Research Design
Context
Profile of CSROs in the Region
Implications for Capacity-building Programs for the Sector
Implications for Bilateral and Multilateral ODA
Research Design
Country Researchers
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Five researchers carried out a survey of Civil Society Resource Organizations (CSROs) in 1997. A total of 77 organizations were included in the survey. The aim of the research was to carry out an initial mapping of local, non-governmental grantmaking organizations supporting development programs in Indonesia, Malaysia, The Philippines, Singapore and Thailand. In addition to basic data on each organization, the survey also elicited information on institutional development needs. It was intended that the survey would be useful to a number of audiences. First, it would be an input in the design of a program to strengthen these organizations. Second, it would assist networking activities nationally and regionally. Third, it would assist policy makers in governments and intergovernmental organizations concerned with enhancing the role of civil society organizations in the region.
Context
The legal and fiscal environment in which CSROs operate varies greatly between countries in the region. In recent years, the governments of the Philippines and Thailand have moved towards creating a more supportive environment for civil society organizations. This means that in the Philippines civil society organizations have been able to influence public policy, partner with government in the implementation of development programs and design a system for the self-regulation of the sector. Civil society organizations in Indonesia, Malaysia and Singapore, in comparison, have been subject to close supervision and guidance by the state. This has limited the scope of their actions.
The corporate sector in the region experienced over a decade of rapid growth until the crisis of mid-1997. However, apart from the Philippines and a few examples from other countries in the region, private corporations have not reached out to civil society in a significant way either by institutionalizing their philanthropic endeavors through the creation of foundations or CSROs or by supporting existing CSROs.
The current financial crisis throughout the region is expected to impact on the development of CSROs. It is anticipated that they will face increasing demands for resources and services as the incidence of poverty increases. At the same time, they will alsoencounter major challenges in maintaining their funding levels from local sources.
Profile of CSROs in the Region
Origins
CSROs are a relatively recent phenomena in the region. The majority of CSROs have been created since 1980. The majority also were either created by civil society leaders as CSROs (in some cases serving the interests of specific religious or ethnic groups) or established as operating nongovernmental organizations (NGOs) and later assumed grantmaking or loan-making functions. It is significant that 63% of CSROs surveyed combined grantmaking with program operation. This was particularly true in the case of Thailand and Malaysia. Malaysia differs from the other countries in the significant role the state has played in the creation of a third of the CSROs surveyed (though they still satisfy the criteria of having independent governing bodies).
CSROs created by the business sector are most common in the Philippines and Thailand. In the Philippines, corporate support for the civil society sector gained impetus as a result of the creation of the Philippine Business for Social Progress (PBSP) in 1970. PBSP, with over 150 corporate members, has played an important leadership role in encouraging corporations to develop institutional mechanisms to handle their social investments. Additional support for the sector comes from the League of Corporate Foundations with over forty members.
Size of Staff and Budget
The CSROs surveyed varied widely in the size of their staff. Twenty-three and a half percent had less than five staff whereas only 7% had more than 100 staff. The longer established ones tended to be the largest, hence the greater average size in Indonesia and the Philippines.
Annual budgets also vary greatly depending on factors such as age and source of funding. The largest are either the oldest or those that have received a major injection of funds from a bilateral donor. The data shows that 22% of CSROs had annual budgets in excess of US$1 million while only seventeen had annual budgets of less than $100,000. Sixty-one percent fell in the $100,000 to $1 million range.
Sources of Funding
In Indonesia, The Philippines and Thailand, the development NGO sector and, by extension, those CSROs originating in the NGO sector have relied heavily on international sources (both bilateral overseas development assistance (ODA) agencies and northern foundations and NGOs) for funding. Currently over 70% of the CSROs in those countries continue to receive funding from official ODA sources. These funding agencies have seen these intermediary funding organizations as a cost-effective way of channeling development funds to NGOs and grassroots organizations and of achieving an impact on poverty. However with rising gross national product (GNP) in the region in recent years and an expectation that the trend will continue, an increasing number of northern funding agencies have opted to decrease their support to CSROs. It remains to be seen whether they will reconsider that decision in light of the recent financial crisis and the adverse impact it has had on the poor.
This reduction in government funding means that these organizations have had to turn increasingly to local sources of revenue to continue to maintain their programs. We, therefore, see an increasing tendency to diversification of funding sources including the exploration of innovative approaches to earned income. The survey identified a number of cases of CSROs that have been very successful in raising funds from local corporations (e.g. PBSP and Dana Mitra Lingkungan-Indonesia) or generating earned income (Bina Swadaya-Indonesia). Over half of the CSROs surveyed now generate some of their own income (80% in the case of the Philippines) and almost half receive some corporate funding. Only about a quarter receive any government funding. One encouraging trend is that 40% of CSROs in the region generate all their income from local sources while a total of seventy-three receive over half of their budget from local sources.
Type of Funding
CSROs see the need to create a permanent source of funding in order to build their grantmaking and other programs and to strengthen their institutions. To achieve this objective about half of the organizations surveyed have created endowments and the income earned from those investments constitutes an important and expanding source of income. The largest endowments (Foundation for the Philippine Environment and Foundation for a Sustainable Society, Inc. in the Philippines and Indonesian Biodiversity Foundation) were the results of grants from ODA agencies, linked to debt swaps or debt purchase and forgiveness agreements. These agencies had the vision to see the value in endowing new institutions with sufficient resources (over $18 million in each case) to build strong grantmaking programs and to provide other support services for civil society organizations such as technical assistance and convening. The majority of endowments, however, are more modest in size and therefore generate only a small percentage of the resources required to run the organization and its grantmaking programs. Sixty-four percent of the endowments are less than $1 million. They have come from diverse sources including individual and corporate contributions, earned income and grants from northern foundations.
Major Needs of CSROs
The major needs identified by CSROs are related to resource mobilization. Thirty-five percent need support in building and investing an endowment to protect them from fluctuations in income. Thirty-one percent identified the need to earn an increased percentage of their income through activities such as product sales and consultancies, while almost half require help in developing fundraising programs from the general public.
Comparative Strengths of CSROs
The majority of CSROs surveyed were comparatively strong in areas such as program design, planning and implementation and organizational development. The Philippines had relatively strong experience in earned income and Malaysia and Singapore in fundraising from the public.
Implications for Capacity-building Programs for the Sector
- Support for programs to assist CSROs in diversifying their sources of income, particularly from local sources and building endowments is required.
- A capacity-building program in the region could draw on the successful experience of existing institutions and individuals in areas such as cooperation with the corporate sector, earned income, endowment-building and fundraising from the public.
- Apart from the Philippines where organizations such as PBSP and the League of Corporate Foundations have facilitated the transfer of skills and experience within an emerging CSRO or foundation sector, there is little sense of common identity among CSROs. Through this study and a follow-up regional meeting of CSROs in the Philippines, we have observed an increasing awareness of the potential benefits to be gained from collaboration between CSROs on both a national and regional level. These benefits include increased visibility for the sector and joint work to create a more supportive legal and fiscal environment.
- Corporate CSROs/foundations and non-corporate ones tend to have complemen- tary skills. The financial, marketing and managerial skills of the corporate CSROs could enhance some of the expressed needs of other CSROs while the latter could help to strengthen the community-level grantmaking programs of corporate CSROs.
- The strong effective corporate CSROs/foundations surveyed have the potential to encourage the creation of new corporate social responsibility programs including corporate foundations in the region.
Implications for Bilateral and Multilateral ODA
- CSROs are playing an increasingly visible role in the region, channeling grants and loans to a range of civil society organizations and in many cases providing other support services. About a quarter of them have received some support from international ODA sources but in only a small minority of cases has this support been of sufficient magnitude to have a major impact on the growth of the organization. Many of the others have significant experience and competent professional staff and are potential partners for ODA agencies seeking to address issues of poverty in the region.
- CSROs have shown an increasing capacity to mobilize local resources to match external funds. Many are performing increasingly critical roles as bridging organizations between sectors -- government, corporate and nonprofit sectors. By partnering with selected CSROs, ODA agencies could play a critical role in enhancing intersectoral collaboration. Given the increasing capacity of CSROs to mobilize local resources, ODA resources could have an important leveraging effect.