An Overview Of The Donor Funding To NGOs In Pakistan

An Overview of the Donor Funding to NGOs in Pakistan
Over the last decade or so international donor agencies have increasingly given greater prominence to the role of NGOs in social welfare and development of the civil society. This prominence has not only been in the form of greater financial amounts being given in grants to NGOs but also as a proportion of the total aid given to countries. This increase in funding both in real and relative terms has seen a substantial growth of NGOs all over the world and especially in the developing nations of the South. Pakistan too, which has a relatively young NGO sector has seen growth in the number of NGOs over the last decade. Today, over three hundred intermediary organizations provide social services through a network of grassroots, and many more local community-based organizations (CBOs) are working to address basic social needs at the community level. According to the SPDC/JHU/AKF Report of April, 2002 there are almost 45,000 active organizations in the non-profit sector. These organizations vary greatly in terms of their size, competence, and transparency, focus and impact. They address a varying range of issues from education, income generation, micro-finance, irrigation, and health, to democracy and rights.Similarly the last decade and a half has also seen an increase in the number of donors in Pakistan. Over 50 percent of the donors in this directory have begun operating in Pakistan after 1980 and now a number of UN agencies, CIDA have offices and staff based in Islamabad. This local presence enables them to better understand the local scenario as well as more easily interact with their recipient partners. Yet with increasing possibilities through the Internet to develop relationships many donors, small and large provide funds to Pakistan without being based in the country. Examples of such are the Packard Foundation, the Ford Foundation and the Bill Gates Foundation.

Who do Donors Fund?
A review of the mission statements of donors (included in the directory) suggests some common threads. All donors state philanthropic reasons for their support, most of them emphasizing poverty alleviation and sustainable development. Many also identify improvement in the lives of vulnerable groups such as women and children. In this directory 87 percent of the donors are working for women, 73 percent for low-income groups and 69 percent for children.Many reasons are cited for why donors provide support to NGOs: the donor–NGO relationship is a mutually beneficial one. In fact the reasons may be as many as the donors; Some common cited include:
• Governments as well as civil society organizations in the donor countries feel a social responsibility towards the developing countries. Colonialism is seen as being a reason for the North-South divide and many seek to redress this balance through assistance and aid. Those providing support targeted at vulnerable groups such as children and women increasingly see NGOs as being more efficient, cost-effective, better able to hit the target of vulnerable groups.
• With increasing globalization most countries of the North have developed strong commercial interests in the South. The South not only provides them with potential human and natural resources but also potentially expansive markets. A strong civil society can bring about a stable environment for business. In addition a developing nation will provide a market with greater purchasing power.
• Through development sector relationships, the North increases its understanding of the South which advances its geographical outreach.
• The North has a political and ideological commitment to democracy. More and more so, development ideals such as participation, equality, empowerment, and good governance are being promoted. Moreover, there is an increasing trend towards supporting advocacy within the civil sector.

The Donors – An Overview
It must be remembered however that donors, like NGOs are not homogenous in nature and consists of various different types of organizations - from vast multilateral donors consisting of substantial funds from several member countries such as the World Bank and the Asian Development Bank - to embassies like the Dutch, the British, and the Norwegian that have projects funds usually for innovative activities executed by NGOs. International NGOs also contribute substantial amounts of financial support to local NGOs and unlike multilateral and government funding agencies, seldom provide assistance to governments.International philanthropic foundations such as the Ford Foundation and the David and Lucille Packard Foundation are also extending upon the tradition of philanthropy from the private to the social sector and are increasingly contributing vast sums of money towards philanthropy in the South. While local philanthropy is also a potentially vast source of resources for NGOs it remains largely based on individual initiatives, and is only beginning to get organized in the sense of organized philanthropy in the North. Yet some local donors such as the Rangoonwala Fund and the Infaaq Foundation do provide funds to CBOs. Corporations such as Unilever Pakistan Ltd, Engro and Shell and business association such as the Rotary and Lions, and the German and British Women’s Associations also provide funds to smaller NGO initiatives.Funding amounts vary depending upon the donor policies and the capacity of the NGO to utilize funds. NGOs having a sound track record and an effective organizational structure with proper accounting, monitoring and evaluation systems in place are more likely to receive larger and repeated grants. NGOs that are able to show the effectiveness of their programs are also more likely to receive grants. Yet many donors have windows with small grants for organizations just starting out. Similarly different donors have different policies on whether or not they will support an NGO beyond one project cycle. Some donors prefer to work with seed grants encouraging recipients to find alternative sources of funding, while other donor-NGO partnerships tend to be longer term with an emphasis on organizational development and institution building.Sometimes donors also provide loans to NGOs. This is particularly so within the micro finance sector. Recently the World Bank and the Asian Development Bank provided a loan to the Khushali Bank so that they in turn could provide small-scale loans for the development of micro-enterprise. Similarly the Pakistan Poverty Alleviation Fund (PPAF) set up by the Government of Pakistan in partnership with the World Bank, extend loans to NGOs. These loans are often given in conjunction with grants that support capacity building of partner NGOs. Apart from financial support, donors also provide technical assistance through provision of expertise in special areas, contribution in kind (vehicles, buildings, machinery etc.) and providing capacity-building opportunities to recipient organizations. These may come as part of the financial assistance package or may be requested for separately from the donors. For example UNAIDS will often provide support for members of NGOs working within the HIV/AIDS sector to attend international conferences. The donors are increasingly becoming more stringent on monitoring and evaluation. This can range from the submission of reports by the NGOs, to ‘missions’ (visits) by the donors to the project area to see the utilization of the grant money or to more extensive evaluation missions where programs and projects are evaluated by external evaluators. Donors too have at times played an active role in advocating an enabling environment for NGOs as in their advocacy efforts against the NGO Bill in 1996. Similarly the Country Assistance Strategies of the World Bank, and the Asian Development Bank have encouraged participation of stakeholders during the strategy formulation process.So what is the role of the state within this NGO-donor relationship? The state plays an important role in the creation of an enabling environment for the civil society. In addition, the government provides benefits (such as tax or customs duties exemptions) to NGOs. On the other hand, International donors, based in Pakistan, do sign protocols/ Memorandum of Understanding with the government and when they give funds to an NGO they are required to inform the Economic Affairs Division (EAD).Operating partnership combing donor, NGO and government are also becoming more common. Donors finance the relationship so that the government and the NGO can derive mutual benefits. Donors sometimes provide money to the government or to credible NGOs to set up social investment funds, which then provides financial and technical support to other NGOs. Two examples of such social investment funds are of CIDA providing money to the Aga Khan Foundation for Pakistan Social Institutions Development Programme (PAKSID), and of USAID who provided an endowment for Trust for Voluntary Organizations (TVO).

Changing Priorities
Most donors have their own sectoral and geographical preferences (please see thematic matrix on page xii). Over the years, development ideologies and priority areas continue to change and adapt. Development funding has moved from a more charitable approach, to one that aimed at economic betterment to more recently, an approach that promotes empowerment. So, for example, work with women has moved from a ‘include’ women-in-development approach to one of gender empowerment which focuses on promoting gender equality. Population reduction theories and strategies have shifted their focus to family planning, to now a wider and more empowering reproductive health approach. Donors not only change their priority areas but also how much they will give and their preferences for partnership (directly to NGOs or through government, long term or small projects). Sometimes donors will entirely close down their program in one country while new donors are always coming in to identify new areas of support.There are multiple reasons for these changes. Always, to some measure donor country foreign policy affects its development aid. Thus the Labour government in the UK saw a substantial increase in grants to developing countries, while the present American government’s policies regarding organizations who provide abortion services has seen a substantial decrease in funds to many reproductive health organizations. The donor’s changing financial or economic status also affects their ability to fund. Following 11th September, corporate sector donors whose stock values fell had to reduce the amount that they were able to commit in the future. International conferences such as the conference on sustainable development in South Africa influence and shape development agendas and governments and donors make commitments which they later strive to meet. Southern countries are increasingly beginning to effectively mobilize and lobby donor agencies towards the agendas of the South. Thus, for example, the International Forum for Capacity Building aims to provide greater voice to NGOs to negotiate with donors.Recipient country politics also influence donor funding policies and procedures. Donors sometimes use funds as political leverage and increase and withdraw assistance to influence policies of the government of the time. Following the testing of nuclear weapons in Pakistan in 1998, the donor community came down strong on the funds that were not only being provided to the Government but also to NGOs. Finally, international tools for monitoring development such as the Human Development Index and other social indicators too influence which fields a donor will prioritize. Similarly donors will often commission in-country research or needs assessments to assess new strategic directions.

The NGO – Donor Relationship – A Critique
Without the substantial funds that have been received by NGOs from donors it would perhaps have been impossible for NGOs to become providers of social and economic services on the scale they do. There is no doubt that donor funding sometimes does allow NGOs to work on issues which are at times not prioritized on the domestic agenda. The vulnerable are often marginalized when there are so many conflicting demands on limited resources. Foreign funding can give voice to interest groups who otherwise would be stifled in a closed political environment. NGOs also tend to prefer raising funds from international donors because they are better organized through a systematic approach to facilitate the relationship (69 percent of the donors within this directory state that they have specific guidelines and forms). But the NGO-donor sector has its weaknesses and both must be aware of their limitations so that both strive to continually improve. There is no doubt that while international donor agencies can be strong proponents of transparency and democracy, sometimes their own systems can be inflexible and not entirely transparent. What is right for the recipient of aid must be right for the donor. Donors must meet the standards of performance that they expect recipient governments or organizations to achieve.International agencies have a tendency to support projects rather then programs, which makes it very difficult for NGOs to maintain and build upon their human expertise over time or for them to secure their administrative costs. This weakens institutional learning as well as the NGOs chances for institutional growth over the long term. Official funding compromises the performance of NGOs in development activities such as institutional development and advocacy that require long-term strategies with few short-term outputs.Donor agencies are sometimes criticized for policies that in reality only serve the economic interests of their own countries. Thus policies which only allow for vehicles to be imported from specified countries or technical assistance to be secured from consultants of specified countries may not be the most effective way to meet the local needs as they may cause delays and other complications.Several successful NGO initiatives have suffered because of their over-dependence on foreign donor support. The NGO community and development sector in general has not yet been able to tap into the vast financial and voluntary resources available within the local communities. This is especially the case in Pakistan where recent studies by the Aga Khan Development Network (AKDN) show that during 1997-8 Pakistani’s gave Rs. 30 billion in money alone, for philanthropic purposes. This is 5 times more than Pakistan received in outright grants from foreign aid. The NGO sector must become better adept at including local philanthropists into the NGO-donor partnership. It is in this way that we will move towards greater self-reliance and sustainability. Therefore, it is essential for NGOs to diversify their sources of funding not only between different donors but also between different types of donor.The acceptance of increasing amounts of donor funds, which usually come with complex requirements for project appraisal, reporting, evaluation and accounting, presents even larger NGOs with difficulties. This official funding and its requirements can sometimes skew the accountability of NGOs away from grassroots and other internal constituencies.Donor agencies usually are convinced to support development NGOs, as they can reach people and places that governments often cannot and their bottom-up approach helps communities to express their needs and use their own abilities. However, many governments in developing countries feel that with the vast amounts of aid money flowing through NGOs, these organizations are becoming competitors to what would normally be government’s responsibilities. NGOs often, rather than addressing these legitimate fears - usually respond by being very critical of the government. For the future development of the country, it is imperative that the NGO-government relationships improve so that they are partners in development rather then competitors for resources.Finally the NGO sector must realize its own social responsibility. With the changing political scenarios in the world, international agencies cannot be seen as an unending source of funds, nor must the sector fall into the trap that it is only the international donors to whom they are accountable. The NGO sector is ultimately responsible for the impact of its work. It must change lives, it must contribute towards changing the future of our country and it must be driven by vision. We must build upon the windows of opportunity that external and local donors provide us today so that tomorrow we are able to do the same for others.