Civil Society Organizations Face Uncertainty Over Stringent Endowment Fund Rules

…𝑪𝑺𝑶𝒔 𝒕𝒐 𝒄𝒂𝒍𝒍 𝒖𝒑𝒐𝒏 𝑷𝒓𝒊𝒎𝒆 𝑴𝒊𝒏𝒊𝒔𝒕𝒆𝒓 𝒕𝒐 𝒓𝒆-𝒆𝒗𝒂𝒍𝒖𝒂𝒕𝒆 𝑬𝒏𝒅𝒐𝒘𝒎𝒆𝒏𝒕 𝑭𝒖𝒏𝒅 𝑴𝒂𝒏𝒅𝒂𝒕𝒆𝒔 𝒕𝒐 𝑺𝒂𝒇𝒆𝒈𝒖𝒂𝒓𝒅 𝑻𝒉𝒆𝒊𝒓 𝑭𝒖𝒕𝒖𝒓𝒆

Sonam Deki

The undersigned civil society organizations (CSOs) are deeply concerned by the Civil Society Organizations Authority’s recent decision on the endowment fund requirement for CSOs. While they welcome the Authority’s decision, the amounts are exorbitant for most CSOs. The Authority arrived at the decision based on the financial statements of the CSOs, but their financial statements reflect running project costs and not reserve funds or savings. “Most CSOs sustain on intermittent project funding without any reserve funds set aside. The implementation of the decision will lead to the closure of many CSOs and make the registration of new CSOs considerably more difficult”, the appeal letter reflect.
Therefore, they will be appealing the Prime Minister to prevail upon the CSO Authority to reduce the amounts of endowment and operational funds, and defer the implementation of the decision.

The Civil Society Organizations Authority in its successive meetings (37th and 38th), deliberated and judiciously endorsed the minimum Endowment Fund requirement for all the registered Civil Society Organizations. The decision is in line with Section 16 of Civil Society Organization Act (Amendment) 2022, which states that; “The Authority shall prescribe endowment fund for the CSOs time to time.”

Similarly, the decision is as part of the Authority’s commitment to enhance CSOs’ sustainability to ensure and strengthen a stable financial foundation to carry out the initiatives effectively.

The minimum endowment fund for CSOs has been set at Nu.3.00 million (Ngultrum Three million) for the Public Benefit Organizations (PBOs) and Nu.1.5 million (Ngultrum One Million and Fifty Hundred Thousand) for Mutual Benefit Organizations (MBOs).

In addition, to the endowment fund aforementioned, secured in the account of the CSOs in registered financial institutions in the country, CSOs are also mandated to submit an operational fund reserve of Nu.1 million (Ngultrum One Million) for PBOs and Nu.0.50 million (Ngultrum Five Hundred Thousand) for MBOs to meet the recurrent expenses. The availability of the funds shall be substantiated by bank statements and will be one of the criteria for the renewal of CSO Registration Certificate.

The Authority considering necessary adjustments in the registered/existing CSOs’ financial planning and operations, decided to grant grace period of one year to mobilize and secure the requirements. However, there shall be no grace period for aspiring/new CSOs applicants.

Passang Tshering, the Executive Director of Bhutan Toilet Organization, expressed his concerns, stating, “CSOs cannot raise endowment funds on their own. We solely rely on project funds, and expecting donors to support the idea of an endowment fund is unrealistic. Following these directives would force around 80% of CSOs to cease operations, as meeting such requirements is beyond our capacity. If the government could extend support to CSOs in establishing endowments, another viable solution could be creating a shared CSO endowment fund.”

He further remarked, “Chairperson Ugyen Dorji claims to have consulted us, but the truth is, we were never consulted. He organized a meeting where we clearly expressed our inability to comply. However, he managed to manipulate the situation, making it appear as if there was a consultation when, in fact, there wasn’t.”

He continued, “We earnestly hope that the Prime Minister will empathize with our predicament and reconsider the stipulated requirement amount.”

One of the CSOs expressed his concerns, stating, “Several CSOs have established endowment funds, while some have not. Every CSO aspires to have an endowment fund for its sustainability. However, the recent decision to set a minimum amount without proper consultation has raised concerns and left us dissatisfied with the specified figure. Through this appeal, we hope for a deferment of this decision, allowing for a reduction in the endowment and operational funds for those CSOs unable to meet the requirements within the stipulated timeframe.”

He further said, “Currently, CSOs play a vital role in complementing and supplementing the government’s efforts in delivering public services across various development sectors. If CSOs are adversely affected, it will create a void in civic space, hindering citizen engagement and participation in crucial development and decision-making processes. This engagement is fundamental for achieving equitable and sustainable development.”

Another CSO, speaking anonymously, said, “The Authority’s decision, while well-intentioned, fails to consider the financial realities of most CSOs. Our funds are channeled into active projects to ensure their success. Setting aside such substantial amounts for endowment funds, without understanding our operational dynamics, jeopardizes our existence and the causes we champion.”

He added, “We appreciate the Authority’s aim to secure CSO sustainability. However, the imposed figures are impractical for organizations like ours, heavily reliant on project-based funding. These decisions should be collaborative, understanding the intricacies of our financial structures, to foster a thriving civil society.”

Similarly, another CSO said, “We are dissatisfied because we were not consulted on this. We hope that the government will defer their decision since this notification came as a surprise to most CSOs, and such short notice is inadequate. A consultation should have been held. The CSOs exist in various fields and help in various development areas, complementing government activities and reaching grassroots levels. If this policy goes through, it will significantly affect many public service deliveries, such as aiding kidney/cancer patients, supporting individuals with disabilities, and providing shelter for thousands of animals. While we recognize the importance of security measures, the idea should not be forced upon us; rather, it should be open to thoughtful discussion and consensus-building.”

The Civil Society Organizations Authority, however, remains completely unaware of this appeal.