Foreign funds to NGOs hit eight-year low in FY24

Infograph: TBS

Highlights

• Foreign grants to NGOs declining for three consecutive years
• Funds redirected towards humanitarian crises in Ukraine, Palestine
• Fund cuts impact ability of NGOs to execute development projects 
• Local NGOs facing significant challenges 
• A notable portion of donations being allocated to Rohingyas since 2017

Foreign funding for non-governmental organisations (NGOs) dropped by 11.6% year-on-year in fiscal 2023-24, reaching the lowest level in the past eight years.

According to data from the NGO Affairs Bureau, foreign grants have been declining for three consecutive years, with $655 million received in the last fiscal year.

Sector experts attribute this decline to the redirection of donor funds toward humanitarian crises in Ukraine and Palestine, which has diverted resources away from Bangladesh.

This reduction in funding has impacted the ability of NGOs to execute their development projects, particularly in health and education, they added.

Local NGOs are facing significant challenges due to reduced funding, with a notable portion of donations being allocated to the Rohingya community since August 2017.

Despite these difficulties, stakeholders remain hopeful about a turnaround with the interim government headed by Nobel laureate Professor Muhammad Yunus, in office since early last month.

The number of approved projects has declined to 1,658 in the last fiscal year compared to 2,007 a year ago. However, the total commitment of funds rose to $840 million in FY24 from $720 million the year before, according to data from the NGO Affairs Bureau, the regulatory body overseeing foreign-funded NGOs.

"Due to the war in Ukraine, Europeans are heavily helping Ukraine as their neighbour. Similarly, large funds go to Gaza. These are two major reasons for the reduction in funding," Rezaul Karim Chowdhury, executive director of Coast Trust, told The Business Standard.

Stating that funds for NGOs with good governance are not decreasing, he said, "The funds for those who can provide transparent and good results are increasing. For example, due to Cyclone Remal, we got the opportunity to work with foreign funds in many coastal areas, including Manpura."

Rezaul Chowdhury said in the ongoing calendar year, their funding has increased by 25%.

"After Dr Yunus took charge, various organisations are looking to us and expressing interest in providing funds. They want to know how it will work. Based on a reasonable hypothesis, I think foreign aid will increase and not decrease in the future," he added.

NGOs implemented Tk707.77cr projects for Rohingyas in FY24

Since the Rohingya influx in 2017, on average, more than Tk1,000 crore has been released for humanitarian response efforts in the camps of Cox's Bazar. Last year, the foreign funds released for the Rohingyas through NGOs amounted to Tk707.77 crore, around 9.31% of the total grants, according to the NGO Affairs Bureau.

However, the Rohingyas are receiving more aid through UN organisations, which reduces the overall funding available for local NGOs. Despite this, NGO leaders say it is still not sufficient to meet the estimated needs of the Rohingya community.

"Although almost 80% of foreign funds in Bangladesh are going to the Rohingyas, which is still not enough compared to the needs of the Rohingyas. In the eight months of the current calendar year, only 30% of the total demand has been met," said Rezaul Karim Chowdhury.

The NGOs mainly work on non-food items for the Rohingya, while the World Food Program provides food in the camps.

"The non-food items, like LNG at Bhasanchar, are being provided for the Rohingyas by NGOs," Md Anwar Hossain, director (Project-2) at the NGO Affairs Bureau, told TBS.

Local NGOs struggling

NGOs that do not have sufficient funds are facing an existential threat due to the dwindling flow of resources, sector insiders said.

The Association of Development Agencies Bangladesh (Adab), a network of around 1,080 local NGOs, reported that approximately 200 of its member organisations work with foreign funding.

"But a significant number of our members are struggling to operate with limited funds, especially NGOs that focus on rights issues. Many have had to shut down their activities by reducing their offices, operational areas, and manpower," AKM Jashim Uddin, director of Adab, told TBS.

Organisations that operate microcredit programmes and social enterprises are better equipped to survive, he added.

Around 10 lakh people are employed in NGOs, most of whom may lose their jobs if small and mid-level organisations are forced to close down their operations due to low fund flows.

Meanwhile, the slow process of fund release by the NGO Affairs Bureau is a long-standing complaint among NGOs.

Regarding these allegations, Md Saidur Rahman, director general of the NGO Affairs Bureau, told the newspaper, "The standard time to release funds for a project is 45 days. We are now very committed to releasing funds within the deadline unless there are technical issues raised by donors."

He also mentioned that the bureau has been engaging with donors to encourage them to provide more funding for Bangladesh in the coming days.