The twist in Indias NGO tale: Strong numbers,low transparency

Leading NGOs themselves maintain that the presence of a large number for active voluntary organisations is deceptive because not all of them are involved in pure-play social activities. A large number of NGOs in the country,they allege,have been floated as a chief source of employment by their promoters,while in a large number of other cases,evading tax liabilities is the main objective,they say. For every good organisation,we have one mischief player. And then,there are many who have the right intentions but do not know how to run a social sector development organisation in a professional and transparent way, says Krishnan,an IIM-Ahmedabad graduate,who set up Give India in 2000 with the intention of streamlining the muddled funding and donations culture in the country.

While arguing that there are still a large number of grassroots organisations doing commendable work across the country,Mathew Cherian,CEO,HelpAge,admits that lack of transparency in the functioning of a majority of cases is an issue. The credit for many recent social developments such as the Right to Primary Education,Right to Information,the awareness about environmental changes singularly goes to several dedicated organisations working across the country. But at the same time,there are a large number of unscrupulous players working mainly towards self interest, says Cherian.

What NGOs do

A glaring aspect of non-profit activity in India is the culture of setting up educational institutions,housing societies,business and professional associations,religious institutions and sports federations. The CSO study,in fact,found that only 41 per cent of 3.3 million NGOs are engaged in social services and philanthropic activities whereas more than 36 per cent were operating in education,housing and development,religious and business and professional union activities. Interestingly,a majority of these bodies are run by not-for-profit Societies or Trusts registered by private groups. The parent bodies of these organisations transfer a large chunk of their revenues to these Trusts or Societies as donations and thus,dont pay taxes on it. A large chunk of the donated funds finds its way back to the parent organisation in some form or the other, says the CEO of a leading NGO. The other popular practice is that of the promoters pampering themselves with hefty salaries and other perks.

A majority of NGOs,such as schools,hospitals,sports federations,in fact,are the primary source of livelihood for their promoters though the laws stipulate that an NGO can neither be a source of profit nor the only source of livelihood for its promoters, says the CEO. Most sports federations and boards in the country are also registered as not-for-profit bodies even though they raise huge amounts of funds from governments,private sector and also through commercial activities such as selling broadcast rights,sponsorships and even raising advertising. The Board of Control for Cricket in India (BCCI),for instance,is registered as a not-for-profit body. The BCCI earned Rs 726 crore in income and Rs 54 crore in profits in 2008-09 from activities excluding the Indian Premier League. Officially,all its members are honorary members and are not paid but senior-level board members get perks that run into several lakhs of rupees for travelling,boarding and lodging.

The other big source of corruption in the sector is government funds. The government is the largest source of organised funds for the sector. Through its various social sector projects,the government allocates crores of rupees every year to various grassroots level organisations. All leading organised players from the sector allege that almost all of the government funds are channelled out to organisations that are directly or indirectly controlled by politicians and bureaucrats. The practice,according to insiders,is more rampant in states such as Maharashtra,Andhra,UP,Rajasthan and Tamil Nadu. Incidentally,these states,according to the government report,also have the largest number of registered NGOs.

Joining the financial dots

The second phase of the study,which is already underway,will look at the financial aspects of the sector. The study will look at the phenomenon of fund-raising and its utilisation,besides affirming the ownership structures. This is when bigger surprises will come up,say people from the sector. Unofficial estimates suggest that the NGO economy in the country is thriving with around Rs 80,000 crore raised in funds every year. The majority of these funds have been coming in from institutions such as the government and private corporations,foreign grants and aids from global agencies including governments such as the UK,Canada and European Union and several religious bodies. According to various estimates,in 2009,around Rs 18,000 crore came in from the government,around Rs 10,000 crore were generated through foreign contributions,Rs 1,600-2,000 crore were raised through religious contributions and the rest through corporate and individual donations.

Insiders,however,feel that if all the 3.3 million entities are taken into account,the annual budget of the sector will be much more. CSO Partners,a Chennai-based organisation set up to promote accountability and transparency in the functioning of the sector,in fact,estimates the sector could be generating around Rs 800,000 crore annually.

The point is that if India,indeed,had 3-4 million NGOs,whatever amount of funds they may be raising,by the sheer amount of work they would do,we will not have the kind of social problems that we are currently faced with, says Soumitro Ghosh,founder and CEO CSO Partners.