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Leaving lower-income bracket

Nonprofits trim operations, facing funding headwinds

| Updated: May 21, 2018 16:33:31

Internet photo used for illustrative purpose only Internet photo used for illustrative purpose only

Stories of Bangladesh's growth and prosperity have swayed the donor community to commit less aid for legions of non-governmental organisations (NGOs) in the country, forcing the nonprofits to trim operations.

"We're seeing the impact at the field level," said Asif Saleh, a senior director for strategy, communications and empowerment at BRAC. "NGOs are now compelled to scale back operations."

In 2014, the country's gross national income per capita reached US$ 1,070, placing it among the lower middle-income category, calculated using the World Bank Atlas method, a year later.

Lower middle-income countries are defined as economies whose income per head is between $ 1,046 and $ 4,125.

The country's economic growth, which averaged 6.26 per cent during the past decade, is projected to reach 7.65 per cent this fiscal year (FY), highest in recent years, after advancing at 7.24 per cent during the FY 2017. Merchandise shipment and remittances wired home by an estimated 10 million overseas Bangladeshis have primarily driven this growth.

"Over the past few years, we've seen increased narratives around Bangladesh's prosperity. I think, that's also influencing donors' decisions on commitment," Mr Saleh said.

Self-financing the Padma bridge without any aid or soft loan from development partners also contributed to the donors' changed attitude towards Bangladesh.

Padma bridge was "quite a significant story," he said.

Bangladesh has been building the US$ 3.5 billion bridge over the Padma River on its own after donors including the World Bank backed out at mid-point over graft allegations. After the World Bank's pullout, co-financiers such as the Japan International Cooperation Agency, the Asian Development Bank and the Islamic Development Bank followed suit.

Traditionally, European countries including the United Kingdom have been major funders of Bangladesh's nonprofit groups.

While the middle-income hype has much to blame, insiders say factors such as a shift in the Europeans' priorities after the refugee and migrant crises and the elections to nationalist governments in some countries who are against international aid have partly contributed to the cutback on commitment.

The government statistics are more telling. Between fiscal years 2014 and 2017, donors' aid commitment for the non-government groups plunged by over one-fifth, according to data from the state-run NGO Affairs Bureau that regulates non-profit organisations receiving foreign donations. And the release of funds fell marginally in the same period.

Aid commitment year-on-year also faced drought, slumping by 21 per cent, from $ 807 million during the fiscal year 2015-16 to $638 million during the fiscal 2016-17, the bureau data showed.

Rights-based campaign groups are the biggest casualties of the sharp falloff in aid commitments.

For instance, the Bangladesh Mahila Parishad, an established grass-roots organisation with nationwide network, had to go hat in hand to BRAC for a "bridge fund" worth Tk 7.5 million (75 lakh).

Acid Survivors Foundation, Ain O Salish Kendro, and the Bangladesh National Women Lawyers' Association have trimmed operations as funding has dried up, insiders said.

Acid Survivor Foundation said that it has retrenched two-fifths of its staffers since 2016.

While microfinance and social enterprises helped BRAC ride out the storm, it was forced to shed more than 3,000 employees after the development behemoth downsized its water, sanitation and hygiene, basic health care and migration programmes.

The charity with an annual budget of $ 1.0 billion saw its staff strength drop to 43,000 from 46,000 three years ago, Mr Saleh said.

The United Kingdom and the Australian government are the two biggest donors of BRAC and Mr Saleh said that support from both countries has gone down substantially.

Under a strategic partnership agreement, the UK's Department for International Development provided 350 million pounds to BRAC in the first half of this decade, but it cut that figure by almost two-fifths to 220 million pounds in the later half ending in 2020, according to the charity data.

The UK government didn't say why it slashed funds for BRAC.

"... at this stage, we do not yet know as official development assistance depends on several factors," said Mashrur Noor Afsar, deputy spokesperson for the British High Commission in Dhaka.

That said, Mr Saleh said that donors are increasingly talking about self-sustained path and are placing importance on sustainability plans of NGOs.

"We take it as a signal that they (donors) are 'looking for exit'," said the New York University-trained business graduate.

Ayesha Khanam, president of the Bangladesh Mahila Parishad, confirmed receiving a Tk 7.5 million cash lifeline from BRAC in 2017 after the Norwegian government pulled out, leaving it in financial ruins.

The Norwegian government had been financing the women rights group since 1995, but it deserted it in 2016.

"The withdrawal is not for 'bad experience' but it (Norway) has changed its agenda," Ms Khanom told the FE.

Morshed Ahmed, senior development adviser of the Royal Norwegian Embassy in Dhaka, said Bangladesh was affected after his government changed aid focus in recent years.

"Consequently, direct development programmes in Bangladesh have been scaled down, including the gradual phase-out from the NGO sector," he said.

Currently, he said the emphasis was on business cooperation and political dialogue, though no new bilateral programmes were taken up in Bangladesh.

During the last four decades, Bangladesh has secured over 7.0 billion kroner, making it one of the largest recipients of Norwegian aid until 2015/2016, according to figures available with the embassy.

But since 2008, the bilateral cooperation has been limited to projects concerning climate change and environment, women rights and gender equality.

Still, he said that Norway is a major multilateral donor through core funding to the United Nations system and multilateral banks, as well as through most global funding mechanisms such Green Climate Fund, Global Health Fund, and GAVI Alliance. Bangladesh has been a beneficiary from those funds too, he added.

K.M. Abdus Salam, director general of the NGO Bureau, acknowledged that the middle income narrative has had an impact on the nonprofits.

But he played down the concern over the falloff in commitment, saying that Bangladesh is making great strides towards self-reliance.

"We sent aid to Nepal after earthquake hit that country," he told the FE.

Aid analysts see intense competition ahead among aid groups for limited donor money.

The slumping donors' commitment has had a major impact on the NGO sector, said Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, a think-tank in Dhaka.

"Since aid commitment has fallen, release will follow suit over time," he said.

He warned that the changed situation has made the source of funding for the NGOs "challenging," while fostering competition among them.

Zahid Hussain, lead economist for the World Bank's Dhaka office, said Bangladesh's aid groups would be affected in the foreseeable future, though he didn't agree with those who believed the nonprofits started feeling the heat of the country's changed status at the moment.

"Impact will come in the near future," he said.

While the country's changed status will make financing for the nation costlier and conditions tighter, Mr Hussain said there would be new access to financial resources.

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