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The Impact of COVID-19 on CSR Funding for Indian NGOs

 

Acknowledgment: We would like to thank Arthan, Atma, Bridgespan, Caring Friends, Centre for Social Impact and Philanthropy at Ashoka University, Dalberg, Dasra, GiveIndia, GuideStar India, India Development Review, Samhita, Sattva Consulting, and TBL Consultancy Services for their help in designing this dipstick research, introducing us to CSR heads and NGOs, reviewing the findings, and helping think through the implications. We would also like to thank Vishnu Rajeev and Valmik Ahuja for their unstinting support during this work.

Since the COVID-19 pandemic reached India, the focus of NGOs and CSR funders has been—correctly—on addressing immediate relief activities, from providing supplies to migrants to giving targeted support to end-beneficiaries. However, this near-term work may have an unintended adverse long-term impact on NGOs, especially those with significant CSR funding.

To understand this longer-term impact, FSG conducted in-depth interviews with 22 NGOs and 18 CSR heads and CEOs. The NGOs we interviewed have staff sizes ranging from 15 to 250, perform on-the-ground programmatic work, and operate beyond large metropolitan areas. We spoke to large Indian and multinational CSR funders with significant experience in the development space. In these 45- to 60-minute interviews, we focused on understanding both current and expected post-COVID-19 activities.

The aim of this blog is to enable NGOs to make more effective decisions—based on data—on how CSR funding is likely to change and how CSR funders are thinking about post-COVID-19. We also share some initial thoughts on how CSR funders can support their NGO partners.

NGO Perspectives

Our conversations revealed that many NGOs have concerns about their CSR funding for the year. In general, they feel that funding committed by long-term funders and backed by a signed agreement will come through. But in instances where a long-term CSR funder has made an informal commitment or verbal agreement, they recognize that there is a possibility that funding may not come through. Some NGOs also feel that they may be able to get some new CSR funding.

Most NGOs expect to resume business-as-usual after the lockdown is lifted. While they recognize that it may take some time to get back to normal, they broadly expect to engage in the same activities that they conducted before the lockdown.

CSR Perspectives

For most CSR funders, decisions on spending CSR funds to address immediate COVID-19 issues (e.g., contributing to the PM CARES fund or supporting local relief measures) are being made by corporate leadership. Some businesses are also allocating additional CSR funds for the post-COVID-19 relief phase, and others may do so moving forward. While the actual implications for CSR funding for NGO partners will vary, and there is still a lot of uncertainty among CSR funders, some trends did emerge in our conversations.

Funding for traditional CSR activities could be reduced by 30–60%. CSR heads want to support their long-term NGO partners. And while they are likely to prioritize contractual commitments to such NGO partners, some of these commitments may have to be reduced. Many CSR funders said that they would not be able to keep their informal or verbal commitments and most said they are unlikely to fund new partners. Many mentioned that they plan to continue to fund COVID-19-related efforts, and would like to support existing partners through this allocation.

Some CSR funders said they would like their NGO partners to be thinking of how they would work in the post-lockdown world. This included thinking about delivery, assuming that social distancing would continue, the possibility of using digital means, etc.

We believe that to ensure the long-term sustainability of the NGO sector, both NGOs and CSR funders need to start thinking about the implications of these findings and start sketching out their plans to respond to them. Here are some initial thoughts that emerged from our interactions:

Implications for NGOs

  • CSR funding cuts are likely to be significantly higher than expected, and are unlikely to be covered by other CSR funders. While the exact magnitude by which CSR funding will reduce is not clear (and this will differ from NGO to NGO), it is important to start thinking about how to significantly reduce costs while maintaining key capabilities, so that your work in core areas can ramp up when CSR funding returns.
  • The near- and medium-term focus of CSR funders is likely to be COVID-19, so it is important to think about what your NGO can do in that context. It would also be important to leverage your on-the-ground presence to learn about new and emerging needs and to think about how you can address them. For instance, if you focus on building awareness for preventive health care in a community, you could address misinformation related to COVID-19 and provide actionable guidelines to the community. Similarly, if you are a skilling organization, you could work with your CSR funders to identify sectors for which the demand is likely to be high after the lockdown and start preparing for these.
  • There may be a need to rethink delivery. For example, how will you deliver your program while maintaining social distancing norms? If a community you are working in becomes a hotspot, how will you continue to support it? How can you leverage digital communication tools?

Some Ways in Which CSR can Support Long-term NGO Partners

In addition to reduced funding, there is also an understandable focus on prioritizing activities related to immediate COVID-19 needs and recovery from COVID-19. For instance, you might decide to postpone initiatives related to road safety and prioritize training. However, this could have devastating implications for important areas you have supported and where your NGO partners have developed capabilities. People we spoke to shared two broad ways in which CSR funders can support their long-term NGO partners:

  1. Work with existing NGO partners to understand the situation on the ground and activities they can support that may not be “mainstream COVID-19 relief or recovery work” but can be extremely valuable in the COVID-19 context (for example, supporting maternal and child health, mental health, or initiatives against domestic violence). Fund existing partners whom you know and trust to do such work.
  2. Provide targeted financial support to NGO partners to help them maintain core capabilities so that they can ramp up when the funding situation improves.

To learn more about the dipstick research, please contact Johan Thuard, Sujata Rathi, or Ashish Karamchandani.

Learn more about FSG’s Inclusive Markets work >

Sujata Rathi

Associate Director

Ashish Karamchandani

Senior Advisor

Johan Thuard

Former Senior Consultant, FSG