Double-edged funding

Reform NGO regulation, including scrutiny of financial governance

The report submitted by the Intelligence Bureau on the activities of non-governmental organisations (NGOs) funded by foreign sources in India has stirred up controversy. It references several instances in which such NGOs have been involved in organising resistance to development projects, from the nuclear power plant in Kudankulam to the Delhi-Mumbai Industrial Corridor. Its basic conclusion is that foreign sources have used these NGOs to promote their specific global agenda, which has impeded progress on projects that are critical to India's development. There is much merit in that argument, given the manner in which protest movements against many projects in India in recent years have been supported and funded by NGOs. One of the logical implications of this is that foreign funding of NGOs should be severely restricted. If the causes that domestic NGOs take up have merit, the organisations should be able to promote them on their own, which will lend legitimacy to their position. On the other hand, if they are unable to garner widespread support, they cannot be allowed to stand in the way of the government's development agenda.

While this broad-brush approach may be tempting, it is important for the government to adopt a more nuanced strategy. NGOs - or, more broadly, civil society - are critical stakeholders in the development process, and views that are contrary to government policy have full legitimacy in a democratic framework. At their most constructive, these organisations and movements contribute to finding an equitable and sustainable balance between the interests of different stakeholders, both present and future. Their ability to play this constructive role depends, inevitably, on resources, which, in a country of India's level of incomes, are naturally constrained. If a cause is legitimate from the perspective of seeking this balance, a lack of funds actually vitiates the outcome - by allowing other stakeholders to exercise disproportionate influence, to their advantage. Therefore, in the interests of equity and sustainability, completely denying these organisations access to funds may not be the correct approach. In other words, the objective should not be to starve the entire NGO space of funds on the basis of the "guilty until proven innocent" principle. Instead, what is required is a more sophisticated categorisation of NGOs with reference to their eligibility to receive funds from different sources. The current mechanism that bestows this recognition is the scrutiny mandated by the Foreign Contribution (Regulation) Act, which is enforced by the home ministry, with inputs from appropriate domain ministries.

Though this process may be rigorous and diligent, one implication of the Intelligence Bureau report is that it does not adequately filter out NGOs whose raison d'être is causes-for-hire. In effect, the criteria for recognition do not differentiate between NGOs in terms of their motivation - in essence, their legitimacy. If this indeed is the correct diagnosis, several steps can be taken to enable NGOs to play a constructive role while ensuring that it is the organisations - not the funding agencies - that are setting and driving their causes. The most important component of this enhanced scrutiny should pertain to the governance framework of the candidate NGO. Proper registration, genuine board composition, compliance with procedures, and well-laid-out policies relating to activities and resource mobilisation are the basic attributes of well-governed organisations. Broadening and deepening the regulatory process, as well as enhancing the capacity of the department to carry it out, would really be the best response to this controversy.