NGOs must explore new funding options

Bangladesh's development sector has relied heavily on foreign aid for years, but recent events have exposed the dangers of this dependence. The United States and Switzerland, two of the country's major donors-have cut back their funding, leaving NGOs scrambling. The US alone provided $550 million in aid in 2023, but with the recent funding cut, thousands of jobs have been lost, and critical programmes, including those in the Rohingya refugee camps, are now at risk. Switzerland has also announced that it will phase out its Bilateral Development Programmes by 2028, further tightening resources.

M Zakir Hossain Khan, chief executive of Change Initiative, warns that this reliance on foreign grants is a "suicidal decision" for NGOs. "It was expected that grant-based financing would decrease. Yet, we took no preparation. We should have had a sustainability plan," he said. As Bangladesh moves towards middle-income status, foreign aid will naturally decline. However, without alternative funding strategies, NGOs will struggle to survive.

The NGOs will, therefore, need to break this vicious circle by diversifying their sources of funds. This does not need to look abroad; local sources such as Corporate Social Responsibility (CSR) funds, Zakat contributions, and carbon taxes are available. Private companies may invest in education and health programmes; Zakat funds may be spent on the processes of poverty alleviation.

Another strategy is capital market participation of Microfinance Institutions (MFIs) in Bangladesh, which have successfully raised funds through bonds and reinvested profits. NGOs can implement those models to create revolving loan funds and ensure financial stability.

Finally, public-private partnerships (PPPs) can provide steady funding. The government could involve NGOs in executing welfare projects, while businesses could co-fund skill development and healthcare initiatives. By embracing these sustainable models, Bangladeshi NGOs can secure their future without solely depending on foreign donors.

Faria Hassan

Student

Bachelor of Business Administration (BBA)

North South University

faria0462@gmail.com