Foreign Investments: A double-edged Sword

If all the money were to be spent in exactly the kind of places it needs to go to, the world would have been perfect. It’s not the allocation of resources but the resourcefulness of the donations that needs to be looked at.

There are 2 major reasons that make allocation of funds a double-edged sword.

Firstly, Identification of intention is the biggest hindrance in allocating funding to a particular organization. The promises and guarantees that an organization makes are under scrutiny and even after verification, there is no certified way to deem them as truthful. There is no policy that makes the recipient of funding accountable and liable to spend it correctly. The industry relies on the idea of a ‘self-check’ mechanism. It is understood, through common logic, that if an institution or NGO flouts those tacit boundaries of expenditure, the same donor shall not allocate them the money again. Hence, again through common logic, it is in their best interest to use their funds with utmost efficacy.

Secondly, the problem of quid pro quo. Most companies/ organisations/ NGOs/ Institutions receive funding with an attempt to give back to its donor. But, this ‘giving back’ may not be in the form of ‘doing good work’ but instead could permeate through various boundaries of bending of rules for larger purposes and interests that benefit only a few at the cost of millions of others. The following NGOs were put in the scanner by FCRA:

  1. In the field of health policy, one of the most influential think tanks is the Public Health Foundation of India (PHFI). Since it was founded in 2006, it has received a total of Rs 219 crore in funds, its foreign donors being the National Institutes of Health (of the US government), Welcome Trust, International Development Research Centre and MacArthur Foundation.
  2. In the human rights space, there is the famous Lawyers Collective, which provides legal aid to members of disadvantaged communities. Since 2006, according to its FCRA filings, the organisation has received around Rs 21.8 crore in foreign funds from the Ford, Levi Strauss and Open Society foundations and from the Campaign for Tobacco Free Kids, Swedish International Development Cooperation Agency, among others.
  3. Centre For Policy research received foreign funds of over Rs 40.8 crore from a range of donors such as the Ford Foundation, Google Foundation, International Development Research Centre, Economic and Social Research Council, Hewlett Foundation and IKEA Social Initiative.

One would not expect IBM to fund a malaria-eradication program for it will keep its funds aside to support an organization that advocated a free internet. Rich organizations have their interests to pursue as well and often they do this surreptitiously by funding a NGO.

It is difficult to prosper without NGOs receiving foreign funding. The ‘Sui Generes’ of this field is the MKSS that does not accept in foreign funding. It only accepts funding from individual donors and the interest on the accumulated principal amount. But, MKSS only recieved 30 Lacs in comparison to crores of rupees received bysome of the other as mentioned above. If they could have got more, maybe they could have impacted more and reacted better.

It is extremely difficult to identify the nature of foreign funding. If it is a clean transaction, it will benefit millions of poor. Otherwise it might just benefit a wealthy few. The impossibility of identification of intention limits the existence of an efficient solution thereby making it a necessary evil for the greater good.

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