. In periods of financial pressure, the balance tends to shift to the institutional

imperative. The tension between institutional and developmental

imperatives can explain the policy choices made by organizations, both NGOs and INGOs (Biekart 1999: 77–78).

The question of sustainability has also initiated a debate on the

growing trend of INGOs, who are NGO funders, setting up their own clones to mobilize resources from within India to fund their own activities. For instance, almost all major INGOs such as OXFAM, ActionAid, Plan International, Charities Aid Foundation, Resource

Alliance and INTBAU have set up Indian non-profit organizations

in their own image. The move grows out of the difficulties INGOs are facing in raising funds at home. Though presently the clones receive some financial support from their parent organizations, the real goal is to make them totally self-supporting over a period of time by raising funds from within India. There are several advantages to having Indian entities staffed by Indian staff and conforming to Indian laws. Instead of standing out as islands of affluence and incongruous in Indian NGO settings, they could mean more cost-effective operations with salary and structures reflecting Indian conditions, and more for Indians. Moreover, they bring in the experience, expertise and more efficient systems and procedures of parent organizations, which will serve to raise local standards. However, what disturbs NGOs is that the move smacks of empire building in the NGO sector, parallel to that of MNCs, because it ensures the parent organization’s name and connection. NGOs also object to it because it means more competition for the same pot of domestic resources, instead of additionality. The INGOs have a head start in the art of fund raising, with international experience, and better resources. For instance, Resource Alliance India is in direct competition with the South Asian Fund Raising Group in providing training and other services to NGOs in fund raising; INTBAU is in the same field of heritage conservation and with modern urban development as INTACH. That the concern is not limited to Indian NGOs alone is evident from an article in the Bangladesh Independent of 4 October 2000, which argues that international NGOs should bring in new resources rather than compete with domestic capacity.20 On the other hand, the positive side of such cloning is that the competition may improve NGO standards and performance, if the indigenous NGO is not wiped off by the competition before that! Many see no problem with that either, arguing that markets always favour the survival of only the most efficient, and NGOs, no less than other actors, should also be subject to the same discipline. In fact, some donors as well as NGOs feel that it would be better to couch the issue of sustainability in terms of relevance. to them it is not necessary that all NGOs should be kept alive,

establishment employment

connections

integration

According

20 ‘The Disparity between National and International NGOs’, 4 October 2000, The Independent, Bangladesh, Dacca.

even if they have ceased to be effective or relevant to society. If an NGO continues to be relevant funding will always be available, if

not from foreign donors then from domestic sources. The need for relevance forces organizations to reinvent themselves if the original mission has become irrelevant. For instance, though the original

mission of the Leprosy Mission was eradication of leprosy, now that

the scourge is controlled they plan to move on to HIV AIDS work for which there is plenty of money.21 But others might see in the example one of the most undesirable ways in which organizations try to stay afloat — by changing vision

and mission to suit available source of funds, irrespective of the needs of their original constituencies, who might not agree that their need has been met fully. Besides, there are certain activities such as research and advocacy which must be treated as a public

good and be subsidized either by the government or the international community. Overall, donor policies which hinder achievement of sustainability are dictatorial behaviour, red tape, short-term funding, and sudden

termination of funding, as well as donor ad hocism, while those which help sustainability are those that support local mobilization, partnerships, long-term co-operation, reducing the quantum of funding slowly, and flexible funding (Bhat et al. 1999: 213). That

donors can help organizations become sustainable if they make the effort is shown by the case study in Box 8.1. However, donors take this kind of initiative but rarely.

NGO COPING STRATEGIES The search for sustainability beyond grant aid has had the positive

outcome of turning NGOs’ attention to diversifying their sources of funds from within and outside the country. This includes seeking grants and donations from government, corporations, indigenous foundations, individuals and donors outside the country, and

turning

to non-traditional means of raising funds. NGOs are trying to wean themselves away from grant dependency by generating income from non-traditional sources using a variety of approaches, as can be seen from the examples given in Box 8.2.

21 Interview with Sanjay Patra, CEO, FMSF, Delhi, 5 October 2006.

Box 8.1 Funding for Sustainability BASIX, started in 1996, is a for profit Indian micro finance organization

to promote sustainable livelihoods for rural producers. A flexible approach to funding by donors like Ford Foundation, SDC, CIDA, and CORDAID helped it build a secure and reliable funding base right from the beginning. Normally, legal and tax considerations in both donor countries and in India, as well as a donor organization’s own rules, prohibit giving of grants to organizations which are not non-profit. However, because the donors believed in the vision of BASIX, which was to serve the poor through provision of efficient micro finance, and liked its approach of attracting both commercial as well as donor financing to create a self-

sustaining entity, not to mention the CEO’s long-term relationship with aid agencies, they were prepared to take risks and to use non-traditional instrumentalities. Thus, Ford Foundation provided funds through the mechanism of the Program Related Investment; SDC and CIDA used the concessional loan and capital grant route; CORDAID gave a loan; and HIVOS-TRIDOS offered equity financing. Ford Foundation structured the investment in such a way as to meet the needs of commercial investors, as well as enable BASIX staff to retain control over the organization’s development mission.

CIDA created a fund in one of the BASIX companies in such a way as to give BASIX control over proper management of the funds, even though it took a year to find this solution to overcome the prohibition on giving loans. By end 2002, BASIX had assets exceeding US $11 million and 15

different funders providing seven different forms of financing. Adapted from DiLeo (2003).

Thanks to the difficulties of getting grant funds to carry out

development projects, a new breed of professionals known as social

entrepreneurs has entered the social development field. They continue to have the same social vision as traditional NGOs, but generate income from the market and talk of business plans and metrics to measure cost-effectiveness. Social entrepreneurship is

growing. Sometimes they use grant money to leverage government or commercial money for development, and at other times they rely purely on the market and social venture funds. For instance, IDE (I),

Box 8.2 Non-Grant Routes to Sustainability Some NGOs generate non-grant revenue from the sale of products and

services, including consultancy services to companies in their area of expertise. For instance, one NGO offers expertise in environmental impact assessment and audit to companies (name withheld at request of NGO). VHAI, Delhi, an association of NGOs in health, has attempted to become sustainable by taking to commercial activities like running

an art gallery, printing press, and a shop for the craft products of its members, even though these means account for only about 30per cent of the budget.22 SIPA, a Chennai-based support organization for small producers in south India, which began receiving foreign aid in 1986 from a variety of donors like CORDAID, OXFAM India Trust, GTZ, and HIVOS,

now gets only about 5 per cent of its budget of Rs 5 crores from foreign donors and 90 per cent from self-generated sources. The latter comes from its members contributing a percentage of their profits to SIPA. Foreign assistance is now used mostly for development of trade and markets and capacity building of individual producers. This will increase their earnings and consequently SIPA’s own income.23

NGOs in the water sector, like Gram Vikas, WASMO, WTO and others are moving towards the use and pay principle to finance their water, irrigation, and sanitation activities. They also use loans from commercial banks to supplement their resources. In this way, NGOs like

drinking

Gramalaya, an NGO in the water sector, has reduced its grant funding to 20 per cent of its income while 80 per cent is raised through loans and

other non-grant means. Similarly, Sulabh International, an NGO which has pioneered low cost technology for public toilets, makes a profit by using the BOT method (Build, Operate and Transfer) to cross-subsidize its other social development activities. In another example, Goonj, a Delhi-based NGO which collects old clothes for redistribution to the rural needy using volunteers for

collection and distribution, has now turned to recycling some of the old clothes

to make sanitary napkins for poor women. But these efforts will suffer due to new income tax regulations which prohibit non-profit organizations to engage in any fee raising/commercial work, if they wish to remain tax exempt, unless the rules are modified or repealed. 22 Interview with Alok Mukhopadhya, CEO, VHAI, New Delhi, 7 September 2006. 23 Interview with Mr Panchakshram, Secretary, SIPA, Chennai, 16 August 2006.

a Delhi-based NGO working on appropriate rural technologies, has formed a Section 25 company for selling hand pumps and solar

lanterns developed by them, and for raising funds from the market or venture funds, as distinct from donations or grants. They to use the latter for supportive activism.

continue Social entrepreneur Arbind Singh is developing sustainable businesses, co-operatives, trade unions and ‘people’s institutions’ led by

the most excluded categories of the poor in Bihar under an umbrella called Nidan. It has promoted and built 20 independent profitmaking ventures governed and owned through shares by the poor

themselves. The collectives negotiate with the government for their rights and entitlements. Aavishkar, like BASIX, is a for profit company, a Social Venture Fund, which actualizes its development vision through giving equity

and debt finance instead of grants. As a social investor, its founder Vineet Rai is content with a lower rate of return on the investment than a commercial investor. Many projects in the fields of water, housing, energy and health have been identified as being amenable

to market interventions. For example, solar cookers and lanterns for rural energy; water treadle pumps; low cost housing materials and construction; selling of water rights for irrigation; bio fuel production for rural energy; building complete supply chains from production to

retailing of herbal and other minor forest products used in medicines and cosmetics, etc. Since NGOs are unable to engage in these new means of raising funds and still remain tax exempt non-profit organizations, they are

experimenting with existing legal options and lobbying for changes. The traditional registration under the Societies Act is therefore no longer the only or the most favoured option for

legislative incorporation of a development organization. Social activists as well as marginalized constituencies such as farmers and other BPL producers are coming together to form both Section 25 non-profit companies as well as for profit companies in which they hold shares to enable them to subsidize their social activism from their commercial

activities. For this purpose they are looking to tap into venture or social investment funds such as the Acumen Fund, for debt and equity, to finance such of their activities as can be marketed. In

capital

the words of Vijay Mahajan, founder of BASIX, ‘If NGOs have to

remain relevant in the 21st century they will have to make peace

with capital and use it in the same manner as businesses do, but use it in a manner which addresses social goals.’24 Other non-grant routes being used in the development sector using the carbon credit market to raise money, while the peer exchange portal such as that set up by the Blue Planet Run uses the Internet and peer evaluation of projects of NGOs to reduce transaction costs and to avoid the grant route to raising resources for NGOs in the field of water. In short, the search for has led to much experimentation with legal forms of incorporation as well as methods of financing. Even traditional Gandhian NGOs like ASSEFA, working on rural development issues, have reduced their grant dependence from a high of over 75 per cent to only 15 per cent currently, while using credit to make up the 85 per cent balance.

include Foundation sustainability

Since Indian regulations prohibit Indian NPOs to borrow

investment funds beyond 76 per cent from foreign investment funds such

as the Acumen Fund, this has created a demand for Indian-owned social investment funds which can invest in the equity of non-profit business ventures. Many NGOs now have to choose between grant dependent non-profit organizations or to shift to marketbased models and strategies. Of course not all NGOs have the option of going to the market because of the nature of their work. For instance, VANI, an apex body of Indian NGOs with a membership of 2,200 NGOs from 23 states in India, which acts as a platform for national level advocacy on issues and policies confronting the development sector, and SICP whose mission is to promote indigenous philanthropy through public education and advocacy find it very difficult to become self-supporting. There are few avenues they can tap for generating income. They are wary of government grants because sometimes their work is of an adversarial nature, and very few indigenous donors like to support advocacy work.25 Sampradaan’s survey of household giving in 2000 found that by and large it is those NGOs who are either engaged in service delivery or whose target constituency (children, the disabled, cancer patients, etc.) arouses compassion who stand the best chance of getting

remaining

research,

24 Vijay Mahajan speaking on ‘Beyond Grants’ at the Third Annual Conference of Arghyam, ‘Are We Really Catalyzing Change?’ 28 June 2008, Bangalore. 25 VANI Annual Report, 2004–5.

resources from the public. Those engaged in research and advocacy find it the most difficult because it is difficult for the lay person to appreciate the need for such work.

The only way intermediary support organizations can raise funds other than grant funds is by charging a percentage from donors and NGOs for services rendered. But this is unlikely to make them sustainable over the long run. 26 Because they are delivering what are called ‘public goods’, which the market cannot or will not provide, the government or other philanthropic donors must subsidize them

just as they subsidize other vulnerable sections of society like farmers and exporters in the national interest. Finally, the search for sustainability has also had the effect of the sector itself with emergence of new organizations for fund raising and training in capacity building in organizational and

diversifying

financial management. Undoubtedly, further transformations can be expected from the quest.

CAPACITY BUILDING Closely linked to and dependent on the type of funding offered by donors is the issue of building up institutional capacity. To make development self-driven is a long-term process and involves changes in society, empowerment of the disadvantaged, and

structural public education about the development processes. It requires sustained and patient work by NGOs, which may not be immediately

evident. Small-time interventions through discrete projects may bring some immediate relief during natural calamities and disasters, and even through some income generating projects, but do not cure the underlying causes of poverty and underdevelopment. It means that first the interacting NGO has itself to become aware of

the processes and become competent to deal with the beneficiary communities. In short, it requires reorientation of thinking and upgrading of skills and competencies of the NGO staff, popularly called capacity building. Capacity building for institutional sustainability refers to the enabling of an organization to attain a level of maturity where the

organization is able to function optimally without, or with minimal, outside support. This internal sustainability requires not only financial sustainability but also the development of human resources and 26 Interview with N. Venkat Krishnan, Founder and Director, Give Foundation and Give India Portal, Mumbai, 13 June 2006.

technical expertise to improve the regular functioning of the and its interface with the community.

organization Capacity building must therefore be viewed in a broad perspective. It should mean building organizations and human resources

which have the ability, backed by decision systems and the needed infrastructure, to identify, formulate and analyse problems of high relevance to their societies and design effective strategies to solve them. For collaborative action between government, business, civil society, media and academia to take place, capacity needs to be built up

in all sectors of society and not only in NGOs; and also at all levelslocal, state, national. It means creating informed leadership. Capacity building is also about choosing the appropriate options, recognizing issues of self-interest and advocating more sustainable policies and negotiating effectively to bring these about (Khosla 2006: 5).

technology

History of Capacity Building Rajesh Tandon (1995) traces the history of training for capacity building to the training provided to NGOs by KVIC and CSWB in the 1960s and 1970s, and by CAPART in the 1980s. Capacity building of NGOs as a foreign donor strategy emerged out of the process of donor evaluations of the outcomes of the first phase of funding in the 1960s and 1970s. On the basis of this course

corrections were made before the next phase. It was believed that if policies were followed properly the benefits would follow. If in spite of this the work failed to deliver then the problems were usually deemed to lie in a lack of capacity or willingness to implement the and procedures professionally. The need to overcome the

policies negative factors — cognitive, organizational and sectoral — responsible

for unsatisfactory performance in the first round therefore led to designing training programmes to ensure better performance. Instead of a re-examination of the assumptions responsible for failure, capacity building was seen as the solution (Wallace et al. 2006: 48). Capacity building became a part of most donor support, being built

into individual NGO project or institutional grants, or supported

through larger centralized training programmes.27 The first round of training was to build expertise in specific development fields such 27 Interview with Shaheen Niloufer, Regional Programme Development

Coordinator, OXFAM India Trust (GB), Delhi.

as health, education and agricultural development. In the 1980s, training of grass-roots NGOs in participatory development,

leadership development, planning, monitoring and evaluation focused on

process rather than products and used participatory methodologies. Essentially the training was for better project implementation,as distinct from organizational development. MYRADA, PRADAN,

PRIYA, and SEARCH were some of the NGOs which specialized in such training. In the mid 1980s, it became clear that merely giving training in technical skills was not enough to ensure either better performance

or sustainability of NGOs or their interventions. In the face of poor remuneration and an uncertain tenure, trained staff was leaving NGOs and monies spent on them were wasted for the NGO. Donors also became concerned with poor management of organizations as

distinct from projects because of the increased donor concern with measurable outcomes and financial accountability. This was put down to poor administrative and financial systems. Therefore,

organizational development for NGOs was initiated to include competency

building in the areas of administration, financial management, communication skills, and marketing. The interest in organizational development has increased

especially since the 1990s. Donors like GTZ have supported both

research and workshops to disseminate ideas on capacity building. SIDA, EED and Ford Foundation concentrated on building management and monitoring systems for their partners so as to

financial

curb irregularities, both through one-on-one consultancies, as well as

workshops and development of a manual of financial management practice.28 Ford Foundation and other donors have also supported AccountAid and FMSF to educate, advise and help NGOs deal with account and audit related issues, and better compliance with

government requirements. Globalization posed new challenges for all NGOs. It a shift in their roles, away from direct implementation of

necessitated

28 Interviews with Sanjay Patra, CEO, FMSF, 5 October 2006; Ramesh Mukkala, Programme Officer, SIDA, Embassy of Sweden Development 25 September 2006.

Cooperation,

aid-funded projects and services and towards building capacity in poor or disadvantaged communities to leverage power for local institutions such as SHGs and PRIs, to enable them to set priorities of advantage to them. NGO roles were widened to

development

include changing economic systems, governance and social policy.

The third phase of capacity building, since the 1990s, has thus aimed at development of the NGO sector or civil society as a whole. More systematic efforts have begun to strengthen capacity for internal good governance, as well as for building civil society and fostering good government. Centre for Advancement of Philanthropy, Sampradaan and others have been supported by DFID through their

PACS programme to provide training in governance issues such as responsibilities of governing boards of NGOs, organizational accountability, operational systems and processes, and culture and values of organizations. Other donors like the Ford Foundation have, through their partner NGOs, offered support to training of Panchayati Raj

members, especially women members, who by force of tradition and temperament tend to be suppressed in the governance process. Members and staff of federations of SHGs have been trained for organizational development and democratic processes, while in Uttaranchal and Karnataka have been helped to upgrade

partners

the technical and marketing skills of producer groups cultivating,

collecting and processing herbs and traditional medicines (Ford Foundation 2002). As ODA levels began declining and donors, including private donors, feared a coming cash crunch for themselves and therefore NGOs, donors like IDRC, ActionAid India, Aga Khan Foundation and others began to support training for local resource mobilization.

The Gap NGOs while acknowledging that they have been helped by donor

efforts at capacity building feel it has not gone far enough. According to the late M.K. Bhat who has worked with NGOs for several decades, a lot of work is called capacity building, but it is not based on real needs, nor has it addressed the critical question of funding. Several of the NGO leaders interviewed remarked that donors are less concerned with internal capacity of NGOs than they are with

project outcomes. Therefore, concern with organizational

development is very recent, not very widespread, and shallow. Not much has

been done to help NGOs put in place personnel policies, purchase policies, asset building, internal control systems, and not enough money is given to staff development and recruitment resulting in HR policies remaining toothless. Functionaries of NGOs working

with the rural and urban poor come from a non-participatory, background, and need both the security of a job and a feeling of worth and power. In such cases there is a need not only

nondemocratic

to upgrade technical skills, but also to build up self-esteem and to

inculcate democratic and participatory values. Short project-based grants do not allow either time or money for this kind of patient and efforts at this have therefore been minimal.

upgrading, Unfortunately, capacity building has been seen as a separate concern, to be dealt with as a discrete area for support, mostly through training programmes for staff of NGOs, though in fact it is essentially linked to funding and ensuring sustainability of an organization.

Institution building, implying strengthening the NGO itself to

perform at higher levels over a long period, requires a long-term programme or core funding which, apart from funds for of core skills, must include better institutional facilities such

upgrading

as equipment, libraries, etc. Serial three-year grants on the basis of

proposals submitted does not build up institutional capability for self-reliance. The organization remains as dependent on donors at the end of every three years as it was at the beginning. As noticed earlier, donor efforts mostly go into funding some

intermediary organizations to hold training workshops, rather than in rethinking of the time frame related to NGO projects and Moreover, in general, donors confine themselves to

interventions. building the capacity of NGOs and leave it to them to build the capacity

in people’s organizations. NGOs in turn most often treat people’s organizations as mini NGOs and try and replicate in them the same structures and skills as theirs. But one vital difference between the two is that the NGO is in many ways a support organization and

therefore needs a different set of skills and structure than a local people’s organization. The values to be promoted in the latter should include collective leadership and rotating leadership. The skills that are most important at this level are mobilization skills, and

building people’s confidence in their own ability to take control of their

lives. If an NGO is to be able to withdraw successfully from a

community, it is not enough to build the capacity of an NGO. It must

build the capacity of members of the people’s organizations by training them in law, relations with PRIs, and in social structures and global developments, which some NGOs like Seva Mandir have begun to do (Bhat et al. 1999: 177). Moreover, though the movement is the strongest at the grass roots, the capacity to deal with the larger issues related to environment is still the weakest at the grass roots.29 NGOs also mention that no attention has been given to helping NGOs anticipate problems and to set up mechanisms to deal with them. Finally, few donors have helped in leadership development beyond suggesting that a second tier leadership be built; in some cases, major donors who should know better have, due to inexperienced and immature POs, attempted a leadership change when the situation did not warrant it. The typical response to capacity building issues, as with others, is to offer a short-term consultant rather than engage in a dialogue to see where the problem really lies and at what level it should be solved. In spite of its many drawbacks, capacity building for internal institutional development has had a good impact on NGO But capacity building to deal with the external environment, within and without India, has not received enough attention. Few of the trainings given now include understanding the broader and economic processes in which voluntary action is embedded. In particular, the political perspective needed to mainstream is missing. Though policy advocacy has joined other development recently, a vast section of civil society does not even how policy is formulated or implemented. No capacity enhancement programmes include this aspect, with the result most NGOs believe the only role to be played in policy making is to resist existing policies in an adversarial manner. The other aspects of engaging with policy, viz. providing the perspectives of their into policy making, policy research and its appropriate dissemination, and pressurizing the government for proper of programmes and policies by the government, without

environment

development.

political development buzzwords understand

constituency implementation

29 Interview with Sunita Narain, CEO, CSE, New Delhi, 12 September 2006.

taking to the street, are lost sight of. Training needs to include all these aspects of policy engagement (Tandon undated). Though civil society building has become an avowed objective of many donors in the last decade, capacity building to strengthen this aspect has not received as much attention as needed. Civil society is composed of different types of membership organizations with different interests; there is also a possibility of conflict of interests between different types of CSOs. A strategy of strengthening civil society must also include facilitating dialogue and building alliances between different types of CSOs and supporting mechanisms to resolve possible conflicts (Bebbington and Riddell 1997). Finally, capacity building to deal with global issues such as property rights, patents and negotiations to demand fair economic trade and development has received minimal attention. Southern NGOs are handicapped in participating as equals in alliances by the exclusive focus of most donors on their domestic role. For successful lobbying and negotiation in a postglobalization world NGOs working on issues with global implications need better legal knowledge and negotiating skills. Reportedly, some donors like ICCO have plans to invest in this area in future.30 In sum, while there are some bright spots, the overall verdict on donor efforts at capacity building or sustainability is not favourable. To quote Edwards et al. (2003: 6), ‘Although fashionable the record of capacity building is not impressive.’ Concerns over the ability of NGOs to tackle new roles and the indifferent quality of capacity building efforts to help them has led to the formation of the International Forum on Southern Capacity Building in 1998, to share the experience of good practice and foster overall innovation. What impact this has had on capacity building in India is not known. To conclude, what NGOs need to solve problems of are not only money or capacity building initiatives as popularly understood in the NGO world, but what Fowler calls ‘insightful agility’, that is the capacity to continuously adapt and adjust in a purposeful, not random way. Both Edwards (2004a) and Fowler

intellectual

international

sustainability

30 Interview with Mr Lennard Roubos, Country Director for India, ICCO, New Delhi, August 2006.

(2000a) stress the role of organizational performance in ensuring

sustainability. Resources will continue to flow to them if they generate

an external development impact which is itself valued and enduring, and stay relevant by adapting and repositioning in a changing world (Fowler 2000a: 8). This means there must be a culture of internally, with responsiveness to citizens, members or users, and a strong constituency to monitor performance and take an active role in governance externally. Without strong local demand no institution will survive (Edwards 2004a: 132). In the ultimate analysis, if they seek sustainability, it is NGOs themselves, and not donors, who must take the responsibility to both regenerate their organizations to stay relevant to the changing needs of their society, and get a younger generation involved in a value-based development process.

performance

9 Calling an Alien Tune: Donor Driven Agendas ‘He who pays the piper calls the tune.’ (Old Proverb)

‘Smugglers know better than scholars that to pass contraband over the border, it must be made to appear innocuous.’ (Paine 1998: 236)

Of all the objections raised against NGOs accepting foreign assistance, perhaps the most oft repeated is that it leads to of alien rather than indigenous agendas. It is implied that foreign donor agendas are necessarily harmful, not only to NGOs but to the

adoption

wider society as well. Further, that the donor development agenda

may be well intentioned, but it has the potential to make NGOs and the development process ‘donor driven’. The two charges are often considered to be the same but they have different nuances. The issue of who controls the development agenda is vital because

even people who are oppressed or marginalized want to be in of their destiny and do not want to be treated as objects of pity or become pawns in a global game of charity (Knight and Hartnell

control 2008).

Few would contest that donor goals such as deepening democracy, promoting participatory and inclusive development, protecting human rights and promoting good governance are valid goals to pursue (Smith et al. 2005). But the problem is in the interpretation

of these concepts. The same terms can have different meanings in

different political systems and cultures and the point at issue then is

whose interpretations prevail. When donors and recipients belong to nations, not only at different levels of development, but also

different civilizations with widely different values and beliefs, what path development in the aided country will take boils down basically to who is making the decisions about what is development and how it is to be achieved, and whose wishes prevail — the donors’ or the recipients’ (Sundar 1995: 4–6).

Donor Driven Agendas

Apart from the question of what constitutes development,

differences are also likely to arise over the method or process of development. Should it be a top-down or bottom-up approach, participatory

or directive, technology-driven or people-centred? How these questions are answered will depend on the equations between the donor nations and the recipient ones. How far the North (really the West) can impose its will depends on how successfully it manages to get the recipients to acquiesce in its agendas.1 There is no harm, it is argued, in accepting donor notions, but the adoption must be out of a nation’s or organization’s free will and used to fashion solutions that fit the local reality. The discourse about foreign agendas is couched in political and ideological terms, and in relation to the effects on the recipient nation or society. Donors are said to have agendas other than of the poor recipient nation, but which are put into effect through the aid offered to individual NGOs. Cumulatively they affect the role or roles of the voluntary sector, the direction and nature of its growth and serve to divert a nation or society from its preferred vision of development, and impact adversely on the social structure, polity and culture of a nation as a whole. What is more, it is implied that the non-developmental agendas are hidden behind a façade of developmental agendas. Since he who pays the piper calls the tune, the influence of utilizing foreign donor funds goes beyond simple finance, and is a means for donors to increase their political and control over the South. The discussion about donor-driven NGOs on the other hand is about its effects on NGOs as individual organizations, that is it is a micro-level concern. The acceptance of funds means agreeing about what is to be done and how it is to be reported and accounted for. Because of this, it is argued, aid often leads to the imposition of donor priorities and ends up imposing models of development, technologies and practices inappropriate to NGO goals and to local conditions. 2

development

ideological

1 Russia, though a Northern country, is now also trying to deal with these issues as a receiving country. 2 Fowler (2000b, 2000c), Goonatilake (2006), Hulme and Edwards (1997b), Sogge (2002), and Bebbington and Riddell (1997). See also the symposium in Alliance Magazine, 12 September 2008, titled, ‘New Emperor, Old Clothes? International Funding–Who’s Setting the Agenda?’

Foreign Aid for Indian NGOs

In the process, NGOs become mere implementers of donor vision and policies, or ‘donor driven’. Ultimately both hidden agendas and donor-driven NGOs lead to a distortion of national development priorities and resources in favour of the rich nations and the elite regions and groups within a country, but the nuances are different. Since the bulk of aid comes from Western countries the charge of using development funds to spread Western civilization, worldview, and sphere of influence, and to bring economic benefit is directed mostly to Western donors. The concerns about donors driving local agendas are not Indian. They have been voiced elsewhere too. The Mail and The Guardian of 2 May 2003 carried a news item titled, ‘A Global Dilemma for NGOs’. It cited the report of a London-based group asserting that donor states are compromising NGO independence by earmarking funds to suit their own interests. It advised that NGOs control fund allocation as much as possible to avoid becoming the executive arms of donor states.3 ActionAid International, in a critique of international aid titled, ‘Real Aid: An Agenda for Making Aid Work’ (2005), too levels the charge that donor agendas have been imposed in several countries and that country ownership of these agendas is mere fiction. It would be naïve and unrealistic to think that foreign aid is, or should be, motivated solely by altruism, or that donors enter a country without any specific agendas. In fact, as pointed out in Chapter 4, ideology, political and strategic considerations, and the pursuit of commercial advantage are often mixed with altruism, and as some cynics point out, are the primary determinants of aid giving, not altruism (Sogge 2002: 43). At best, aid flows out of enlightened self-interest. Winning people over to your side by giving them money is a very old and widely accepted instrument of state policy. It is used where the other person is financially weak and thus susceptible to monetary incentives. In India, traditional statecraft accepted that Daan or charity was one of the four ways to deal with opponents, the others being Saam, Dand, and Bhed (appealing to their self-interest, wielding the stick, and creating divisions amongst them respectively).

uniquely

research

3 ‘Donor Input into Aid Operations Growing’,Alertnet, 24 January 2003.

Though the potential for donors driving NGO agendas or using them to pursue own hidden agendas is real, it does not follow that donors always give grants for only selfish reasons. The best grant making has a social purpose; the aim is to bring larger benefit not only to one society or nation but also to humanity at large. Nor does it follow that all NGOs will be donor driven. Similarly, it must be noted, right at the outset, that not all agendas are sinister. They often align with mainstream values and aims of national policy and law of the recipient nation. One has therefore to distinguish between hidden agendas which are harmful for the nation’s stability and well being, and those which have no hidden objective but are influenced by the socio-economic cultural perspective and assumptions of the people who run/support the donor agencies for purely philanthropic reasons. Unfortunately, even these can sometimes have an adverse effect because of the opportunist motives of those who are in charge of the dispensation of resources at a point of time and who take decisions on the basis of how it affects their own livelihood or career opportunity. Granting that foreign donors have agendas which are not those of the recipients, the question can legitimately be asked whether this is unique to ‘foreign’ donors. Does it not apply equally to other donors? All money given in charity can be said to be driven by the ideology and values of the donor. 4 Even an individual donor will give to a charity only if its worldview matches his own. Any funding other than self-generated funds raises issues of organizational autonomy and operational integrity, and all organized donors, official or private, national or foreign, will use the powers of patronage conferred by their giving to direct activity along channels desired by them. If external funding jeopardizes the independence, autonomy, credibility, integrity and effectiveness of NGOs, so equally does heavy dependence on government or corporate funding. There are references in non-profit literature to the dangers of state funding in bringing about co-option, distortion and even corruption of the NGO mission (Smillie and Hailey 2001, Weisbrod 1998). On the other hand, it has also been argued that state funding is neither necessary nor sufficient to produce NGO dependence on the state.

numerous

4 Interview with N. Venkat Krishnan, Founder and Director of Give Foundation and Give India Portal, Mumbai, 13 June 2006.

NGOs can, and often do, pursue strategies to maintain their even in conditions of high reliance on state funding. If deemed necessary, NGOs can and do bite the hand that feeds them; conversely, NGOs that do not receive any state funding can still be co-opted by the state or other actors.5 Corporate funding of NGOs is also suspected of having its own agenda, especially in funding research to endorse its products and services, or for getting legitimacy for certain activities that may be suspect. Then why, it is asked, is there concern only with foreign donor agendas? Another related question posed is why are only NGOs, and not government or business, deemed to be more susceptible to donor agendas? If the latter can accept funds freely, why is it more pernicious for NGOs to accept foreign money? There are several answers to both questions. Regarding the first, it is the extra territorial dimension that is bothersome. The of foreign aid have no political leverage or recourse to legal or political remedies in the donor country nor can they exercise much influence on the decision makers in the donor country, whereas in their own country they can influence or take recourse through the political process. The decisions related to foreign aid are, almost entirely, a function of the preferences of interest groups in the donor country (Martens et al. 2002). Regarding the second, while the government is accountable to Parliament and through it to the people and there are other checks and balances to watch government actions, as well as business activities, NGOs have no such formal accountability. In the case of business too there are external regulators like the Reserve Bank, Company Law Board and others to prevent them from acting against the national interest. Moreover, ground reality shows that NGOs are more easily used as fronts for anti-national activity, whether political or religious, than government or business organizations. The anxiety has increased with increased levels of terrorist activity in India. Against this it is argued that in India international does not pose an acute threat of subversion of the indigenous democratic processes because it is carefully scrutinized through the FCRA process than domestic funding and that makes for its relative transparency and probity compared to domestic activities

independence

beneficiaries

philanthropy

5 According to a study by Themudo (2004).

(P.B. Mehta 2003). Though this is true to some extent, it is also a fact that because direct political funding from foreign sources is

almost closed off, international organizations with political objectives need to inject their funds into Indian political processes through development funding of NGOs. This may be the reason why more and more NGO programmes are acquiring quasi-political overtones.

In addition, FCRA does not control the nuances of funding and it is in the unstated and implicit assumptions and methods that hidden agendas are operative. A second argument used by critics of aid to NGOs is that while

an MNC like Coca Cola may impact on only one aspect of social behaviour such as consumption patterns or propagandize one product, if NGOs are allowed unmediated access to sources of external influence, without any democratic processes to check them, it can

affect a whole range of life situations (Goonatilake 2006: 285). Thirdly, foreign aid is a small fraction of the Government of India’s budget and therefore the impact of donor agendas on national sovereignty or government policy is likely to be negligible. On the

other hand, it is often a substantial part of NGO budgets, many NGOs being foreign funded to the extent of 80 per cent or even 100 per cent of their budgets. The scope for being donor driven is therefore greater. Besides, since the NGO sector is much smaller in

size than the government sector, the influence on it can be deeper, especially since the money goes to the influential top few who are the opinion leaders in Indian society. Even though only about 19,011 NGOs (in 2006–7) out of close to a million small and big non-profit

organizations receive foreign contributions, the influence of foreign aid is pervasive because even organizations that claim they do not take/receive foreign grants take hospitality and travel costs for attending seminars and conferences or receive funding through some

other NGO, which has FCRA registration. Moreover, though the direct economic impact of donor funds may not amount to much, donors are in a position to influence policy because almost all policy advocacy work by NGOs is funded by

donor funds. Finally, because NGOs are supposedly value driven, and because they interact more intimately with people, the effect of donor agendas is likely to be deeper and more pervasive on the culture of a society

than foreign funding of government.

The following looks at what causes NGOs to be donor driven, how this is accomplished and with what effect; and whether NGOs and donors themselves agree to the charge. It then looks at the alleged hidden agendas and how they might operate, and what effects they might have on society. Finally, if indeed there is any substance in

the allegations of donor agendas, then what can be done to avoid or minimize the harm.

DONOR DRIVEN AGENDAS Why and How they are Imposed NGOs become donor driven, that is adopt donor agendas without questioning, for several reasons.

One, since the donors hold the purse strings, they are in a position to dictate to NGOs. Two, the grant-making mode of resource transfer enables a donor to impose conditions on how grants will be used, and accounted for, and enhances donor power. Three, the practice of giving mostly project funds rather than institutional support adds to the problem of dependency, because in case of institutional support,

the monies are pooled from other sources and generally it is the recipient who has the say in the plans of the organization, whereas with project funding each project is identified with a particular donor and needs to follow its terms and conditions. Whether foreign funding will lead to an NGO being donor driven depends on the extent of an organization’s dependency on that source,

that is what proportion of the total budget comes from that source; whether plural sources of funds are available; and, how strictly conditions are enforced by a donor. Other factors include the relationship between a donor and the NGO; whether the socio-political history of the nation plays a role in predisposing the NGOs to accept donor demands (as in societies with

a history of colonization where the colonization of the mind outlasts political domination); and the level of development and maturity of the NGO sector and its leaders. These will determine whether an organization has the ability to say no to something opposed to its values and mission. The NGO must have the capacity to figure out the real impact or intention of the donor, and the ability to make its

voice heard before it can say ‘No’. Though the extent of NGO dependency varies considerably in India, many NGOs are dependent on foreign funds, even up to

100 per cent of their budgets. Donors are enabled to impose their will on NGOs because of this high degree of dependence. The NGOs’ very existence depends on these donors and they will do anything to please and retain the donor. Sometimes the need is genuine but those who change their vision, mission and activities to suit donors are unscrupulous elements who run NGOs purely to acquire foreign funding and have no compunction about doing the donor’s bidding, convictions and ideologies be hanged. On the other hand, there are NGO who, though dependent, are savvy enough to know that donors need them as much as they need donors, and can therefore resist donor pressures. Donors mostly achieve their objectives, whether good or through the carrot and stick method. Control is often exercised and limits set to operational freedom of NGOs through attached to grants and threats to stop grants unless specific management practices are followed by NGOs. But donor objectives are also achieved by holding out carrots, such as fellowships, travel monies and recommendations for awards such as the Magasaysay Award which make the recipient obliged to the donor (Martens et al. 2002: 27). Even those who see a danger in accepting donor directions hesitate to speak out because of a desire not to jeopardize their further funding chances, or out of a desire not to bite the hand that has fed them (Seabrook 1999).

sometimes

motivated conditions

Effect on NGOs and the Sector The process of imposing donor agendas is a gradual and invisible process which begins with acceptance of donor grants, use of donor techniques and methods for programming, implementing etc., and goes on even to determining the nature of appointments until the whole organizational culture is attuned to donors and the local, indigenous and informal features that have underpinned NGO activity are lost. NGOs become more bureaucratic and risk averse. Ultimately it impinges on the NGO’s stated mission, values, vision and inspiration, independent voice and perspective (Edwards and Hulme 1997: 278). Apart from diverting an agency from its mission, it also encourages certain forms of activity over other more urgent needs just because funding is available for that activity. One instance of this is NGOs turning to HIV AIDS work which is lower down in priority for India

than say the eradication of malnutrition or malaria which are more urgent national problems. Similarly, the availability of funds for micro finance work has many NGOs to refocus their work to include this. Micro finance in particular has become popular with both donors and NGOs because of the following reasons: it promises to be financially sustainable; it can be scaled up quickly; it satisfies the donor’s needs for high volume rapid disbursement; it does not upset the status quo; and, it is good for PR. However, micro finance does not address the basic cause of poverty, viz. unequal power structures which deny the poor access to mainstream opportunities and assets. Though donors talk of empowerment as their goal, few donors provide funds to produce ‘rural revolutionaries’ rather than ‘development bankers’ (Edward and Hulme 1997: 9). As an astute NGO leader pointed out recently, the vocabulary, lexicon, language and idiom of development today are entirely foreign.6 The absorption of donor ideas and norms privileges the English-speaking, more sophisticated and vocal individuals at the expense of the vernacular-speaking ones who may be closer to the grass-roots reality. But to be fair this is as much due to the dynamics of growth and globalization as to donor agendas. At a broader level, accepting donor agendas means an import of concepts and technologies in their entirety, though they may not fit into the Indian context. Ultimately, it introduces inefficiencies in development. Given the colonial background many NGOs are predisposed to accept any donor suggestion as being more ‘modern’ and therefore superior, rather than thinking for themselves. Early aid with its emphasis on technological solutions brought in from the West discredited and sidelined the Gandhian approach of self-reliance, low cost local technology and decentralized as well as the more political-social change model adopted by peasant and other social movements of the early 1960s and 1970s. Indian traditional knowledge for conserving water, for instance, was sidelined in favour of large dams at the instance of foreign experts. Now the pendulum has swung to the other extreme, and donors are espousing small check dams and irrigation by using the Persian

encouraged

development,

6 Dr Sudhirendra Sharma, Director Ecology Foundation, New Delhi, speaking at the Conference, ‘Are We Really Catalysing Change?’ organized by Arghyam Foundation, Bangalore, 28 June 2008.

water wheel in the newly created water sources because of low energy requirements. Though some NGOs and even donors are re-examining Gandhi’s views on development, NGOs have, by and large, adopted the market orientation of many of the aid agencies and are taking a more managerial and metrics oriented approach to development rather than a political one. One manifestation of inefficiencies in development being at donor insistence is the import and adoption of large, lumpy technologies, though the problem occurs more in the case of bilateral assistance than with private philanthropy. In the Ganga Action Plan, for instance, the Dutch and the Japanese have prevailed on the government to adopt complicated technologies rather than favour the indigenous technologies developed by Mahant Mishra of Sankat Mochan Foundation.7 Rosenfield et al. (2004) illustrate by way of two case studies from Africa, two contrasting outcomes which can result from donor policies. In one, the donor, the Carnegie Corporation, thrust inappropriate policies and models of development on their grantees, and this had an adverse effect on the long-term economic development of the country. On the advice of white American consultants, it provided grants for introducing better farming techniques, improved sanitation, hygiene, low cost building through vocational education, and teaching of household economics, rather than liberal art education, much as the Ford Foundation did in its promotion of the community development model in its early years in India. The Africans rejected the education offered, and liberal education for Africans at the secondary and higher levels, which would have helped in self-governance, was delayed. In the words of Rosenfield et al. (2004: 61), ‘Accepting one set of values, even if in alignment with foundation leadership, without taking into consideration the validity of other approaches, may inappropriately privilege one philosophy and lead to deleterious results.’ By contrast, its grants which introduced public interest law, at the height of the Apartheid movement, on the lines of its work in the USA, played a vital role in the movement for democracy in South Africa.

introduced

7 See Pushpa Sundar’s article ‘A Study of Religious Giving: Religion and Social Activism in Varanasi’, in Sundar (2002).

The contrasting outcomes were the result in the one case of the Corporation staff members’ confidence that they knew what was best for the intended beneficiaries without their consultation, and a reliance only on the advice of the elite of the recipient society. The other grew out of an effort to understand the specific condition of the beneficiaries and designing of programmes that resonated with the local populations rather than transporting ideas which may have worked in America but had no relevance in the aided country. In India too the early community development model benefited the richer farmers rather than the poor and had little impact on poverty which needed more structural changes like land reforms. The case studies also raise questions as to how to sensitize those who hold the purse strings in a cultural context different from their own. Should donors rely on experts from home and give them an to different contexts in which they will work? Or should local staff be recruited and exposed to new ideas and developments in the West? Obviously both approaches are needed, but given the unequal power dynamics between the giver and the recipient, the first continues to be preferred with those coming to the East being termed ‘experts’, but in the second they are ‘students’ who have to learn from the West. Jehan Perera’s (1997) case study of the experience of the Sarvodaya Shramadana Movement, Sri Lanka, with foreign aid is a graphic description of how donors take over a country’s civil society and then transform it according to their vision of development, and finally withdraw aid as and when they want, leaving organizations stranded. According to Perera, donor approaches to development are On the one hand they want to work with NGOs because they are low cost, and flexible and quick to respond to changed circumstances, but on the other hand foreign funds lead to unpaid volunteers being paid, highly paid professionals being employed, and greater and profligate use of vehicles. They talk of participation, devolution, stakeholder analysis, and social development but impose hastily prepared plans by visiting or foreign trained local consultants. He concludes that unless NGOs are prepared to rely on voluntary contributions from within the country, donors will have the power since they have the money and money talks. Closer home, some aid-driven ideas introduced and championed by the big foundations in India through support for research, training,

exposure

inconsistent:

publications and conferences were population science, public health, green revolution, law and development, and development of the informal sector with an emphasis on self-employment (Sogge 2002: 148–52). There was pessimism about local knowledge, for example, that local crop varieties were not suitable and needed to be changed or that rural poor were incompetent managers of natural resources. There was a disregard of macro factors which would nullify the micro solutions suggested such as that imports would destroy the markets of small aid subsidized producers in the informal market (ibid.: 151). Some of the ideas were good, especially in the context of their time, and many see their introduction as a success of foreign aid. Others were failures because they were inappropriate to local conditions. The identification of the problems and issues was correct but the prescriptions for using them in local contexts were wrong because of optimism about the suitability of the Northern model, which ignored local contexts or processes for problem solving and policy making, and showed lack of faith in the indigenous. It was a case of ‘a solution in search of a problem’. Failure was put down not to faulty conceptualization but to faulty implementation by the local people (Sogge 2002). The emphasis on family planning for population control had a backlash, the introduction of the public interest litigation was on the whole good but added to the clogging of an already overburdened legal system, and the Green Revolution has created complications for farmers four decades on. The increased use of irrigation coupled with pesticides and fertilizers, while bringing prosperity to Punjab at the time, has led to contamination of the ground water in Punjab’s cotton belt and elsewhere, leading to a cancer epidemic, neurological disorders and other illnesses (Dogra 2007). Despite the accompanying rhetoric of public participation, aid driven ideas in fact give preference to control by scientists/technical experts, national decision makers and donors rather than grass-roots practitioners (Perera 1997: 165). A recent instance of adoption of inappropriate technologies and ideas in India is the building of street shelters for youth by some urban NGOs. The actual constituencies were not involved in shaping the agendas of the NGOs. Instead, it was decided for them that street shelters are a priority because that is what was done abroad in the other countries supported by the foreign donor, and the design and

operation was as conceptualized by the donor. But because the NGO’s work was not relevant, or based on local needs as articulated by those affected, it failed. 8 Thanks to secure foreign funding, some NGOs do not care for a feedback from the locals. A further example of the risks and unintended consequences of adopting foreign concepts because foreign grants are available to propagate them is that of CSR practices. Corporate Social or CSR as a concept is not new to India, but its modern version, which lays emphasis on using responsible supply chains, is part of a global compact conceptualized in the West. It involves among other things adoption of progressive labour standards by business including not sourcing from suppliers using child labour. Though no one can take exception to these ideas by themselves, the new standards as formulated from current Western practice, when adopted in India without thought, can have disastrous consequences. They sometimes prohibit poor families from earning an income, as children are suddenly withdrawn from the labour force due to campaigns against Western apparel companies such as GAP for sourcing their supplies from Indian suppliers using child labour. Kishore Mahbubani, international diplomat, intellectual and author of Can Asians Think, gives the following example of how imposition of Western policies based on Western values can have effects even worse than reduction in family incomes. He recounts one such case. A Belgian NGO went to Bangladesh and found a factory that was employing child labour. They caught them redhanded and said, ‘You see? Aha. We were right.’ Two years later, the NGO went back. And guess what? Many of the young female child workers had gone into prostitution!9 Similarly, higher environmental quality standards for suppliers may act as a barrier to market entry for local firms; and, requirements for community investment and greater transparency can reduce profit margins for new investors and act as a disincentive for them. No wonder many see in the insistence by Western donors of Western standards an instance of unfair trade practice to stop cheaper Indian goods from competing with costlier products of Western

Responsibility

unthinking

8 Interview with Lysa John, Coordinator, Vada Na Todo Abhiyan. 9 Kishore Mahbubani, in an interview with Suzy Hansen, profiled in Salon. com, 25 March 2002.

manufacturers, using the development aid channel as a front. Some people believe that Western companies, affected by cheap products from India and China, sponsored the drives against such practices, which are, to some extent, a product of local economic conditions, rather than a deliberately exploitative practice in toto. Cracking down

on this helps to ensure that the local market production cycles are disrupted and suppliers are unable to deliver/compete with Western mechanized processes even as the West continues subsidies on its agricultural goods and campaigns for removal of trade barriers for their free access into developing countries. After the GAP controversy erupted, Vivek Debroy, a columnist for

the Indian Express, wrote: ‘When Western nations ban such imports do we believe that the US government, Western NGOs and Indian NGOs funded by Western NGOs [emphasis mine] are driven by altruism? Or is it protectionism? Is trade policy the right instrument to solve a problem like this’ (Debroy 2007)? The above examples are not intended to suggest that practices

violative of human rights ought to be condoned, but that it is best to leave progressive Indians to deal with it at their own pace and their own way as they are doing even now. What are considered human rights should flow out of a country’s social and cultural context and be decided by the representatives of its people and not by standards decided in a different civilization. After all, it took even the West

several centuries to change exploitative labour practices. Kishore Mahbubani argues that Western-initiated human rights campaigns amount to putting the cart of civil liberties before the horse of civic order and economic development. Human rights are important but societies that have achieved a very high level of human rights did so at the end of a process. Societies have to go through

economic development and the development of the middle class and

certain institutions first. It can’t be done overnight. Western nations took centuries to get to where they are. Women and blacks got to vote after a long struggle. It wasn’t done overnight. The critical question to ask is whether or not the societies are marching in the right or

wrong direction. What people want in the first phase of development

is food, shelter and schooling.10

10 Same as footnote 9.

Particularly in personal matters such as wearing of the veil, triple talaq, dowry, female infanticide, etc., the reform should come from within and genuinely flow from its own people, not be funded covertly through civil society by donors according to their interpretations. Moreover, while donors talk of the need for transparency and accountability of the NGOs who receive their aid, they themselves are less than transparent about their own sources of funds or where the funds go. The donor who actually funds the Indian NGO may be but the last link of a chain whose origin may be another donor interested either in evangelization or commercial gain. In one instance, as part of its child rights campaign, an Indian NGO is reported to have targeted the making of footballs by child labour at the instance of a Western sports goods manufacturer who was the back donor for the INGO funding the NGO. Fortunately, failure to reach stated development objectives has sometimes led to better understanding and more mature appreciation of local needs by aid staff. Today, donors allow more emphasis to local and traditional knowledge in rural areas. Early attention to the informal sector allowed a closer look at precarious livelihoods and the need for supportive inputs, such as access to markets. Ideas emerging from population science catalysed action in women’s reproductive health. External ideas reviewed by local intellectuals have triggered rethinking about several concepts like gender, role of the state, social service delivery, and CSR.

NGO Perspectives It is one thing for informed and objective observers to see the pitfalls of being donor driven and another for NGOs themselves to admit to being donor driven. Critics of NGOs feel that they should guard themselves against being used as covers for collecting information or preparing the ground for subversive activities (Dogra 1990), or becoming an arm, not merely of government, but of the new global economic order. However, unwittingly, a major section of the NGO world is gung ho about accepting foreign funds. It could be because many have no ideology, or because economic necessity overrides ideology, or because they genuinely believe that foreign aid is more of a blessing than a bane. It is also a fact that many NGOs themselves start behaving in ways that donors like or endorse in order to attract or retain donors, rather than wait to be ‘donor driven’.

Interestingly, none of the NGOs canvassed for this book admitted to being at all donor driven though they claimed that there were such instances in the sector, especially in the case of smaller and less well established NGOs.11 Many of the respondents either claimed that they had never faced any problem with donor agendas or that they had refused money if it meant compromising their mission. One NGO claimed that they had not received too many donor funds because they were not prepared to give massive publicity to the donors for the projects supported by them or were not prepared to meet all the donor conditions. This NGO does not feel they are donor driven because they had the strength to say no. Two national NGO networks similarly claimed that in spite of being foreign funded (in one case almost fully, till recently), they have never been donor driven because they have put in place the right rules, policies and behaviour for accepting any funds. Since recent years they do not accept grants for individual programmes/projects but insist that the donors, who are presented with an overall programme and budget for the year or for five years, put their money into a pool, the programme allocation being decided by the themselves. In this way, they claim no one donor can dictate terms or claim ownership over any programme. Nor will they accept any funds from a donor if it is likely to divert them from their core programmes. They both claimed that they refused large grants offered by different donors for HIV AIDS, for work related to the Fair Trade Campaign, and for disaster relief programmes because these were not their core competencies. Instead, they directed the money to appropriate members of their networks. One of the CEOs stated that there must be a judicious balance in an organization’s between foreign and indigenous, and it must have a choice of multiple sources. Only then will there be no question of being donor driven. Both networks admitted having some members who are known to have changed agendas to suit donors because of the lure of easy money. A Delhi-based NGO claimed that they were not donor driven because they planned their programmes first and then sought and found donors for these. They did not have to do programmes and

common organizations

funding

11 Based on interviews with several of the NGO leaders mentioned in Appendix 2 of this book.

projects to survive and so were not at the mercy of donors. Therefore for them foreign aid has been entirely beneficial. A leading environmental NGO said that they were clear about their priorities. They did not take on consultancies from foreign or any other donors if it meant compromising on their principles. The truth of this claim seems to be borne out by the fact that though the NGO has been engaged in controversial campaigns, a scanning of the press coverage of its campaigns does not show anyone questioning its credibility on the ground of foreign funding. This is partly because it used the money mostly for research, documentation, allied activities (establishment of a resource centre, printing and publication of materials), and creating awareness of environmental issues through workshops. It was not used for active campaigning against vested interests or government policy. However, this is not to say that agendas do not get subverted through research. As will be seen further on, funding of research is a potent way of bringing in alien ideas. There are instances where NGOs themselves twist donor policies to further self-interests. One such instance is that of a human rights NGO whose funding depended on how many public interest (PILs) it filed. This NGO was alleged to unnecessarily take up cases just to get the foreign funds. Similarly, children’s homes that get money depending on number of children admitted in the house allegedly keep children in the homes longer than necessary, rather than rehabilitating them with families, as they should. In fact, many children’s homes are run as orphanages, though in fact some may have parents in town. Some such homes are run by small NGOs and often they are funded by small international donors who themselves raise money using sob stories of need. However, the NGO respondents agreed that such cases could happen even with indigenous funding. Some unscrupulous NGOs take advantage of the popularity of certain issues with donors to get funds, for example, Dalit issues are exaggerated to donors, and when donors come to visit projects they are shown some exemplary instances of how the situation has been improved by them, whereas in reality the changes are not widespread or sustainable. Fortunately, the more experienced donors can see through these kinds of NGOs.12

information

litigations

children

12 Based on an interview with the head of a children’s NGO.

In general, it appears that the smaller the NGO, the more donor driven it can be. It is also more likely to take advantage of donor agendas to benefit itself. Conversely, it is believed that the more established and more mature the NGO, the less likely it is to be donor driven. A south Indian NGO leader concluded that if NGO credibility is high there could be no donor-driven agendas. Interestingly, in contrast to NGO views is the perspective of a former bureaucrat who is now a part of the voluntary sector. He believes that foreign funding comes as part of an ideological package and cannot be entirely divorced from political and cultural contexts, and that Indian NGOs are greatly influenced by Western development positions and models. According to him, NGOs take extreme and strident positions on equity vs. development issues such as child labour, human rights, genetic engineering, and environmental issues involved in large projects such as dams, roads, or location of industrial The advocacy of their positions is not sufficiently rooted in research or in Indian realities. Such extreme positions create practical difficulties in development administration and delay development projects with attendant costs. Sometimes the anti-government stance, in line with international thinking, is unreasonable, lopsided and inconsistent. Also, so much stress is given to the donor relationship that some NGOs have been known to take partisan stands. For instance, on housing issues some NGOs will work only with the marginalized and not with the builders and the government, and they will accuse those who work with builders and government for the sake of the marginalized of being sold out to the big interests, while they may be following the prescriptions of other big interests such as their foreign donor. Such partisan working happens, according to one NGO leader, because NGO funding is not dependent on local conditions. Understandably, failures affect the credibility of the whole sector.13

projects.

themselves

The Donor Perspective Donors, as expected, reject charges of ‘donor-driven agendas’, and claim that through the use of local consultants, through workshops and seminars and recruiting of local programme staff, foreign donor 13 Based on an interview with an urban NGO.

organizations constantly try to make their work relevant to the local context. It also happens that local issues get on to international agendas after they are voiced in local forums and then become part

of international agendas. Equally, there are many issues which show a striking similarity across nations and in such cases, cross-national learning and experience helps to enrich an agenda. Sometimes, NGOs themselves adopt what they think are donor agendas without any prompting by donors, by tailoring their proposals to what they think donors want to hear.

However, independent evaluations of donors, as quoted earlier (Cox et al. 2002, van Diesen 1998), have debunked the claim of consultations as mere cosmetic whitewash, an opinion confirmed by those in the sector who have attended such consultations. They say the donor has generally decided exactly what it wants to do, and the consultations merely give the decisions some legitimacy. Quite

often, the independent consultants used for the consultations are working around a framework given by the donor. Taking a or independent path often means that the consultant is not retained again. A donor representative claims that his agency is driven by the

different Indian agenda and there is no other donor agenda. In fact he

mentioned that sometimes the government and even NGOs use foreign

donors as shields to get done the things they want. Also, if NGOs say yes to donors, equally they say yes to government because their funding is at stake. In fact he feels an NGO is more at the mercy of the collector and the district police officers for freedom to operate than that of a donor. Moreover, the system of co-option and corruption

according to him is so deep that though NGOs are generally indulged by the state in receiving foreign funds, they can equally and quickly be controlled by it. 14 Some critics of aid argue that a large number of Western agencies automatically try to pit the recipient NGOs against the local government. In some cases, this is very subtle; in others there is open encouragement of rebellious attitudes.

In sum, though there is some truth in NGOs being donor driven, Indian NGOs, by and large, either do not see this as a major problem or actively acquiesce in it. They also claim that the problem is not insurmountable. Some suggestions for overcoming the problem are discussed in Chapter 11. 14 Interview with a representative of a donor agency, 25 September 2006.

II HIDDEN AGENDAS Both the extreme Left’s and the extreme Right’s objection to foreign aid for NGOs is that it carries hidden political, economic, religious and cultural agendas. Allegedly, the objective of the political agenda is to establish political hegemony by using NGOs for covert intelligence operations meant to destabilize the nation, either through violent or non-violent means. The objective of the economic agenda is to open up markets for the products and investments of the donor country and to secure favourable terms of trade. The goal of the religious agenda is said to be to effect religious conversions, especially to Christianity, under cover of humanitarian assistance. Finally, the apparent aim of the cultural agenda is to assert cultural hegemony through assimilation of recipients’ values, beliefs, social customs and traditions to those of the donor’s civilization, so as to enlarge its sphere of influence.

Political Agendas That there is a political agenda to official development aid is undeniable. The politics of aid is a subject which has been addressed by many scholars.15 In fact, it would be illogical to pretend that state-sponsored philanthropy can be anything but an instrument of state policy. This has always been very explicitly recognized in Indian political treatises.16 What is not so well known is that this is as true of private as of official aid. Though private donor rhetoric is all about ethical and humanitarian concerns, in practice, self-interest underlies both official and non-official aid. Politics cannot be ruled out even in private aid because even private donors are situated in the particular political and cultural context of their times. While bilateral donors, of necessity, reflect the political stands of their governments, so too do INGO donors at times. A vast majority of the European agencies emerged during the era of decolonization, and though their agendas, as also of Canadian INGOs, have generally been more oriented to social change than

15 For instance by Goonatilake (2006), Martens et al. (2002), Ruttan (1996), Sogge (2002). 16 In the Mahabharata and Kautilya’s Arthshastra, for instance.

that of the US agencies, they too are not totally apolitical because of their dependence on official donors, the dependency varying from 50–90 per cent (Biekart 1999, Hulme and Edwards 1997c, Ruttan

1996, Sogge 2002). The US private aid agencies are known to have worked more closely within the limits of official foreign policy objectives, and often became instruments of US Cold War policies (Biekart 1999). While the ostensible objective of funding NGOs in poorer nations by the West was to remove global poverty and distress, the implicit agenda

before the collapse of the Soviet Union was to contain communism. Large amounts of money poured into NGOs in the developing world in pursuit of these objectives, though India, China and Malaysia were selective about allowing in aid unconditionally. While private endowed foundations can exercise more

independence than INGOs, they too are a product of their own cultural milieu

and subject to regulation by their own governments. In fact, independent foundations such as the Ford and Rockefeller were, in their early years, seen as indirect extensions of the US government, expressing similar ideological views and aims, though this was a perception denied by the Foundations (Chandrashekhar

Foundations

1965). It is claimed by James Petras (2001) that in the early years,

‘The Ford-CIA connection was a deliberate, conscious joint effort to strengthen US imperial cultural hegemony and to undermine political and cultural influence.’17 The fact that at least in the early days, the Ford Foundation and the US government shared a common ideology is mentioned by several scholars.18 Certainly, the Foundation played an indirect support role to the US government

leftwing

17 See Chapter 6, footnote 8 of this book. Also see case study of Ford

Foundation, Aspects of Indian Economy, no. 35, 2003, Appendix I, downloaded

from the Internet. The then political connection, covert if not overt, is also evident from the fact that the Ford Foundation, during its long history, has had as its head, several top-ranking men who either came to it from senior positions in government or went on to serve the government. Richard Bissell, head of the Foundation during 1952–54, was in close touch with Allen Dulles, head of the CIA during this period, and when he le0t the Foundation he became special assistant to Dulles at CIA. His successor, John McCloy, was earlier assistant secretary of war, and he intensified the Ford-CIA collaboration. In 1966, Mc George Bundy, earlier special assistant to the US president, in charge of national security, became president. 18 For instance, Chandrashekhar (1965), Rosen (1985) cited in James (1993).

by taking up questions reaching to the heart of India’s social and economic problems, which the US government could not do. When the New Delhi office of the Foundation opened in 1952, the communists had come to power in China in 1949, and the Indian government had also faced the communist-led peasant armed struggle in Telengana (1946–51). Chester Bowles, then US Ambassador to India, wrote to Paul Hoffman, then president of the Ford Foundation, expressing his anxiety that India may go communist too, especially after the death of Nehru. Hoffman agreed that a strong central government was necessary and that Nehru’s hands needed to be strengthened if hardcore communists were to be kept under control. Some of the fields of activity which the US government felt were important in terms of American policy could not be taken up by it directly because they were felt to be too sensitive for a foreign agency to support. But they could well be supported by a private foundation without criticism, especially since in the early years Ford Foundation had direct access to Nehru. The Ford Foundation thus acquired great power over Indian development plans. Though they had to operate basically within the broad framework of India’s planning system, the Ford and Rockefeller Foundations could initiate schemes and ideas of their own and persuade the Indian government to give them serious attention, which it may not have done had the suggestions come from an official agency. Conversely, the Foundations could refuse Indian requests for particular forms of aid without political embarrassment (Chandrashekhar 1965: 24), though often, in order to maintain its independence, the Foundations did indulge the government by giving fellowships and travel grants to some key government officials. The result was that from the early 1950s to the early 1960s ‘the foreign expert often had greater authority than the Indian’.19 The origin and history of the Asia Foundation, noticed in Chapter 6, also makes it clear that private philanthropy was both willingly and unwittingly an instrument of the American government to achieve its political objectives where these could not be carried out directly, or in order to supplement government efforts. Nor was Russia playing a different game. It is clear from the recently released Mitrokhin Archives that there was extensive Soviet funding of Left-wing

government

19 George Rosen (1985) cited in James (1993: 65–67).

organizations to spread disinformation (Andrew and Mitrokhin 2000: 328–29).

After the collapse of communism, the twin objectives of foreign aid became to promote and sponsor civil society in the developing world, and after 9/11, to fight Islamic fundamentalism. The ultimate goal is to maintain the political ascendancy of the West. There are

many NGOs today being urged to get into shadow politics or lobbying/ advocacy by the aid agencies. That aid is politics by another name becomes amply clear by the donor reaction to three things: India’s nuclear tests on 11 and 13

May 1998; the 2003 bilateral aid policy of the Indian government which followed from it; and, the Burmese government’s reception of humanitarian aid agencies when the cyclone devastated Burma in May 2008 (Kazmin and Jack 2008).

Critics who assert that foreign aid is driven by political ideology object to it most on the grounds that it is not consistent but has double standards (Rajan and Kak 2006). In support, they cite how Western philanthropic and official aid has selectively supported US foreign

policy with its many contradictions. While secularism, prevention of communal conflict and protection of human rights are supported as aid objectives for promoting civil society and democracy in India and other countries, US aid continues to flow to countries such as

Pakistan and other countries which are or have been dictatorships. The West opposes the occupation of territory, but the last piece of occupied territory in the world is in Palestine, because of American support to Israel. In the field of climate change, the West only talks

about India and China needing to reduce emissions but does not agree to reduce its own. The West will contest the reversal of democracy in Myanmar and Nigeria but not in Algeria. These double standards, they assert, hurt.20 Critics from the Right point out that while Hindu fundamentalism is decried and human rights violations where they relate to Muslims are highlighted, similar atrocities committed in Kashmir on Kashmiri Hindus receive no recognition or condemnation. Leading Indian

intellectuals and NGOs are funded by Western liberal funders to

20 Inshore Mahbubani’s interview with Suzy Hansen, on his book Can Asians Think?, 25 March 2002, www.salon.com.

accept and echo the anti-Hindu divisive stand of US and other Western donors who through their funding selectively espouse agendas of their choice: crying over Gujarat, religious freedom, Dalit and women’s rights, while remaining silent over genocide of Kashmiri Pundits, infiltration of Muslim Bangladeshis, and treatment of Hindu in the neighbouring countries. But then, the Indian Right too has used contributions from abroad to further its own religious agendas. Without directly refuting that official aid has hidden agendas, one of the donor respondents for this book mentioned that the field offices do not always accept official policy uncritically, and sometimes try to temper the adverse effects. In support he mentioned how after Pokhran there was official indignation over the tests and the official view was to stop all aid. But the development staff wanted that at least aid to NGOs continue. Their view prevailed, perhaps because it also helped the governments to keep a toehold in India. He also mentioned that some of the European countries are strongly democratic and provide space within the framework of the laws of both India and their own country to dissenting views, both from government and NGOs.21 While political agendas cannot be denied, it does not imply that they are not obvious to either the government or to recipient NGO, and cannot be dealt with. But merely being aware may not be enough. It may be necessary to acquire media capability to counter the effects of such funding. Most recipient countries have relatively weak media, especially when it comes to an international audience, as compared to the BBC and CNN who have acquired the power to define international news. Indians do not have the same capacity to their version of the story.

minorities

broadcast Economic Agendas

Political and commercial agendas are inextricably linked. While pure altruism would have dictated direction of bilateral aid to where it was most needed, many commentators have shown that in fact it seldom flows there (Cox et al. 2002, Hancock 1989, Sogge 2002). of aid is very skewed for the reasons discussed in Chapter 7. Where bilateral donors are concerned, commercial reasons provide

Distribution 21 Interview with a donor representative, 25 September 2006.

an additional reason. Aid flows to states and regions which match the donors’ commercial interests. Both Hancock (1989), referring to British aid, and Cox et al. (2002), referring to European bilateral donors, point out that in the selection of states within a country

commercial interests have played a great role, distorting aid and making

it less poverty oriented. The new market orientation in particular has led to a reordering of their priorities. Many are focusing on better performing states, with strong economic management.

Since NGOs derive their support from bilateral donors, largely as government partners in aided projects, this means that they also are not working where there is greatest poverty and need. In the early years, British aid went into infrastructure and power

sectors which offered little scope for targeting poverty. The changed priorities emphasizing the social sectors are dong better in this respect. In 1998, Danish aid was scaled back from four states to just

two — Karnataka and Madhya Pradesh. Bangalore and Karnataka feature as focus areas at least partly because of a desire to promote business interests in one of the fastest growing segments of industry. As for SIDA, it chose to concentrate on Rajasthan only for social

sector projects, leaving it open to choose other states for other projects where business interests could be simultaneously aligned. Netherlands removed Uttar Pradesh from its list of priority states after an aid review, though Uttar Pradesh and Bihar account for

almost 50 per cent of India’s poor. The post-1997 focus is on Andhra Pradesh, Kerala and Gujarat (Karnataka phased out), as they have been leaders in economic reforms. Since official aid is also aligned to business interests, it is not entirely fortuitous that the above states are

also the ones that offer the most opportunities for foreign business interests (Cox et al. 2002). P. Sainath, a well known development journalist, charges

international agencies with funding NGOs to dump fertilizers, harmful

contraceptives and obsolete technologies, and promoting drip irrigation in districts with good rainfall using a technique applied in the deserts of Israel, merely because an MNC had a product to sell (Sainath 1992: 430–34).

Funding of civil society has been used to further economic agendas also by putting indirect pressure on the Indian government, especially in the field of human rights (bonded and child labour, Dalit atrocities, etc.). Some analysts argue that the Country Strategy prepared by official donors is a useful tool for the agencies as it helps cloak the

ideas of the agencies and present these as legitimate Indian voices. The Country Strategy ends up being used as a stick to force the Indian government on the back foot at critical junctures in international diplomacy.

Religious Agendas The extreme Right critique of foreign aid, voiced by Hindu groups such as the Rashtriya Swayamsevak Sangh (RSS), Vishwa Hindu Parishad (VHP), etc., alleges that NGO funding by foreign donors essentially furthers the ‘anti-Hindu’ agendas of Christian, Islamic and Communist organizations. The bogey of conversions has been used by them to campaign against Christian groups receiving money from abroad. Though covert evangelism and conversions through the means of aid, especially private aid, has been considered a greatly charge, and therefore to be discounted, it cannot be totally ignored. According to Hancock (1989), the onward march of Christianity remains an abiding concern of many international NGOs, and he cites examples of several INGOs putting evangelism before good management, the result being that there were human costs to be paid. In support of his claim he quotes Ted Engstrom, president of World Vision, till June 1987: ‘We analyze every project, every programme we undertake, to make sure that within that programme evangelism is a significant component. We cannot feed individuals and then let them go to hell’ (p. 9). Presently, World Vision is more and subtle. Their mission, as described on their international website, states,

fundamentalist

exaggerated

sophisticated World Vision is an international partnership of Christians whose mission is to follow our Lord and Saviour Jesus Christ in working with the poor and oppressed to promote human transformation, seek justice and bear witness to the good news of the Kingdom of God.

The last is of course a well-known euphemism for evangelical activity. However, interestingly, this kind of statement does not show up at the Indian website.22 A well-known columnist in The Indian Express 22 http://www.wvi.org/wvi/wviweb.nsf/maindocs3F50B250D66B762988257 36400663F21?opendocument

also cites instances of World Vision surreptitiously proselytizing in India and elsewhere under the garb of developmental work (Kulkarni

2008). Further evidence, that aid and religious agendas in fact go together, comes from Goonatilake (2006). Writing about his experience of Sri Lanka, he argues that the grand era of Western missions in terms of

activities and missionaries was not in the 19th century, or during colonial times, but that it is now, and that donor agencies have used development aid as a vehicle for evangelization. According to him, during the era of developmental aid, religion has come to influence

world politics as never before. In support he mentions that though historically some NGOs in Sri Lanka were associated with the Church, the churches had no grass-roots base in Sri Lanka except in Christian areas. However, during the last two decades, the new church-

associated NGOs have enabled the churches to acquire a larger organizational base throughout the country, something the Christians never had, even during colonial times. This was at a time (1970s and 1980s) when Buddhist organizations were being repressed for

political reasons. Thus what happened in Sri Lanka was that local

religious groups were marginalized. NGOs are now suspected of an externally financed spate of forced and induced conversions of poor and depressed communities to Christianity.23 As we saw in Chapter 6, the FCRA owes its origin at least as much to this concern as due to fears of covert political activity to the nation. Moreover, it is evident from the FCRA figures

destabilize mentioned in Chapter 3, that a large portion of the money received as aid comes from Christian missionary organizations and goes to their own branches in India or to Christian organizations who, alongside their secular development work, also evangelize. Some of the biggest INGOs operating in India are faith-based

organizations such as EZE (EED), Bread for the World, NOVIB,

ICCO, Christian Aid, Danchurch aid, HIVOS, etc., and though they now fund secular development organizations, in the earlier years they showed a preference for church-related NGOs. It

accounted for a large flow of aid to Tamil Nadu which had numbers of such NGOs.

23 Wanigaratne (1997) quoted in Goonatilake (2006).

The home ministry’s department of FCRA analysed the figures of FCRA receipts for 2000–1, for amounts going to religious Out of 14,598 recipient organizations that year, the returns of 6,669 NGOs were analysed. It showed that 60 per cent of foreign

organizations.

funds go to religious organizations. The religious break up of these is given in Table 9.1. Table Table 9,1 9.1 of NGOs NGOs Receiving Contributions According to Religio Break-up of Receiving Foreign Foreign Contributions According to Religion n

Religion Hindu Sikh Muslim Christian Buddhist Not specified Total

Total 321 10 205

5,100 70 963

6,669

It is clear from the Table 9.1 that Christian agencies dominate in

receipt of contributions. This is not surprising since most of the contributions come from the Western countries which are largely

Christian, and humanitarian work has always been one of the tenets of Christianity. Besides, many Christian organizations do secular work either entirely or alongside their evangelical work. These findings are corroborated by an analysis of top 25 receivers

development

done by AccountAid, which regularly tracks FCRA figures. According

to it, in 2001–2, as much as 65 per cent of the FCRA funds came from organizations with religious linkages. The balance 35 per cent came from organizations that do not have a religious identity or are non-religious.24 Seventy nine per cent of FCRA funds went to organizations with

religious linkages and only 21 per cent to those with no religious linkages. In 2001–2, Gospel for Asia was one of the top recipients of

foreign funds, Rs 99 crores. However, in interpreting these figures it must be kept in mind that funds received by religious organizations may also be spent for secular developmental purposes.25

24 AccountAble, No. 94, August 2003, www.accountaid.net. 25 ‘60% FCRA funds for religious organizations?’ AccountAid capsule, no. 154, 2 March 2004, www.accountaid.net.

In 2005–6, of the top 25 associations receiving FCRA funds, 59 per cent of the total or Rs 1,100.11 crores were received by or faith-based organizations. The 2006–7 figures show an

religious unprecedented increase in religious funding from abroad. Nine of the top 10 receivers of foreign funds were religious organizations, eight of them Christian, and one Hindu. Among the top 10 givers of funds too, religious organizations dominated.

The location of the top recipient organizations is also revealing:

Jharkhand, Maharashtra, Delhi, Tamil Nadu, North Karnataka, Rajasthan and Kerala. These areas have large concentrations of religious NGOs. It is perhaps also not a coincidence that the

unprecedented increase in foreign funding and its source in religious

organizations in 2006–7 has followed a period of intense religious activity and strife in these very states. In the early years of aid even official agencies like NORAD, and officially aided INGOs such as ICCO and EED, gave a preference to

Christian NGOs in their funding programmes. Later, when mission organizations of the West became strongly influenced by secular priorities and concerns during the period 1963–93, there

development

was an effort on the part of both the INGOs and their back donors

to reconcile their distinct priorities by having different departments or institutions within an organization, one working with aid using the secular NGO language and the other being traditionally mission oriented. However, evaluations have shown that in the field, the

separation of mission and development has been regarded as and difficult to maintain (Tvedt 1998: 217). Mission organizations in India and elsewhere today face a dilemma

irrelevant,

between being organizations formed to spread the gospel through

ministering to the needs of the poor and being simultaneously funded by public institutions like donor governments and their aid agencies who often include a clause about religious neutrality in their

agreements. In general, mission organizations are said to have abided by

the rules and downplayed evangelization in development projects co-financed by the state or state agencies like NORAD. However, the overlaps between mission and developmental secular work are undeniable, and ‘Development aid workers paid by NORAD have

been involved in evangelization, and missionaries have been involved in development aid work, and it is only in the reports to the donor that a clear distinction has been upheld’ (Tvedt 1998: 218). Many Indian NGOs, especially in the south, where there is a

concentration of Mission-driven INGOs and Christian NGOs, believe

that the popular perception that evangelization and development work go together is right. They point out that church-based donors focus on the poorest outcastes or Dalits and there are a large number of such donors and NGOs in south India, especially Tamil Nadu. However, aid goes not to all Dalits but only to Christian Dalits or to those likely to become Christians. One respondent for this book therefore rhetorically asks whether donors are interested in removing poverty or in using poverty for their agenda of conversion. The secretary of another leading NGO based in Tamil Nadu, and an academic from coastal Karnataka, mention religious conversions going hand-in-hand with development activities. The hidden agenda manifests itself in the way staff is chosen and the way programmes are carried out. It is a charge substantiated with examples by yet another NGO leader who works with children. However, the leader also blamed Indian NGOs who use such donor motives to their own advantage. For instance many children’s homes in Tamil Nadu are run by Christian families to make money from Christian charities, though they may also admit non-Christian children to make up numbers. At the same time, it is a fact that if Christian money comes in for religious purposes under the guise of development aid, so does Hindu money; not all of the latter is for entirely laudable purposes either. Only about 35 per cent of the FCRA funds are from secular sources. Islamic funding from abroad, probably considerable, does not come in through FCRA channels. Some of the Hindu funding goes for counter evangelization, while the rest goes on rituals, temple upkeep and religious charity. Overall, one must recognize that some money will inevitably be religiously as well as ideologically tainted, and deal with it as necessary. There is no reason to damn aid as a whole.

CULTURAL IMPERIALISM The third invisible ‘agenda’, though it is really the consequence of aid, is cultural imperialism. It is the most pervasive consequence with the most potential for social change in a Westernizing direction. Those nations and people who have experienced colonialism see in the aid industry the dangers of cultural imperialism. This charge is more difficult to substantiate through direct data, because cultural imperialism operates at deeper, and more invisible levels, and this aspect of aid — the role of donors in ‘the marketplace of

policy ideas’ — is not obvious, especially to the recipient who sees aid only in terms of additional resources. The subject has not been

studied in depth, and one has to fall back on perceptions and such extant studies as exist. Perhaps the most oft quoted Indian criticism in this regard is that of Prakash Karat, CPI(M)’s general secretary and ideologue, who

saw in foreign funding an imperialist strategy for domination of Indian society by Western capitalism. Writing in The Marxist in 1988, he stated, There is a sophisticated and comprehensive strategy worked out in imperialist quarters to harness the forces of voluntary organizations/ action groups to their strategic design to penetrate Indian society and influence its course of development. It is the imperialist ruling circles,

which have provided through their academic outfits the political and ideological basis for the outlook of a substantial number of these proliferating groups in India. By providing liberal funds to these groups, imperialism has created avenues to penetrate directly vital sections of Indian society and simultaneously use this movement as a vehicle to counter and disrupt the potential of the Left movement. 26

Karat wanted the FCRA not for reasons of national security, but to prevent the penetration of imperialist ideology.

Interestingly, the CPI(M) position changed by the end of the 1980s to one of acceptance and justification of NGOs as necessary and integral to Indian society (Biswas 2006). The change was sharp enough to allow the CPI(M) to be an important participant at the

World Social Forum (WSF), funded largely by Western funders. 27 It must be noted, however, that the change has been limited to CPI(M) because, in general, communists remain extremely wary and allergic to NGOs, particularly in states ruled by them. The space between

the people and the government is occupied by the party, and so there is no space for NGOs!

26 Karat, quoted in ‘WSF Mumbai 2004 and the NGO Phenomenon in India’, Aspects of India’s Economy, No. 35, September 2003, pp. 2–3. 27 See, ‘WSF Mumbai 2004 and the NGO Phenomenon in India’,Aspects of India’s Economy, No. 35, September 2003.

It is evidently a concern in other Asian countries as well, as articles in the press in Malaysia,28 Indonesia,29 and Jordan (Mekki 2000) testify. Russia too is now wary. In April 2006, the Russian passed a tough law to regulate the funding and activities of foreign charities in Russia, despite strong protests from Europe and USA. In a way, this is recognition of the growing influence of NGOs across the world.30 Though the fears may seem exaggerated, if we accept the definition of cultural imperialism as the process of ‘permeation and pervasion of one culture by the thought, habit and purpose of another’ (Thornton 1965: 187) and recall to mind Lord Macaulay’s arguments for introducing English education in the English language in India, then perhaps one can appreciate that there is a kernel of truth in these critiques. Though the stated ideal of British rule was to bring moral and material progress to India (the noble ideals of modern donors as well!), Macaulay was also alive to the political and economic benefits a policy of Anglicization would bring the British. He wanted Anglicization through the introduction of education in the English language on the grounds that it would create a durable bond between the rulers (read donors) and the ruled (read recipient nation). He foresaw that it would create a class of persons ‘Indian in blood and colour, but English in tastes, in opinions, in morals and in intellect’ and so would lessen the danger of revolt. Macaulay was equally alive to the commercial benefits of Anglicization: the creation of affinity with the English way of life would create a vast market for England’s industries and ensure continued prosperity. In the long run, the Westernizing policy proved beneficial, the fruits being reaped even today, but in the short run, it spelled the death knell of traditional culture and created a deep divide between modern and traditional India, which persists to this day. Modern foreign donors

government

28 ‘NGOs Defend Foreign Funding’, 2 June 2002, New Straits Times, Malaysia. 29 ‘NGOs Told Not to Rely on Foreign Funding’, 28 October 2000, Jakarta Post. 30 AccountAid Capsules 238 (9 March 2007), 240 (12 March 2007), and 241 (29 March 2007) talk about FCRA being introduced in Uzbekistan, Venezuela and Peru. Bangladesh has had one since 1978 or so. See www.accountaid.net.

are equally aware of the political and economic benefits of imposing their ideas, values and beliefs on developing nations. Cultural imperialism is only possible because of an unequal power relationship, whether it be of trade, colonialism or aid, between the developing and the developed nations. Cultural hegemony is achieved through ‘a colonization of the mind’ made possible by the aid process. 31 Edward Said in his seminal and influential book, Orientalism: Western Conceptions of the Orient, argued that the transmission of ideas and knowledge are used by the dominating party to replicate the structure of power and to perpetuate it, even though his remarks were made in the context of colonialism. Today’s development analysts like Sogge (2002) have extended Said’s argument to aid. According to Sogge, the donors form a that produces, legitimizes and transmits ideas in fields as general as governance and as specific as warehousing of farm chemicals (could also be GM crops). The power of aid lies in its ‘influence potential’ which is more important than its resource contribution (Sogge 2002: 146). Sogge observes, ‘Aid driven ideas have leveraged change far out of proportion to the monies applied. The World Bank, the endowed foundations, think tanks, and policy activist NGOs all know this’ (p. 142). They are the modern day equivalents of the Orientalists of colonial times. Foreign aid provides a toehold for aid agencies to broadcast their views. Through careful use of media, state policy and public perceptions, a little money can be leveraged to produce results, and foreign funded NGOs act as a vehicle for donor hegemony of knowledge systems. The donors fund research of all kinds, especially social science research. British rule produced a great output of knowledge on India — social, political and culturalbecause knowledge is power, and knowledge was needed to gain control over an alien country, by presenting their versions of history, economy or religion. So too modern aid donors have contributed not only to transplanting foreign models into India — management and law schools, agricultural extension, etc. — but also to the

network

disproportionate

31 See Bhat et al. (1999), Biswas (2006), Goonatilake (2006), Mahbubani (2004), Roy (1988), Said (2003), Sogge (2002), and others. Also see Kishore Mahbubani’s interview, ‘Asians have not arrived. They have just begun on the road to modernity’, Indian Express, 9 April 2008.

preservation and extension of indigenous knowledge in architecture, folklore, bio diversity, water harvesting, and so on. While such research is no doubt of value to India itself, it also becomes available to the West for its use, bonafide and otherwise.32 Mahbubani in his book Can Asians Think (2004) observes that in the year 1000 the most successful, the most flourishing and the most dynamic societies in the world were Asian. One thousand years later, the most dynamic and flourishing societies are in North America with Europe one tier below and Asia far behind. The reason why Asians lagged behind, according to him, is that while there was a leap in Western thinking after the Renaissance and the Reformation, Asians stopped thinking for themselves. Instead, they began accepting Western values and practices unquestioningly, in spite of having a long intellectual tradition of their own, and in spite of the fact that the Western way may also not be totally and automatically relevant in the East. This was partly the result of colonialism and partly due to aid, which provided a channel for introducing Western ideas and practices. Ideology has long been at the heart of foreign aid. The World Bank and the US, as the largest purveyors of aid, have for long insisted on calling the shots as to how the world should develop. Through the doctrines and knowledge about development conveyed through aid, they have had the supreme power of defining alternatives. Thought imperialism by the West ensured that the flow of ideas is a one-way street, from the West to the East.33 Huntington points out that the West dominates the world because ‘The West in effect is using international institutions, military power and economic resources to run the world in ways that will maintain Western predominance, protect Western interests and promote Western political and economic values’ (Huntington 1993). Foreign aid has played a key role in this.

32 Goonatilake (2006), Said ( 2003), Mahbubani (2004). Also see, Kishore Mahbubani’s interview, ‘Asians have not arrived. They have just begun on the road to modernity’, Indian Express, 9 April 2008. 33 Kishore Mahbubani’s interview, ‘Asians have not arrived. They have just begun on the road to modernity’, Indian Express, 9 April 2008. Also, Kishore Mahbubani in an interview with Suzy Hansen profiled in Salon.com, 25 March 2002.

Most of the theoretical and conceptual research is done in the North because of better funding and research facilities, but the South is used as the subject under observation. The ideas are then

disseminated through the aid channel, targeting audiences carefully-

key decision makers, researchers, journalists and NGO leaders. Donors disclaim any responsibility for harm done due to their ideas, but claim credit for success, what Sogge (2002) calls intellectual bullying. At the same time, no one wants to expose the bullying. As

Said has remarked, the Orientals willingly acquiesce in their own Orientalizing. The privately endowed foundations such as the Ford, Rockefeller and Carnegie were, and continue to be, in the vanguard of using the

power of their money for shaping the world to their ideas. The influence they exert is subtle, as remarked on by Harold Laski then at the London School of Economics: The foundations do not control, simply because, in the direct and

simple sense of the word, there is no need for them to do so. They have only to indicate the immediate direction of their minds for the

whole university world to discover that it always meant to gravitate swiftly to that angle of the intellectual compass. 34 In short, the problem with foreign aid is not only arrogance on the

part of aid givers, but also ‘an unchecked power to define truth and falsehood’ (Sogge 2002: 153). The ability to fund research and then to use the findings to legitimize donor decisions is according to Sogge manipulative. Independent research which goes counter to

donor interest is either ignored or does not get disseminated due to paucity of resources or because it is not couched in ‘donor speak’, understood all over in the world of aid. American NPOs are themselves fully aware of the dangers of

cooption to donor views through acceptance of aid. American universities, when offered millions in funding by big donors from

Taiwan, Korea and Singapore, have apparently hesitated to accept

the grants on the ground that the money would bring with it an

obligation to support their points of view or support their (Sogge 2002: 140–41). If there was no danger of imposition of foreign agendas through aid why should American universities

governments

34 Laski (1930: 174), as cited in Sogge (2002: 145). Some of the big-ticket ideas emanating from their stables have been mentioned earlier.

be apprehensive that accepting Japanese and other funds would compromise academic freedom? Unfortunately, developing countries do not have the same choice of turning down money. Though there are many takers for the idea that aid plays a role, there are also dissenting voices which discount the possibility of donor agendas being harmful. They argue that India is too complex, segmented and multilayered a society to be mentally colonized. An Indian has several identities and he plays different roles in different contexts. For receipt of foreign funds he takes on a different identity and role and keeps it separate from the others. With the maturing of the NGO sector, and increased self-confidence of its leaders, the likelihood of being donor driven is remote. Of course there is also a positive side to donor agendas — sometimes it is useful to have donor-driven agendas, if the donors have a proactive vision. They may look ahead and see what smaller, more insular NGOs may not be able to see. Some private aid agencies such as OXFAM, ActionAid, Christian Aid, have paid attention to the larger contexts of their work and developed conceptual paradigms. Ideas such as global policy agendas on debt relief, farm pesticides, and environment-poverty links have been recast. Knowledge-based policy activists are building alliances with social movements, all contributing to new ideas being debated jointly by South and North. By themselves the NGO sector may not be able to take the broad global perspective that is necessary to counter global challenges. Besides, as Jeffrey Paine has argued, ideas do not flow down a corridor between cultures only in one way, but simultaneously in two directions — East to West and West to East (Paine 1998: 369). Nowhere is the positive aspect of adoption of ideas from abroad better illustrated than in the life of Gandhi. He transmuted his English education and influences to come up with unique solutions which were totally Indian and born out of his own experiences of injustice and poverty. But then few ordinary mortals can be Gandhi. While conceding that ideas can flow beneficially in two directions the point really is that ideas must be adopted out of free volition and not because of financial dependency.

hegemonic

CONCLUSION The foregoing suggests that the answer to the question whether foreign aid has hidden agendas and whether NGOs become donor driven by accepting aid must be a qualified yes. It is undeniable that

donors have the power to call the shots which comes from money. Some use it rarely, some gently, some inexpertly (Nath 1997: 123). It is also erroneous to think NGOs are unable to assert their even within the unequal power relationships, provided NGO credibility is high and financial dependence on donors is limited because of plural sources of support. 35 Fortunately, India’s voluntary sector is maturing and the self-confidence gained in the process, coupled with the fact that internal plural sources of support are growing, will hopefully ensure that NGOs do not become donor driven. But certainly the sector will have to put its house in order in terms of credibility before charges of being donor driven disappear. It has been wisely suggested that the best way to deal with agendas is to recognize their existence as a reality of life and deal with the excesses when they occur, on a case-by-case basis. NGO and public vigilance must go alongside donor willingness to recognize that in an era of globalization, the development dialogue has to be both post-modern and post-colonial, recognizing the plurality of global society, and the validity of plural, alternative approaches relevant to a particular society and context (Nath 1997: 124–26). One size fits all cannot be the dominant philosophy, especially because it is not only the developing economiesthat are harmed by the telescopic vision of the West, but Western countries too. 36 The West can maintain its outdated worldview at is own peril. Westerners must therefore transform their ways of thinking, and become aware of how the world is changing and adapt to the changes by being open to a reverse flow of ideas.37 The government on its part, instead of restricting aid from the West, must encourage plural sources of support, especially aid from non-Western, oil rich countries as well as from the developed Eastern countries. More importantly, cultural imperialism of the West will cease the day Indians themselves become creative and acknowledged thought leaders of the world.

independence,

35 Interview with Arun Pandhi, Sir Ratan Tata Trust, Mumbai, 12 June 2006. 36 Kishore Mahbubani in an interview with Suzy Hansen profiled in Salon. com, 25 March 2002. 37 Ibid.

10 No Free Lunches ‘The wealth of the large hearted is an unfailing medicine tree.’1 ‘Where have honesty, sacrifice and courage gone? Who are the so

called successful role models that youngsters copy today in the sector — those who have made money, those who run large organizations, those who travel to seminars and workshops abroad, those who speak smoothly but have nothing to show on the ground.

voluntary Look what easy foreign money has done.’

Roy (1996: 3161–62)

A visitor to Bali cannot but be struck by the bold black and white checked cloths draped over columns or idols outside temples. They symbolize the duality inherent in existence, and particularly that good and evil must necessarily co-exist. Without the one, the other will have no meaning. Likewise, with foreign aid: if one face of the coin shows its strengths, the other will show that there are weaknesses as well. India has received foreign developmental assistance for over 50 years now. Though NGOs were not major recipients in the early years, they have received sizable aid at least since the 1990s. Whether it has been for better or worse needs careful assessment, but the one thing that can be said with certitude is that it has left a deep mark on the NGO sector — on its size, its structure, its culture and style of operation. By and large, Indian NGOs, with a few exceptions, love foreign donors and believe aid has been a boon. Those who say otherwise are largely from outside the sector — Western and Indian analysts, journalists, and the Indian political class. The dream of the average NGO is to be able to secure foreign aid. This was brought home to me forcefully when I was invited in the mid 1990s to speak to a group of small NGOs working in Bihar. At the workshop on local resource mobilization, I presented what I thought were several good 1 Tiruvalluvar, The Kural, circa second century bc–eighth century ad, Penguin Classics, p. 40.

Foreign Aid for Indian NGOs

options and methods to tap indigenous funds. At the end, however, I could sense some disappointment among the participants. From the tenor of the questions it became clear that they had hoped to be taught a mantra which would seduce foreign, not Indian donors! What is not obvious either to recipients or to people in general is

that if aid brings resources and other benefits it also has hidden costs. This chapter attempts to draw up a balance sheet of the benefits and costs for the NGO sector and for Indian society.

IMPACT ON THE NGO SECTOR The Good News Overall, external assistance has played a very positive and catalysing

role. It brought more resources which served to expand, diversify and organize the sector and to bring order and fiscal discipline into it. It also brought in new ideas, methods and technologies and

enabled the sector to experiment with new approaches to development.

Additionally, it brought in a much needed focus, both in policy and practice, on equity issues and underserved sections of society such as women, the scheduled castes and tribals, who were and continue to be the poorest, as well as on the environment. By supporting research, alliance building and policy advocacy it

enabled the sector to disseminate its successes and mainstream its achievements. Through encouragement and interaction it contributed to the self-confidence and maturing of the sector. Though the initial effect

of external assistance on Indian philanthropy was negative, taking the pressure off Indian donors to contribute to social development, the later effect, through example rather than direct assistance, was more positive. Finally, the sector was able to forge global links and find

a place at the global table thanks to donor support. Aid encouraged a two-way flow of ideas, with Indian achievements in development finding their way into international development discourse, even though the ‘experts’ were, and continue to be, Western, with a few

honourable exceptions. The following substantiates.

Expansion and Diversification of the Sector Aid enabled the sector to expand and diversify in scope and

sophistication faster and beyond what it would have if it had to depend

only on internal resources. It was not the sole contributory factor in the expansion of the sector which benefited from an increase in government funding as well, and from its policy of encouraging the

No Free Lunches

formation of SHGs as registered societies, but undoubtedly the steady growth in foreign aid helped. The expansion of Indian NGOs, which first began in the period 1970–80, was both a cause and effect of increased foreign funding. Sometimes the NGOs were promoted by donor agencies themselves (less common in India than elsewhere) or sprang up as entrepreneurial ventures to meet donor specifications (Sogge 2002: 97). In Uttar Pradesh, numerous NGOs focusing exclusively on issues are said to have been born overnight in a few districts, soon after a 1992 USAID deal brought US $325 million solely for population control in just 10 districts of that state (Sainath 1992: 432). In urban India today many NGOs have sprung up to take advantage of the huge amount of foreign money going into AIDS. Today, few major NGOs have not become aid integrated. Unfortunately, a lot of the growth has been unhealthy. The easy availability of money without too much effort brought in many into the sector. In some places, NGOs have proliferated not in response to community needs, but to take advantage of donor funding and tax breaks. The NGO organizational form has been misused by unscrupulous people, either for personal benefit or as a front for illegal activities. N.C. Saxena, former secretary to the Union Ministry of Rural Development, calls them ‘contractor’ NGOs, who, he claims, have no expertise in mobilizing or empowering people and use the funds to support themselves and to create some assets. According to him more than 50 per cent are corrupt. 2 In Uttaranchal state, a survey by the income tax commissioner in 2003 found that with a population of only 84.7 lakhs it had close to 45,000 NGOs in 13 districts, giving a density of 4,000 NGOs per district. Many of these NGOs were only on paper or non-functional, but money was being pumped into them by government and several international aid agencies too (Das 2003: 22).

population

malpractices

A check ordered by the Dehradoon District Magistrate following

the report showed that of 233 organizations, as many as 139 were frauds. Allegedly many paratroopers lured by funds on offer for a newborn state had come in and set up NGOs.3 2 N.C. Saxena quoted in The Down to Earth Team in ‘The Power Game’ in Samuel (2000a). 3 Rural Litigation and Entitlement Kendra (RLEK) chairman Avdesh Kaushal, quoted in Das (2003: 22).

The latest scandal to hit the public eye is that related to the World Bank funding of the AIDS programme which has 78 per cent NGO involvement. The World Bank’s Detailed Implementation Review highlights a range of allegedly corrupt practices involving NGOs as well as government officials. The review details malpractices such as bribes demanded by state officials and paid by NGOs to get incomplete and fraudulent reporting and accounting by NGOs; non-existent offices and staff of contractor NGOs; non-existent NGOs awarded contracts; NGOs selected on the basis of political connections and so on (Jain 2008). To top it all, a report carried in The Times of India of 6 October 2007 mentions a brothel in Delhi running as an NGO called Manav Vikas Sansthan (Human Development Organization)! In short, growth has been at the cost of the ethical underpinning of the voluntary sector. Such NGOs do not strengthen civil society at all. Though foreign funding is not solely to blame, it has certainly played a part in encouraging the emergence of such opportunistic organizations because of the generous level of grants and the easy access to donors, especially for the sophisticated and those with contacts.

contracts;

comparatively Infusion of New Concepts, Practices and Technology

Secondly, donors contributed more than additional resources to the development table. The real value of their contribution lies in the quality of funding provided. Because grants could be individually negotiated, and flexibility was allowed in use of funds to allow for differences in NGO needs and local contexts, it allowed NGOs freedom to innovate. The best donors made the funds available for experimentation in technology, development approaches and and were prepared to take a risk that the NGO experiments may fail or that the innovations may be short-lived. Sometimes the donors themselves introduced new ideas and technology which had worked elsewhere in the world, though these sometimes had adverse consequences, because they were inappropriate to local contexts. When government spending on the social sector had brought no visible changes on the ground, foreign donor support enabled fresh thinking to be brought to bear on the problems. Bilateral aid in particular encouraged government to think out of the box and to include NGOs in aided projects where feasible. It not only helped to improve the GO-NGO collaboration, but also enabled NGOs to

processes,

mainstream and replicate their successes through major government programmes. For instance, through bilateral aid-supported projects like the Sarva Shiksha Abhiyan, Mahila Samakhya and the District Primary Education Programme, donors helped to bring about in procedure and content of the projects, to involve new partners, and to introduce an emphasis on monitoring and evaluation. DANIDA introduced new approaches to community and community empowerment by evolving innovative methods of reaching the poorest and for adoption of low cost technologies. In watershed projects supported by it in Orissa and Madhya Pradesh, a period of one and a half years was allowed prior to any physical intervention to help the community organize, to explore their resources and to plan for their development, a feature absent in government funding. In the leprosy and TB projects, communication and education (ICE) material was widely used; in the water and forestry sectors PRA techniques, transacts, watershed mapping, and tree preference marking was introduced (Mathew 2005: 9). The Ford Foundation helped rural women to advocate for their rights by supporting an innovative method called the Learning Friend Diary, a component of the Internal Learning System — a pictorial method of helping poor, illiterate women members of savings and credit groups to examine their lives, and then to begin to change them by learning new skills based on their understanding (Ford Foundation 2002: 6). Aid thus improved the functioning of both government as well as NGO programmes. After supporting experimental work many of the donors helped to disseminate the learning by supporting seminars, conferences and publications. The sector was also introduced by donors to new concepts such as gender budgeting, baseline mapping of communities for better evaluation of outcomes, explicit targeting of the poor, empowerment of women and the and monitoring and self-evaluation. NGOs were taught to prepare strategy and business plans, and to draw up vision and mission statements. This contributed to improved organizational performance and outcomes, even though only a few NGOs and communities really internalized concepts like empowerment, participatory development, gender equality, and affirmative action. Donors also introduced and disseminated low cost, low risk technology in the fields of animal husbandry, drinking water and fisheries (Mathew 2005: 9).

innovation

participation

natural information,

workshops,

marginalized,

Finally, though rare, donors have not hesitated to collaborate with other donors, in untraditional funding experiments. The case of BASIX has already been discussed in Chapter 8. In a similar DFID and SIDA supported the Society for Promotion of Area Resource Centres (SPARC), Mumbai, an NGO working with urban slum dwellers, to form Sparc Samudhaya Nirman Sahayak (SSNS), a construction company to assist slum dwellers to design and construct their own houses. Several donors collaborated to set up the Slum Dwellers International (SDI) as a transnational organization to assist national federations of NGOs working for slum dwellers, and helped it set up an International Urban Poor Development Fund to fund national affiliates (Patel 2008). Indian donors are yet to forge such collaborations on a large scale for NGO benefit.

initiative,

Bringing Discipline to the Sector Addressing the Parliament and Consultative Committee in June 2006, the Indian finance minister made the point that aid without was helpful both because it provided access to improved and acted as a disciplining factor.4 Indeed, to a sector used to informal, flexible and relaxed styles of working, aid brought some much needed rigour in analysis and discipline in working, though, as mentioned in Chapter 7, the implied control has begun to irk NGOs. Because of the donors’ insistence on specific results, systematic methods of working and reporting, and by providing training support for these, NGOs have learned to improve project design, planning and implementation by focusing resources and activities on target segments. Insistence by donors also led to a growing acceptance by NGOs of the importance of putting in place monitoring and reporting systems and processes. Once monitoring was accepted in principle, further refinements were added such as shifting from monitoring activities and outputs to better monitoring and reporting on project and programme outcomes, and better integration of qualitative and quantitative monitoring (CIDA 2005). Aid has also enforced a certain much-needed fiscal discipline and probity on the sector. NGOs have been forced to design and implement

conditions technology

4 ‘No Question of Accepting “Tied Aid”’, Indian Express, New Delhi, 28 June 2006.

the projects carefully, and the financial scrutiny (some donors insist on their own auditors) has also led to better financial systems and Several donors like EED, Ford Foundation, CIDA and others have helped put systems and procedures into place for better project and financial management, including clear project agreements, independent audit, and fund-based accounting models specifically for NGOs. To meet this weakest link in NGO functioning they have supported and organized training in financial management and and have supported the creation of specific organizations such as Financial Management Services Foundation (FMSF) by EED) and AccountAid (Ford Foundation) to help NGOs improve their accounting systems and reporting requirements. The downside, mentioned in Chapter 7, is that too excessive and rigid an emphasis on modern management techniques to the of the human aspects of development has removed some of the passion and humanitarian aspects of development which gave the sector its distinctive flavour. The adverse effects of adopting foreign concepts and technologies have also been noticed earlier.

accountability.

accounting exclusion

unquestioningly

Building Networks and Strengthening Civil Society Another important contribution has been to help NGOs build

networks and alliances. As mentioned in Chapter 2, a weakness of NGOs is their reluctance to build lateral alliances to improve outreach and scale, and to reap the benefits of synergy. That this is

changing is in some part due to foreign donors who have consciously supported the building of networks within the sector as a strategy for building civil society. Plan International was instrumental in building a water and sanitation network bringing donors, NGOs, UN agencies, and government round this issue. Similarly, the Aga Khan Foundation created a network with 12 NGOs in education. The Ford Foundation has developed a coastal zone network as well as a network for forest management.5 ActionAid has promoted NGO-Corporate partnerships, and OXFAM networked 50 NGOs around agricultural issues. In the India Canada Rural Energy Project promoted by CIDA, 50 partner NGOs were formally linked into an Indian Rural Energy 5 Interview with Ganesan Balachander, Representative, Ford Foundation (India), New Delhi, 2006.

Network (IRNET) along with government agencies and others. The Tree Growers Co-operative supported by it first promoted village co-operative societies, which were later linked to village

institutions

like Panchayats for regeneration of wasteland and water management. This network proved very useful when the National Rural Employment Guarantee Act (NREGA) was launched, to educate communities, to mobilize them for employment and to get them to design relevant projects for the guarantee scheme. Several donors like the Aga Khan and Ford Foundations have

supported attempts to create a more enabling environment for the NGO

sector through research and advocacy for changing the legal and fiscal framework and infrastructure for voluntarism and philanthropy.

Developing New Fields As they did elsewhere in the world, foreign foundations helped the emergence of new fields of endeavour and enquiry in India as well. Today, the Bill and Melinda Gates Foundation is contributing US $1.5 billion to the International Vaccine Initiative, and more to the

fight against diseases like malaria, tuberculosis and AIDS. The Ford Foundation, through a variety of grants used as building blocks, has helped create or develop the fields of population research, community health, micro finance, public interest litigation, and management education. NORAD, SIDA, CIDA and other bilateral donors have helped to

bring environment into public consciousness by supporting action and research conducted by organizations like CSE, New Delhi. Social science and humanities research outside the university system is typically a much neglected area because few donors the need for good quality research to backstop action. Ford

appreciate

Foundation has been one of the few donors who has encouraged

social science and humanities research through NGOs and non-profit institutions to further the development discourse in fields as varied as policy formulation, Panchayati Raj and Indian philanthropy. It is also to its credit that it gave support to initiatives in culture, a much under-funded area, because it saw development in a holistic perspective, recognizing that economic development is conditioned

by a nation’s cultural development and vice versa. Though far from adequate in terms of outreach or scope, donors have also attempted to build NGO capacity in a variety of areas, from organizational development to disaster management and resource mobilization.

Effect on Indian Donors The effect of foreign aid on Indian philanthropy in the early years was adverse. The inflow of foreign funds from the 1960s onwards absolved local philanthropy from taking responsibility for local development. Because of the greater ease with which external funds could be accessed, it also prevented NGOs from making efforts to seek local resources. But post-1990, it can be said to have had a limited beneficial effect in improving the practice of Indian philanthropy, if not its quantity. Some Indian foundations have begun to emulate foreign donor practices. Some of the leading Indian foundations like the Tata Trusts, and especially some of the newer trusts set up by companies and wealthy families, such as the Sehgal Foundation, Nand and Jeet Khemka Foundation, the Srinivas Services Trust, and the Arghyam Foundation, among others, have adopted approaches similar to those of foreign donors in grant making for development, though the bulk of Indian trusts remain untouched. However, few donors, on their own admission, have done much to directly encourage the development of indigenous philanthropy. Except for occasionally organizing some fund-raising workshops to teach NGOs new fund-raising techniques and supporting NGOs to attend them, little else was done to systematically promote indigenous philanthropy. That indigenous philanthropy has revived in recent years is fortuitous, and not due to foreign donor efforts (Sundar 2006b).

Global Connections Overall, the aid system has provided for a two-way flow of ideas. Indian civil society has not only received aid and ideas from donors but has also contributed significantly to development philosophies, strategies and practices that can be adopted by other countries round the globe. As noticed in Chapter 2, many Indian individuals and NGOs are now internationally acknowledged for their and the intellectual capital they have supplied, thanks to the dissemination of their ideas worldwide through the aid channel (Mahajan and Parthasarathy 2005: 3). International connections and funding support have enabled NGOs to build partnerships with counterparts elsewhere in the world. CIDA, DIFID and some other bilateral donors have resources to NGOs, partly through NGOs in their own This has helped build partnerships between NGOs in the donor

innovations

transferred country.

countries and Indian NGOs that go beyond financial support to strengthen people to people ties. Unfortunately, the relationships tend

to diminish fairly rapidly on project completion since money, effort and institutional mechanisms are needed to continue professional relationships. Through such support and connections foreign donors have

strengthened NGOs’ self-confidence that they have a legitimate and important role to play in a democratic society and in the world, and have enabled NGOs to find a place at the global table and to have an independent voice in international affairs.

On the whole, though it is difficult to separate the contributions of foreign donors (who are only one of the actors in the development process) from that of the others, foreign donors can certainly be said to have made a positive contribution to shaping the voluntary sector.

The Bad News In spite of the many achievements to its credit the aid copybook has several blots. To sum up the deficits at a macro level, aid is driven by geopolitical and commercial objectives rather than rights and needs of poor people, and it has failed to target aid at the poorest

countries. In India and elsewhere, it has led to runaway spending on overpriced technical assistance from international consultants, in the initial years. Further, it is tied to purchases from donor

especially countries; has cumbersome and badly coordinated planning, implementation, monitoring and reporting requirements; and, excessive

administrative costs. Donors are not always accountable or transparent, they break

commitments of aid pledged and impose their own agendas on

recipients so that country ownership of these agendas is mere fiction

(ActionAid International 2005). To this long list one can add a few more. For instance, aid increases disparities, leads to inappropriate technological choices and promotes a development pattern that is

neither in the interest of the recipient country as a whole nor (Khosla 1992b). While the capacity of individual NGOs and the sector, especially

sustainable in management of development, has undoubtedly been enhanced

by aid, sustainability of NGOs and their interventions continues to be in doubt. Many NGOs would face a collapse, need to downsize drastically, or turn to the market if aid was withdrawn.

In the initial years, because of a lack of confidence and maturity, the sector was more vulnerable to foreign pressures than it is today. It is undeniable that political agendas were at play and NGOs were wittingly and unwittingly used to win the power game. Partly this was due to diffidence, a hangover from colonial days, and partly due to their financial dependence. It is also undeniable that some NGOs have used foreign funds for religious purposes. Fortunately, the sheer size of the country, the insignificance of external assistance relative to this size and need, government policies, strong indigenous roots of the voluntary sector in either the Gandhian or Leftist all ensured that the adverse effects of the political or religious agendas were not deeply felt, unlike in some other developing With growing self-confidence, maturity and development of plural sources of funds, the sector is not so easily swayed by external rhetoric now. The various adverse impacts are described in more detail under four main heads: creation of a deep divide in the sector between donor funded and non-funded NGOs; introduction of inefficiencies due to donor practices; loss of social and political activism due to institutionalization of the sector; and, an erosion in the values and culture of the sector.

traditions, countries.

Creation of a Divide Though donors have their own justifications for the way their funds are allocated, foreign contributions have created a deep cleavage in the voluntary sector between the smaller, more rural or provincial, and less well funded NGOs which depend on local charity, and the more prosperous, more sophisticated, and mostly urban and metro based ones, many of them funded by foreign donors. This divide can be said to parallel the divide between Bharat and India, the former being the rural and poor India and the latter the prosperous, urban and ‘Shining’ India. The funded organizations are modern talking the same language of projects, appraisals, core monitoring and evaluation as the donors and following the same systems and procedures, while the vast bulk of the NGOs continue to function in an ad hoc, informal manner.

organizations funding,

Among the foreign funded NGOs themselves there exists the

elite among NGOs, with a few large NGOs at the top of the pyramid receiving substantial contributions and the bulk receiving small amounts, as can be seen from Figure 10.1.

Figure 10. 1 NGOs Classified According to Size of Foreign Contribution, 2006–7

Note: The percentages relate to total number of reporting associations, and not to

those who actually received the contributions, or to registered associations.

Most of the well-known names in the sector have been funded and in fact have been enabled to become leaders in the field by receiving money and other assistance from multiple foreign donors. Success has attracted more funds. The divide is characterized by more than differences in incomes or sources of income. What troubles many is that the NGOs of Bharat are driven by the spirit of voluntarism and NGOs of India seem driven more by professionalism, and less by passion, idealism or ideology. Lysa John, co-ordinator of Vada Na Todo Abhiyan, a movement for better governance and accountability to people, feels that if the situation is to improve, organizational politics and ethics must be right, as also priorities. The divide should be in terms of legitimacy and not in terms of money or elitism due to money. The same effect may be there with government funding which recognizes some NGOs and not others, but the effect is sharper with foreign funds because of their larger size and nature. The tensions are created by the fact that an organization’s worth is measured only by whether they are recognized by or consulted by government or foreign donors and not by the direct feedback from the constituency served.6 6 Interview with Lysa John, co-ordinator of the Vada Na Todo Abhiyan, Delhi, 16 July 2006.

Consequently, it has created a situation of envy and petty

jealousies within the sector with NGOs unwilling to share not only information about their funding or funders with others, but also other kinds of information in case others get ahead in the race.

Inefficiencies Due to Donor Practice There is too much money running after too few good organizations leading to over-funding of an organization or a few organizations. This has led to leakages, sloppy management and high cost, and unsustainable patterns of operation in the sector. As they are competing for a relatively small pool of good NGOs,

donors tend to ignore warning signs of lack of capacity, quality or integrity among recipients. Sometimes a donor gives more money than is really needed or wanted by potential grantees without a proper analysis of institutional capacity. Original proposals submitted by NGOs get inflated several times partly because budgets have to be spent and spent within a certain time period, and partly because it inflates the ego of a PO to show big ticket grants in his/her portfolio. When funds are in excess of need and grantees and donor agency staff are judged and rewarded by how quickly they spend the money, rather than how economically they manage their affairs, there is a tendency to misuse money by deviating from agreed norms and to undertake unnecessary extravagant expenditure. NGOs who receive foreign money create a culture of affluence in which goods and services are not costed at par for the sector as a whole, and little consideration is given to organizational in a context where there would be no aid. It is reported that in Orissa, one of the most impoverished states in India, the easy of funds has led to NGOs being the largest users of tourist taxis and air travel. Making funds available to the people without proper political orientation is an invitation to conspicuous consumption (Bhat et al. 1999: 115). In some pockets like Delhi, where most of the donor organizations are located, NGOs face a situation of inflated rents and staff salaries partly because funded NGOs have created little islands in the larger sea of slim budgets. There is a hierarchy in development circles, with foreign donor organizations at the top paying handsomely and attracting the best talent, followed by those who receive large foreign funds. Salaries have spiralled and there is a constant movement from smaller and poorer NGOs to the better known and better funded,

sustainability availability

making it difficult for NGOs to attract and retain good staff. The situation is reportedly not so bad in Mumbai or the south. The salary structure of foreign-funded NGOs distorts the local reward structure in the sector and is also unsustainable in the long

run. Because of the advantage conferred on Indian NGOs by the favourable rupee-dollar parity, NGOs with foreign grants are able to pay better than others. The difference in salaries between funded and non-funded NGOs, and especially between urban and rural

NGOs, can be considerable and can affect the quality of civil society and its work. Setting standards and styles of operation which cannot be sustained without further grants creates false dependencies 7 and also leads to

adoption of half-baked ideas, which do not take long to flop. While agreeing that operating costs, especially staff costs, have

gone up, some NGO leaders argue that that this is not the effect of foreign funding alone. Equally, it is the effect of globalization and

competition with the media and private sector.8 Others see the problem of salaries as not of size per se, but as one of inequities in remunerations between foreign-funded NGOs and the others. Another aspect of too few NGOs with capacity to absorb foreign

grants and too much aid money in circulation is that the money gets diverted to hiring consultants. International consultants are as integral a part of the aid chain as NGOs and donors. In the early days of aid in particular, there was heavy spending on international

consultants by most donors, and disaster aid in particular was an income generating opportunity to Northern citizens, with a great deal of money spent in purchasing the expertise that Americans and Europeans provided. 9 Fortunately the situation in India today is not as acute as it continues to be in some of the African countries, where an African refugee is reported to have ruefully asked, ‘Why does every US dollar come with twenty Americans attached to it?’ 10 7 Interview with Anmol Velani, Director, India Foundation for the Arts, Bangalore, 14 September 2006. 8 Interview with Sunita Narain, Director, CSE, Delhi, 12 September 2006. 9 In a follow up study to its 2005 study, the South Africa unit of ActionAid International released a report in July 2006 called ‘Real Aid 2’. The Report came down heavily on the heavy spending on international consultants by donor agencies. ‘Real Aid 2’ estimates that just under half of all aid is phantom aid due to such unnecessary spending. 10 Quoted in Hancock (1989: 7).

Such high payments to expatriates cause resentment among

counterparts and the public in recipient countries. What’s worse is that

the aid regime creates false experts, whether Indian or foreign, and many of these advisors fail to deliver lasting benefits, or offer inappropriate advice. In India, while expatriate consultants are fewer now, their place has been taken by local consultants, hired by foreign donors at rates higher than average for the sector, effectively putting them out of reach of non-aided NGOs. Several NGOs feel that though there are honourable exceptions, the donor practice of using consultants for several tasks is not only wasteful but also inimical to development in the sector because consultants have no long-term interest in a community or organization, and they should not be the ones who make the decisions as to whether a certain kind of support is required and what priority it should have. The decision should be left to the field. But generally, they say, donors listen more to the consultants who are more articulate and from a peer background (Bhat et al. 1999: 225). The higher operating costs due to some of the above factors means that NGOs are perhaps no longer as cost effective compared to programmes, as they were earlier presumed to be. In some NGO programmes and organizations there is too little output to inputs (Roubos 2006b: 8–9). If Rajiv Gandhi famously lamented that only 15 paise of the developmental rupee reached the targeted beneficiaries due to high transaction costs in government, the case of NGOs is said to be not so different now because their own overheads and administrative costs are substantial. 11 The stopgo, chop and change behaviour and changing priorities of donors also leads to stalled projects, lost momentum, and even infructuous investments, which in the end add up as costs to society. The more volatile the aid the less effective it is. The rich learning that should have happened after half a century of foreign aid has not happened to the extent it should have, for many reasons. As a donor representative candidly admitted,

government compared

The so called development sector is not much into development of its own. It remains rather dormant and stagnant. Criticism — either

11 Ramchandran (1998) quoted in Jayaram (2005).

from outside or inner circles — is never very much welcomed, the own role is over-stressed and critical reflection on achievements, and efficiency are almost absent. In general the sector is not

relevance

strong in terms of its own learning. Strangely enough, this does apply both to the receiving partners (NGOs) as to the giving end (donors).

(Roubos 2006b)

Donors’ short-run needs for data about money, operations and

immediate outputs discourage learning about long-term purposes.

Monitoring and evaluations have become exercises in controlling proper use of donor resources and not mechanisms for learning from previous mistakes and experience in order to respond more effectively to the changing needs of the people. In NGOs there is typically a high turnover of staff, which drains the institutional

memory. Finally, incentives usually reward spending and action rather

than inquiry, reflection and prudent management of resources. The inability to learn from past experience is a systemic problem both

in aid chains as well as with recipient organizations, as each tries to cover up causes of failure, since jobs, future funding or career depend on success not failure. Success stories are publicized, failures brushed under the carpet. This is but one of the symptoms

prospects

of the process of institutionalization of the sector which has been

strengthened by foreign aid.

Institutionalization The move towards institutionalization received a fillip when, after

the 1980s, donor agencies increasingly preferred partnerships with NGOs to sending expensive expatriate experts to the field and

setting up field offices. They began funding NGOs to take up development work. Institutionalization was actively encouraged because

of legal requirements for giving funds, the need to audit funds for accountability, and because an enduring institutional presence was necessary for a long-term relationship. Most of the social work and relief operations became professional voluntary organizations for

service delivery. What started as movements or informal groups became

formalized organizations once funding was assured (Samuel 2000b). By itself institutionalization is not bad. When NGOs move from

being informal popular movements to adopting formal legal and organizational structures, it leads to permanence of their work. It should also lead to more efficient functioning as well as better

financial accountability, but does not always. As they grow, there is a tendency for NGOs to become more flabby, less innovative and

creative. They settle into a ‘zone of comfort’, and internal overshadow their innovative and critical role (Roubos 2006b, Tendler 1982). Though some NGOs continue to do pioneering work, a

interests

majority of them engage in routine work. But more importantly, as

they become more organized they become more pragmatic, less fluid and less radical as social activists. In raising and managing money; organizing and managing large numbers of staff, they begin to

replicate not just the ways of functioning but also the forms of organization

of government or corporate agencies (Béteille 2000: 66–71). This means that while there has been a gain of operational effectiveness it has brought with it a constant need to raise funds for their own existence and increased their dependency on their donors, whether

government or foreign agencies. This has had several adverse effects. The need to secure funds and retain donors has led to the of upward accountability to donors as NGOs seek to keep

emergence

them happy, rather than a downward and lateral accountability to

the beneficiary constituencies and peer organizations. Accountability has come to be equated with ‘accountancy’ and legal compliance, because of tighter donor controls on use of funds, rather than a commitment to their own constituencies to fulfil promises.12 being accountable to donors has not meant that NGOs are compliant with legal requirements. As of 31 March 2006, 32,144 associations were registered with the FCRA authorities and 513 were

Unfortunately,

granted prior permission, but only 18,570 associations or 56 per

cent reported receipt of foreign contribution (including those which received NIL amount). Among the non-reporting organizations are well-known organizations and institutions, and hundreds of concerns receiving money for HIV AIDS. In 2006, 35 NGOs were banned from

taking foreign funds for reasons ranging from diversion of funds for anti-national activities, and for purposes other than stated in their charter, to misuse for personal gain (Vij-Verma 2006: 34–36). Upward accountability has also meant NGOs do not take stands

on local issues and problems because their funding is secure, unlike political parties who have to nurture their local constituencies in

12 Fowler (2000a) and others.

order to win elections. Traditionally, people’s movements were selfreliant in that they had to raise their own resources and were led by representatives from among the people to whom they were But NGOs funded by foreign aid are led by paid staff. They are not accountable to the people and cannot be removed by them; they are also free to act without regard for people’s opinions. They focus instead on keeping their funders happy because it is easier for them to convince donors about their work, rather than the local people who have better knowledge of actual conditions. They have thus become more intimately linked to the aid system than to their own society. 13 Such upward accountability, by divorcing NGOs from their roots, damages the fabric of civil society.There are also issues of legitimacy — whose interests do the NGOs represent? Legitimacy implies that an organization is authentic and is justified in its actions, and is empowered by its constituencies to represent them. The NGO advantage over government operations stems from the fact that NGOs are small and close to their constituencies at the ground and can call forth popular participation in development projects because they are representative. However, Biswas (2006) and others claim that many NGOs are not especially democratic or representative. In general, their board and staff members are not drawn from the constituency for which they tend to work. Rather, they are by and large of higher class or higher caste origin. It is also argued that though NGOs talk of partnerships and participatory processes they do not always genuinely respond to grass-roots demands and instead pursue their own agendas, decided in consultation with the donors on whom they depend for funds. NGO staff lower than the top management grouse that NGOs do not always practice what they preach in terms of gender equality, or action in favour of the socially excluded; and that there is autocratic leadership and non-democratic functioning. Nor are they equitable in their distribution of benefits.14 Once NGOs lose touch with the grass roots, ‘loyalty yields to opportunism, shifting towards whoever holds the purse strings. Activities start being programmed and implemented in hasty,

accountable.

affirmative

13 This is a view expressed by many analysts, for example, Biswas (2006), Bunker Roy (1988, 1996), Murthy and Rao (1997), and Lysa John, Co-ordinator, Vada Na Todo Piya Abhiyan. 14 See footnote 13.

superficial response to funding opportunity’, at the cost of

sustainability (Eberhard 2001: 18–20). It appears that the dependency

on foreign rather than indigenous funding may have prevented or weakened the emergence of a real civil society and contributed to a disempowering of popular organizations. P. Sainath, a seasoned development journalist who has documented grass-roots development in his writings, believes that the sector has got romanticized, and NGOs have become a sacred cow which the media in particular worships, ignoring its weaknesses. The media accepts unquestioningly the role of NGOs as spokespersons for the poor, though, in fact, a majority of NGOs are deeply integrated with the establishment, with the government, and with the agenda of their funding bodies. While governments have to face the people at least every five years, the NGO is accountable only to its funding agency (Sainath 1992: 432).

extensively

But perhaps the most tellingly adverse effect on the voluntary

sector of ‘institutionalization’ has been the loss of political and social activism by NGOs. Inevitably, with greater formalization the voluntary sector came to lose some of its radical struggle aspect so essential for altering the dominant politics and power structures in society.15 In their desire to counter the operational inefficiency of with better technological and managerial solutions, both donors and NGOs became apolitical. The emphasis was on need-based, costeffective operations, ethical professionalism and least on changing the social status quo. Donor funds, especially since the 1990s, have been made available for a variety of development initiatives such as watershed development, joint forest management, or AIDS but not for issue-based struggles such as rights to land, just and equal wages, and the public distribution system. Therefore, NGOs have tended to concentrate on the former type of issues to the of the latter. Many of the newer development activities such as water harvesting focus more on the techno-managerial aspects rather than those of class and power structures.

government

prevention,

exclusion

Secondly, because funding has been available for particular

issues such as income generation for the landless, or microcredit for

15 This has been remarked on by many authors, among them Biswas (2006), Raghuram (1999b) and Samuel (2000b).

women, it has tended to compartmentalize and depoliticize social relations. For instance, although the new dialogue talks of gender

and development, it treats this as distinct from the use of the term gender as used by the women’s movement in the sense of unequal power relations between man and woman. NGOs and donor agencies tend to look at gender in terms of who performs what roles in any

specific development task, and how to take these into account in planning for project efficiency and effectiveness, but without this into concerns about relative power. Separate NGOs

integrating

are funded for dealing with questions of gender such as domestic

violence, discrimination in work practices and so on. Similarly, the interest in Dalit issues is more in terms of numbers — how many beneficiaries, affirmative action in organizations and so on, rather

target

than on the relationships between Dalits and non-Dalits (Murthy

and Rao 1997). The concern with the latter has been addressed by donors, if at all, separately through support for research or writing on Dalit issues. The problem of poverty has thus been converted to a technical or

managerial one, diverting attention from the political economy of poverty. The legitimization and adoption of this paradigm as the dominant development discourse foreclosed the option of

integrating the ethical and political perspective within the institutional expression of social action (Murthy and Rao 1997, Samuel 2000b).

This apolitical approach was made possible by the convergence of the interest of the government with well meaning middle-class professionals and international aid organizations who were similarly

dominated by apolitical middle-class professionals. There was a compatibility of communication and perspectives, language, attitude, ideology, and approach — pragmatic and managerial — between the NGO leaders, senior bureaucrats in government and aid donors.

Because foreign donors and NGOs need government permission for transfer of funds, they were discouraged by government from intervening in the political processes at the macro (state or national) level, though both the government and donor agencies allowed NGOs

to indirectly engage in a certain amount of political intervention at the micro level of local self-governance in their empowerment work. Samuel rightly observes that this paradox nullifies the transformative potentials of the social action agencies to change the dominating

power structures that control the state (Samuel 2000b: 16).

This depoliticization of social action and fear of disturbing the social status quo was also tied up with the desire of NGOs to retain

not only foreign contributions, but also their tax exempt status and ability to attract domestic funds. Only those NGOs who did not care for these and preferred a more explicit political stance stayed away from foreign money.

Loss of social activism is also the result to some extent of the increased numbers of professionals — MBAs, agricultural scientists, etc. — in the sector, who would have otherwise joined the corporate or government sector. Many of these gravitate to the foreign-funded

NGOs, rather than to non-funded social-political groupings. It is in the institutional context of these foreign-funded NGOs that they learn their skills in advocacy and focus on one or two aspects of social problems, but without seeing the larger political context of

the problem, since foreign funding by its very nature, and the under which it is allowed to operate, precludes engagement in political activity of any sort.

conditions

No doubt these professionals have brought some competence to

the technical and managerial problems encountered in development, but many of the problems associated with development are not techno-managerial in nature but socio-political, and the new

professionals have not been able to contribute so effectively to these. Differences in lifestyles and worldviews have led to tensions between the new professionals and old activists with long experience in the field (Murthy and Rao 1997). This is part of the larger problem of human resource management in the voluntary sector, an area badly

neglected so far. Finally, the separation of the functions of action at the grass roots and support and advocacy at a higher level with different

organizations performing them has also contributed to a general decrease in

social activism. Frequently, the support and advocacy organizations function from the national or state capitals and are divorced from ground realities. Moreover, it means that the poor or dispossessed are not themselves advocating their own concerns.

There have been a few attempts in the last two to three decades at political statements against the divisive policies of the government in power by some NGOs who also accepted foreign money. But the attempts soon called forth a reaction from the government and

put an end to further such attempts. In 1999 the FCRA authorities

served a notice on NGOs party to the sponsorship of a newspaper advertisement criticizing the BJP’s position on women’s issues. The loss of social activism on the part of funded NGOs highlights

one of the dilemmas donors face: if they do support radical they come into disfavour with government and are also accused of interfering in sensitive internal matters best left to society itself. If they don’t, they are accused of being managerial in outlook and status quoists to boot, especially by their critics at home. Perhaps the only way this can be resolved is by both NGOs and donors recognizing that the comparative advantage of foreign funding lies with non-political activity. Those who wish to be more activist must depend on indigenous funds, and indigenous donors must be prepared to fund more activist NGOs than they have done so far. However, this division of functions will not solve but may deepen the BharatIndia divide in the sector, as mentioned earlier.

activism

Effect on the Culture and Values of the Sector Religion in the 19th century was followed by Western liberal Gandhian and Leftist ideologies as the driving force behind voluntarism soon after Independence. The dominant motive later changed to enlightened self-interest, born of knowledge that unless poverty and inequalities are reduced, violence and discrimination controlled, and the environment protected, the future for the human race everywhere will be bleak. This change in motive force has changed the look and outlook of voluntarism. Some believe that it is for the worse. In the early years of Independence those who were drawn to action to improve the lot of the disadvantaged were powered by altruism and concern for fellow human beings and believed that their living and working styles must be in conformity with their constituencies. This is not uniformly so today. While some are moved by a secular liberal ethic of concern for fellow beings, rather than religious belief or ideology, a large number, professionals and non-professionals alike, have moved into the voluntary sector merely because there is rampant unemployment and they need a job. Hence the earlier dedication is not always there and most charitable organizations are in a constant state of flux, with people moving in and out in search of better prospects. It is alleged, even by those in the sector, that NGOs have become self-serving, have lost their raison d’être and independence and are working merely as subcontractors

humanism,

voluntary

and implementing agencies either for corporations to fulfil their social responsibility, or for government or foreign donors. Several critics lay the blame for this state of affairs at the door of foreign aid though they admit that it is not the sole cause. They claim that aid has romanticized poverty that is often discussed in five star hotels thanks to liberal foreign funding. Leading the charge is Bunker Roy, founder of the Social Work and Research Centre and the Barefoot College at Tilonia in Rajasthan. He believes that with too much money coming in and no self-discipline or public the spirit of voluntarism is being destroyed. In an open letter to the home minister in 1996, Roy wanted an amendment of the FCRA to prevent misuse of funds and to bring some transparency into NGO working. He wanted the FCRA tightened as well as amended to plug the loopholes that permit the big recipients to get away with misuse while genuine small groups suffer. They are at the mercy of policemen who have no idea of the type of work done by voluntary groups, and also cannot afford lawyers and accountants to protect them. They are fighting bonded labour, non-payment of minimum wages, untouchability and the like, and therefore face both the wrath of local vested interests and persecution under FCRA while the richer funded groups who do ‘irrelevant work such as (whatever that means), training, (non) participatory research and producing glossy reports, studies and newsletters no one reads go scot free’ (Roy 1996: 3161–62). He also came down heavily on the self-indulgence that had crept into the sector due to large grants being made to a few organizations. He alleged that NGOs have built little empires and enjoy lifestyles and salaries comparable to those of senior company executives in multinationals and government officials. More than 90 per cent of the groups, according to Roy, are totally dependent on foreign funds, have no other source of income and have not raised any money from within the country. Stretched far beyond their means because easy foreign money is available they have become institutionalized, and incapable of innovation. According to him: ‘If poverty was big business in the 1980s, volunteerism is big business in the 1990s with every nongazetted officer starting an NGO’ (ibid.: 3161). Roy further claims that ‘the voluntary groups have been splintered, they have lost their idealism and identity, they have compromised their values, their simplicity and their integrity all because too much foreign money is available too easily’ (ibid.).

accountability

advocacy

inflexible

Some dismiss Roy’s charges as an instance of double speak since his NGO has also received foreign funds. Others believe that to foreign aid stems from rivalry and envy of the haves by the have-nots. Still others feel that such arguments are obsolete and that what the sector needs today are not low salaries and austere lifestyles, but competitive compensation to attract the best professional skills, and, above all, changed mindsets that adopt the best that the market has to offer for bringing about social change. Though Roy’s statement about high salaries and affluent living made possible because of foreign grants highly exaggerates the his point is less about these and more about easy and excessive money in a few hands, lack of transparency and accountability, especially to the grass-roots constituencies, and an erosion in the cultural values of the sector which has held simplicity, even austerity, and self-reliance as cardinal virtues. And here, though they may be less caustic or provocative than Roy, there are many who agree with him. They claim that today’s NGOs have no sense of their own history and of how money was raised from within the country for all the causes important to society at the time, even big projects like the Benaras Hindu University. If they had, they would not be running after foreign funds especially those in Delhi where most big NGOs have executives who are well off, live comfortable lives, have big offices, and are cut off from the grass roots. 16 The irony is that many of those who make these allegations have themselves enjoyed foreign aid at some point of their career.

objection

reality,

The anti-foreign money tirade of Roy and other critics of foreign

aid raises a more fundamental question which goes beyond whether foreign money enables an NGO executive to live well. It is a question that the voluntary sector needs to confront squarely. Is essentially about purely voluntary work with austere lifestyles, whether or not it makes a significant difference to the problem to be solved? Or, is it about dedication and commitment and adherence to certain values like human dignity, freedom of expression and religion, social justice and gender equality irrespective of the source of funds and the salary and lifestyles enjoyed by those who work in the sector?

voluntarism

16 Interview with Alok Mukhopadhya, Chief Executive, VHAI, New Delhi, 7 September 2006.

Roy, and those who think like him, represent one end of the

spectrum in the voluntary sector today arguing for a return to traditional

values. At the other end are those who argue for moving with the times. This last includes not only the generation of professionals who came into the sector in the 1980s and 1990s and younger who have gravitated to the sector in encouragingly larger numbers in recent years, motivated by a higher ethic, but also some Gandhians. For instance, Loganathan, the founder of ASSEFA in Tamil Nadu, who has been described as a pragmatic Gandhian, is willing to experiment with new business opportunities and methods for the sake of progress.17 This last group no longer consider self-abnegation and sacrifice to be the hallmarks of voluntary action. They rightly believe that development work requires the best and not the least expertise to solve problems that are more intractable than those faced by business. To attract this talent even a voluntary organization must pay well enough, and those who live and work in backward rural areas adequate compensation to attract talent. They also argue that drawing a decent salary and even living in a city does not necessarily mean a lack of commitment. Efficient performance in today’s world depends on using good technology for better communication and using the most efficient means of transport. It is no longer possible for voluntary organizations to depend purely on unpaid volunteers. Moreover, many a time NGOs need to hire top notch doctors, lawyers, engineers and communicators to challenge corporations, or international organizations (for instance, the campaigns against soft drink companies), WTO issues, World Bank projects, etc. For this money and expertise are needed. True, but there is nothing to prevent those who believe this to make the effort to find money internally as well as from aid sources. It also cannot be denied that some unhealthy self-indulgence has crept in with corporate practices such as retreats and conferences in five star hotels and fancy folders and lavish food at seminars and conferences becoming a norm in urban areas. If organizations are to be sustainable after withdrawal of foreign funding, then support from local communities will depend on their perception of how an

professionals

managerial

deserve

government

17 So described by a participant at the conference ‘Are We Really Catalysing Change?’ organized by Arghyam Foundation, Bangalore, 28 June 2008.

NGO uses donated funds, and rightly or wrongly the public still believes that ‘voluntary organizations’ should not be corporate bodies. While project vehicles are necessary in many cases to reach inaccessible places in the shortest possible time, use of luxury hotels and resorts for meetings and conferences on poverty, and frequent foreign travel, though justified on some other grounds, jar on the public and attract negative publicity. It is likely to result in a denial of public support for the NGO seen to be indulging in wasteful expenditure, and also for the sector as a whole. If at least the from the NGO’s working are obvious then it will matter less than if the benefits are not immediately obvious. Then a hostile public reaction cannot be ruled out. Non-ostentatious lifestyles are a prerequisite for legitimacy regardless of the salaries and perks paid to NGO staff. Whether the present less than austere life and work styles an erosion of values can be contested, but there are other areas where there is less disagreement. One such is the charge that it has spawned a culture of expecting freebies. When they have to pay or invest some of their own funds for acquiring any professional services, such as those of fund-raisers or communication specialists, NGOs hesitate (Bhat et al. 1999: 139). Development funding, both government and foreign, has also had the unfortunate effect of the propensity for self-help. Shramdaan, earlier an intrinsic part of voluntary action, has become a token gesture. Beneficiaries know that their inability to contribute will not stop the project’s implementation. Other groups not served by NGOs or other aid programmes, in turn suspend possible self-help efforts in of arrival of outside help. This is not particularly the case only with foreign funding but is certainly one of the effects on society of getting resources external to the community. It leads to a vicious circle — no genuine self-help component = no sense of ownership = no sustainability = more dependency.

benefits

indicate

suffocating

expectation

Another unfortunate consequence of foreign funding on which

there is much agreement is that NGOs have learnt to dissemble and make excessive claims of success, leading to a crisis of credibility. Both NGOs and donors hype their achievements beyond reality and hide their failures. Both donors and NGOs need each other. Donors have power over NGOs because they have the money but NGOs also know donors cannot achieve their missions without them. So both collude in a game to portray success, without there being any

true accountability, either to the beneficiaries, or to their own Boards. The culture within the aid chain, from donor to NGO, is not to admit or talk about mistakes, bad funding decisions, or bad donor openly, but to sweep the failures under the carpet. There is a conspiracy and a victimization of the whistleblowers.18 Image building and image management have become more important than making a real impact on the ground. Foreign donors tend to project a positive image of their work and the projects they support in developing countries, in order to raise money from their constituencies; and NGOs do the same to ensure continued funding from donors. Nobody will reward a failure, even though it may be inevitable and a valuable learning experience. In order to continue to get funds from their own governments, INGOs have to continually show that NGOs are in fact the better alternative to developing bureaucracies. Consequently, NGOs have come to spend more on media relations, advertising and lobbying in order to gain a higher profile for themselves so as to attract more resources. Other NGOs are afraid to speak out against the poor practices in the sector for fear of rocking the boat and having their funds stopped. Admittedly, competition for resources in a tight funding situation is one reason for this phenomenon. Since the probability of receiving future funding from the grantor would be diminished by candour, there is a tendency on the part of grantees to exaggerate the of a project or the success or outcomes of the project claiming, for instance, that they are pioneering a new approach when they are merely reinventing the wheel.19 Sutton Francis, working on a history of the Ford Foundation, calls this tendency to exaggerate a ‘conspiracy of optimism’ arising from a desire to achieve something important on the part of the donor and on the part of the grantee who wants to please the donor.20 Many of the claims of both NGOs and donors have been contested by evaluations.21

practices

country

importance

18 Tuan (2004), Tvedt (1998); Ajay Mehta, personal communication. 19 Tendler (1987) quoted in Chandra (2001: 288). 20 Sutton quoted in Hooker (1987). 21 Chandra (2001) quotes an Ellis/Gorman study (1984), which found 40 per cent of the 19 projects studied to be borderline or unsatisfactory in terms of their objectives. Similarly, the Netherlands and FINNIDA evaluations point to a lack of success with income generating projects (from OECD 1988: 19 quoted in Chandra 2001).

In some ways, the older Indian model of philanthropy, termed the operating foundation model, where the donor took a direct interest in initiating and running a project is better than the grant-making model because it keeps the donor in touch with reality and with the ultimate recipients, so doing away with the need for the hype. This culture of dissembling, of hyping achievements and failures, of wanting free lunches, of being concerned more with image than substance has a harmful effect on the moral values of the recipients of philanthropy and then by extension to the moral fibre of society. While this may be acceptable in the market sphere, it is not appropriate in the social arena represented by civil society and because their purpose is to improve the world in all its aspects. This purpose cannot be accomplished if the agencies themselves do not exemplify the highest ideals and values (Hooker 1987). There is anguish in sections of the voluntary sector that the of institutional values is leading to a weakening of solidarity; to self-interest having the edge over social, other-oriented goals; to a recession of the principles of trusteeship; and, that the jargon of authenticity is replacing sincere development efforts to reduce Mutually beneficial purposes are being replaced by interventions that destroy the informed and democratic choices of communities; humanism is emphasized less than efficiency, and voluntary action is viewed purely as a profession, shorn of its ethical dimensions or humanist considerations (Raghuram 1999b). According to Shobha Raghuram, who has seen voluntarism from within donor organizations as well as NGOs, aid can be a hydra headed monster, destroying not only the recipients’ culture but also that of donor organizations. According to her, the culture of aid giving institutions is undergoing drastic changes for the worse, by opportunism, protection of turf, privatization of social action, the ‘transnationalization’ of aid, and the mergers of small aid organizations. Under pressure to reduce staff due to budget cuts, aid agencies see a parallel development to that being seen in the service sector at large, viz. outsourcing of its thinking to outside consultants who have no organizational loyalties or long-term interests in the aid process, and can be likened to mercenaries offering services for hire. This army of consultants is increasing and there is less and less social thinking being done by those who also act at the grass roots and derive their insights from such experience. The management of aid takes up a major portion of the time of donor staff, leaving

disguising

philanthropy

erosion

inequalities. instrumentalist

characterized

them less time for substantive discussions and to offer intellectual leadership on social issues, that is to be at the cutting edge of which is what NGOs used to look for, apart from financial resources (ibid.).

thinking IMPACT ON SOCIETY

The impact of aid on the voluntary sector goes beyond it to an impact on the wider society. As before there is good news and bad.

Benefits In the 1970s and 1980s, many humanitarian INGOs and others helped create social assets in the form of hospitals, schools and centres, especially in rural areas or small towns, though after 1990 fewer donors have given grants for capital expenditure. While the poorest or the most disadvantaged have benefited marginally from India’s growth, external aid has provided specific resources for this segment of Indian society. Though nowhere as as needed, at least it served to focus attention on their plight (Saxena 2003, Sethi 2003, Tandon 2003). Children and women in particular can be said to have benefited from the importance given by aid to their problems. The donor insistence on reservations and quotas for women in every group and committee in supported projects, keeping and monitoring of gender disaggregated data, and skills training programmes specifically for women has brought women into the mainstream development process. DANIDA’s support of the agricultural development programme targeted at women in agriculture strengthened women’s leadership at the grass roots, so that later, of the 400,000 women farmers who benefited from TANWA training, 1,800 women were elected to Panchayats.22 In particular, foreign aid has helped to give a voice to the sections of society, for example, the Dalits and tribals, and to regions such as the north-east that are marginalized in mainstream development, even though, given the size and complexity of India’s problem, it may amount to no more than a drop in the ocean. One instance of how aid has opened windows for Dalits is when four Dalit activists from India were able to take the issue of lack of adequate

training

adequate

invisible

22 George Mathew’s 2005 evaluation of DANIDA’s contributions to India. See Mathew (2005).

affirmative action by the Indian government to a congressional hearing in the US Congress in October 2005. Explaining why he and other Dalit activists were testifying before the Congress, Kancha Ilaiah, head of political science at Osmania University, said, ‘It needs global alliance and global involvement to put pressure on the government to address the problem of Dalit marginalization’ (Rajghatta and Bagchi 2005). The Dalits could aspire to such notice only by virtue of the support given by global networks such as the Dalit Christian Network. Not all will agree that the role of foreign aid in cases such as this

is beneficial for the country. Though the need for Dalit is undisputed, even moderate nationalists argue that it is an undue politicization of internal political problems, made possible by aid’s hegemonic agendas, political, religious and cultural. Would any Western country, it is asked, allow its nationals to take up the issue, say, of Black civil rights and seek intervention from a foreign government? Most governments and even sections of the civil society believe that these are internal issues that should be solved through internal agency, especially when the national government is seized with the issue and local NGOs are in dialogue with the government. Goonatilake (2006) terms such attempts of NGOs getting foreign governments to interfere in a sovereign country with the help of foreign aid as ‘recolonisation’. The Dalit example indicates that the ideological opposition to foreign aid, if any, may be based on class and gender. While intellectuals oppose foreign aid on ideological grounds, Bhat et al., in their 1999 study of withdrawal strategies of donors, found that of their respondents, Dalits and women were clear that they needed foreign funding, which they saw of great benefit. They believe that in the present socio-economic environment they cannot sustain any meaningful empowerment process without external support. They felt that a lot of money was being spent and made in their name but none reaches them. They see no reason why, when the elite are being subsidized in many ways, foreign funding for solidarity of the poorest should not be legitimate only for them. They ask why, if the government of all hues can be trusted to use foreign funds from the World Bank responsibly, should citizens like them not use it well also (Bhat et al. 1999: 285–86)? While donor programmes have undoubtedly served to sensitize government and communities to gender and social inequity issues,

empowerment

middleclass

several evaluations have pointed out that progress in this respect has been uneven. The OXFAM NOVIB evaluation (2007) of its partners’ work, one of the latest of the evaluations, points out that gender and social equity issues are deeply embedded in culture and must be

addressed with a framework that can capture heterogeneous realities and multiple disadvantages (OXFAM NOVIB 2007: 10).

socioeconomic-religious

While the rights and wrongs of using foreign aid for politicizing

Dalit issues may be debated, few in civil society will disagree that advocacy of a different sort has been a definite gain for the country. Though inappropriate development models and policies may have been and continue to be thrust on governments by multilateral donors

such as the World Bank, private foreign aid has enabled NGOs to question and protest the Bank’s lending policies, and to establish that economic reform needs to be tempered by social priorities and political realities (Clark 2002). Since the Bank plays an important

part in the country’s economic policies, the fact that NGOs are able to apply a corrective from the perspective of the poor can definitely be counted as a gain. Without foreign funding Indian NGOs may perhaps not have had the capacity, the clout or the resources to

oppose Bank policies at home and in global fora. The government itself could not and would not have played that role.

Further, not all foreign aid is ill intentioned. Many donor

organizations work in their own countries with constituencies like MNCs

and educate them about responsible corporate practices, and force them to give back to the developing countries some of what they take out by making them responsible for education of exploited children, fair trade practices, etc.

British INGOs like OXFAM and ActionAid, and Dutch NGOs like ICCO, HIVOS and others have campaigned for free trade, protection of biodiversity, more and better quality of aid to poor countries and so on, recognizing that the trade rules and

regulations

are biased in favour of the rich nations and therefore there cannot be fair play in unregulated markets. They have thus opposed distorting priorities such as subsidies by the rich nations. OXFAM for instance provided support to NGOs such as Gene Campaign

for preservation of biodiversity and indigenous rights in traditional knowledge, and to the Centre for Trade and Development for work on trade-related issues. It has also supported radical forums like the WSF even when its own ideology is different, in the interest of

tolerance of diversity.

Unlike the power that bilateral donors exercise over recipient nations, the loyalty and frame of reference of Northern NGOs is not always restricted to their own country. Therefore, at their best they represent a force to counteract regionalization and of the world. The more progressive INGOs are more sensitive to world issues, more loyal to the world community than bilateral aid workers and more activist than foundations in bringing pressure to bear on the formulation of their own government’s development assistance policy and programmes. In an international regime marked by dominance of one group over another, INGOs can and have helped temper the international order with values of pluralism and equality. As they build networks cutting across nations, they build a community of interest even though the distribution of power international and national NGOs is still, and may continue to be, unequal for some time. At the same time it must be pointed out that not all aided NGOs buy into the objectives of the lobbying campaigns. An OXFAM NOVIB evaluation (2007) mentions that some campaigns are seen by the NGO counterparts as brought from the outside, and as being donor driven and donor funded. They lack ownership by the local NGOs and communities affected because the campaign bodies and NGO partners lacked communication to clarify issues, programmes, activities, roles and responsibilities (OXFAM NOVIB 2007: 37). Be this as it may, it is undeniable that many of the achievements of NGOs that have had a beneficial effect on Indian society are due to the funding support received by them from foreign donors. For instance, CSE has forced the government to take action against air pollution through an extensively researched, and campaign funded by a donor. The NGO sector has also been instrumental in promoting human rights, women’s rights, ecology, consumer rights, and sustainable development as priorities in political and policy discourse, and in the mass media in these. As a result, since 1975, a number of progressive policies and legislations in the fields of social justice , human rights, etc. — for example, the Domestic Violence Act, the Dowry Act, the Right to Information Act and the National Rural Employment Guarantee Act — have come into being due to advocacy by social action groups, often funded by foreign donors. One of the major achievements of NGOs is the introduction and use of public interest litigation successfully to achieve the

fragmentation

between

increasing relentless

sensitizing environment,

goals of social and economic justice. The widespread resistance to displacement due to development, unjust mining, and deforestation

have helped to give voice to the poor and resulted in new enactments such as the Tribal Rights Act of 2007, a review of the Narmada Dam, and discussion on an improved rehabilitation policy for the displaced. Public advocacy by Indian NGOs along with global NGOs

has also impacted on environmental action at the global level, as also on aid, trade and intellectual property rights issues, landmines, and governance of global institutions (UNDP et al.). Similarly, by taking an activist stance with the World Bank and

WTO, NGOs have made opportunities for citizen participation in about roads, dams, health care and agricultural development.

decisions

Adverse Effects Alongside the benefits, aid has also had some adverse effects on Indian society. For instance, it has exaggerated the already skewed

distribution of resources, led to some erosion of the responsibility of government for development, and, to some extent, has also on the ability of the elite to question the West and to think

impacted for themselves.

Skewed Distribution of Resources As was obvious from Table 3.4 (Chapter 3, ‘Top 10 Recipient States at Periodic Intervals’), which shows receipt of FCRA aid by states, the distribution of private aid has been very skewed geographically. Aid has not gone to the poorest but to the more developed regions.

Almost all donor organizations, claiming the need to make an impact with limited resources, have chosen to work in a few select regions, though a few work on an all-India canvas. Most

geographical

private aid from 1991–92 to 2004–5 went to the same five states, viz.

Tamil Nadu, Delhi, Andhra Pradesh, Karnataka and Maharashtra. The BIMARU states of Bihar (now bifurcated into Bihar and Jharkhand), Madhya Pradesh, Rajasthan, and Uttar Pradesh, which have the lowest ranks in the human development index, together

received less than 10 per cent of the total foreign contributions. See Table 10.1. Even if Orissa, another major backward state, is added to the BIMARU states, the proportion of the total going to these states

in 2005–6 did not increase beyond 7.3per cent with the six states

12.24

15

11

Uttar Pradesh

145.76

%of

9.19

2.68 0.77 2.26

3.48

total

-

-

15 10

11

8

R

230.01

18.02 70.16

57.81

84.02

Amt

1996-97

8.95

2.73

0.70

2.25

3.27

% of total

-

9

14

8.63

2.95

134.09

392.53

1.15

2.07

2.46

%

52.51

94.01

111.92

11 12

Amt.

R

-

10

12

11

13

R

575.47

69.32 102.45 96.96 128.95

77.11

100.57

Amt.

200S-06

7.3

1.6

1.2

0.87 1.30

0.98

1.2

%

1827.92

90.25

216.46

333.9 191.17 725.6

139.14

131.4

Amt.

14.9

1.7 0.7

5.9

2.7 1.5

1.1

1

%

crores

2006--07

Amount in

Receipt of Foreign Contribution at Select Intervals

2000-01

National

Table 10.1

Tota! Percentage of Receipt to Total

R Rank among other States & Union Territories. Source: Compiled from FCRA Annual Reports.

Total

Meghalaya, Nagaland, Arunachal Pradesh)

Orissa N.E. States (Mizoram,

-

55.15

42.49

8

9

Bihar

Madhya Pradesh Rajasthan

35.88

Amt

Jharkhand

&

1992-93

Rank, Amount

R

BIMARU states

BIMARU States:

together receiving Rs 575.47 crores out of a total of Rs 7,877.57 crores received that year. In 2006–7, however, the amount going to them doubled (14.9 per cent of total) largely due to a seven-fold increase in contributions to Jharkhand, and a five-fold increase in amounts going to Rajasthan. The increases could be due to the conscious policy decision of the secular developmental funders like Plan International, ActionAid, DFID, OXFAM NOVIB, and others to redirect their funding to the poorer states, but it is also likely to be due to the greatly increased funding of religious organizations in these states. So long as the trend is sustained and money goes into purely development activities it is a welcome development. If one looks at the district-wise distribution, then again it is seen that it is the most developed metros and the districts of which they are part that receive the maximum amount of funds. With the exception of Ranchi in 2006–7, the seven districts of Delhi, Chennai, Bangalore, Mumbai, Hyderabad, Kolkata and Anantapur (in Andhra Pradesh) received the bulk of the funds. If the unusual case of 2006–7 is ignored, the skewed distribution of funds lends credence to the charge that foreign donors do not necessarily give funds where they are most needed, and other such as chances of success, better living conditions, etc., come into play. Since the Western and Southern states are better endowed with modern institutions and have traditions of being in the vanguard of social reform many private donors concentrated their aid there. The uneven spread of voluntarism, with good NGOs rather thin on the ground in the states of Bihar and Uttar Pradesh, deters those who want to work with NGOs rather than departments. The exception is church organizations that have given attention and continue to give attention to the tribal belt and poorer areas. The same picture is obtained if one looks at the distribution of bilateral aid till recent times. In the early half of the 1990s, the five states of Gujarat, Maharashtra, Andhra Pradesh, Karnataka, and Tamil Nadu received well over half the amount of aid allocated to individual states. These states are among the most industrialized and developed of the Indian states. Conversely, the poorer states of Rajasthan, Uttar Pradesh, Madhya Pradesh, Bihar and Orissa received only 20 per cent of the state allocated aid (Cox et al. 2002: 65,295). In short, all aid goes where there is demand, not need, and where there is good infrastructure.

considerations

government

Admittedly, the skewed distribution of resources is not due to foreign aid alone since it is but a small portion of total developmental spending by the governments, both state and central. However, if we consider foreign aid as a catalyst then certainly the already poorer regions have been deprived and the benefits have gone to those who already are better off.

Erosion in Government Responsibility As a result of the difficulties of working with government, both NGOs and donors tried, especially post-1990, to circumvent state institutions and to work directly with beneficiaries A negative fallout of the exaggerated faith in NGO capability, fostered among others by foreign donors, is that it has let government absolve itself of its basic responsibilities for good governance, including disciplining its own functionaries to perform their roles properly. Increasingly, the received wisdom, in many cases propagated by foreign donors, that NGOs perform better than government in reaching the poorest and responding to their needs in a participatory, innovative and cost-effective manner is being questioned.23

inefficient

While some NGOs are more effective than government, the

effectiveness of all NGOs in reaching the most marginalized cannot be

taken for granted. Though some NGOs have pioneered innovative health and education delivery systems, a majority of NGOs are in routine work. Some NGOs are more sensitive to issues of class, gender and caste than government departments but others override these concerns. Though government organizations in their structures, practices, staffing, and resource allocation patterns may reflect social hierarchies rather than challenge them, not all NGOs challenge them either. It is only those who challenge the hierarchies and power structures who do better than government in poverty alleviation (Murthy and Rao 1997). Besides, NGO presence is much lower than the scale of poverty. Where poverty levels are extremely high NGOs can never substitute for government programmes for poverty alleviation. In fact, the of NGOs who perform better than government can be partly attributed to the infrastructure created by government and progressive legislation. Some of the tasks are better undertaken by

engaged

effectiveness 23 One such study is Murthy and Rao (1997).

NGOs and some by government. ‘It would be wrong,’ concludes one observer, ‘to assume that NGOs, by their very nature, work more

efficiently than public development organizations, that they are less susceptible to corrupt motivations, and that they are less phlegmatic in adapting their concepts to better knowledge and experience.’ 24 Even the apologists of the NGO sector admit that though the

government is corrupt and inefficient, civil society is not well equipped enough to meet the challenges of poverty eradication either. Only the government has the infrastructure to reach large numbers. NGOs can improve the situation at micro levels but cannot bring

about large changes unless they can bring their experience to bear on government’s delivery mechanisms or policy making. NGOs are particularly successful where local participation and self-help is needed. But when it comes to reaching large numbers they have

limitations (Cassen 1993). Typically, organizations in the sector are often leadership driven and dependent on a few individuals, making replication of successful models extremely difficult. Only if they can interact with the public and private sector can they have a

multiplier effect. Of course, the responsibility for the discourse on the efficacy of people’s participation as an alternative to state centred development being shallow cannot be laid at the door of foreign donors alone. Even

governments paid lip service to these strategies till many NGOs like Sewa Mandir abandoned them in the 1990s, after experience showed them that participatory approaches to land management were not finding resonance amongst village communities (Mehta 2006).

Effect on the Political and Cultural Autonomy The effect on the political and cultural autonomy of the nation has

been discussed in some detail in the last chapter. To this one can add the effect on a nation’s self-image of the sensational fund raising showing the worst side of poverty, indulged in by even well meaning INGOs. The aim is to help a poor country, but the portrayal of a

nation with a perpetual begging bowl damages the country’s image in the international arena and its self-respect. Only rarely do they

24 Eberhard (2001). Fowler (2000a), Goonatilake (2006), and Bebbington and Riddell (1997) are some of the other critics who question NGO infallibility.

appeal to the ‘solidarity among the peoples’.25 Little wonder that Southern NGOs are also questioning the legitimacy of INGOs to speak on their behalf without formal procedures for consultations.

CONCLUSION As was to be expected, the picture that emerges from the review is one of light and shade. It is also hard to escape the conclusion that there are no free lunches. If aid has brought several benefits these have not been without their costs. If the costs are not to outweigh the benefits, socially committed aid givers will need to ask some hard questions: How serious and committed are their pledges to achieve social development goals? How willing are they to support causes that may be unfashionable as far as dominant knowledge systems go, but which reflect the genuine aspirations of the communities themselves? Where do their loyalties lie — with the communities they profess to aid or with their own governments from whom they may draw their funding (Raghuram 1999b)? Ultimately aid must return to the arena of human concerns as opposed to the concerns of the marketplace, and aid institutions must remember the original political and social calling of itself.26 At the same time it is time too for Indian NGOs to take charge of their own destiny by resurrecting traditional wisdom, subjecting it to scientific scrutiny and integrating it with the best modern practices from the West, adapted as appropriate. They need to turn their efforts inwards to making donors within India government) more responsive to their roles and corresponding needs. Ultimately, it is the renewed unleashing of the creative and the innate generosity dormant in hundreds of dedicated Indians which will change the dynamics of development in India, not foreign aid, which at best can be the cherry on the cake.

foregoing

voluntarism

(including potential

25 Hancock (1989: 4) quotes the example of OXFAM and CARE’s fund-raising campaigns. 26 See Hivos Netherlands (1998), ‘Hivos in Asia: Policy Framework, 1998–2000,’ quoted in Raghuram (1999b).

11 Looking Back to Look Forward ‘I believe the future is only the past again, entered through another gate.’

Pinero, The Second Mrs Tanqueray ‘We need to be reminded that philanthropy is not about the relationship between donor money and recipient project, but a relationship between people, the tangible expression of human solidarity and strengthening of community.’ (Broadhead 2004)

I Foreign aid has been a part of the Indian scene for almost as long as India has been independent. Yet, as would have been clear from the foregoing, it has not been a story of unalloyed success. In spite of this it is unlikely that the need for, or lure of, foreign aid will completely in the near future. The relative importance of aid in both government’s and NGOs’ scheme of things may decline and the nature of aid may change, but it seems unlikely that there will be no room for international philanthropy in India. India, in spite of growing at an average of 8–9 per cent over the past few years, and possibly continuing on the same trajectory once the current economic and financial meltdown is over, still faces challenges relating to poverty, social development and the environment. Even after almost six decades of planned the picture is grim. India may have moved up in the UNDP’s Human Development Index six places in 2007 (from 134 in 1994 to 128 out of 175 countries), but the benefits of growth are yet to reach an estimated 300 million people who live on less than US $1 per day.1

disappear

important development

1 Official estimates of the poverty line are based on 2,400 calories per capita per day for rural areas and 2,100 per capita per day for urban areas. According to National Sample Survey (NSS) data, the number of people below the poverty line was estimated at 238.5 million, down from 26.1 per cent of the population

Foreign Aid for Indian NGOs

The GDP per capita (purchasing power parity in US$) is only $3,452 compared to China’s US $6,757 (UNDP 2007).

The benefits of growth are skewed with the top 20per cent enjoying 85 per cent of the income and the bottom 60 per cent getting only 5–8 per cent. Illiteracy is still high; some 50 per cent of the people have no access to commercial energy and about 700 million

people, a large number of them women, have no toilets. Close to a 100 million people living in urban slums have little access to water, sanitation, health care, education, or housing. While the rich are

undoubtedly getting richer, the poor are not getting rich at the same pace. The need for humanitarian assistance due to natural calamities, growing terrorist activity, and Naxalite and communal violence also looks set to continue. Though aid alone will not be enough, foreign

aid will give the nation breathing space and room to manoeuvre and

to foster creativity. Hunger, malnutrition, and ill health, especially of women and continue to be causes of concern, in spite of continuous and

children, substantial increases in government’s development expenditure between

1995 and 2008. 2 The goals of Education for All,3 and Health for All,4 which were to be achieved by 1990, continue to be elusive. But aid will be needed for more than these reasons. Environmental deterioration, climate change, ethnic conflicts, terrorism (including

cyber terrorism), AIDS, and transnational organized crime are all as much a part of the Indian scene as of the global. None of these can be solved by nations acting alone. Foreign aid or co-operation will be needed because we are entering a complex world system

where the lines between national and foreign are getting blurred due to globalization. Most of today’s global and national problems are interrelated, and the international context has a critical influence on each country’s development.

in 1999–2000 to 21.8 per cent in 2004–5. But if the World Bank’s internationally comparable standard of proportion of people living on less than US $1 per day is used, the population below the poverty line is estimated at around 300 million. 2 The development expenditure is estimated to have increased from Rs 76,000 million in 1995 to Rs 1,200,000 million in 2008. 3 Adopted in the National Policy on Education, 1986, and the revised policy of 1992. 4 Adopted in the National Health Policy, 1983.

Looking Back to Look Forward

NGOs too will face new challenges because of the several new roles they will be called upon to play on the national and global scene. They will have to build on the empowerment achieved by poor groups so far, by helping them to use the market forces to their advantage. At the same time, they will have to educate their constituencies and protect them from an adverse fallout of globalization by lobbying for pro poor global trade and aid policies, rules and patents, and reform of global institutions. They will need to learn to work with the state, collaborating and opposing, as necessary. They will have to link with each other, across sectors and other groups in national and global civil society in ways different than what they have done so far. In this aid will not only provide the resources but also the connections, and provide a bridge in times of trouble. Aid will be particularly useful in helping Indian NGOs build capacity to lobby international financial institutions, monitor commitments like the MDGs and aid goals, and for of global regimes, and especially to redesign international systems to ensure global equity. Increasingly, aid will be sought not for the money alone, but because of its opportunities for work. In sum, it is unlikely that the need for aid will disappear completely. Nor will donors want to exit India, however well it does on the economic front, or rather because of it. The political wisdom of investing in a large region to improve the capacity of the people to buy Western products will not be overlooked. But if aid is to be more effective in future, and not lay itself open to the charges of opportunism, both donors and NGOs must look back and take to heart the lessons of the past.

international democratization

collaborative

LOOKING BACK: LESSONS FROM THE PAST The most important lesson that emerges is that there must be plural sources of funds available to NGOs to afford them choice. Only if they have choice can they avoid dependency on any one donor and the dangers this poses for being donor driven, for hijacking of development agendas by outsiders, introduction of inappropriate development models, or unethical behaviour by NGOs themselves. This has three implications for government and one for NGOs. If government would like NGOs not to be dependent on foreign donors it must, first, improve its own funding practices and the quality and quantity of aid it provides to NGOs. Second, it must encourage, not restrain foreign aid from as many countries and

sources as possible to enable NGOs to be independent of any one ideological or cultural influence. Third, it must, through a variety of incentives, promote indigenous donors to give to NGOs. Only if there is greater availability of indigenous funding will it be possible for NGOs to engage in political or social activism on sensitive issues where foreign funds are best avoided. By and large, serious NGOs will not mind if the size of indigenous grants is not as large as those of foreign donors, so long as the other positive practices of donorsbeing responsive to need, timeliness, flexibility in use of funds and willingness to take risks — are present. The lesson for NGOs is that that foreign funding cannot be a longterm solution, and that they must make greater efforts to diversify their sources of funds and to raise a greater proportion of their funds from within the country — from the market as well as and the government. Learning from the past they must first put their own house in order in terms of values, accountability and more efficient management. For donors one of the first lessons is that they must develop clarity about the role of aid to developing countries. Northern donors need to make up their minds and clearly articulate what their interest is in the Third World — is it to help build institutions or is it to bring about changes in social structure by working on social processes? Or, is it merely to contribute to specific development efforts such as universalization of education or access to water as embodied in the MDGs? In each case, the aid portfolio, approach and level of interaction may differ. If the interest is in funding development activities, then the aid would need to centre round the minimum needs programmes as articulated by government. There might need to be a greater emphasis on co-funding with government. If the goal were to strengthen then a different set of criteria would apply. Again, if the emphasis were on changing the social structure, then projects for securing rights, social justice and empowerment of the poor and would need to be given a preference. This last also raises the question whether foreign aid is the best instrument for changing the social structure, or whether domestic resources are best used for this. Many would argue that the latter is best even though it is precisely for these objectives that domestic resources are most to obtain. This is a subject — that is the best use of aid — which calls for greater debate and introspection on the part of all the If the goal were to encourage a two-way flow of ideas, it may

philanthropy,

institutions marginalized

difficult stakeholders.

require less financial support but more interaction among donors and NGOs. On the other hand funding of specific development activity is typically a one-way traffic — from donor to NGOs. In short, donors need to be clear about the objectives of their aid and to clearly communicate these to the recipient country and NGOs. Of course this is easier said than done. ‘Donors’, as we have seen, is not a homogeneous category and each category and each will be driven by different motives. Most donors and NGOs have multiple objectives that require simultaneous action on many fronts. It is hard for donors, or NGOs for that matter, to their ideas or work so sharply. It also requires a deeper understanding of the development process than has been displayed by donors so far. Therefore, clarity about aid’s role is not likely to be achieved in a hurry. But more debate about the best role for aid, in the context of an individual society or section of society like NGOs, will certainly help to make outcomes better fit recipients’ own expectations (Nath 1997: 121–28). There also needs to be more debate on which agency is best for which kind of development objective. There has been some among donors about the role of NGOs in development. Donors have swung between aid to government (even private agencies like Ford and Gates Foundations) and aid to civil society, with the former being in fashion in the early years and the latter post 1980. Once again, donors are asking whether NGOs are indeed the development messiahs they were thought to be.5 There has to be more realistic analyses of NGO contributions, and especially why their own constituents do not provide them with support. Another fact that emerges from the foregoing is that a review of the donor-government-NGO relationships is even more important now. Till recent years NGOs were the only local development actors on behalf of the poor. Now they have to contend with the emergence of panchayats or elected local self-governance bodies, which have political legitimacy to speak on behalf of the poor. For instance, in Kerala, an experiment is on to introduce the cadres of political parties into the development planning effort. They work with PRIs and decentralize decision making truly to the grass roots. This means

organization

compartmentalize

ambivalence

5 Tendler (1982, 1987), Hulme and Edwards (1997c), Fowler (2000a, 2000b), and others.

NGOs and political cadres will be contending for the same space. If the experiment succeeds it will diminish the uniqueness and

usefulness of NGOs to the poor. If, on the other hand, NGOs get co-opted

into the political mainstream then foreign donors and the state will have to rethink aid to them because foreign funds in tandem with local politics could be dangerous and may be resisted by the state as

well as political activists (Nath 1997: 127). Donors as well as NGOs will need to reassess their relationship with the government, also because having frequently seen it as an adversary of those NGOs who are helping the poor to fight the

injustices of the state, it might be difficult to see it in another light. Though the government’s role in development cannot be wished away, few NGOs or people who have experienced government

corruption, inefficiency and tyranny would willingly endorse a retreat from NGOs to purely government operation. NGOs find their own working style and attitudes more incompatible with government approaches than with those of foreign donors. Government, on

the other hand, finds working with NGOs equally irksome because

few NGOs at the ground level, especially in some states, have the requisite capacity or administrative skills or outreach. Nevertheless, both donors and NGOs will have to learn to live with government on mutually acceptable terms (ibid.: 128).

Government on its part will need to decide what role it wants donors to play vis-à-vis NGOs. It will need to lay down clearer and guidelines for accepting aid, without any of the existing

policies

ambiguities that offer scope for arbitrary interpretation. While it is

possible for the government to lay down what it will or will not accept from donors, it is likely to be more difficult for NGOs to articulate what they will or will not accept/tolerate. Mutual commitments in place of one-sided conditionality, which are agreed upon at the outset

and monitored transparently, would go a long way to removing and charges of donor agendas. Establishment of national and international forums where donors and recipients can review progress

suspicion on an equal footing would also help (ActionAid 2005: 3, 51–53).

Equally, new mechanisms are necessary to substantially increase the volume and predictability of aid, official and private (ibid.). Moreover, reciprocity must be the key for all international

cooperation. It should be based on mutuality and fair give and take;

otherwise it breeds resentment on both sides, the donor complaining

of lack of gratitude and the recipient of arrogance. Aid should not be treated as a gift from the rich to the poor or a charitable transfer from North to South, but must be managed such that it is viewed as an investment in a common future (Edwards 2004a: 138–39). It needs to be part of a wider redistributive agenda for which poor

people’s voices, needs and priorities must be put in the centre of aid programme design, and it should be only one part of a broader and more coherent development strategy. This applies equally to givers of official as well as private aid. The implication is that donor organizations must introspect about their own organizational structures and approaches as well as what

they need to do in their own societies to make their international development work more effective. They must refocus attention on encouraging values of compassion and service, and argue for lifestyles in the home countries, besides sensitizing domestic constituencies to differences in religions and cultures. This argues for

sustainable

more development education in their home countries on their part.

This kind of introspection, reassessment and realignment of

relationships between the North and South, and between the various

players in a country, as well as the designing of new systems and mechanisms will require leadership of a high order on every side, but especially in civil society. Indian civil society, like many others, is

fragmented and NGOs work together mostly during times of national crisis. Otherwise they either compete with, or are suspicious of, each other. There are encouraging signs that NGOs are learning to work together and in partnership with other development actors.

IMPROVING PRACTICE Sustainable development needs action that is quite different from conventional development assistance programmes. The future to smaller, more decentralized initiatives that involve the active participation of the people affected. To be successful such action must

belongs

be designed from the bottom up. It must be more sensitive than it has

been so far to issues of gender, environment, community and local culture, and must take care not to usurp the accountability to the community, which is its due. For making organizations sustainable more effort needs to be made by both NGOs and donors to build up local and other sources of funds, and to explore generation of revenues from the market.

For aid to be effective in meeting its objectives, five conditions are essential: • Ownership of the project, in the sense of intellectual and

emotional involvement by government in case of ODA, and by the

community in which it is located in case of NGOs. If the project is perceived as an externally induced one, and has no buy-in by the NGO or local community, it will not be sustainable.

• Strong administrative and institutional capacity in government and NGOs. • Sound policy framework and good governance within which civil society operates.

• Close coordination by donors so that there is no overlap, but instead supportive policies and procedures. • Improvement in aid agencies’ own business practices. Based on past experience some solutions to meet these conditions are discussed here.

Rethinking Funding Practices and Modalities To address the concerns about donor-driven agendas, sustainability, donor dependence, lack of local ownership and upward

accountability,

new modalities for funding need to be adopted. These include making endowment grants a more widespread practice; creation of autonomous funds at the country, local and sectoral level with several donors pooling their aid budgets; more long-term institutional

support as against short-term project support; general budgetary creation of local foundations; and, making block grants to large NGOs to in turn give to smaller NGOs.

support;

First, donors need to make a long-term commitment since many

of the problems discussed are the result of very short project grants. An alternative to long-term institutional grants to allow NGOs stable funding and independence of action would be using endowment grants more widely than has been the case so far. Since many donors

do not like to do this for reasons discussed earlier, one suggestion that was made at the Sampradaan Dialogue of 2001 was that instead of a lump sum grant, a provision could be made for building the endowment by including an amount for the purpose as a line item

or spending category in the project or programme grant. Thus, with each project and from each donor, some money gets ploughed into an NGO’s endowment fund. An alternative to making line provisions

could be that whatever is unspent at the end of the grant period is allowed to be added to the endowment fund, provided the project objectives have been fully met and the unspent balance represents

careful and prudent spending. This would also act as an incentive to NGOs to spend the money carefully, instead of frittering it away on non-essentials in order to spend the money before the end of the grant period. Though the suggestion has not been accepted by any donors so far it is worth considering seriously. One of the most innovative donor initiatives in recent times and

worthy of emulation is a consortium approach adopted by some donors to jointly fund some NGOs as a network with common objectives. Till recently, five NGOs — Accion Fraterna in Andhra Pradesh, Agricultural Development and Training Society (ADATS) in Karnataka, Gram Vikas in Orissa, Professional Assistance for Development Action (PRADAN) in New Delhi and Seva Mandir in

Rajasthan — were supported separately by different donors. In 2003, ICCO raised 5.559 million euro from the EU to support these five NGOs under one project, viz. the Sustainable Income Security for the Rural Poor in India (SISIN), with a common broad theme but with varying approaches specific to the respective organizations. Christian Aid (GB) and EED Germany then joined ICCO and EU,

contributing to and participating in the SISIN programme. Under the project all five partner NGOs have committed themselves to joint learning in order to achieve the overall objective of sustainable livelihood and income security. To facilitate the joint learning all five NGOs have made major organizational investments of time and energy to improve their own

planning, monitoring and evaluation systems and for developing the skills and abilities of their staff. FMSF (India) supports the with aspects of financial management. Both NGOs and donors learn through annual workshops between partners and donors, as well as through internal learning events. This innovative consortium

network

approach has increased the potential for future cross-learning in

areas such as capacity development strategies for people-based organizations working on non-farm income and employment initiatives. It will thus be a good exemplar for the government and other NGOs, and donors.6 6 ‘Partnership for Attaining Sustainable Income Security for the Rural Poor in India (SISIN)’, Brochure by ICCO, EU, Christian Aid, EED, and FMSF, circa 2007.

Another innovative approach could be for donors to together create a joint funding pool at a regional, sub regional or national level. Governments or NGOs could draw on such funds according to plans generated by open political processes. Public watchdogs would monitor the use of money, and a regulated private banking sector could fill the gaps. Instead of creating a new institution an existing institution could be adapted for the purpose (Sogge 2002: 105–7). A variation of this — social sector funds at a national or district level — had been proposed by the World Bank for some African countries, but it has not been mooted in India so far. At the international level Edwards (2004a: 138–39) has suggested an international development fund from which those who need may apply for an ‘entitlement’. To keep the funds free of the fashions and fluctuations that characterize the world of foreign aid, he suggests that the fund be sourced through global taxation, or development bonds, or penalties for ‘economic injury’. A similar mechanism could be established at a national level with donors putting in money into a mega fund, which could be controlled by a body representative of donors and local cross-society representation. The funds should be sustainable in the long term by recycling repayments on favourable terms. The funds could also act as bridge funds to help NGOs tide over late releases of grants, whether from government or other donors. But to be successful much would depend on the quality of public life and standards of transparency in the system. Perhaps the idea will work better at a sectoral level. Several such funds, viz. the International Urban Poor Development Fund, the Global Fund for Community Foundations and others have already been set up. The Ford Foundation has created local funding pools by creating indigenous foundations such as the National for India (NFI) or Dalit Foundation. These have the advantage of being able to fund many local and small NGOs which otherwise would have no access to funding. The one drawback is that though the foundations were meant to mobilize resources from other donors, they have not been very successful so far and the identification with one major donor remains. A modality adopted by DFID in its PACS programme to enable small NGOs to access DFID funds is to release block funds to a partner organization like Development Alternatives to on-grant to smaller organizations. They can also consider providing support to small NGOs to help them develop proposals.

Foundation

To maintain NGO institutional independence while

strengthening it at the same time, donors and NGOs could emulate the solution that many leading NGOs like PRIA and VANI have adopted, of

drawing up a three- to five-year strategy plan and a projected budget

to meet the goals. Donors are then invited to pool their contributions into the common fund so that no project or programme is identified with a particular donor and there is no charge of foreign agendas. The practice has already been adopted in official aid practice. Termed

General Budgetary Support or GBS it involves donors putting their funds straight into a developing country’s national budget, instead of granting it for discrete projects and programmes. It allows donors to agree on the big picture with recipients — the size and composition of

the national budget, national monitoring systems, public service etc. — without interfering in domestic decisions (Hulme 2008). Though neither private donors nor official donors have adopted the

reform,

practice with many NGOs so far, NGOs should lobby for the change.

Ultimately, the only solution to foreign donor-driven agendas or sustainability is to decrease dependence on foreign aid by increasing indigenous sources of funds, including self-generated income. So donors should support initiatives aimed at local resource

mobilization. The public will not support with funds what they do not see as an appropriate agenda.

Improving Donor-NGO Relations To avoid the charges of arrogance, micro management and donordriven agendas, one of the most important things donors need to

do is to institute orientation training for their staff to change their attitudes and sensitize them to cultural differences. Other measures must include frequent open dialogues on donor practices with NGOs, and with NGOs and government on policy issues so that

their programmes all synchronize and are especially in tune with the development philosophy and priorities outlined in the government’s Five Year Plans. NGOs on their part must network at national and state levels

and mutually support one another. If such networks exist and NGOs are strong, credible and vigilant then there will not be unwanted donor-driven agendas. The networks will also act as pressure groups on donors.7 If strengthening civil society is indeed the goal of donors 7 NGO-Donor Dialogue organized by Sampradaan Indian Centre for Philanthropy in 2001.

then they should support a range of such networks, coalitions and alliances (Edwards 2004a).

Bebbington and Riddell (1997) suggest that alongside, a new

incentive structure is needed in donor agencies to improve the monitoring process and relations with NGOs. The performance evaluation and incentive structure in donor agencies is presently based on

product or output delivery — often the number of grants made or amounts of money shifted — and the emphasis on monitoring is by numbers and targets. If NGO involvement and participation in civil society building is to progress, then it will be necessary to reward POs

for innovation and risk, and to reward quality of work rather than quantity. Donors also need to review the balance between and proactive philanthropy in their own organizations. It may

responsive

be that more responsive grant making is needed (Kayser 2008).

To help smaller but good NGOs access donor funds, donors could support more intermediary organizations to disseminate relevant information and act as a bridge between donors and NGOs.

Donor Transparency and Accountability Donors must be prepared to take their own medicine and adopt

internally the same kind of procedures and practices that they demand from their partners, viz. democratic, non-hierarchical functioning, transparency and accountability to NGOs. Though it is true that many NGOs manipulate donors and are guilty of misutilization of

funds, the onus for ensuring transparency and preventing misuse is as much on donors as on NGOs. Often they do not publicize or pull up the black sheep for political reasons or to hide their own mistakes. Both NGOs and donors can be kept accountable by

competition, and by pressure from networks of engaged philanthropists, NGOs and professional intermediaries. Accountability to local constituencies also means translating donor

documents into local languages, recognizing work patterns based on

local holidays, and using recipient countries’ fiscal calendars.

Co-ordination and Co-operation among Donors Major donors should get together periodically to share experiences related to funding and to work out common formats for reporting

and to improve other practices. Better practices in monitoring, and evaluation will obviously need to be put in place only in consultation

with NGOs. Coordinating country or field visits to avoid undue stress on NGOs will also help.

Aid co-operation further means taking into consideration unique country conditions and forgoing the practice of every donor country planting its own flag as a donor. Harmonization implies that donors resist the temptation to impose their own models on committed

governments, and instead align themselves behind local priorities and local systems. Pressed by Southern governments and INGOs, efforts at aid harmonization to make official aid more effective have been gaining

momentum in OECD donor countries. It started with the Rome Declaration of 2002 and continued with the Paris Declaration of March 2005. But though donors claim that the quality of aid has improved in terms of ensuring more local control over use of

funds, not everyone in recipient countries or NGOs agree that it has (Hulme 2008). While some of the recommendations such as of documents and reorganizing work patterns to suit local

translation consolidation of aid, or demarking territories of donors to avoid too many contexts are workable and may be adopted, others such as

operating in one region may not, simply because aid is politics by another name. In the case of official aid harmonization, NGOs have a role to play

not only as recipients of aid but as watchdogs to monitor ODA to ensure democratic governance within aid institutions and to give a feedback on how to simplify funding proposals and contract

procedures for NGOs.

To sum up, both donors and NGOs need to reserve more time for learning and reflection on processes within and outside their own organizations.

II LOOKING FORWARD: THE SHAPE OF THINGS TO COME Having looked at the past it is tempting to gaze into the crystal ball to see what shape aid will take in future. One fact is clear: While

aid will continue to be needed, it is likely to lose its pre-eminence as a driver of development. The future is also likely to see a in the nature of aid, its purpose and priorities, and the way

transformation

it is given because of changes in the global political and economic context and equivalent changes in India. But it is difficult to predict the exact shape of the transformation as there are contrary trends acting on the demand and supply side of the aid equation. Any

negative effect on the supply of traditional aid funds is likely to be countered by the growth of non-traditional sources of international funds

and development of indigenous philanthropy. On the demand side, the changed role of NGOs and conscious efforts by them to diversify their sources of funds could reduce their demand for foreign funds.

Changes in the Global Context of Aid Aid in the future is likely to be influenced by the global changes afoot. On the one side, the world is facing crises on the global and climate change front as well as on the food and energy front.

warming

The current global economic downturn has added another dimension

whose duration and impact it is difficult to predict at this time. All will reshape the poverty agenda. On the other side, we stand on the cusp of unprecedented wealth creation in emerging economies like India and China who are widely tipped to emerge as the new

economic powerhouses, overtaking the formerly powerful economies

of the Soviet Union, Japan and even UK. The Forbes Magazine listed a record 946 billionaires in 2006 of which 178 were

newcomers. These included 19 Russians, 14 Indians, and 13 Chinese. India’s tally of billionaires stood at 36 in 2006, which is more than the 24 billionaires from Japan. At the same time there are pockets of deep poverty and inequality within these nations which are unlikely to go away in a hurry.

Globalization has only exacerbated the already skewed distribution of productive resources, skills and capacities that lie at the heart of poverty. Underlying these inequalities are power structures that

discriminate against certain groups of people, within nations and in the

international arena (Edwards et al. 2003: 3), and these too will take time to change. Higher growth could lead to higher inequality, and income inequality rather than poverty will be the issue of concern in the years ahead.

Development aid is becoming but one of the total financial flows between North and South, and a relatively small one at that, where India is concerned. Foreign direct investment (FDI),

especially diaspora remittances and other flows are overtaking official aid. These

changes will act on the supply of resources for developing nations. Already they have led to changes in the aid architecture. ODA is no

longer the most important resource for countries like India; INGOs are facing a crisis of identity and resources, and private philanthropic flows have increased beyond expectation, though how this will play out after the global recession is difficult to say.

Changing Context of Aid in India The context of aid in India is also changing. On the economic front, the dynamic growth of the Indian economy at an average of 7–8 per cent per annum, India’s success in several fields, and the selfconfidence gained by Indians as a result, have made the international world look at Indians with greater respect. India’s clout has increased and it will no longer take aid unquestioningly. This applies also to NGOs, though to a lesser degree. This trend will but grow in future. At the same time, as younger Indians who have no memories of colonialism take charge of affairs of state as well as NGO, they will have no hang-ups about foreign aid. They are likely to accept foreign aid on merit and also interact with foreign donors on a basis of equality, rather than subservience. They will likely seek collaboration rather than a top-down relationship. Consequently, there will be a two-way interaction and transfer of knowledge, without the or arrogance associated with aid hitherto. On the political front, coalition governments seem here to stay because of the political churning underway with a different set of interest groups, such as backward classes, women and Dalits emerging to occupy the political space. This is likely to favour the continuation of foreign aid without restrictions because as elsewhere in this book, the Dalits and women have favoured the acceptance of foreign aid, which they see as having offered them a voice and more opportunities than the government. On the other hand if the present national security situation as it seems likely to do at least for the medium term, the Indian state of whichever political ideology will prefer to encourage the development of indigenous funds for NGOs rather than allow them access to foreign funds freely and without regulation. It is also likely that the future might see a diversion of foreign aid from NGOs to Panchayats and Nagarpalikas (local councils, rural and urban).

paternalism mentioned

continues,

The Demand and Supply Equation Regarding supply of external development assistance to India, there are two contrary trends arising from the global and national changes

at work, which on the one hand are likely to reduce the quantum of aid funds into India, and on the other increase it.

Supply of Funds To take the supply side first, ODA, which has been declining in importance for India, is likely to continue declining in the near future because as India continues to grow it will lose eligibility for concessional aid. A nation is eligible to receive ODA so long as its per capita income is less than $750. India, whose per capita income is already $735, will soon lose eligibility if it continues to grow at the same rate. Also, the government is likely to pay greater attention to more equitable trade regimes and payments for use of global such as environmental space, commons, carbon emission and genetic resources, rather than to securing ODA. However, while ODA on official account will decrease, it is that aid to NGOs from official donors will decrease as well. Many observers believe that direct funding of NGOs could well not decrease, since China, Brazil, Italy, South Korea and Canada are all renegotiating with their governments for direct funding of NGOs. But rather than funding NGOs for their traditional service delivery role, the new ODA will likely emphasize more aid through good governance, and will therefore encourage civil society-government partnerships, donor coordination, local ownership, and operation within a comprehensive development framework. The trends regarding aid to NGOs from INGOs are somewhat confusing at present. There are fluctuations in ODA at the global level, but even when it is declining official donor agencies continue to rely on INGOs for channelling funds, especially where Southern counterparts are weak. The amounts channelled through INGOs therefore continue to be high for some countries, though more aid agencies are also sending aid direct to Southern NGOs as in India. On the other hand, the income of INGOs from private individual contributions in the North is going down because of a decline in giving and volunteering by younger generations there. A pessimistic forecast is that by 2020 there may be no INGO funds from abroad because they themselves are facing a resource crunch. Many of the INGO donors were Church-based, but now with reduced church going in Europe and Canada (not in the USA) the charitable raised by them are diminishing. In most countries, total

resources unlikely increase effectiveness

official

contributions

giving is growing less slowly than expected because of worries that the donations will not be put to good use. Public trust in charitable organizations is falling and there are calls for more accountability in NGOs, both international funding NGOs and those that receive the donated funds.8 The global financial crisis that has hit the Western nations severely is only likely to worsen this trend. With individual donations from abroad diminishing, INGO donors will have to depend more and more on their own governments. This is likely to raise questions of political agendas, and Indian NGOs may need to be more watchful. In countries like India, with a maturing civil society, secular INGO funding is likely to decrease because of official donor preference to route their funding to capable NGOs directly, so although INGOs will continue to play a part in NGO development it is likely to be a radically altered role. The greatest hope for Indian NGOs would appear to be private foundation philanthropy. Though it could decrease in the short run due to reduction of asset values in the current crisis, it is more likely that once the crisis is over it will increase. The numbers of are growing worldwide, and of these the numbers interested in international funding are going up even more. According to Foundation Center figures, international giving by US was 23.4 per cent of total foundation giving of $42.9 billion in 2007.9 With a growing sense of social responsibility among the business community, new private donors are entering the scene every year. Already the Gates Foundation, the Union Against TB and Lung Diseases, the Global Fund, the Global Fund for Community Foundations, the Soros and the Turner and the Dell Foundations, and many others are pouring money into India and other developing nations. Since trade follows aid, the flow is likely to increase as India becomes the ‘flavour of the month’. Even the small fraction of the Indian rich at the top of the pyramid and the large Indian middle class together constitute a large enough and growing market for the products of developed countries. The private aid that could come in could equal or exceed aid from bilateral sources.

foundations

foundations

international

8 Biekart (1999: 73–77), Edwards (2004a), and others. 9 http://foundation center.org/gain knowledge/research/nationaltrends.html. Also, Foundation Center (2008).

The future will see this global elite seeking to change the world by combining lots of money with new ideas, cutting edge business techniques, media and marketing savvy, and mobilization of citizens and political connections. However, there could be a contrary trend here too. The of the new mega foundations may not mean that big money is available for NGOs. The large foundations typically look for really large partnerships, either with INGOs or governments, and may not be interested in giving to smaller NGOs. Few Indian NGOs are of a scale as can use money on the scale that Gates Foundation, for instance, offers. Besides, the Gates Foundation is focused more on service delivery for particular development problems, especially health, and not on institutional or structural social change. Worry has also been voiced that the new mega foundations can interfere in national agendas even more than the old style aid. An article in The Economist cites the example of how in Uganda Bob Geldof, the rock star turned philanthropist, provoked demonstrations when he suggested that the country’s president should not stand for re-election.10 A non-traditional source of international charitable funds which has recently emerged and which is likely to grow in future is Internet-based charitable giving. It makes possible fund raising and programme delivery without borders. It is capable of the relationship between the giver and recipient. Portals like GlobalGiving, Give Foundation India network and Blue Planet’s Peer Water Exchange work like charity marketplaces providing donors with information on pre-screened charities and projects and allow them to make online donations to those of their choice. In fact, the Blue Planet portal leaves the choice of appraising individual projects submitted by NGOs to the portal, to their peers in the field through an online process. Donors are then free to direct their to whichever project or organization they choose. Though the amounts received from online Internet giving are modest so far, the amounts are likely to grow as the credit card culture spreads, more overseas donors come to know of the projects through more portals, and corporations make such portals available to their employees, business partners and customers.

emergence

official

transforming

resources

10 ‘The Business of Giving’, The Economist, 25 February 2006.

There are many advantages to this type of foreign aid: It can help facilitate small grants and donations and can encourage individuals

who previously might have shied away from giving overseas. It can also help small organizations to access a wider range of funds more easily without their having much fund-raising experience or capacity. It can produce money relatively quickly for causes and

projects, especially for causes with emotive appeal where the result will be evident quite quickly. It will help smaller NGOs, especially if they have no established networks in traditional grant-making circles and work in traditional service delivery mode on projects that

are needed but are not necessarily ‘innovative’, and which are not reached or favoured by the big donor agencies, bilateral or private. For instance, a small NGO in south India, Child Aid Foundation, which had an annual budget of $12,000 was able to raise $16,000

through online giving through the Give Foundation portal. Money from several donors can be pooled for a project and can be spent as the NGO wishes, without having to abide by the grant conditions of any one donor. Internet giving is particularly well suited to first

time donors (Venkat Krishnan 2004). Internet giving is less good in providing funds for projects where an instant or obvious return may not be evident. It is also not effective at stimulating overseas giving where the main obstacle is

a mindset that encourages parochialism and not the lack of an easy mechanism. Most often it results in donation of money for education, health and disability but much less for environment, general poverty alleviation projects and especially for social justice initiatives focused

on the inclusion of the marginalized. There is no way of directing the giving into those areas where it is more needed, as can be done with traditional organizational philanthropy. Another drawback is that it tends to be low level, ad hoc and

noncumulative and therefore its impact is likely to be less than that of

traditional strategic philanthropy. But according to Venkat Krishnan of Give Foundation, Mumbai, the flexibility it gives to an NGO to do the work they want, in the way they want, far offsets the effect

of strategic philanthropy, which in any case would help only a few. Moreover, numerous small social investors who choose what they want to support spread the risk of a bad investment over many

projects, whereas one big strategic investment, if it goes wrong, will mean a bigger loss and greater negative social impact (ibid.).

Another non-traditional source of funds for NGOs, which is also growing, is diaspora philanthropy. Apart from direct remittances to Indian projects and NGOs in India (which incidentally do not feature in FCRA statistics unless they are from people of Indian origin who are non-Indian citizens), several foundations have been set up abroad, either as extensions of Indian foundations or as new bodies altogether, to promote charitable giving from Indians settled abroad. These include Give Foundation USA, ASHA (which focuses on basic education in India and now has chapters across the globe), and Pratham (which has outreach offices in London and Houston). In the US alone there are over 1,000 Indian community and a number of these serve as vehicles for giving to India. One such is The Indus Entrepreneurs (TIE), which consists of leaders from the Indus regions. Another is the American India Foundation (AIF) formed in 2001 as a response to the Gujarat earthquake in 2001. So far diaspora giving suffers from many drawbacks, mentioned in Chapter 3. But as donors gain experience and mechanisms develop to guide them to the right concerns, this will change. The net result of all these factors will most likely be to increase the international resources available to Indian NGOs. Paradoxically, they may play a less dominant role in NGO lives in the future due to a number of indigenous developments.

associations business

The Demand Side In future, the NGO role of a countervailing force to the expanding influence of the markets and the state is likely to grow even more than at present. But many feel that their ability to play this role will be compromised if they remain aid dependent. In any case, as mentioned earlier, NGOs are being forced to look at non-aid sources of income for the sake of sustainability of their and the need to engage more directly with democratic politics. Increasingly, they will have to make choices about how their work is to be financed — whether to move closer to the market in their quest for financial sustainability, or whether to remain non-profit; how far to depend on aid and how far to rely on indigenous funds? If restriction on aid becomes more stringent, or if government itself steps up funds for NGOs, as is promised in the National Policy on the Voluntary Sector, or if new ways of collaborating with the corporate sector open up, then the balance may swing away from

important

organizations

foreign funds. Their improved communication and marketing skills gained through donor support and more specialized agencies for NGO fund raising, marketing, programme management, and and evaluation will enable NGOs to diversify their sources of funds, instead of remaining heavily aid dependent. Changes now afoot in Indian philanthropy will further aid NGOs to lessen their dependence on external assistance. Since the last two to three decades there is a renewed interest in philanthropy in India for several reasons: One, there is more money in the economy to give away due to the development of the IT, entertainment and financial industries. There are today many globally ranked billionaires and millionaires of Indian origin. In December 2007, there were 311 in India, and 48 of these are dollar billionaires (wealth over Rs 4,000 crores) thanks to the booming stock market and the high growth rate of the economy.11 Already there are signs of a resurgence of the philanthropic spirit as the newly rich realize that creation of wealth (entrepreneurship) has to go hand-in-hand with reconstitution of wealth (philanthropy) in order to nurture future economic growth. They are therefore seeking opportunities for doing good. The middle class has also expanded considerably, and is, moreover, more charitably inclined due to the feel good factor induced by an expanding economy. In the intergenerational transfer of wealth among the affluent a growing number of the affluent elderly are likely to consider giving away a portion of their wealth to society since the next generation of such families is in many cases settled abroad and is disinterested in, or unable to, inherit property in India. There is thus an increased for, and an interest in, engaging in philanthropy which needs to be turned to good account if the new wealth is not be frittered away in unproductive ways (Sundar 2006b). Two, recent years have seen the establishment of several new charitable trusts and foundations by companies and wealthy both resident and non-resident in India. The Infosys, Azim Premji and Dr Reddy’s Foundations are but the more visible of this new wave of foundations which includes the Jindal South West Foundation, J.M. Morgan Stanley Foundation, Bharti Foundation,

implementation

billionaires

potential

individuals,

11 The Billionaire Club: Richest Indians, Business Standard Supplement, December 2007.

Byrraju Foundation, ABB India Foundation, and Pushpawati Loomba and Sehgal Foundations to name but a few foundations recently set up by multinational and Indian companies and NRIs. There has been a growth also of foundation-like organizations — CRY, Concern India, Naz Foundation and others — who both raise funds from the public at large and then give them out to organizations in need of them. Three, the concept of corporate social responsibility is more than ever before, and since most corporations equate social responsibility with philanthropy, rather than socially responsible behaviour, NGOs can turn this interest to good account. Four, the uncertainties of our times have stimulated an interest in religious and spiritual matters and giving to religious organizations is at an all time high. Though some religious leaders and are using some of this money for social development, it is not always the case. There is both a potential and an opportunity to bring some of this money into organized philanthropy for constructive use. Five, technological developments, especially in information and communication technology, have provided powerful tools to bridge time and space so that donors and would be donors can learn of new developments and opportunities and contribute to humanitarian needs in hitherto new ways. Six, as witnessed during the Tsunami and other calamities, when charitable contributions reached unprecedented heights, the media has demonstrated an undreamt of power to motivate people and to mobilize resources for charity. This power can be harnessed by NGOs to motivate indigenous donors. At the same time, it can ensure in recipients. In response to the new interest, more organizations as well as a new profession of fund raisers have come into being to promote giving and to service new donors. Not only is there more willingness to give for social action, but also more willingness to support grass-roots initiatives and newer causes such as disability, environment, human rights and women’s Old style charity, characterized by ad hoc, small, unplanned and informal giving for immediate relief of distress, and largely for religious and local community projects, also continues to thrive. NGOs can thus look forward to more funds from within India. Nevertheless, there are several obstacles before Indian can become more responsive to NGO needs, among them development illiteracy, even among the educated. People do not know what is socially important, what an organization engaged in

widespread

organizations

accountability intermediary

empowerment. philanthropy

a public cause expects to achieve, and how it plans to do so, and which are good organizations. Business management training is still divorced from social development education. The continuing preference for retaining control over one’s philanthropy by directly operating charitable projects rather than grant making may mean resources will not increase as much as needed by NGOs. Both foreign donors and Indian NGOs believe the future lies in Indian donors taking over but the latter need to learn from foreign donors the art of giving wisely. Also, to enable Indian philanthropy to replace international aid in any major way will need several infrastructural improvements, including more research to provide accurate knowledge about the overall contours of Indian philanthropic giving and more proactive government policies to make giving easy and beneficial for donors. Many NGO leaders are sceptical about Indian philanthropy making up the deficit left by withdrawal of foreign donors. to them the gap between domestic funds available to civil society and international funds is too wide and it will take a full generation or more of newly rich people to begin engaging in philanthropy, possibly up to 2040, before domestic funding can match the of foreign funding. The quality of giving depends not only on the generation of surplus wealth but also on a culture of giving, which is willing to back new ideas. This is yet to mature because in the Indian psyche it is the government who must be the provider. It will take time to overcome this mindset. In the short term, therefore, work that depends on research and innovation of all kinds will suffer from the decline of foreign aid.

According

quality

NEW EXPECTATIONS OF AID To accommodate the emerging contexts and NGO needs there are likely to be changes in the way aid is given and used. According to Edwards et al. (2003) development co-operation rather than development assistance will need to be the terms most used, with an emphasis on rules, standards, and interventions to protect the most vulnerable between nations and within nations. Foreign aid will best be used in a supporting role to a broader and more coherent framework of international co-operation that would include linking aid policies to policies on trade, debt reduction and diplomacy. Improved terms of trade, more inward investment, abolition of trade tariffs and agricultural subsidies, and easier access to trading

blocks such as NAFTA and EU are as important as, or more

important than, aid. They create the same conditions without a feeling of

obligation for the handouts. What this will require is coordinated action by donors for a unified strategy for all development related decisions instead of the ad hoc decisions at present, and new social contracts between citizens and authorities at different levels of the

world system (Edwards 2004a: 131). INGOs will no longer be required to play a grass-roots role in either humanitarian or development operations, and even in

research and policy, as indigenous intermediary organizations become

competent. As a result, they might concentrate more on their global roles, one part of which is development education of the in their home countries. They will need to invest resources and

constituencies

imagination in devising better communication strategies to help

people in the North to connect complex global trends (climate change, excessive consumerism) with simple individual responsibilities. They will need to build linkages with movements and alliances other than with the traditional international aid systems.

There is likely to be more transfers of block resources into local hands — into institutions which own the resources and dispense them as local needs demand. These institutions are likely to be

nongovernmental and will likely include indigenous foundations, intermediary organizations and social investment banks. Donors will be

expected to support more national impact strategic interventions through networks and partnerships, national and international, and not stand alone work.

In fact, the future of private aid may not lie in funding NPOs, NGOs or civil society through grants at all. While the amounts for development from the new international business

available philanthropy could be sizable, indications are already visible that the new

philanthropy would approach aid giving differently from traditional philanthropy. For one, new blood is invigorating it, bringing younger people, more women and more non-whites into it, so enlarging and changing traditional perspectives. New tools are also emerging such

as the Internet which make for faster communication and provide new mechanisms for giving. Since business and philanthropy are linked ever closer than before, many of the new philanthropists want the world of

philanthropy to be transformed by learning from the world of business.

Therefore, philanthropy in future is likely to take the form of philanthropy, rather than grant-making philanthropy, and be talked of as social investing and social entrepreneurship. The new approach is strategic, market conscious, knowledge based and high engagement. Donors will seek to concentrate their own money on select problems and seek to attract other donors and government to join in the effort. Prepared to take risks with their resources, they are seeking innovative solutions that can then be adopted on a larger scale by governments (Edwards 2004a). The characteristics of the market influenced (not necessarily market led) philanthropy are:

venture

• Direct connection between the owner of the wealth and the recipient, unmediated by grant-making professionals; • an emphasis on small projects, giving where it is really needed, or alternatively very large projects involving several partners; • a mix of profit and non-profit mechanisms; and, • wider use of Internet technology to connect and transfer so that the donor directly monitors where his money goes and who receives it.

ultimate resources

People like Pierre Omidyar, creator of the eBay online auction site, are creating structural shifts in the way people think about charitable giving for the public good. They are moving from traditional to the concept of social investment for greater social impact, in the process blurring the boundaries between for profit and the non-profit world. In March 2004, he announced that the Omidyar Network would house both a foundation and an arm that would also invest in for-profit companies. Omidyar and other venture capitalist like him argue that it is not true that business is only about making money and non-profits are about helping people. The profits from investing in for-profit social ventures are ploughed into philanthropy through the foundation which gives grants to individuals creating social change through their non-profits. Omidyar’s hybrid philanthropy lets the people decide how they would like to spend his philanthropic money, through the Internet contact network (Conlin and Hof 2004: 104–5); similarly with the Google Foundation. Instead of grants, the trend will be to invest in equity of social as NGOs reinvent themselves as social enterprises. There will

philanthropy

social

enterprises,

be a demand for social banking as a source of funds. In this

connection, Ashok Khosla, chairman of DA, mentions how a check

dam requires at least Rs 6–7 lakhs, money that is beyond the range of individual farmers, but which the village community as a whole can borrow from a commercial bank at low interest and repay after

improved productivity has increased incomes. There are some examples of success. In Nasik, the United donated a large sum to a village community for building check dams, as part of their public relations work, on the advice of DA who also built the check dam for the village. Some NRIs have also

Distilleries

donated money. Once people see the benefits of the dams, people

raise money themselves for such initiatives. Returns on such are big. The cost of the dams can be recovered in the profits from just one improved crop. But the difficult part is to mobilize the whole community since it is generally fragmented and there is no mechanism to ensure sharing of costs as well as benefits. The

investments

mobilization of the community to bring them to a stage where they

can productively co-operate requires intense effort, and time and money.12 Who will fund this? It is unlikely that social investment bankers will pay for the back end work. It needs to come from money, and may also come from corporate philanthropy, indigenous foundations or foreign social investment funds.

philanthropic A preview of how donors might give in future for poverty

initiatives is also offered by the recent announcement by former World

Bank president James Wolfensohn of a private investment fund set up by him, picking up 6 per cent equity in Fabindia, an ethnic wear and handicrafts company founded by John Bissell. The money raised is to be used to strengthen its supply chain. Fabindia is setting up community owned joint ventures in the rural areas with artisans

and craftspersons as shareholders. Through the community-owned companies Fabindia intends to invest back into the supply base making it easier for craftspeople to access money, design inputs and quality control mechanisms. The fund will also be used to develop support structures, particularly technology and training. The

company plans to create 100,000 sustainable jobs in the rural handicraft and handloom sector in the next four years (Chakravarty 2007).

12 Interview with Ashok Khosla, Founder and Chairman, Development Alternatives, New Delhi, 11 October 2006.

Signs are that the new donors and NGOs will increasingly talk the language of the market; the organizational models being developed to work in the philanthropic market being ‘enablers’ not ‘funding

agencies’. The talk is of using synergy, efficiency and of the ‘customer’, who may be a donor or an NGO, rather than the ‘grantee’. The new approach will put pressure on the traditional donor agencies to show measurable results because philanthropy, especially international philanthropy, is going to be under more scrutiny than ever before from the government and media. There will, therefore,

be more debate on the need for foreign aid in developing societies and its effectiveness or otherwise (Fulton and Kasper 2005). While social investment will take care of the productive undertaken by NGOs and social entrepreneurs, grant aid or private donations will still be needed for empowerment and civil

activities society strengthening work to promote democracy and good

governance.

Unless someone comes up with innovative concepts for financing this type of activity, dependence on old style philanthropy will continue. In other NGO activities different funding methods would need to be used. Research, for one, would need to be paid for by public funds, as would advocacy work. NGOs who are doing service

delivery for government would need to put pressure on government to

increase grants because they are doing government’s work for very low cost. It has been suggested that deals should be formalized with government to put money into a common fund from which NGOs can draw.13 The gradual replacement of foreign aid by a wider agenda of

international collaboration will make it easier for NGOs and other CSOs

to work together without the distorting effects of contracts, conditionalities and unequal access to funding. If the funding relationship is replaced as the primary relationship between North and South NGOs, then partnerships can work out complementary roles and resources that are equally valued in support of broad common goals.

Of course there will be many difficult issues to sort out at the global level. Edwards et al. (2003) list these as follows: • Legitimacy: Who speaks for whom and how differences are resolved in an unequal power situation. 13 Interview with Ashok Khosla, Founder and Chairman, Development Alternatives, New Delhi, 22 October 2006.

• Accountability: Who enjoys the benefits and bears the costs of what the alliance achieves. • Structure: How to deal with the challenges of truly international decision making and communication. • Strategy: The need to develop more rigorous arguments and credible alternatives as contributions to policy debates. At the same time, the one overarching critical question that will remain is who will fund the alliances? And will the same unequal relationship between those who hold the purse strings and those who do not command the resources still obtain in multilateral civil society institutions (ibid.). In future, donors will have to play a more significant non-financial as well as financial role to promote civil society. One such role could be to promote a dialogue with the state to help build trust between NGOs and the state. Another would be to help NGOs get an exposure to different models of success and failure in different parts of the world. NGOs on their part will require developing new capacities and new relationships to meet their new roles and the challenges of a new world order (ibid.). They will need to redefine their roles more broadly, both in terms of geographical reach and in terms of functions to encompass different levels from the local to the global, from development delivery at the grass roots to confronting the more complex international forces that lead to poverty. Though some Indian NGOs have strong funding bases of their own, several presently depend on external funding. These NGOs, just as much as INGOs, will need to invest more on educating their domestic constituencies so that they can mobilize both citizens and funds for change. The increasing emphasis on the market, as well as the newly emerging global power equations, have changed and will further change the power equations between donors and recipients. Some NGO activists claim that at international forums, rather than a gung ho attitude about thrusting Western ideas on developing nations, there is now an apprehension, and even some diffidence, about whether the ideas proposed will go down well in developing countries. This itself is some achievement on the part of the Indian NGO sector and evidence of its growing self-confidence to articulate issues that matter to them.

One of the most positive developments in the NGO world today is that global linkages are being built in several areas. For instance, a global non-profit reporting model has been developed through collective brainstorming of NGO leaders from several countries, North and South, to assess the potential of organizations to deliver change. This would help donors to direct the social change that they want, and by looking inwards it would help NGOs to improve themselves. Similarly, the Philippine Centre for NPO Certification and India’s Credibility Alliance are sharing their learning in NGO certification and rating. Another instance is the collaboration between Guidestar and Give India to set up the same type of databases for philanthropy that the former has developed abroad. Guidestar is also collaborating with the Tata Consultancy Services (TCS), after a global bidding process, to design the technology needed for its data collection and verification process. Several countries will share the costs of this new technology platform, just as the inputs about what is needed have come from many global NGO partners. Such sharing of learning and costs is a big leap forward in international NGO relations. The next big challenge in this process of collaboration will be how to reduce transaction costs of information and technology transfer, and to make the process smooth.14 Hopefully, in the next decade we will move towards a world where old habits and patterns of thought represented by a North–South interaction with money and knowledge flowing in one direction alone will be supplanted with more complex interrelationships based on equality and genuine partnerships. It is happening already and will accelerate. It is as much in the interest of the West to nurture this trend, as it is for the developing countries to be open to all that is best in the West. The West needs to become as aware of how the world is changing and to adapt to the changes by being open to a reverse flow of ideas, as it is for the developing world to learn from the West. Therefore, some part of the external aid, private as well as ODA, needs to be spent on educating Western domestic constituencies in other religions and cultures (Edwards 2004a: 195). Change will also come when, as Mahbubani argues, the large numbers of Asian students in the US, often at the top of their classes

14 Interview with Pushpa Singh, COO, Give Foundation, Mumbai, 27 June 2006.

in leading universities, return to their countries as they are beginning to do and run organizations. They will not be passive and will not take all the wisdom that has been given to them and as gospel truth. Likely, they will have a different point of view and will overturn received Western wisdom. It is this unleashing of the creativity of hundreds of thousands of Asians that will change the dynamic of development in India as well as other developing countries.15 Hopefully, the future will see a true partnership among the peoples of the world, and we will all learn to see the world, not through Eastern or Western eyes, but universal eyes.

15 Kishore Mahbubani’s in interview with Ravish Tiwari, ‘Asians have not arrived. They Have just Begun on the Road to Modernity’, Indian Express, 9 April 2008, on his latest book, The New Asian Hemisphere: The Irresistible Shift of Power to the East.

Appendix 1 List of NGOs Which Responded to the Questionnaire North Zone CSE-Centre for Science and Environment 41, Tughlakabad Institutional Area,

New Delhi – 110 062 www.cseindia.org West Zone Centre for Youth Developments & Activities (CYDA) 4, Vasant Tara, Above Udhyam Vikas Sahkari Bank Near Surya Hotel, Off Ghole Road, Pune – 411 004

Maharashtra [email protected] www.cydaindia.org Manav Kalyan Trust Bhaktinagar, Behind New Police Line

Opp. Tapodhan Samajvadi, Khedbrahma, Dist. Sabarkantha – 383 255 Gujarat [email protected]

Pratham Mumbai Education Initiative Above Adarsh Mithai Mandir, Oswal Bhavan, Tardeo Road, Nana Chowk, Mumbai 400 007 Mumbai

South Zone The Banyan 1231, Annanagar, West End Colony, Mogappair, Chennai – 600 050

Tamil Nadu [email protected] [email protected] [email protected]

Grace Peter Charitable Trust Plot No. 25, 14–11/7, Mahatma Gandhi Nagar, Narmadha Nadhi 4th Street, Madurai – 625 015 Tamil Nadu

www.gracepetercharitabletrust.org Sahara 2–3–703/k/1, Tirumala Nagar, Amberpet, Hyderabad – 500 013 Andhra Pradesh,

[email protected] Swami Vivekananda Youth Movement Hanchipura Road, Saragur, H D Kote Taluk, Mysore District – 571 121 Karnataka, India

[email protected] East Zone Atma Nirbhar — Ek Challenge

‘Mamata’, Gopinath Nagar, Opp. T. B. Hospital Guwahati – 781 016 Assam [email protected]

Economic Rural Development Society (ERDS) 6, Kiron Sankar Roy Road, Ground Floor, Room No. 3, Kolkata – 700 001 West Bengal [email protected]

[email protected], [email protected] www.erds.org

Appendix 2 List of People Interviewed Note: The designations shown against the names are those at the time of interview. Since then many have moved on from the organizations mentioned. NGO Leaders

P.M. Tripathi Director, AVARD-Association of Voluntary Agencies for Rural Development

Delhi Rati Misra Regional Programme Officer for South Asia The Resource Alliance Delhi

Sunita Narain Director Centre for Science and Environment (CSE) Delhi

R. Karthik Venkatesh Civic Craft Chennai B.N. Makhija

Chairman Credibility Alliance Mumbai Ashok Khosla Chairman

Development Alternatives Delhi

M.K. Bhatt Principal Consultant (NOVIB) Founder Director, Development Support Initiative Bangalore

Pushpa Aman Singh COO & Vice-President (Programs) GiveIndia Foundation, Mumbai Alok Mukhopadhyay Chief Executive, VHAI

Convenor, Independent Commission on Development & Health in India Delhi Ms Andal Damodaran

Chairperson Indian Council of Child Welfare Chennai Viraf Mehta CEO

Partners in Change Delhi Dr Rajesh Tandon President PRIA,

Delhi Samuel Paul Founder & Chairman Public Affairs Centre Bangalore

F. Stephen Executive Director SEARCH Bangalore

Malini B. Eden Director – Strategic Alliances SEARCH Extension Programme Bangalore

Vijay Sardana Former Director Aga Khan Foundation and Society for Promotion of Wasteland Development (SPWD) Delhi Mr K. Panchaksharam Secretary South India Producer’s Association (SIPA) Chennai Puran Chand Pande CEO VANI India Delhi Ajay S. Mehta Director, National Foundation for India Delhi Dr Mihir Shah Secretary Samaj Pragati Sahayog ( SPS) Madhya Pradesh Rajesh Shah CEO Blue Planet Run Foundation Bangalore Dr Ravi Chopra Founder Director People’s Science Institute Dehradun Dr Vijay Mahajan Founder and Chairman BASIX Hyderabad N. Venkata Krishnan Founder and Director GiveIndia Mumbai

Lysa John, Former Executive Director

YUVA Mumbai National Campaign Co–ordinator Vada Na Todo Piya Abhiyan

Delhi Dr R Balasubramaniam President Swami Vivekananda Youth Movement, Saragur, Karnataka George Mathew

Director Institute of Social Studies Delhi

Representatives of Indian Foundations Arun Bhende

Director Dhirubhai Ambani Foundation Mumbai Arun Pandhi

Senior Programme Officer Sir Ratan Tata Trust

Mumbai Tara Sabavala

Senior Programme Officer Sir Dorab Tata Trust

Mumbai Dileep Ranjekar

Director Vijay K. Gupta

Head, Advocacy Azim Premji Foundation Bangalore Rohini Nilekani

Founder and Chairman Arghyam Foundation Bangalore

Anmol Vellani Executive Director

IFA (Indian Foundation for the Arts) Dr T.L.S. Bhaskar

Programme Manager Byrraju Foundation

Hyderabad Representatives of International Donor Organizations Shankar Venkateswaran

Executive Director – India American India Foundation Delhi Steve Hollinghworth

Country Director Care India Delhi Solveig Schuster

Counsellor & Head of Development Cooperation India/Nepal/Bhutan

and T. Sampath Kumar Advisor (Development) & Canada Fund Coordinator Canadian International Development Agency (CIDA)

Delhi Ganesan Balachander Representative Ford Foundation

Delhi Dr Shobha Raghuram Former Director India Regional Office HIVOS, Bangalore Hans Bruning

Project Director Lennard Roubos

Country Director for India ICCO Utrecht, Netherlands

Mr Biranchi Upadhayaya Country Director Oxfam GB Shaheen Niloufer

Regional Programme Development Co-ordinator Oxfam (GB) Delhi Roland Angerer Director

Plan International India Delhi Michael Hjortso Minister Counsellor, Deputy Head of the Mission

Royal Danish Embassy, Delhi Mr R.C. Bakshi Senior Program Officer The Royal Netherlands Embassy Delhi

Renu Wadehra Advisor Royal Norwegian Embassy Delhi

Ramesh Mukalla Programme Officer (Environment & Governance) SIDA — Swedish International Development Cooperation Agency Delhi

Others N.C. Saxena Former Secretary Planning Commission GOI New Delhi

Sanjay Aggarwal CEO AccountAid Delhi

Vineet Rai Founder and CEO Aavishkar Micro Venture Capital Fund Mumbai

Anuj Sharma Deputy Secretary Ministry of Home Affairs New Delhi Sanjay Patra

Director Financial Management Service Foundation, Delhi Sri Sai Prakash President

Erin Foundation Ex-Chief Coordinator Karnataka Diaspora Cell Bangalore Prof. G.V. Joshi

Mangalore University, Department of Economics Mangalore

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Eldridge, P.J. 1969. Politics of Foreign Aid in India. Vikas Books, New Delhi. FAO (Food and Agriculture Organization of the United Nations). 1988. ‘ Aspects of FAO’s Policies, Programmes, Budget and Activities aimed at Contributing to Sustainable Development’, Document to the 94th session of the FAO Rome, 15–25, No. 1988, Rome, FAO. Farouk, Fazila. 2002. ‘Why Donor Funds Don’t Reach NGO Coffers’, All Africa, 8 August. Fernandes, Walter. 1981. ‘ Nature of People’s Participation in Development: Role of Voluntary Organizations’, in Walter Fernandes and Rajesh Tandon (eds), Participatory Research and Evaluation: Experiments in Research as a Process of Liberation. Indian Social Institute, New Delhi. ———. 1986. ‘The National NGO Convention: Voluntarism, the State and for Change’, Social Action, New Delhi, vol. 36, pp. 431–41. Finn, Heinrich. 2005. ‘ Ensuring Not Just More—But Better—Development Aid’, CIVICUS Newsletter, 13 June. Fleishman, Joel L. 2005, ‘ How Much is Enough?’ Unpublished paper presented at Princeton Conference on Ethics and International Grant Making, May. Ford Foundation. 2002. ‘ Building Capacity’,Ford Foundation Bulletin, Special Issue, December 2002. Ford Foundation, New Delhi. Foundation Center. 2008. Foundation Giving Trends. Foundation Center, New York . Fowler, Alan. 2000a. The Virtuous Spiral. Earthscan, London. ———. 2000b. ‘ Beyond Partnership: Getting Real about NGO Relationships in the Aid System’, IDS Bulletin, vol. 313, pp. 1–11. ———. 2000c. ‘Civil Society, NGDOs, and Social Development: Changing the Rules of the Game?’ UNRISD Paper, Geneva, January. Freire, Paulo. 1972. Pedagogy of the Oppressed. Sheel and Ward, London. Fulton, Katherine and Gabriel Kasper. 2005. ‘Cultivating Change in Philanthropy’, Alliance Magazine, Issue on ‘Whither Philanthropy’, December. Gaberman, Barry D. 2004. ‘Building the Infrastructure for Philanthropy’, Alliance Extra, March. Gee, Marcus. 2005. ‘Aid Goes Best with Skepticism’, The Globe and Mail , 6 July. Geithner, Peter and Trina Vithayathil . 2003. ‘ Diaspora Philanthropy: Analysis of China and India’, Workshop Background Note, Hauser University, Harvard. Geloo, Zarina. 2006. ‘ Bilateral Donors and Civil Society: Long Engagement… Will They Ever Get Married?’,TerraViva, 24 June. Gerster, Richard. 2008. Partners in Development: India and Switzerland. Social Science Press, Delhi, in cooperation with Berghahn Books, Oxford/New York. The Global Equity Initiative. 2003. Report of the Proceedings of the Workshop ‘Diaspora Philanthropy: Perspectives on India and China’. Harvard University, Cambridge. 7–8 May. GOI (Government of India). 1995 to 2006. Receipt of Foreign Contribution by Voluntary Associations: Annual Reports. Ministry of Home Affairs (Foreigners Division), Government of India, New Delhi.

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Robertson, Sarah. 2004. ‘ The Skoll Foundation Focuses on Social , February 2004, Stanford Graduate School of Business. Available at: http://www.gsb.stanford.edu/news/headlines/csi_phil_disc_series_osberg. shtml# Feb. 2004. Robinson, Mark A. 1991. Evaluating the Impact of NGOs in Rural Poverty Alleviation: India Country Study. Working Paper Series No. 49. Overseas Development Institute, London. ———. 1995. ‘ Can Foreign Aid be used to Promote Good Government in Countries?’, Ethics and International Affairs, vol. 8. ———. 1996a. ‘The Role of Aid Donors in Strengthening Civil Society’, in Andrew Clayton (ed.), NGOs Civil Society and the State , pp. 204–18, INTRAC , Oxford . ———. 1996b. Strengthening Civil Society through Foreign Political Aid , ESCOR Research Report No. 6234, Institute of Development Studies, Brighton. Rosenfield, P., C. Sprague and H. McKay. 2004. ‘ Ethical Dimensions of Grantmaking: Drawing the Line in a Borderless World’, Journal of Leadership and Organizational Studies,11 (1). Roubos, Lennard. 2006a. ‘ Chains of Freedom. 40 Years of Experience with the Dutch Co-financing Model’, second draft, Mimeo, Spring. ———. 2006b. ‘For the People, With the People, By the People’—Some Personal Reflections on NGO Dynamics in South Asia and on the Role and Position of Donors in the “Aid Chain” (1985–2005)’, Unpublished Mimeo. Roy, Bunker. 1988. ‘ Voluntary Agencies Twenty Years from Now’, Mainstream, vol. 26, pp. 17–19. ———. 1996. ‘ Open Letter to Home Minister: Foreign Funds and Threat to Sector’ in Economic and Political Weekly, December 7, XXXI (49), pp. 3161–62. Ruttan, Vernon W. 1996. United States Development Assistance Policy: The Domestic Politics of Foreign Economic Aid.The Johns Hopkins University Press, Baltimore. Said, Edward. 2003. Orientalism: Western Conceptions of the Orient, Edition, Penguin Classics, London. First published in 1978. Sainath, P. 1992. Everybody Loves a Good Drought. Penguin, New Delhi. Salamon, Lester M. and Helmut K. Anheir. 1992. In Search of the Nonprofit Sector I: The Question of Definitions. Working Papers of the Johns Hopkins University Nonprofit Project No. 2, Johns Hopkins University. Samuel, John (ed.). 2000a. Social Action. An Indian Panorama. VANI, New Delhi. ———. (ed.). 2000b. ‘Changing Contours of Social Action’, in John Samuel (ed.), Social Action. An Indian Panorama.VANI, New Delhi. ———. 2000c. ‘ Who’s Afraid of Foreign Funds?’, in John Samuel (ed.), Social Action. An Indian Panorama. VANI, New Delhi. Saxena, Naresh. 2003. ‘ The New Government Policy on Bilateral Assistance to India’, Paper commissioned by the Embassy of Sweden, New Delhi , and included in SIDA’s Report of the Workshop on Future Development Assistance to India from Smaller Bilateral Donors, 6–7 October, New Delhi.

Entrepreneurship’

Developing

International

Voluntary

Anniversary

Schotte, Jan Aart with Schnabel Albrecht (eds). 2002.Civil Society and Global Finance. Routledge, Warwick University. Seabrook, Jeremy. 1999. ‘Role of NGOs’, in Jeremy Seabrook, Pandurang Hegde, John Shotten and Bharat Dogra (eds), NGOs and Social Change , Bharat Dogra, New Delhi. Seeta, Prabhu K. 2002. ‘ Financing Human Development During Fiscal Strategies and Options for Indian States’, Revised version of paper presented at the 85th Annual Conference of the Indian Economic Association, Thiruvananthapuram, 27–29 December. Sen, Siddharth. 1992. ‘ Non-profit Organizations in India: Historical and Common Patterns’, Voluntas, vol. 3, pp. 175–93. ———. 1993. Defining The Nonprofit Sector: India . Working Papers of the Johns Hopkins Comparative Nonprofit Sector Project, No. 12, edited by L. M. Salmon and H. K. Anheir . The Johns Hopkins Institute for Policy Studies, Baltimore. Seth, D.L. 1982. ‘ Movements’, Seminar, October. Seth, D.L. and Harsh Sethi. 1991. ‘ The NGO Sector in India: Historical Context and Current Discourse’, Voluntas, 2 (2), pp. 49–68. Sethi, Harsh. 2003. ‘ Doing Without Aid ?’, Economic and Political Weekly , 18 October. Sharma, S.L. 1992. ‘ Social Action Groups as Harbingers of Silent Revolution’, Economic and Political Weekly, 12 (27), pp. 2557–61. Sharma, Shantanu Nandan. 2008. ‘ India to Create Agency for Bilateral Aid’ , Economic Times, New Delhi, 4 May. Shulman, Mark R. 2004. ‘ Civil Society’s Response to the Challenges of , a Conference Report from a meeting held at headquarters of the Luso-American Foundation, Lisbon, Portugal, 7–8 June. SICP (Sampradaan Indian Centre for Philanthropy). 2001a. Investing in Giving and Fund Raising in India, Sampradaan, New Delhi ———. 2001b. ‘ NGO Needs and Donor Dilemmas—A Background Paper’, for ‘ NGO-Donor Dialogue’, 20 and 21 July, Sampradaan, New Delhi. ———. 2001c. Report of ‘The NGO-Donor Dialogue’, 20 and 21 July, Sampradaan, New Delhi. ———. 2004. A Review of Charities Administration in India,Sampradaan New Delhi. SIDA. 2003. ‘Report of the Workshop on Future Development Assistance to India from Smaller Bilateral Donors’, Mimeo, 6–7 October, SIDA, New Delhi. Simmon, Adele and Dan Nielson. 2004. ‘ Promoting Global Giving: An ’, Alliance, 9 (4). Simmons, Adele. n.d. ‘ Benefactors—A Critique on Contemporary American Philanthropy’, in Global Giving Matters , Synergos and World Economic Forum. Singh, Daman. 2001. ‘ Private Wealth, Public Gain’, Sir Ratan Tata Trust Annual Report 1999–2000, Sir Ratan Tata Trust, Mumbai.

Stringency:

Development

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Ourselves: prepared

Report, Overview

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Programs

Overview

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Citizenship

Development

Themudo, Nuno. 2004. ‘ Managing Resource Dependence: NGOs, Funding and Organisational Independence’, ISTR Sixth International Conference, 11–14 July, Toronto, Canada. Thomas, Binu S. 1999. ‘ Foreign Aid Adjusts to New Market Realities’, Third World Network . ———. 2003. ‘ Re Response to issues raised regarding ActionAid India’. Open letter to ActionAid India, posted on the internet on 4 March. Available at: http://www.hvk.org/articles/0603/169.html. Thornton, A.P. 1965. Doctrines of Imperialism. Wiley, New York . Times of India. 2008a. ‘ Safe Haven: FDI leaps 56% in ‘08’, 3 May, New Delhi. ———. 2008b. ‘ Government wants Unified Voice on Climate’, 5 May 2008. ———. 2008c. ‘ Focus on Civic Driven Change for Development Work ’, New Delhi, 29 June. Tisch, Sarah J. and Michael B. Wallace. 1994. Dilemmas of Development The What, Why and Who of Foreign Aid . Westview Press, Boulder. Tuan, Melinda. 2004. ‘ The Dance of Deceit: A Power Imbalance Undermines the Social Sector’, Stanford Social Innovation Review, Summer. Tvedt, Terje. 1998. Angels of Mercy or Development Diplomats? NGOs and Foreign Aid . James Curry Ltd ., Oxford . UNDP (United Nations Development Program). 2002. Human Development Report. Oxford University Press. ———. 2007. Human Development Report, Oxford University Press. UNDP , INEP, World Bank, and World Resources Institute. 2003. ‘ Joining in Global Environmental Governance’, in World Resources 2002–2004: Decisions for the Earth: Balance, Voice, and Power. UNDP, INEP, World Bank and World Resources Institute. United Nations . 2003. ‘ Defining Voluntary Organizations/NGOs/NPIs’, in Handbook on Non-Profit Institutions in the System of National Accounts. United Nations, New York . VANI (Voluntary Action Network India). 1999. Report of Campaign for in Foreign Funding, Mimeo, May. VANI, New Delhi. ———. 2006. ‘ Visioning Voluntary Sector in Emerging India’, Mimeo, report of the VANI National Convention, VANI, New Delhi. Van Der Velden, Fons. 1997. ‘ Private Development Cooperation in Transition. The Rise and Fall of Northern NGDOS’,SEARCH Bulletin, April–June. Van Diesen, Arthur . 1998. The Quality of British Aid to India. Christian Aid Report for DFID, UK. Van Rooey, A. 1998. Civil Society and the Aid Industry.Earthscan, London. Venkat Krishnan, N. 2004. ‘ Can Internet Based Market Places Help Overcome the Barriers to Overseas Giving?’, Alliance Extra, June. Available at: http:// www.allavida.org/alliance/axjunoya.html. Verghese, B.G. 1977. ‘ Voluntary Action: A New Mission for the New Missionaries’, Voluntary Action, Vol. 19, No. 1, pp. 985–86. Vij-Aurora , Bhavna. 2003. ‘ Dollar Shrines’, The Sunday Express, New Delhi, 24 August.

Assistance:

Transparency

Vij-Verma, Bhavna. 2006. ‘ We Serve Fudge’,Outlook , 20 March, pp. 34–36. Vishwanath, Priya. 2003. Diaspora Indians: On the Philanthropy Fast Track. Centre for Advancement of Philanthropy, Mumbai. Viswanath, Priya and Abha Manchanda. 2006. ‘ Diaspora Philanthropy—Real Potential or Seeming Aspirations?’ Mimeo, CAF India, New Delhi. Walker, David. 2001. ‘ The Aid Game’, Guardian Unlimited, 24 July. Wall, David. 1973. The Charity of Nations. Macmillan, London. Wallace, Tina, Lisa Bornstein and Jennifer Chapman. 2006. The Aid Chain. Coercion and Commitment in Development NGOs. ITDG Publishing, UK. Watt, Carey Anthony. 2005. Serving the Nation: Culture of Service, Association and Citizenship in Colonial India. Oxford University Press, New Delhi. WCED (World Commission on Environment and Development). 1987. Our Common Future (The Brundtland Report). Oxford University Press, Oxford/ New York . Weisbrod, Burton A. (ed.). 1998. ‘ Institutional Form and Organization Behaviour’, in Powell and E.S. Clemens (eds), Private Action and the Public Good, pp. 69–84, New Haven, CT, Yale University Press. Wild , Leni. 2006. ‘ Strengthening Global Civil Society’, Paper Presented at the International Conference held at the Rockefeller Foundation’s Bellagio Center in July, Italy . Institute for Public Policy Research (IPPR), London. World Bank. 1995. Strengthening the Effectiveness of Aid: Lessons for Donors. The World Bank, Washington DC. ———. 1998a. Assessing Aid: What Works, What Doesn’t, and Why.A World Bank Policy Research Report, Oxford University Press, Oxford . ———. 1998b. ‘ The Bank’s Relations with NGOs: Issues and Directions’, NGO Unit, Social Development, Paper No. 28, 11 August. ———. 2002. A Case for Aid: Building A Consensus for Development Assistance. World Bank, Washington DC. ———. 2003a. Global Development Finance. World Bank Publications, Washington DC. ———. 2003b. Issues and Options for Improving Engagement Between the World Bank and Civil Society Organizations. 24 October. World Bank, Washington DC. ———. 2006. ‘ World Bank-Civil Society Engagement. Review of Fiscal Years 2005 and 2006’, World Bank, Washington DC. ———. circa 2006. ‘ The World Bank’s Partnership with Nongovernmental Organizations’ (undated brochure), Participation and NGO Group, Poverty and Social Policy Department, The World Bank, New Delhi. ———. n.d. ‘ Non-governmental Organizations and Civil Society. Overview’, posted on World Bank website, date unknown. Available at: http://1n0018. worldbank.org/essd.nst?NGOs/home

About the Author Pushpa Sundar is an independent consultant and writer with over 30 years’ experience in the field of development and civil society. She is at present Chairperson of Winrock International India, a non-profit organization, and a founding member of the Board of Partners in Change, another non-profit organization. She was also a co-founder and the first Executive Director of Sampraadan Indian centre for Philanthropy for nine years, and has been on the governing councils of IIHMR, Jaipur, Sanskriti Foundation, and South Asia Fund Raising Group. Till recently she was Senior Advisor to the Nand and Jeet Khemka Foundation. Pushpa Sundar has written extensively; her books include Patrons and Philistines: Arts and the State in British India, 1773–1947 (1995); Beyond Business: From Merchant Charity to Corporate Citizenship: Indian Business Philanthropy through the Ages (2000); and For God’s Sake: Religious Charity and Social Development in India (2002).

Index Aasra, 143 Aavishkar, 210 ABB India Foundation, 316 Accion Fraterna, 303 accountability and transparency, 12, 53–54, 56, 61, 86, 91, 96, 105, 118, 120, 124, 140, 143–44, 169–70, 179–87, 205, 214–15, 224, 232, 234, 263, 266, 268, 272–73, 279, 283, 298, 300–4, 306, 311, 316, 322 AccountAid, 214, 247 Action for Welfare and Awakening in Rural Environment (AWARE), 194 ActionAid (AA), 26, 49, 67, 73, 83, 90, 99, 102, 105, 110, 114, 115, 119, 204, 205, 255, 263, 287, 291 ActionAid India, 73, 192, 215 ActionAid International, 185, 215, 222 ActionAid Karnataka, 73 Acumen Fund, 210–11 Adimjati Sewa Sangh, 33 ADITHI, 116 affirmative action, 261, 274, 276, 286 Aga Khan Foundation (AKF), 107, 108, 110, 114, 116, 125, 200, 215, 263 Aga Khan Rural Support Program (AKRSP), 81, 196 Agricultural Development and Training Society (ADATS), 303 aid architecture,

changing contours of, 8–10, 309 bilateral aid bilateral aid policy, 149–56 multilateral aid global context of, 308–9 impact, lack of, 190–93 quality of, 175–79

Aid Et Action, 183 Al Gore, 49 Aligarh Muslim University (AMU), 33 All India Sarva Seva Sangh, 138 American India Foundation (AIF), 109, 111, 125, 199, 314 Andhra Pradesh District Primary Project, 89 Antyodaya Chetna Mandal, 34 Anubhav, 116 Apartheid movement, 27, 104, 229 Arghyam Foundation, 265 Arya Samaj, 31 ASA. Switzerland, 99 ASHA, 314 Asia Foundation, 107–8, 148, 201 Association for Sarva Seva Farms (ASSEFA), 34, 211, 281 Association of Voluntary Agencies for Rural Development (AVARD), 77–78, 138, 144n13 Avahan (India AIDS Initiative), 112 Azim Premji Foundation, 61

Education

Ball, Colin, 168, 202 Barclays Bank, 47 Barefoot College, 279 BASIX, 208, 210, 262 begging bowl image, 11, 293 Benaras Hindu University (BHU),

33, 280 Bharatiya Janata Party (BJP), 133, 278 Bharti Foundation, 315 Bhat, Ela, 115 Bhat, M.K., 215 Bhoodan movement, 34–35 Bilateral Assistance Informational Memorandum (BAIM), 157 Bill and Melinda Gates Foundation, 14, 83, 99, 106, 109, 111–12, 125–26, 264, 299, 311, 312

BIMARU (Bihar, Madhya Pradesh, Rajasthan, U.P.), aid to, 74, 157, 289–91 Bissell, John, 320 Bissell, Richard, 240 BKE Belgium, 99 Blue Planet, 211, 312 Bombay Public Charitable Trusts Act (1950), 132 Bowles, Chester, 241 Brahmo Samaj, 31 Braun, Mr, 164 Bread for the World, 246 Brian, Sergey, 14 British Partnership Scheme, 90 Brook Bond, 47 Brundtland Report, 188 Buffet, Warren, 109 Build Operate and Transfer (BOT), 209 Bundy, McGeorge, 240 Byrraju Foundation, 316 Canada, aid to India, 88, 89, 90, 92, 93, 99, 151 Canada Fund for Local Initiatives (CFLI), 89, 92 Canadian International Development Agency (CIDA), 25, 26, 88, 90, 92, 93, 116, 199, 208, 263, 264, 265 capacity building, 177, 181, 212–19 CARITAS, 73, 102 Carnegie Corporation, 85, 229, 254 Catholic Organization for Relief and Development Aid (CORDAID), 89, 208, 209 Catholic Relief Services (CRS), 102 Central Intelligence Agency (CIA), USA, 135 Central Social Welfare Board (CSWB), 33, 50, 133, 213 Centre for Advancement of (CAP), 45, 215 Centre for Civil Society, 45 Centre for Environment Education (CEE), 4, 5, 49, 116, 122, 146, 264, 288

Philanthropy

Centre for Science and Environment (CSE), 5, 116, 122, 196, 264, 288 Centre for Youth Development and Activities (CYDA), 80 Chambers, Robert, 164 Charities Aid Foundation, 205 Chavan, Y.B., 135 Child Aid Foundation, 313 Child in Need Institute (CINI), 116 child labour, 52, 62, 151, 153, 232, 234, 237, 244 Child Rights and You (CRY), 51, 316 Chipko movement, 114 Christian Aid, 102, 169, 246, 255, 303 Christian missionary (church-based) organizations, 11, 12, 31–33, 36, 123, 169, 238, 245, 246, 248–49, 310 Church’s Auxilary for Social Action (CASA), 73, 102 Church Development Service (EED), 103–4, 185, 246, 263, 303 Citizens for Democracy, 136 civil society, 3, 5, 8, 10, 13, 18–19, 21–25, 31, 44, 52–53, 58, 68, 81, 89–90, 92, 95–96, 103–5, 107–9, 131–33, 138, 143, 152, 154, 157, 170, 172–73, 192, 213, 215, 217, 234, 242, 260, 265, 270, 274–75, 284, 286–87, 293, 297, 299, 301–2, 305, 306, 311, 317–18, 321–22 building and strengthening, 52, 118–22, 174, 218, 263, 306 global, 46–50, 94 Civil Society Organizations (CSOs), 21, 22, 24, 90, 94–96, 120, 218, 321 climate change, 3, 5, 43, 48, 49, 84, 122, 173, 242, 296, 308, 318 Clinton Foundation, 109

co-financing agencies (CFAs), 89–90, 99, 118, 152, 154 Colas, campaign against pesticides in, 4, 225 Cold War, 6, 7, 86, 91, 102, 240 collective action, 46, 48, 119

Commission for Sustainable 154 Commonwealth Foundation, 168, 202 Commonwealth Human Rights Initiative, 45 communicable diseases, 46, 85 communism, 3, 34, 36, 85, 86, 103, 113, 117, 132, 135, 240–42, 245, 250

Development,

Communist Party of India (Marxist,

CPI [M]), 11, 250 Community Aid Sponsorship Project, 73 Community Based Organizations (CBOs), 22, 37–38, 189 community development, 2, 33, 64, 109, 189, 229–30 Companies Act (1956), 45, 132 Company Law Board (CLB), 224 Comprehensive Rural Health

Programme, 40 Comptroller and Auditor General (CAG), 60 Confederation of Indian for Service and Advocacy (CIOSA), 78 Consumer Education and Research Centre, Ahmedabad, 61

Organizations

Cooperative Development

Foundation,

40 Cooperative for Assistance and Relief Everywhere (CARE), 34, 83, 102, 199, 200 corporate philanthropy, 63–64, 223–24 corporate social responsibility (CSR), 45, 232, 234, 316 corruption and malpractices, 1, 5, 12, 39, 43–44, 53, 117, 139, 140, 143, 145, 153, 194, 223, 238, 259–60, 293, 300 Council for Advancement of People’s Action and Rural Technology (CAPART), 35, 50, 66, 89, 133, 213 Council for Child Care, 73

Country Assistance Strategies (CAS), 96 Country Strategy, 13, 244–45 Cowles Foundation, 107 Credibility Alliance (CA), 45, 54, 145, 323 cultural imperialism, 11, 240, 249–55, 256 Dalit Christian Network, 286 Dalit Foundation, 201, 304 Dalits, 2, 24, 43, 109, 114, 119, 153, 170, 236, 243–44, 249, 276, 285–87, 309 Danchurch aid, 246 Danforth Foundation, 107 Danish International Development Agency (DANIDA), 18, 25, 26, 88, 92, 93, 111, 116, 118, 150, 199, 200, 261, 285 debt rescheduling, 104 decentralization and participation, 15, 118 Dell Foundation, 109, 311 democracy, 2, 4, 113, 121–22, 225, 308, 314 Denmark, aid to India, 87, 88, 92 Department for International (DFID, UK), 26, 86, 88, 89, 90, 93, 99, 119, 169–70, 185, 215, 262, 265, 291, 304 dependency syndrome, 117, 204 development, development process, 2, 15, 19, 23, 33, 41–44, 51, 91, 94, 210, 220, 237, 299 agenda, 13–14 aid/assistance, 1, 6, 8, 16, 41, 67–77, 78, 84, 86, 97, 101, 103–104, 114, 117, 149, 156, 180, 233, 239, 246, 248–249, 282, 288, 301, 308–309, 317 education, 301 illiteracy, 316 Development Alternatives, 52, 73, 81, 94n4, 304 Development Assistance Committee (DAC), 68, 70

Development

DHAN Foundation, 196 diaspora philanthropy, 58, 64–66, 308 disaster preparedness and management, 122, 264 District Primary Education Programme, 261 Domestic Violence Act, 288 donors official, 87 private, 14, 58, 82, 97, 105, 110, 154, 179, 215, 239, 291, 305, 311 donor attitudes and practice, changes, 122–30 -driven agenda, 14, 129–30, 220ff; economic, 243–45 hidden, 249, 255 religious, 245–49 evaluations, 213 hierarchy, 161 inefficiencies due to donor practice, 269–72 donor–NGO relationship, 14, 131, 161ff, 194, 305–6 perspective, 237–38 policy, 154 power privileges, 161 strategies and programmes, 113ff; transparency and accountability, 306–7 of support, 193–97 Dowry Act, 288 Dr Reddy’s Foundation, 61, 315 Duke Foundation, 107 Dulles, Allen, 240

withdrawal

eBay, 14, 319 economic conditions in developing 47

countries,

development, 38, 42, 69, 91, 96, 103, 187–88, 229, 233, 264 growth through market 153 reforms and liberalization, 42 EED, see Church Development Service Emergency (1975–77), 36–37, 136 EMMAUS Community Welfare Fund India (ECOMWEL India), 103, 199 empowerment process, 14, 43, 53, 57, 83, 118–19, 121, 133, 156, 173, 180, 204–5, 212, 228, 261, 276, 286, 297–98, 321. See also women’s empowerment endowment grant, 163, 165 Engstrom, Ted, 245 Ensminger, Douglas, 108 environment and ecological factors, 38, 43, 46, 84, 115, 153, 189, 236, 237, 296, 310 Escorts Heart Institute and Research Centre (EHIRC), 143 ethics and donors’ motive, 84 of ends and means, 56–57 Evangelische Zentralistelle fur Entwicklungshilf e.v. (EZE), 83, 102, 164, 246

interventions,

Fabindia, 320 Fair Trade Campaign, 235 Finance Act (1983), 38 Finance for Development Initiative, 6 financial accountability, 124, 140, 144, 179, 186, 214, 273 Financial Management Services (FMSF), 103, 214, 263, 303 fiscal crisis (2008), 9 Fondacion de Oriente of Portugal do, 110 Food and Agriculture Organization (FAO), 94

Foundation

Ford Foundation (FF), 15, 26, 50, 83, 85, 99, 107–9, 111, 114–16, 118, 121, 125, 126, 128, 147, 155, 164, 166, 178, 185, 190, 193, 201, 208, 214, 215, 229, 240–41, 261, 263, 264, 283, 299, 304 and CIA connection, 240 foreign aid demand and supply, equation, 309–17 impact on society, 285–94 official and private, 58, 193, 229, 287, 301 Foreign Contribution (Management and Control) Bill (FCMC Bill, 2005), 141– 142 Foreign Contribution (Regulation) Act (FCRA), 12, 24–25, 37–38, 50, 64–65, 68, 70, 76–79, 81, 93, 97–99, 126, 134, 138–39, 141–46, 149, 155, 157, 171, 224–25, 246– ,50 273, 277, 279, 289, 314 Foreign Contribution Regulation Bill (FCR Bill, 2006), 141–42 Foreign Direct Investment (FDI), 4, 9, 153, 308 foreign donors, 82ff, 283 categories, 86, 87–97 Foreign Exchange Management Act (FEMA), 142 Foreign Exchange Regulation Act (FERA), 140 forestry management, 191 Foster Parents Plan International, 73, 77 Foundation Center, 311 Foundations, 10, 14, 22, 24, 27, 45, 50, 57, 58, 60–62, 67, 82, 85, 93, 99, 102, 106–12, 114, 121, 125–26, 129, 148, 165, 167, 170, 201, 207, 230, 240, 252, 254, 264, 268, 302, 304, 311–16, 318 Friedrich Ebert Stiftung Foundation, 110, 121

Friedrich Neuman Foundation, 110 Friere, Paulo, 103 funding practices and modalities, 302–5 Gandhi Peace Foundation, 138 Gandhi Smarak Nidhi, 33, 138 Gandhi, Indira, 136 Gandhi, M.K., 15, 32, 103, 134, 229, 255, 278, 281 Gandhi, Rajiv, 271 Gandhi, Sonia, 5 Gates, Bill, 14, 85 Geldof, Bob, 312 gender issues, 24, 38, 42, 43, 48, 51, 83, 96, 108, 114–19, 172, 234, 261, 274–76, 285–87, 301 Gene Campaign, 5 General Budgetary Support (GBS), 123, 175, 177, 179, 302, 305 genetic engineering, 5, 237, 310 Germany, aid to India, 87, 88, 90, 97, 149 Gesellschaft fuer Technische Zusammenarbeit (GTZ), 26, 91, 116, 191, 192, 209, 214 Give Foundation, 45, 65, 80, 312–14; India network, 312, 323 Global Environment Facility (GEF), 70 global financial crisis, 9, 308, 311 Global Fund for Community 304, 311 global warming, 85, 308 GlobalGiving, 312 globalization, 2, 4, 25, 49, 153, 202, 215, 228, 256, 270, 296–297, 308 post-globalization years, 41–46, 218 Google Foundation, 14, 319 Goonj, 209 Gospel Fellowship Trust India, 99 Gospel for Asia, 99, 247

Foundations,

government delivery system, 39, 43 and donors, 147–156 funding of NGOs, 58, 66–67, 258 and NGOs (voluntary sector), 38, 132–147, 147, 152, 260 responsibility 292–293 vs NGOs and donors, 131ff tripartite relationship, 157–158 role in development, 300. See also state Gram Vikas, 196, 209, 303 Gramsci, Antonio, 19 grant-making process, 163–64, 313 grassroots development, 22, 56, 166, 172, 275 Grassroots Organizations (GROs), 79 Green Revolution, 107, 111, 231 Grenada, 97, 99 Gross Domestic Product (GDP) NGOs contribution, 4 NPOs contribution, 51 per capita in US and China, 296 Guidestar, 323 Hawala channels, 141 Hazen Foundation, 107 Hoffman, Paul, 241 Hopkins Fund, 107 Human Development Index (HDI),

74, 289, 295 human rights, 2, 22, 24, 40, 43, 44, 46, 53, 64, 84, 119, 150–51, 153, 172, 233, 236, 237, 244, 288, 316; violations, 84, 242 Human Rights Commission, 154 Humanistisch Instituut voor Ontwikkelings Sameenwerking (HIVOS), 83, 90, 99, 204, 208, 209, 246, 287 humanitarian assistance, 17, 25, 59, 86, 110, 111, 162, 239, 242, 247, 285, 296, 316, 318

Ilaiah, Kancha, 286 Illich, Ivan, 103 Income Tax Act, 1961, 132–33 India Canada Environment Facility (ICEF), 90 India Canada Rural Energy Project, 263 Indian National Trust for Art and Cultural Heritage (INTACH), 206 Indian Rural Energy Network (IRNET), 263–64 Indian Trusts Act, 1882, 132 Indira Gandhi National Open (IGNOU), 143 Indo-Dutch Programme for Alternatives in Development, 151 inequalities of wealth and power, 1, 48, 113, 278, 284, 308. See also poverty information technology (IT), 315 Information, Communication (ICT), 42, 47, 130, 169, 261 Infosys Foundation, 61 institution building, 54, 157, 181, 216 institutional development, 217 donors, 60–63 self-reliance, 198 support, 62, 125, 174, 176, 226, 302 institutionalization and growth of NGOs, 111, 267, 272–78 Integrated Child Development Services (ICDS), 40 intellectual property rights (IPRs), 218 Intelligence Bureau (IB), 145 Inter Church Organization for Co-operation (ICCO), 83, 89, 90, 99, 102, 103, 119, 123, 126, 130, 164, 168, 170, 178, 202, 218, 246, 248, 287, 303 Intergovernmental Panel on Climate Change (IPCC), 49

University

Technology

Development

Internal Learning System, 261 international community, 47–48, 207 International Development Enterprises (India) (IDE [I]), 208 International Development Research

Centre (IDRC), 200, 215 international financial institutions (IFIs), 297 International Forum on Southern Capacity Building, 218 International Monetary Fund (IMF), 56, 140 International Network for Traditional Building, Architecture and Urbanism (INTBAU), 105, 205–6 International NGOs (INGOs), 9, 25, 34, 48, 83, 91, 99, 101–6, 110–11, 114, 118–19, 122, 125–26, 131, 154, 167, 169, 178, 180, 198–99, 205–6, 234, 239, 248, 285, 287–,88 294, 310–12, 318 International Poor Development Fund, 304 International Urban Poor Development Fund, 304, 262 Internet giving, 312–13, 318–19 Islamic funding, 249 Italy, aid to India, 92, 97, 150 J.M. Morgan Stanley Foundation, 315 Jain, Devaki, 115 Jamia Millia Islamia University, 143 Janata government (1977–80), 37 Japan, aid to India, 88, 149–50, 155 jholawalah, 3–4 Jindal South West Foundation, 315 Johannesburg Declaration of Development (2002), 188 John, Lysa, 268 Johns Hopkins Comparative Nonprofit Sector Project, 21 Johns Hopkins University (JHU) Civil Society Project, 4

Sustainable

Joint Funding Scheme, 90 JSW Group of Companies, 122 Karat, Prakash, 1, 250 Karl Kubel Foundation, 102 Khadi and Village Industries (KVIC), 33, 50, 66, 213 Khoj, 143 Khosla, Ashok, 320 Krishnan, Venkat, 313 Kruso, Raine, 164 Kudal Enquiry Commission, 138

Commission

Laski, Harold, 254 leadership development, 216–17 Learning Friend Diary, 261 legislation and state control of NGOs, 134–36 Leprosy Mission, 207 Liaison Office of the Dalai Lama for Japan, 99 livelihood projects, 38, 173 local resource mobilization. See resource(s) Lok Jhumbish, 116, 151 Macaulay, Thomas Babington, 251 Madras University, 143 Maharishi Vedvigyan Viswa Vidyapith, 73, 77 Mahbubani, Kishore, 232– ,33 253, 323 Mahila Samakhya, 151, 261 Manav Kalyan Trust, 80, 144n13 Manav Vikas Sansthan, 260 Manos Unidas, Spain, 99 market, 4, 5, 10, 39, 41–48, 84–85, 96, 124, 153, 164, 167, 204, 206, 208–12, 229, 231, 233–34, 239, 244, 251, 266, 280, 284, 287, 294, 297–98, 301, 301–12 and civil society, 31 driven approach to development, 15, 91, 120 failure, 91, 125

fundamentalism, 104, 118, 167, 179 orientation, 105, 229, 244 and state, 21, 22, 23, 58, 314 Marxism, 32, 36 Mata Amritananadamayi Math, 73 Mazumdar, Veena, 115 McArthur Foundation, 109, 110, 111 Microsoft, 14 Millennium Development Goals (MDGs), 47–48, 118, 297–98 Miseror, 99 Mishra, Mahant, 229 misuse and mismanagement of funds, 38, 63, 124, 136, 179, 187, 259, 269, 273, 279, 306 Mitrokhin Archives, 241 monitoring and evaluation, 44, 47, 57, 83, 89, 91, 146, 149, 156, 169, 179, 182–84, 214, 261–62, 266, 272, 285, 303, 305–6 multilateral donors, 94–97, 154 Multinational Corporations (MNCs), 10, 42, 47, 109, 136, 206, 225, 244, 287 Mysore Resettlement and Development Agency (MYRADA), 52, 73, 81, 94n4, 196, 214 NAFTA, 318 Nand and Jeet Khemka Foundation, 265 Narayana, Jaya Prakash, 36–37, 103, 136, 138 Narmada Bachao Andolan (NBA), 5, 13, 43 National Adult Education Programme (NAEP), 40 National Advisory Council, 5 National Foundation for India (NFI), 122, 201, 304 National Policy on Voluntary Sector, 314 National Rural Employment Guarantee Act (NREGA), 4, 264, 288

National Security Act (NSA), 141 Naujhil Integrated Rural project for Health and Development (NIRPHAD), 192 Naxalite and communal violence, 296 Nehru, Jawaharlal, 108, 241 Nestle, 47 Netherlands aid to India, 88, 89–90, 93, 99, 150, 151 Netherlands Organization for Development Cooperation (NOVIB), 49, 83, 90, 99, 103, 204, 246 networking and linkages, 48, 121–22, 305 Nidan, 210 NINASAM, 193 Niyogi Committee, 134–35, 245 non-development agendas, 221 non-government development organizations (NGDOs), 21–22 non-government organizations (NGOs) beneficiaries, 31ff coping strategies, 207–12 depoliticization due to aid, 19 donor interface, 161ff, 205 sources of conflict, 164–87 donor driven agendas, 227–34 expansion and diversification identity and resource crisis, 9 infusion of new concepts, practices and technology, 260–262 operational freedom, 227 selection, 25, 89, 163, 169–74 sources and resources, 55ff non-profit organizations (NPOs), 21, 22, 46, 50–51, 78–79, 165, 205, 210, 254, 318 non-resident Indians (NRIs), 65, 136, 315–16, 320 North and South relationship, 301, 321 Norway, aid to India, 88–89, 92, 93, 150, 156

International

Norwegian Agency for International Development (NORAD), 25, 26, 86, 88, 91–92, 111, 116, 199, 248, 264 Norwegian Church Aid (NCA), 131 nuclear tests, 1998, 150 Oak Foundation, 109 Official Development Assistance (ODA), 6, 9, 10, 14, 17, 19, 67, 68–70, 86, 87, 89, 93, 101, 150, 152, 199, 215, 302, 307–10, 323 British, 190–91 Omidyar Network, 319 Omidyar, Pierre, 14, 85, 319 operational effectiveness, 273 Organization for Economic and Development (OECD), 117, 307 Organization of the Petroleum Countries (OPEC), 68 organizational

Cooperation

Exporting accountability, 215

autonomy, 223 capacity, 106, 120–21, 191 culture, 227 deficit, 181 development/growth, 2, 166, 214–16, 264 donors, 59 efficiency, 105 experimentation, 38 goals, 184 investment, 303 management, 212 NGO form, 259 performance, 219, 261 philanthropy, 313, 321 politics, 268 structure, 45, 91, 156, 227, 272, 301 sustainability. See of organization Oxford Committee for Famine Relief (Oxfam), 26, 34, 67, 83, 90, 99, 102, 104–6, 118, 126, 168, 185, 200, 205, 209, 213, 255, 264, 287

sustainability

India Trust, 73, 105, 110, 121 NOVIB, 104, 105, 119, 126, 287, 288, 291 Pachauri, R.K., 49 Pachod (Comprehensive Health and Development Project), 116 Packard Foundation, 109 Page, Larry, 14 Panchayati Raj Institution (PRI), 43– ,44 157, 200, 215, 217, 264, 285, 299, 309; NGOs relations, 44 Paris Declaration (2005), 307 Parivar Seva Sanstha, 90 participatory development, 53, 96, 116–17, 130, 214, 220, 261 Participatory Rural Appraisal (PRA), 117, 261 Participatory Research in Asia (PRIA), 21, 49, 50, 78, 81, 305 partition of the Indian subcontinent, 33 Partners in Change, 45, 81 Patel, Sheela, 181 Patel, Vallabhbhai, 134 Peer Water Exchange, 312 People’s Action for Development India (PADI). See Council for Advancement of People’s Action and Rural Technology (CAPART) Persons of Indian Origin (PIOs), 65 philanthrocapitalism, 128 Plan International, 83, 99, 102,104–5, 110, 126, 148, 178, 199, 202, 205, 291 Plan International Delhi, 73 Plan Nederland, 90 Planning Commission, 38, 50–51, 108, 145, 147 policy action: national policy on the voluntary sector, 146–147 political agenda to official development, 239–43 and cultural autonomy, effect of foreign aid, 293–94 relations, 150, 154, 220, 224

politics, 84, 86; criminalization, 44 Poorest Areas Civil Society (PACS) Initiative of DFID, 93, 119, 215, 304 post-project assessment, 186 poverty, 1, 24, 2, 36, 42, 49, 186, 276, 278, 295 alleviation, 37–38, 106, 150, 292–93, 313 reduction, 24, 69, 114, 118–19, 191 Poverty Reduction Strategy Papers, 13 power relations, 11, 14, 42, 65, 120–,21 167, 204, 228, 252, 256, 276, 322 Pratham, 80n16, 314 Premji, Azim, 315 PREPARE, 195 private aid, 193, 229, 287, 301 private donors, 7 , 58, 59, 85– 86,

97–101, 105–6, 120, 291, 321 average contribution, 70–71 organizations, 71–74 purpose, 76–77 recipients, 70–77 states, 74–75 Private Voluntary Organizations (PVOs), 21, 22, 93 privatization, 95, 120, 131, 284 PRIYA, 214 procedures and practices, monitoring, 179 Professional Assistance for Action (PRADAN), 94n4, 196, 214, 303 professionalism, 157, 268, 275 Programme Related Investment, 208 Public Interest Litigation (PIL), 62, 231, 236, 264, 288 Pushpawati Loomba Foundation, 316

Development

quality control mechanism, 320 quality of aid, 175–79

Rai, Vineet, 210 Ramakrishna Mission, 65 Rashtriya Swayamsevak Sangh (RSS), 245 Ratan Tata Trust, 60 Red Cross, 142 Registration of Societies Act, 132, 210 relief and rehabilitation programmes, 2, 9, 39, 62, 65, 77, 114, 289 religious fundamentalism, 43, 56, 76, 242. See also Christian missionary (church-based) organizations Reserve Bank of India (RBI), 224 Resource Alliance, 205, 206 resource(s) allocation, 14, 292 mobilization, 264 local, 17, 176, 193, 200, 215, 257, 264, 305 by networking with other NGOs and donors, 203 transfer process, 163–64 Right to Information Act (RTI), 4, 288 Rockefeller Foundation, 83, 85, 107–9, 111, 240–41, 254 Rome Declaration (2002), 307 Rotary International, 67 Roy, Bunker, 12, 38, 279–80 rural development, 33–35, 37–38, 62, 65–66, 76–77, 97, 107, 122, 211 SADHAN, 45 Said, Edward, 19, 252, 254 Sainath, P., 244 Sakshi, 143 Salwa Judum, campaign against, 151 Sampradaan Dialogue (2001), 302 Sampradaan Indian Centre for

Philanthropy (SICP), 45, 59, 64, 143, 146, 162, 211, 215, 302, 305n7 report on charities administration, 146 Sankat Mochan Foundation, 229 Sardar Sarovar Dam and Power Project, 95

Sarva Shiksha Abhiyan, 261 Sarvajanik Gram Vikas Kendra, 34 Sarvodaya (NGO), 17 Sarvodaya movement (Total Revolution), 36–37 Sarvodaya Shramadana Movement, Sri Lanka, 230 Satyashodhak Samaj, 31 Save the Children, 83, 102, 106 Scheduled Castes and Scheduled Tribes (SCs and STs), 37, 43, 65, 116, 258 SEARCH, 214 Sehgal Foundation, 265, 316 Self Help Fund, 91 Self Help Groups (SHGs), 38, 78, 79, 117, 119, 177, 215, 259 Self-Employed Women’s Association (SEWA), 40, 116 Sengupta, Badal, 164 Seva Mandir, 217, 293, 303 Shiksha Karmi, 116, 151 Shramdaan, 282 Singh, Arbind, 210 Sir Dorab Tata Trust (SDTT), 60, 185 Slum Dwellers International (SDI), 262 Small Grants Programme (SGP), 94 social activism, 15, 21, 44, 108, 114,

117, 174, 210, 267, 275, 277–78, 298 change, 14–15, 23, 54, 65, 77, 111, 128, 156, 165, 174, 177, 188, 228, 239, 249, 280, 312, 319, 323 development, 16, 22, 36, 64, 77, 87, 188, 208, 209, 230, 258, 294, 295, 316–17 208, 210, 319, 321

entrepreneurs,

forestry, 38, 116, 151

inequity issues, 36, 65, 189, 223, 286–87 investment, 10, 64, 65, 210–11, 313, 318–21 justice, 43, 46, 53, 59, 62, 108–9, 118, 153, 170, 280, 288, 298, 313

movements, 21, 23, 31–32, 36, 38, 43, 46, 115, 228, 255 Social Venture Fund, 210 Social Work and Research Centre, 279 Society for Development Alternatives, 73 Society for Promotion of Area Resource Centres (SPARC), 181, 262 Society for Promotion of Wasteland Development (SPWD), 81, 116 Society for Rural Education & Development, 73 Soros Foundation, 311 SOS Children’s Villages, 73 sources, relative importance, 77–81 South Asian Fund for Women, 201 South Asian Fund Raising Group, 45, 206 South India Producers Association (SIPA), 209 Sparc Samudhaya Nirman Sahayak (SSNS), 262 Sri Satya Sai Central Trust, 65, 73, 77 Srinivas Services Trust, 265 state, 56, 110, 118, 131–33, 147,

150–51, 154, 234, 248, 291, 297, 300 abuse of power, 52, 58 accountability, 44 and aid agencies, 35, 43, 309, 322 control of NGOs through legislation, 134–36 family and market, 22, 46 funding, 200, 223–24, 239, 291 market and civil society, 21, 23, 31, 58, 120–21 performance in development, 39, 292 policy, 222, 239, 252 structural adjustment programme, 42, 44, 95 Sulabh International, 209 sustainable development, 15, 40, 43, 48, 53, 115, 117, 124, 154, 177, 188ff, 288, 301

Sustainable Income Security for the Rural Poor in India (SISIN), 303 sustainability of organization, 189–91, 199–201, 269 Swami Vivekananda Youth Movement (SVYM), 80, 144n13 Sweden, aid to India, 87, 88, 92, 93, 99, 156 Swedish International Development Agency (SIDA), 25, 26, 91, 92, 93, 111, 116, 151, 178, 199, 214, 244, 262, 264 Swiss Agency for Development and Cooperation (SDC), 93, 116, 208 Swiss International Committee of Red Cross, 102 Switzerland, India cooperation, 18, 88, 97, 99 TANWA, 285 Tata Consultancy Services (TCS), 323 Tata Trusts, 60, 62, 265 tax exemptions for income generating activities of NGOs, 38 technological factors, 124, 189, 192 Tehelka, 122 Terre des Hommes, 90 terrorism, financing, 9, 56, 84, 85, 139, 142, 144–45, 296 The Energy Research Institute (TERI), 49, 52, 116, 122, 196 The Indus Entrepreneurs (TIE), 314 Third World, 298 Thornton, A.P., 19 Tirupati Devasthanam, 65 Total Revolution. See Sarvodaya movement trade unions, 22, 24, 121, 140, 210 Transparency International, 45 Tree Growers Co-operative, 264 Tribal Rights Act, 289 Tripathi, P.M., 78 tsunami, 6, 26, 70–71, 316 Turner Foundation, 311

unemployment, 36, 278 Union Against TB and Lung Diseases, 311 United Distilleries, 320 United Kingdom: aid to India, 26, 88, 89, 90, 93, 97, 105, 149, 150, 181, 308 United Nations (UN), 2, 3, 24, 140, 156 Aid Harmonization, 157 United Nations Development Program (UNDP), 70, 94, 101, 295–296 United Nations Fund for Population Activities (UNFPA), 94 United Nations International Children’s Emergency Fund (UNICEF), 40, 79, 94 United Nations Millennium Summit, 47 United States Agency for International Development (USAID), 86, 88, 92, 93, 120, 122, 259 United States of America (USA), aid to India, 87, 88, 92, 93, 97, 149 Vada Na Todo Abhiyan, 268 Vaidyanath Aiyar Committee, 3 Van Leer Foundation, 83, 110 Ved Vigyan Viswa Peetham, 77 Vincent St Ferrer Foundation, 110 Vishwa Hindu Parishad (VHP), 245 Voluntary Action Network India (VANI), 19n14, 25n17, 45, 51n8, 80n16, 152, 211, 305 voluntary action, 31–33, 35–36, 38, 54, 58, 66, 99, 132, 141, 146–47, 217, 278, 281–82, 284 Voluntary Health Association of India (VHAI), 45, 209 voluntary organizations (VOs), 2, 21–23, 31–32, 36, 66, 93, 119, 139, 143, 153, 184, 250, 272, 281–82 Washington Consensus, 118 WASMO, 209

Water Aid, 122 watershed management, 192, 261, 275 Watumull Foundation, 107 Williams, Raymond, 19 Wilson, Woodrow, 83 Winrock International India (WII), 197 Wolfensohn, James, 95, 320 Women’s Development Trust, 73 women’s issues, 2, 24, 43, 47, 115–16, 153, 261, 276, 288 women-in-development, 115–16

women’s empowerment, 51, 65, 151, 173, 261, 316 Working Women’s Forum, 116 World Alliance for Citizen Participation (CIVICUS), 49, 162 World Bank, 24, 31, 47–49, 56, 91, 94–97, 116, 120, 136, 140, 154, 162, 252–53, 260, 281, 286–87, 289, 304, 320 World Health Organization (WHO), 70, 94 World Social Forum (WSF), 250, 287 World Trade Organization (WTO), 3, 47, 48, 49, 56, 120, 281, 289 World Vision, 73, 99, 102, 245–46