NGOs in Nepal are blandly accused of doing “dollar farming” largely because of the use of foreign funds from international agencies to carry out their activities. They are also denigrated by many critics as a quick, and a lucrative way to make money because many believe that almost all NGOs have an easy access to foreign funding. Moreover, another widespread charge is that NGOs make quick money by selling poverty of fellow Nepalis to outsiders. However, most detractors of NGO work fail to ask why there is so much reliance on donor funding for NGO work in Nepal. In this article, we attempt to explore some reasons for such reliance on foreign funds and put them in a comparative perspective.
ReasonsWe might have entered a loktantrik framework in name but we continue to remain a very centralized state, controlled by politicians and bureaucrats steeped in the “control mentality” more suitable for the Panchayat Regime rather than open democratic society. While the availability of public money for state-activities and those controlled by elected politicians has increased in the past 25 years, the channeling of Nepali public money to Nepali NGOs is almost non-existent in the form of grants. Even though some such money goes to support NGO-run libraries and archives and similar ventures, there is, to our knowledge, no publicly announced annual grant application system of the Government of Nepal (GoN) to which Nepali NGOs can apply. One can perhaps argue that since there are many other demands on the government-managed public money, the little availability of earmarked funds for NGOs is not that surprising. However, if we desire a loktantrik polity that uses public funds to also support the efficient generation of public goods by a diverse set of NGOs, then ear-marking funds for NGOs would indeed be an excellent idea. GoN funds could be provided to civic organizations of various capacities on a competitive basis. Other mature loktantras have such programs. This absence is the primary reason why Nepali NGOs have to rely on foreign support.
In other countries, many private individuals, who have made money in the corporate world, set up philanthropic organizations and foundations to support NGO work. The privately-founded Gates Foundation is one such entity with one of the largest endowments in the world. It supports work by NGOs, universities and similar entities the world over. There are many thousands more such entities in different parts of the world, with endowments of various sizes. Many such foundations not only support the work of NGOs, but also that of research carried out by universities and think tanks. For instance, in the United States, which has an elaborate and complex system of using public money to support research in the universities, foundation grants not only support a variety of teaching and research activities in the universities but also activities carried out by service-delivery NGOs.
Here in our country, a handful of Nepali businessmen and corporate entities have made donations to support NGO work. We are told that many businesses prefer to contribute to social causes discreetly since publicity of such support draws the attention of all kinds of financial “brokers.” Such private support – no one seems to have a clue on the annual volume of such support (hence it is hard to evaluate its impact) – is perhaps good but publicly announced programs of such support is hard to find, both at the level of an individual business house or at the level of organizations in which businesses are members. The absence of philanthropy supported by private-sector wealth in Nepal is the second reason why Nepali NGOs have to rely on foreign funds.
If the government and the corporate world cannot support NGO work in Nepal, wealthy individuals could in theory but the set of super-rich Nepalis is tiny. In addition, most prefer doing their philanthropic work through their own organizations or support work in religious and related sectors. This is the third reason why Nepali NGOs have to rely on foreign funds.
In the international financial support architecture for not-for-profit organizations, there are now many programs that publicly call for applications from NGOs in the global south. These programs exist both for service-delivery NGOs (here we rely on what we have heard from others since we don’t have firsthand knowledge of applying for them), and for NGOs that do work in the field of research. Several Nepali NGOs of the latter type (“academic NGOs”) have successfully responded to such calls, either as the lead applicant or as a co-applicant in a collaborative effort. Such grants earmarked for research, often collaborative in nature, have enabled some Nepali NGOs to execute important work with full editorial control. Needless to say, such grants are highly competitive in nature. More than being the fourth reason why Nepali NGOs have to rely on foreign funds, the success of these few Nepali NGOs in this mode of securing support is a signal of their quality beyond the borders of Nepal.
ContextThere must surely be other reasons why Nepali NGOs have to depend upon foreign assistance. However instead of adding to the above list, let us put it in a comparative context.
First, if the “dollar farming” charge against Nepali NGOs has any validity, much the same could be said about the GoN as well. Since the GoN started accepting foreign aid for its development efforts starting in the early 1950s, its development budget has relied, to a great extent, on foreign grants and loans. Since many previous commentators have written about this phenomenon elsewhere, we need not belabor this point here. We simply wish to point out that this is a continuing phenomenon. According to a recent report published in the magazine Himal Khabarpatrika (dated 12 February 2017), the various projects run by the Nepal government concerning security and judiciary, climate change, disaster management are heavily dependent on foreign funding. The same report, titled “Nongovernmental government”, cites the Ministry of Finance and mentions that the total amount of foreign aid received by the Nepal government from 135 different INGOs in the current fiscal year amounts to Rs 15,771,928,000. The report also mentions that there are five ministries that received more that Rs 1 billion in aid under the “technical assistance” category. Among them, Ministry of Federal Affairs and Local Development alone received Rs 6,065,000,000 in foreign assistance for its 25 different projects. It is fair to say that at times the government itself is competing with NGOs for the same funds from external sources. And if the accusation that NGOs are selling poverty of fellow Nepalis holds any water, it is plausible to say that our government has been more successful at doing that.
Second, it is inaccurate to claim that all NGOs have easy access to donor money in order to harvest dollars whenever they need. The reality is that most NGOs in Nepal don’t have access to huge amounts of donor money, even though some big NGOs regularly do because of their previous track record and social connections. Therefore, lack of access to donor money on the part of most NGOs makes the “quick buck” argument untenable.
Third, “dollar farming” is an also expression of rage against the supposed higher salaries of those working in the non-governmental sector. While admitting some excesses, it must be pointed out that the salary scale in urban NGOs is not very high compared to the cost of living. The problem is that the salary scale in GoN and our universities is too low and it can be said without doubt that they need to be increased.
Fourth, while corruption in the NGO world cannot be denied and should be subject to scrutiny, it should be a subject of rigorous research whether corruption and financial irregularity are more rampant in the government and public institutions or NGOs.
Finally, in the context of a long history of the reliance of Nepali state itself on foreign aid, it would be more useful to tackle problems that are within Nepali public institutions, donor communities, and also those faced by NGOs in a concerted manner rather than trying to delegitimize the whole non-governmental sector as immoral and greedy “dollar farmers”.
Onta and Bhandari are researchers at Martin Chautari, Kathmandu