Bangladesh needs to look for alternative funding sources to keep the activities of NGOs that support the marginalised communities as foreign aid for the development sector continues to shrink, experts said.

In 2020, the country received close to a billion dollars but the receipts have progressively shrunk. Last year, it received $655 million in foreign aid for non-governmental organisations, down 11.6 percent year-on-year, according to the NGO Affairs Bureau, the government wing that regulates NGOs.

Read more

US axes 17 more US-funded projects

The need for alternative funding sources to continue with the development activities has taken on fresh urgency given Bangladesh's forthcoming graduation from the least-developed country bracket next year; the new Trump administration's move to suspend USAID programmes; and Switzerland's announcement of phasing out funding to Bangladesh after 2028.

The Trump administration's move had an immediate impact in Bangladesh, which received $450 million for nearly 100 projects. Overnight, thousands of development professionals were staring at an uncertain future and millions were cut off from essential services.

For instance, icddr,b has sacked more than 1,000 of its staff, while all services save for emergency food supplies provided by US-funded NGOs in Rohingya camps were suspended.

"The abrupt fund suspension is a serious concern," said AKM Jashim Uddin, director at the Association of Development Agencies in Bangladesh, the apex body of NGOs.

As of February 2, there are 2,498 registered NGOs, with 240 being foreign and the remainder domestic, according to the NGO Affairs Bureau. However, other estimates suggest 27,000 NGOs operate here.

"The NGOs work in the areas where the government has little intervention. In that way, the NGOs complement the government and play a vital role in the country's socioeconomic development," Jashim Uddin said.

Any government can change its policy on foreign aid.

"Our government needs to negotiate with the major development partners for more funding given the rising needs, but at the same time, it also should find alternative avenues of funding for the NGOs and help them become sustainable," he added.

Rezaul Karim Chowdhury, executive director of COAST Foundation, an NGO that works in Bangladesh's coastal districts, suggested shifting to microfinance and enterprises for sustainability, citing the cases of BRAC and Grameen Bank.

BRAC has 13 commercial enterprises and Grameen Bank has at least 10 social businesses, he said, adding that COAST Foundation itself is also mostly reliant on its microfinance activities.

"We need to go for sustainable approaches, instead of depending on foreign funds. Sometimes, depending on foreign aid is humiliating."

A major share of foreign aid is used for consultants and foreign nationals of the respective donor countries, according to Chowdhury.

The UN agencies too have high overhead costs when they operate projects with foreign funds, he said.

"We have long been raising our voice for improving aid effectiveness, but it is not working."

One cannot deny the role of foreign funding in Bangladesh's development, but often times the foreign aid-based projects are on an ad-hoc basis and do not help sustainable development, said Mohammad Abu Eusuf, a professor at Dhaka University's department of development studies.

As the aid is declining, it is high time that the government focuses on some fundamentals. These include promoting entrepreneurship on a massive scale and training youths for employable jobs.

"Let's have a comprehensive market of our workforce both at home and abroad. Then, we train them accordingly and support their employment. This will radically change our economy," Eusuf added.

An alternative to foreign funding for NGOs could be the funds allocated by the corporates as corporate social responsibilities (CSR).

Corporates often use CSR funds for their own foundations or trusts as there is no clear policy on the use of CSR funds, Jashim Uddin said, suggesting a robust policy on CSR funds for its best use.