How Foreign Donations are Revolutionising the Indian Social Sector

According to an article by the Hindustan Times, foreign donations to Indian NGOs was at a soaring amount of INR 12,000 crores in the year 2013-2014. This number nearly doubled to INR 22,000 crores in the year 2014-2015. It is to be noted that majority of the foreign donations to Indian NGOs was distributed across seven states – Delhi, Andhra Pradesh, Maharashtra, Kerala, Tamil Nadu, Karnataka and West Bengal.

 

The drastic increase of NRI donation calls for an enlightening discussion about the potential of crowdfunding for NGOs in India through NRI donations, and the role of the FCRA (Foreign Contribution Regulation Act) in paving way for overall social development in a number of sectors.  The pattern of foreign donations in India has highlighted child welfare, education, rural development, and public health, as the categories with the most amount of foreign funding. The consequence of this is that we have taken a significant step in improving and securing the future generations of India by growing in these categories, and allowing common man an easier access to it.

 

Cutting back to a few years ago, NGOs had very few options to financially sustain their work. It was mostly philanthropic individuals, charitable trusts, and more recently, CSR initiatives by large corporates that made the most contributions. But today the opportunities are bursting through the seams. The era of internet connectivity and tech innovations have expanded the scope of fundraising activities that a nonprofit can take up. Crowdfunding is a case in point, where anyone, from business, to NGOs, and individuals, can raise money for projects ranging from personal needs, social work, capital for business ideas, medical expenses, to educational expenses. All you have to do is pitch your idea, make an appeal to your circles on social media, and ask them to donate to your cause and share it with others if the idea resonates with them. The more viral it gets, the more donations you draw. This has brought success to innumerable startups, social enterprises, NGOs, and individuals world over, as well as in India.

 

On the other hand, the opportunities that foreign donations brought to the social sector, are no less. The FCRA implemented in 2010 came as a blessing to NGOs and nonprofits who truly wanted to further their projects in the development sector. FCRA enables individuals, associations, and NGOs in India to receive foreign funding after a formal registration process.

 

An interesting dynamic can be established between the two aspects (crowdfunding and foreign donations) in the social sector. A combination of NRI donations and crowdfunding for NGOs in India not only allows NGOs to raise funds with higher currencies, but will also keep a check on the utilization of funds received, and the projects undertaken with those funds. Moreover, social media communication, which is fundamental to crowdfunding is a great catalyst to draw in, and encourage NRIs to make donations towards development in their homeland. This also puts responsibility of accountability on Indian NGOs to utilize the funds they receive through NRI donations, appropriately. Interestingly, FCRA prohibits political funding through this method.

 

The bottom line is that crowdfunding in combination with foreign donations has the potential to be a sustainable financial model for NGOs in India, looking to create a better India with their various interventions. As long as the ulterior motive is to add long-term benefit to society, there is no reason that individuals or corporates, both, in India and overseas won’t want to be a part of it. The only questions remains is if Indian NGOs and nonprofits are quick enough to recognize and seize such opportunities.

 

Indian donors living in the UK and USA, can donate towards vetted NGOs in India now, and are further incentivised to participate in India’s development activities, by claiming tax benefits from their own government. The Indian NGOs that are interested to reap the benefits of this partnership may visit this link.

Valentine’s Day – Be someone’s Valentine by Giving

Valentine’s day is just around the corner. If you’ve been wondering how to celebrate it this year, we suggest doing something meaningful like crowdfunding. Something that adds value to society, or benefits people of lesser means. The few bucks you spend on chocolate and roses can actually have a huge impact on the life of a child, or an aged or ill person in need.

 

We recommend celebrating Valentine’s day by giving to charity. You can be a valentine to someone in need, and we promise it’ll be worth it!

 

Here are a few ideas for Valentine’s day, and how to celebrate it in a meaningful way this 2017:

Switch your expensive dinner by feeding the hungry

 

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Instead of going out on a date to an exorbitantly priced meal for two, you could stay home and cook a home cooked meal for your loved one. The money that you save from that one expensive meal can be donated to a program or a charity that feeds the hungry.

 

Switch your bouquet of roses for a tree plantation drive

 

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Rather than buying a bouquet of roses, you could support an environment foundation by giving your savings to a tree plantation drive that will make our environment a better place to live in. Breathing clean air is definitely worth the bouquet of flowers you pass on!

 

Switch your romantic weekend getaway by providing to a shelter home

 

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A weekend away to celebrate Feb 14 with your loved one is a great idea. But you could also consider directing the money you spend on the trip, to provide shelter for homeless or needy people.

 

We hope this list of small and meaningful ideas helps you to reach out to those in need. Celebrating with random acts of kindness can be the most rewarding feeling in the world. So, go ahead and be a valentine to someone in need!

 

 

 

 

 

 

What the Budget of 2017 means for crowdfunding in India

The budget 2017 has brought both challenges and opportunities to the nonprofit sector in India. The two main announcements that impact the development sector are expected to completely change the landscape of how people do charity and how nonprofits accept it. The first is the cut down on the limit of cash donations one can make, second is the alterations in the tax exemption clause.

 

The recent demonetization move in India revealed what digital India will look like in the years to come. That said, social problems won’t be going away anytime soon, so the need to fundraise is indispensable.

Let’s discuss what the Union budget announcements of 2017 will mean, and how they will impact the world of crowdfunding.

 

Reduction in amount of cash donation

 

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The amount of cash that one can donate anonymously to an organization has been reduced from Rs 10,000 to Rs 2,000. This is a major crackdown on political funding. It is a bold step towards curbing illegal activities and money laundering that nonprofits may be involved in. In any case, it will always be more beneficial for a genuine donor to give donations with proper documentation and through registered banks because it will add credibility and accountability to the organization’s utilization of the funds.

 

So what does this mean for crowdfunding in India? It means that nonprofits need to start embracing technology and digital tools to raise money for their cause. No longer can they sustain themselves in this competitive ambiance, by using traditional methods of fundraising. They will have to invest their efforts in online fundraising platforms such as Impact Guru.

 

Removal of clause 35AC

 

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Clause 80G allowed a tax rebate of almost 50% and 35AC of almost 100%. The union budget 2017 announced the removal of clause 35AC, which has been a cause of worry for the development sector. It allowed 100% tax exemption to individuals and companies that donated to certain specific charities that are required to be verified by the central government. Experts believe that removal of this provision will also remove the most valuable incentive that motivates people and organizations to donate.
With regards to crowdfunding, it means that nonprofits will have to use newer and more creative techniques that incentivise people to donate. Online crowdfunding platforms use digital and social media tools, as opportunities to draw in funds. 

Therefore the time has come for more people to shift to such platforms and create new processes to sustain that conducive environment for giving in such times of unpredictable dynamism. 

More and more charities have begun to see the need for digitization in achieving their social mission, and the announcements in the Union Budget of India 2017 seem to be a positive catalyst for it. It remains to be seen how nonprofit organizations react to the changes that are coming their way.

For any queries regarding online donations, you may visit Impact Guru and speak to our fundraising consultants for more clarity on recent developments.