The shape of India’s non-profits in the 21st century

India’s non-governmental organizations (NGOs) have been in the midst of a brewing crisis for sometime now, which goes well beyond questions over technical competence or efficiency of delivery, to questions over their existence and their legitimacy. It is pertinent to examine the reasons for this crisis, and set out ways in which NGOs can restart swimming against the tide.

NGOs trace their raison d’etre to the twin failures of state and markets. In the latter half of the 20th century — the heyday of NGO action in India — there were vast swathes of population who did not have access to basic services, mostly living in areas that were geographically not served by the state, typically in rural areas. The private sector, particularly prior to 1991, was largely state-controlled, and had an even more limited reach.

Where basic services reached hitherto neglected regions, sections of population were left out owing to usually their social background. NGOs swung into action to fill this gap. Funds flowed in, as did public-spirited people, either helping extend government services, or providing services of their own. NGOs became a sector.

Evolving context

More recently, particularly in post-liberalisation India, with significantly enhanced penetration of the market, and superior tools of governance available to the state, the situation is quite different. India’s urban population went from 11% in 1991 to 31% by 2011. Pockets of severe deprivation remain, but the story of the average rural person is significantly different than before.

As much as 77% of the bottom quintile of the Indian population today owns mobile phones and 87.3% of all households reported having access to electricity. At the same time, nearly 7% of the bottom quintile of the population also face catastrophic health shocks that wipe out over 20% of their annual household income. All said, the poverty line for per capita income remains at Rs 32 per day in rural areas and Rs 47 per day in urban areas.

The changing role of the state has been one of the most notable factors affecting the role of NGOs in India. On the positive side, health, education, and a host of other government services reach a far greater section of the population than before. Governments have enacted key legislations that created a legal framework for local governments, and introduced a wave of rights-based entitlements. Several NGOs had key roles in conceiving and piloting activities that culminated in these laws.

Shifting landscape

Projects that used to rely on NGOs for last mile delivery have gradually moved towards local governments, or networks of self-help groups established by government programmes. The political impetus for this, in no insignificant measure, came from the proliferation of identity-based politics in the post-Mandal era.

In terms of the negatives, governments have tended to pit empowerment and entitlements against each other, and even as entitlement-based legislations are in place, the current political narrative doesn’t appear to be in its favour. The same goes for rights activists, who have suffered from a crackdown on funds and their freedom to dissent.

The basic rights framework built over several decades of struggles (education, food, employment, information, etc.) is increasingly being challenged, and key legislative measures to ensure these rights are being diluted through a combination of executive orders, amendments that erode their core characteristics, or by allowing bureaucratic apathy to rule the roost. Also, while local governments now see more funds passing through their bank accounts, there are several reports that their scope for intervention and discretion has been significantly curtailed.

Problematic response

As the external environment evolved, NGOs responded, but in ways that in the long-term weakened them as institutions, and the sector as a voice of the poor and marginalised. NGOs allowed their mandates to be dictated by the nature of funds available. Several other development sector entrepreneurs adopted the social enterprise model, taking to heart, for instance, management guru C.K. Prahlad’s bottom of the pyramid thesis.

There are numerous examples of NGOs who have grown rapidly to essentially become large-scale contractors of the government, or have adopted a set of targets and management practices that erode the social core of the organisation. In doing so, a common casualty is their ability and willingness to engage with the political economy, which is often at the heart of protecting or furthering the interests of people they work with.

The other direction some NGOs took was to move away from implementation. This was a direct consequence of the state expanding its reach, and arguments being raised in favour of NGOs withdrawing from areas where they had been working since long. Some NGOs took up research and advocacy, and settled into a role where they intended to be watchdogs of government programmes, and a few influential NGOs (as research agencies, think tanks and advocacy units) have been successful.

However, even the larger (and more influential) NGOs failed to come up with a widely accepted accountability framework. The sector demanded self-regulation (in terms of activities, and results, not funding), but was unable to put forward a coherent framework that could be used to measure them. Attempts to arrive at sector-wide standards were defeated by ego clashes, and some of these attempts were viewed as siding with the government.

NGOs also were guilty of not putting in place sound systems, especially in human resources, and to a lesser extent, financial management, at times driven by donor pressure to cut administrative expenditure.

What next?

First of all, one needs to acknowledge that a simple narrative of state and market failures will no longer work. Gaps exist, but of a different nature. NGOs have to not only frame the new narrative around how these failures manifest themselves in our world today, but also demonstrate an ability to design, pilot and implement bespoke responses to these failures. This calls for reforms, both to the NGO’s mission, and in its organisation.

NGOs should focus on innovation and learning. NGOs are far more valuable for their ability to experiment with approaches, and promote learning from both success and failure, not just at the organisation level but also at a sectoral level. The accountability framework that is currently missing needs to take shape. By doing this, they can seek to re-occupy the moral high ground without having to hide behind altruism when questioned on impact.

By cultivating space for experimentation, learning, innovation, it will continue to create models that a scale and optics-hungry state and the efficiency-seeking private sector can adopt in future. From the early days of micro-watershed development, biogas, community healthcare, micro-enterprises for rural livelihoods and sanitation, there are examples of this phenomenon. NGOs have also had significant success piloting and advocating initiatives that resulted in pro-poor legislations — whether in the area of women’s rights, or rural safety nets — and that reveals ways in which NGOs should seek to achieve long-lasting impact.

Scaling caveat

An important caveat is in order here. NGOs are regularly questioned on their ability to take programmes to scale. This is a red herring, and one that NGOs must ignore, or at least, rethink. Scaling up is not the responsibility of any one NGO. They will have to not only implement, but also focus on transferring the design and implementation capability to more local, more cost-effective implementation teams on the ground — whether they belong to local governments, or other smaller local community-based organisations. Scaling solutions require robust networks of organisations on the ground.

Refusing to be distracted by political pressure and lucrative funding opportunities, and instead focusing on a well-defined core mission requires strength of character and the stamina to stick to a mandate. It will require a strong coalition of NGOs and donors built on mutual respect and openness. If this implies a deviation from what the priorities of government, mainstream philanthropic foundations and donors are, there will be fewer, or perhaps a different set of financial resources to work with.

Moving along this path will also help the sector redefine its human resource models. While high quality professionals come at a price, knowledge and capabilities will have to be made more open-source if NGOs are to be successful in promoting external networks of learning and implementation agencies. Internally, for professionals working in NGOs, it is important that a clear career path exists right from the beginning, and NGO leaderships should demonstrate that these professionals growing up the ranks could occupy the corner rooms in NGOs.

This is part of the way ahead. NGOs in India, seeking to adapt to the shifting landscape of India, need to work with the state and markets, and at the same time, retain its difference. This is a critical reform or perish phase for NGOs as we know them. It will be interesting to watch how many NGOs today are up to this challenge.

Suvojit Chattopadhyay is a development professional currently based in Dhaka, Bangladesh with Adam Smith International. He earned his undergraduate degree in Economics from Shri Ram College of Commerce, Delhi, and masters’ degrees from Institute of Rural Management, Anand (IRMA), India, and Institute of Development Studies (IDS), Sussex, UK. He has worked in India, Ghana, Kenya, Somalia, Bangladesh and Myanmar in a career spanning 12 years.

Views are personal.