We found a very interesting article in Business Today called "Charity in crisis" by K.R. Balasubramanyam and Anamika Butalia taling about how the recession has impacted the donations received by NGOs.
“Eight IT companies that had promised 12 vehicles (of Rs 9 lakh each), in all, to transport food and fund feeding of 6,000 students have also put off their plans. Four automobile and ancillary units, who had offered to give about Rs 40 lakh, have backed off for now,” he adds. The global recession—as well as the slowdown in India—has begun to have disturbing consequences for non-profits like Akshaya Patra, which undertake programmes across India’s most neglected social sectors. India’s vast population of NGOs relies on either foreign aid or the domestic corporate sector for its survival. Declining corporate profits in the last year, bleak revenue forecast and cash-strapped foreign governments have left agencies in deep distress.
“This means a collapse of the services NGOs have been providing to communities as well as the livelihoods of a million of development workers in the country,’’ says Hari Krishna, a disaster management expert who was associated with Oxfam America’s India operations. Oxfam itself has cut $1 million in grants for the next year.
Like Akshaya Patra, the Cancer Patients Aid Association (CPAA) was flying high on a legacy of robust aid, mostly from Indian corporates, such as Godrej, HUL, Citibank and the Union Bank of India. The programme required Rs 20 lakh a month for its operations but routinely ended up with more. On its annual fund-raising day for cancer patients last year—dubbed “World No Tobacco Day”, held on May 31—the organisation’s initial target was Rs 22 lakh, but it effortlessly netted twice that amount.
Today, the organisation is struggling to stay above water, unable to attract even Rs 10 lakh a month for its operations. Plus, as of the second week of May, the agency had mobilised a paltry Rs 1 lakh to date for this year’s fund-raiser. “We have lost 50 per cent of donations as compared to last year,’’ says a worried Anita Peter, Director, CPAA.
Ultimately, it is the poor who suffer the most during recessions, warns P.V. Unnikrishnan, Emergencies & Conflicts Advisor (Asia & Americas), Action Aid International. “Both types of support available for poor people—government spending and charities—are getting negatively impacted. Since the poor are affected, a bailout process should focus on supporting them and their small businesses,’’ suggests Unnikrishnan.
While these are tough times for NGOs, many experts feel that this is precisely the kind of opportunity that NGOs need to revamp themselves for the future. “This is a good chance for NGOs and civil society groups to see carefully how they function and work smarter and leaner,’’ says Rohini Nilekani, Chairperson of Arghyam Foundation— an organisation that promotes access to water for the poor.
“We have to be realistic and know that the future beyond our current grants is uncertain and we have to plan for this contingency,’’ adds Ashok Kamath, Chairman of Akshara Foundation, which spearheads a primary education movement in Karnataka.
Infosys Director, T.V. Mohandas Pai—who is on the boards of both Akshaya Patra and Akshara— has a plan for NGOs: they need to expand their base for funds as well as curtail administrative expenses, he says. An NGO should limit its administrative spend to around 8-10 per cent of its overall budget and spend the rest on direct activity, he says. The Nasscom Foundation, too, believes this is the right time to test more innovative ways of doing things. “We are exploring some ideas that may not necessarily need loads of money,” says Fernandes.
Once the global economy climbs out of its recessionary hole and companies begin to post improved results, the NGO sector is sure to bounce back. Till then, however, they would do well to take a page from corporate India’s handbook and hunker down for the lean times ahead.
