4 Oct 2023 : Daily Answer Writing
Mains Answer Writing
4-october-2023
Q1. Civil society organizations, play a pivotal role in fostering “collective private action for the public good”. What challenges do they face in local resource mobilization (LRM) and corporate funding through corporate social responsibility (CSR)? Also, suggest measures.
ANSWER:
A Civil Society Organisation (CSO) is a non-profit, voluntary citizens’ group which is organized on a local, national, or international level. They are task-oriented and driven by people with a common interest. Civil Society Organisations (CSOs) perform a variety of services and humanitarian functions, bring citizens’ concerns to Governments, monitor policies, and encourage political participation at the community level.
CHALLENGES FACED BY CSOs IN LOCAL RESOURCE MOBILIZATION
- Poor Resource Availability: Since these organizations are largely non-profit, they are dependent on grants, donations from Governments, Corporates. There is a lack of institutional mechanisms for resource mobilization. For e.g., NGOs and CSOs are restricted from raising funds from the public as deposits under the Companies Act, of 2013.
- Poor Financial Expertise: Local CSOs and NGOs lack the financial expertise to manage and mobilize funds which often leads to fiscal issues like leakages, and wastage which discourage funding to such CSOs.
- Duplication of Resources: There are several NGOs and CSOs working in one sector that too in the same geographical area. This raises competition between NGOs leading to diversion and poor distribution of funds especially for emerging NGOs.
- Restrictions on Foreign Funding: CSOs that operate in India are regulated under FCRA, 2010 by which there are certain restrictions that inhibit their resource mobilization from foreign sources.
- Political Interference: Government policies and political climate increase the bureaucratic red-tapism for CSOs. CSOs are often perceived as a threat to the stability of the State and there is a certain apathy on the part of the Government.
- Increased Cost: Legal requirements such as carrying out Environmental Impact Assessment (EIA), maintaining an Escrow Account, etc. have added to the cost of raising money for these CSOs. Increased costs have reduced the workable capital available with the CSOs.
- No Scope for Onward Grants: Government regulations restrict bigger CSOs to transfer funds to smaller CSOs that are more focused on a particular cause which adversely impacts the financial viability of smaller CSOs.
CHALLENGES FACED BY CSOs IN CORPORATE FUNDING THROUGH CSR
- Tied Grants and Lack of Autonomy: Most of the grants and funds CSOs mobilize are tied to certain prerequisites and modes in which they can be spent. This creates an issue of poor autonomy, restricted working, and over-interference. For e.g., CSR funds are usually pre-decided and create issues of duplicity and confusion.
- Diversion of Funds: When there are natural disasters or other emergencies, most donor funds get diverted to support relief programs, and many local CSOs lack the capacity or expertise to undertake relief projects during this time fewer funds are directed to normal development programs.
- Competition from Government CSOs: For e.g., in the CoViD-19 times, the government amended the CSR Rules to include donations to the PM-CARES fund under eligible activities. This diverted most of the funds for CSR activities from NGOs. This creates competition between the CSOs and Government sector.
- Shift from Welfare to Market Approach: With increasing liberalization and adoption of capitalist liberal market models, CSOs originally having a social cause are increasingly being subjected to corporate metrics like sustainability, financial viability, deliverables, etc for funding decisions.
- The emergence of Sovereign Funds: The emergence of sovereign funds like PM-CARES, NDRF, and SDRF has made these CSOs less attractive to corporate donors due to higher regulations compared to donating to sovereign funds.
MEASURES TO TACKLE THE FUNDING CHALLENGES FOR CSOs
- Relaxed Regulations: Recently many prominent NGOs and CSOs lost their license under FCRA, 2010 which led to poor mobilization of funds. Thus, in order to help the CSOs network to improve, the regulations should be bridging instead of being restrictive.
- Partnership: The CSOs and Government should see each other as partners in the development process. The inputs from CSOs can improve program implementation, help in pre-legislative discussion and shape public discourse.
- Sector Approach: The mission and nature of the work of the CSOs must be clearly demarcated so that the donors, charities, and corporates can clearly decide the flow of funds in the sector they want to work in. This allows better management of resources.
- Links to Institutional Credit: NGOs, CSOs, and other non-profit organizations should be allowed fundraising through mechanisms like crowdfunding, sponsorships, and even banks and FIs.
- Gram Panchayats: NGOs play a significant role in areas like Social Audit, Environmental Impact Assessment and thus they must be given Government support through grants to improve their work in these sectors.
- MPLADS: CSOs like PRS Legislative Research can provide requisite expertise to MPs and MLAs in order to improve the implementation and effectiveness of MPLADS. This serves the dual purpose of capacity building of elected representatives and a participatory approach with CSOs.
- Restriction on Sovereign Funds: Sovereign Funds which erode the available financial space of CSOs must be restricted to a certain level. Their funding should be through cesses and surcharges and not through CSR funds which make up 70% part of the funding of CSOs.
CSOs play a crucial role in the pre-legislative stage or in the redress of lacunae in the implementation of government schemes. However, their abilities have shrunk considerably due to a lack of funds and poor resource mobilization. Steps in this direction can strengthen the overall working of NGOs and improve the implementation of schemes, providing crucial feedback and overall governance structure.
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2. What are the main functions and objectives of the Competition Commission of India (CCI), and how does it contribute to fostering fair competition in the Indian market?
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