Foreign funds for NGOs hit 6-year low as grants diverted to war-torn Ukraine
Grant-based small and mid-level organisations are in an existential threat amid the poor flow of donations
The flow of foreign funds to non-government organisations (NGOs) operating in Bangladesh reached a six-year low in the just-concluded FY23, which sector insiders attribute to global donors redirecting their financial support to the war-torn nation of Ukraine.
The flow of foreign funds shrank by 10% in FY23 and the number of approved projects was down to 2,007 from the previous fiscal's 2,061, according to NGO Affairs Bureau, the government's regulatory body.
Less funding means less opportunity for NGOs to carry out their development activities, primarily in health and education, stakeholders said.
The Russia-Ukraine war came at a time when the country's development organisations were eyeing a recovery from the Covid-19 pandemic, they said, adding that grant-based small and mid-level organisations are now in an existential threat amid the poor flow of donations.
Coast Trust, one of the 2,500 registered NGOs under the NGO Affairs Bureau, is facing the impact of the global crisis.
Rezaul Karim Chowdhury, executive director of the nonprofit dedicated to coastal community development, told TBS that the situation will continue until the end of the Russia-Ukraine war. "Due to the war, European donors are mostly diverting money to Ukraine."
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"Almost 60% of our projects are now suspended due to low fund flow. We had four projects from international non-governmental organisations (INGOs) last year which has come down to only one," he said.
For Bangladesh, UNHCR could not raise more than 30% of the funds for the Rohingya response this year, he mentioned.
Besides fluctuations in foreign exchange and market turbulence, all donor agencies have reduced their humanitarian and development aid budgets.
For example, the UK was supposed to give about one billion dollars for combating climate change which has been completely cut, Rezaul Karim said.
Meanwhile, Asif Saleh, executive director, Brac, told TBS, "There is a general message from the government that we are now on the way to self-sufficiency, so we don't want any more grants.
"Why should foreigners give if there is no interest from the receiving side?" he asked.
"Foreign funds will gradually shift from Bangladesh to poorer countries due to the LDC transition. More countries will move away from us after LDC graduation," he added.
Regarding the issue, SK Md Moniruzzaman, director general of the NGO Affairs Bureau, told TBS that "It is an international matter. I, as the Bureau's DG, feel that donations are declining because of the slowdown in trade and globalisation."
Recent trend of funds
Foreign funds for NGOs were already in decline in Bangladesh as the country is striding towards graduation from the least developed country status.
However, the Rohingya crisis boosted the flow of funds. International donors spread their generosity to the world's most persecuted people in Cox's Bazar refugee camps and NGOs saw their foreign funds grow by 15% in FY18 and FY19.
On average, the NGO Affairs Bureau has been disbursing around Tk1,000 crore every year following the massive Rohingya influx from Myanmar in 2017, sources said.
However, the growth turned negative in the next two fiscals amid the pandemic shock. Then the fund flow was in positive growth in FY22.
But the Ukraine war that started in February 2022 has once again trampled on the fund flow.
Funds are being diverted to ever-increasing humanitarian disasters around the world, said Brac Executive Director Asif Saleh.
He mentioned that Brac is increasing its own fund in its development budget as foreign funding is dwindling. "Where previously 20% of funds were given from our own funds, in the last financial year we were forced to give 39%."
He said the UK, one of Brac's major donors, has withdrawn from a strategic funding initiative. "Their contribution, once amounting to $30 million, has now dwindled to nothing."
However, they still provide some funding for the education sector, he added.
Institutions in crisis
The NGOs who do not have sufficient funds are facing an existential threat from the dwindling flow of funds, sector insiders said.
Around 10 lakh people are employed in NGOs, most of whom will lose their jobs if small and mid-level organisations are forced to close their operations due to low fund flows.
Coast Trust's Rezaul Karim Chowdhury, said NGOs that do not have good governance and financial management will find it very difficult to survive during this crisis.
According to a report of the Association of Development Agencies Bangladesh (a network of 1,060 local NGOs), the average fund flow to its member organisations was Tk82.43 lakh in 2019.
But, it declined to Tk70.80 lakh in 2020 and Tk56.87 lakh in 2021.
However, NGOs with alternative income sources like microcredit programmes are smoothly running their operations.
Microfinance institutions are also facing a funding crunch as they are not receiving loans from banks because of the ongoing liquidity crisis in the country.
There are over 700 registered microfinancing institutions in Bangladesh, according to the Microcredit Regulatory Authority.
Abdul Awal, executive director, Credit and Development Forum, a network of more than 200 MFIs, told TBS, "All our small and mid level member organisations are suffering from sufficient bank loans and failing to meet demands of micro borrowers."
Slow fund release
As several countries are raising questions about Bangladesh's rights issues, foreign funds for NGOs working on human rights, good governance, and democracy are shrinking, a top executive of an NGO, requesting anonymity, told TBS.
On top of that, these NGOs are facing serious problems to get funds released from the NGO Affairs Bureau.
The official said the hurdles they are facing now in fund release are "unprecedented".
Furthermore, the "poor capacity, complicated process, and manpower crisis" of the bureau are also reasons behind the slow project approval, said the official.
Acknowledging some recent improvements, the official mentioned, "For the approval of a related project, certification is required from the upazila level, which takes a lot of time."
However, SK Md Moniruzzaman, director general of the NGO Affairs Bureau DG SK Md Moniruzzaman said he was unaware of such allegations.
Funding to other countries
Funding for other protracted crises in 2022 has also been hindered by the overwhelming political interest and donor pledges for Ukraine.
For instance, while the 2021 Afghanistan Humanitarian Response Plan was very well funded at 112.8%, the programme received only 45.6% of its funding appeal till October 2022, according to The Conversation, an International Media.
Also, at the 2022 international donor conference on Yemen, the United Nations appealed for $4.3 billion for humanitarian aid. But, world leaders offered less than one-third of that.
The European Commissioner for Crisis Management explicitly stated that it would not pull funds from other crises around the world as it responds to the conflict in Ukraine. Other EU ministers made similar commitments.
Excluding the generous support for Ukraine, the US also cut its humanitarian budget by $1 billion last year relative to 2021.
Furthermore, individual EU member states have already begun diverting funds, as real-time aid data shows.
For instance, Sweden and Denmark have announced cuts to other aid priorities by 14% and 10% of their respective 2021 aid budgets.
