The landscape of civil society and philanthropy in India paints a complex picture. On one hand, there’s a widely held belief that Indian philanthropy is thriving like never before.
This narrative highlights the growth of international donations, the sustained momentum of corporate social responsibility (CSR) funds even after the COVID-19 peak, and the increasing contributions from wealthy individuals and domestic foundations. Adding to this optimism is the rise in social impact investments and innovative fundraising methods such as social stock exchanges (SSEs).
Contrastingly, many NGOs express dismay over diminishing international funding, restrictive funding preferences from businesses and affluent donors, significant job losses, and a shrinking civil society space. This dichotomy illustrates the volatile environment within which these organizations operate. 
A major obstacle in accurately assessing this situation is the scarcity of reliable data. Various sources, including reports from sector experts and institutions like the Bain-Dasra India Philanthropy Report 2024, indicate that the narrative isn’t straightforward.
This data vacuum necessitates greater transparency and substantial investments in developing a robust data infrastructure.
Government Spending and NGO Funding
Government expenditure overshadows all other financial contributions, accounting for a whopping 95% of all social sector spending. While substantial amounts are funneled through NGOs for implementing state and central schemes, the grants are often found lacking.
These public funds are typically insufficient, short-term, and subject to unpredictable decision-making and delays. Thus, funding from the government, though significant in volume, is fraught with execution challenges.
Foreign Funding Dynamics
Despite expectations, foreign funding under the Foreign Contribution (Regulation) Act, 2010 (FCRA) has managed to stay relatively stable, even exceeding Rs 23,000 crores in 2023.
This stability comes against the backdrop of numerous NGOs having their licenses canceled and international donors facing stricter regulatory scrutiny. Although access to detailed FCRA data remains restricted, making in-depth analysis difficult, it’s evident that the nature of foreign funding has shifted.
Support for NGOs focused on human rights and policy advocacy has nearly vanished, while politically neutral projects continue to receive backing. Additionally, efforts by Indian NGOs to engage with diaspora communities are bearing fruit.
CSR and Domestic Donor Trends
CSR funding, an essential lifeline for many NGOs, reached Rs 28,000 crores in 2023. As corporate profits maintain an upward trajectory and compliance improves, CSR remains a crucial funding source.
Nonetheless, nearly half of these funds are directed toward corporate-initiated programs, leaving fewer resources for external NGOs. Corporates often prefer funding short-term, measurable projects, avoiding longer commitments and controversial causes.
This creates a tough environment for rights-based and systemic-change-oriented organizations, especially those working in marginalized communities or remote areas.
Contributions from the Wealthy
Philanthropy by India’s ultra-rich is growing, albeit at a slower pace compared to their global counterparts. Estimated at Rs 26,000 crores in 2023, this segment offers significant potential for NGOs, especially in the context of declining international support.
Donor interests have expanded to include health, climate issues, higher education, scientific research, and nonprofit capacity building. However, foundational issues like caste and gender discrimination remain underfunded. Preference for market-driven solutions by these philanthropists can often sideline deeper, systemic change.
Emerging Forms of Social Investment
Newer fundraising avenues such as impact investing, development impact bonds (DIBs), and SSEs are promising but come with caveats.
Impact investments have surged to $5.8 billion in 2022, and a variety of DIBs have raised significant sums since 2015. Despite their potential, these channels typically favor projects with easily measurable outcomes over short timeframes. Consequently, NGOs focusing on long-term, community-led, systemic changes may find these streams less accessible.
Challenges and Opportunities
The challenging environment for India’s NGOs underscores a need for innovative survival strategies.
Potential solutions include tapping into ‘retail’ fundraising by mobilizing resources from citizens.
This method, although underutilized, can provide sustainable support if executed well.
Capacity building for NGOs to adopt such approaches and the development of a digital-friendly giving ecosystem are critical areas for investment.
The interplay of different funding sources—governmental, foreign, CSR, and emerging social investment channels—outlines a diverse yet challenging funding landscape for Indian NGOs.
While there are opportunities for growth and adaptation, the path forward requires addressing significant gaps and fostering greater collaboration and innovation in fundraising strategies.
