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.

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