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

Date

May 13, 2020

Co-author: Sujata Rathi, Johan Thuard, Valmik Ahuja, Vishnu Rajeev

5 min read

Since the COVID-19 pandemic reached India, the focus of NGOs and CSR funders has been—correctly—on immediate relief activities, from providing supplies to migrants to giving targeted support to end-beneficiaries. This near-term work, however, 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 / CEOs in April 2020. We interviewed NGOs that have staff sizes ranging from 15 to 250, perform on-the-ground programmatic work, and operate beyond large metropolitan areas. We also spoke to large Indian and multinational CSR funders with significant experience in the development space.

To enable NGOs to make more effective decisions and help CSR funders better support their NGO partners, we have identified key CSR funding trends that may emerge post-COVID-19.

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 they recognize that in instances where a funder has made an informal commitment or verbal agreement, there is a possibility that the 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 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 the corporate leadership. With the exception of one CSR funder, all said that these efforts are being financed through their CSR funds[1].

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 reduce by 30-60%. CSR heads want to support their long-term NGO partners. And while they are likely to prioritize contractual commitments to such partners, even some of these commitments may have to be reduced. Many CSR funders said they would not be able to keep their informal or verbal commitments and most said they are unlikely to fund new partners for non-COVID-19 activities. 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 about their work in the post-lockdown world. This includes thinking about delivery assuming that social distancing would continue, the possibility of using digital means, ways to address the needs of returning migrant labourers and their families, and so on.

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

Implications for NGOs

  • CSR funding cuts will likely 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 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 picks up again.
  • 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 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 start identifying 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 your program 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?

How CSR funders 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 skilling. 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:

  • 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 mental health, or initiatives against domestic violence). Fund existing partners whom you know and trust to do such work.
  • Provide targeted financial support to NGO partners to help them maintain core capabilities so that they can rampup when the funding situation improves.

To summarize, funding for traditional CSR activities is likely to drop by 30-60%. NGOs need to start developing plans to address the challenges arising from this funding drop. Further, CSR funders can help their partner NGOs respond to the imminent funding crunch while retaining core capabilities.


[1] Three organizations mentioned that in addition to funding COVID-19 relief efforts, they also had a program where employees contributed to COVID-19-related efforts and the organization matched employee contributions. In such instances, the organization’s contribution was over and above its CSR funds.


About Author
Ashish Karamchandani
Ashish Karamchandani Senior Advisor FSG

Ashish focuses on using market-based solutions to drive sustainable social change. This includes multi-year programs like low-income housing where he helped develop a market which now has 26 Housing finance companies who have given over USD 5 billion of mortgages to finance over 350,000 houses. He has co-authored seminal reports like “Blueprint to Scale” and “The Pioneer Gap”. He founded Monitor Inclusive Markets (MIM), and prior to that started Monitor Group’s consulting business in India.

Ashish also co-founded Ummeed, a non-profit that works with children with or at the risk of developmental disabiliites. Ashish holds a B.Tech from IIT Bombay, an M.S. from University of California, Berkley and a PhD from Stanford University.