“He wears a mask and his face grows to fit it”
-George Orwell, Shooting an Elephant
On 12 January 2010, when a devastating earthquake struck the Caribbean country of Haiti; the world saw a great human tragedy unfold. Depending on the various (conflicting) estimates, anywhere between 85000 to 360000 Haitians were killed in the tragedy. A tide of international sympathy and monetary/material aid poured into Haiti. Along came the phalanxes of the NGO and International development “experts”. These NGOs were so omnipresent in the battered country that a US magazine wrote:
“Welcome to the NGO Republic of Haiti, the fragile island-state born, in part, out of the country’s painfully lopsided earthquake recovery. The Haitian government doesn’t even know how many NGOs are operating within its borders. No one does. According to Bill Clinton, the UN special envoy to Haiti, the country has the second-highest number of NGOs per capita in the world (India has the highest).”
Well, India has the highest number of NGOs per capita. And neither does the Indian government know exactly how many are there. On 21st February 2014, the counsel for CBI told a Supreme Court bench that they “estimated” the number of NGO’s operating in India under the Societies Registration Act, to be around 20 lakhs. This means India has a NGO for every 600 citizens. And even this estimate is lesser than the actual as many other NGOs are registered as Section 25 Companies or Charitable Trusts. A survey of Non-Profits conducted by the Central statistical Office of the Ministry of Statistics and Policy Implementation put the number of “societies” at 31.7 lakhs. It again excluded the Section 25 companies but included the institutions registered under the various state trusts act and religious endowments acts. According to information obtained from the government records, an average annual funding of Rs.950 crores was disbursed as grants to the NGOs by the government for running various government schemes between 2002 and 2009. This was in addition to the Rs.12000 Crore received by the organizations reporting under FCRA from foreign sources , approximately Rs.2541 Crore reported as exempted donations claimed under Section 80G of the IT Act and around Rs.600 odd-crore reported as exempted under the Section 35Ac of the IT Act. This makes it almost a 15,000 Crore strong sector of the economy (which by the way is greater than the GDP of most of the northeastern states). So why exactly have these organizations proliferated and how effective have they been?
The article 19(1)(c) of the Indian Constitution as well as articles 20 and 23 of the Universal Declaration of Human Rights recognize the “freedom to form associations and unions”. This, in addition to the right to religious freedoms and protection of the rights of religious/linguistic minorities to establish and operate their own institutions provides a very conducive and solid legal ground (and morally required) for growth of non-governmental associations and institutions. This combined with the people-centric nature of the independence movement, post-independence idealism and the Gandhian legacy of keeping a distance from the state contributed to the formation of many such NGOs with similar ideology in the early days. With the leftist tilt of the intelligentsia and the student bodies and the need for a space for political dissent (inspired by the internationally prevalent rebellious mood and the emergency of 1975), this growth was further spurred. The government was broadly tolerant of such organizations (except few extreme cases). At least till and after the emergency. They were also looked upon as a supplementary mechanism to the government machinery which was pitiably limited in its reach and understanding of such a diverse nation. The international developments, impacting India in terms of the heavy aid from the western countries and the strengthening of the international organizations like UN, were further helping formalize the role and expanding possibilities for the “development” sector. A further expansion of educational institutions specifically training students in social work and development provided the necessary manpower (more on this travesty in a later blog “The Indoctrination of Minds”) and the post-liberalization economic scenario provided the necessary funds. The cumulative effect of this is the gargantuan “non-government development” sector which we see today.
The numbers at the beginning of the blog, however mind-boggling, hide a bigger story. That largely of a set of institutions as ineffective (if not less ineffective) as the government delivery systems. That of ossified ideologies and petty fiefdom wars. That of an open Pandora’s box with irreversible effects and yet a holier-than-thou retaliations, monumental failures and in many cases, insatiable greed. And all this, all the time with a pretension of “benevolence and greater good”.
There are no statistics available on how effectively the NGOs have functioned and their impact in their field of work. But a glorious example would have stood out. In many cases, the same NGOs who whined about the inefficiency of the government-run schemes have lined up to be a partner in the cash cow schemes the government has fashioned out of heavy deficits. Some have even been formed just to partner with the government (safeguards do exists but are not very effective). Most are based on minimal ideas/experience and are either un-scalable or downright impractical. The lack of a uniform system of registration and a defined system of classification is one of the major issues. The regulation is so fragmented among different state and federal agencies that a complete oversight is impossible. Hell, even getting a near-accurate count of the NGOs is impossible. The databases of the organizations are not consolidated and shared between agencies. Criteria for recognition are not uniform. A body recognized by a state official as a charitable body does not pass muster with the federal tax authorities and vice versa.
The funding and financial records are opaque. It has been repeatedly brought to public notice that most NGOs are reluctant to disclose funding or even file tax/disclosure returns. In spite of laws like Prevention of Money Laundering Act and Foreign Contributions Regulation Act, the NGOs could be used as a conduit for money laundering due to loose reporting standards. It has also been pointed out in many cases that the NGOs have engaged in political propaganda and have been involved with political opinion-making often coinciding with high amounts of foreign funds (and this is not just based on the leaked IB report on foreign funding of NGOs but also from other authenticated newspaper reports. More on that in a later blog “For a few pieces of silver”). That a NGO cannot engage in political activities is not ethically sustainable but then the state also deserves a right of due diligence for the possibility of sinister activities and a responsible citizen’s body should be open to that.
Given the fact that the sector has formalized into a career option, it becomes harder to preclude the possibility of manufacturing of issues for the sake of self-preservation. This has lead to entrenchment in the area of work with intentional confrontation with the administration and fights amongst the NGOs over their fiefdoms. As in any career, imaginative job descriptions have cropped with multitudinous expertise in terms of fund raising, mobilization, social entrepreneurship etc. Long careers have been made and nests feathered at the expense of tax payers money.
This is not to say that all NGOs can be painted with the same brush but the public’s right to know and demand legal behavior calls for better (arms-length) oversight of the NGOs. A judgment by the Supreme Court in October 2013 (civil appeal no. 9017 of 2013) ruled that NGOs substantially funded by the government are “public authorities” under the RTI act. The government will do well to modify the law to bring ALL NGOs which claim exemptions under 12A of the Income Tax act or which are registered under the FCRA be declared public authorities as they are claiming an exemption from taxes AND are by the virtue of the definition of 12A exist for public good. The disclosure requirements being subject to section 8 exemptions of the RTI Act. The state will have to review of all exemptions issued under section 12A and remove the overlap and possible loopholes in the registration process. It must also initiate a review of all Section 25 companies to verify their functioning with respect to the initial objects of the company.
Some housekeeping is essential to save the sector from itself.
(Correction: The blog was changed to correct the amounts under 80G and 35AC. The earlier numbers were as given in the annual statement of revenue foregone. These were the tax liability which would have arisen and not actual donations. In the calculation for actual donations, a average tax rate of 30% has been assumed.)