Nu 3mn Endowment Fund leaves CSOs in limbo

The sudden decision by the Civil Society Organization Authority throws CSOs off-balance

Civil Society Organizations (CSOs) around the country are disgruntled with the requirement of a minimum of Nu 3 million (M) as Endowment Fund.

This comes in the wake of the Civil Society Organization Authority (CSOA) in its successive meetings (37th and 38th) where this was deliberated and endorsed as the minimum Endowment Fund requirement for all registered CSOs.

Discontented CSOs are crying over the huge amount required as endowment fund and also the time frame of few months to declare the fund, with some CSOs even complaining they were never consulted or informed before the decision was taken.

Executive Director of Chithuen Phendhey Association (CPA), Tshewang Tenzin said that he remains neutral on his stance. “It will definitely help in the sustainability of the company. In the long run, the challenges of the limited source of fund and financial insecurity can also be put to halt,” he said.

However, he said that most of the CSO in the country might not be able to create the endowment fund with the given time of few months from the Authority since getting donor funds for CSO is very challenging as most of them have to find a donor or a sponsor which in Bhutan is very limited.

“I think that if the Authority asks about one million as endowment fund in a year, then most of them might be able to create endowment fund. However, with the very limited time it might be challenging for most of us,” said the Executive Director. 

In addition, Tshewang Tenzin opined that the government does not grant access to any donors to the CSOs in the country as far as he is concerned. 

Likewise, most CSOs shared that although they like the idea, concept and the principle behind the Fund, the sudden announcement of huge amount as endowment fund will be very challenging for them. They underlined that it is important for the Authority to look into the capacity of the CSOs in the country too at the same time.

Tshewang Tenzin argues that the government should re-deliberate this and see through it once as it will affect the CSOs in some way and most of the CSOs were also not consulted and most of them didn’t agree to it.  

Some CSOs opined that with the sudden endorsement of the endowment fund, the services that the CSO provide to the public might get compromised in order to save some money for the endowment fund by having to reduce the number of staffs, activities, amongst others.

Similarly, Bhutan Toilet Organization’s (BTO) Executive Director, Passang Tshering said that endowment fund is a paid amount of money that they keep in the bank or invest somewhere so that from that interest they run the office.

However, he told Business Bhutan that for the CSOs it is not possible as donors or the partners will never give the money for endowment as they will only give money for projects and activities. He underscored that endowment fund is very difficult to garner unless the government provides the fund.

Cautioning about the risks associated with it, he said, “If the CSOs are not able to have the endowment fund of Nu 3mn to Nu 4mn and if they are to be deregistered, then by next year, half of the CSOs in the country will cease to exist.”

“Some of the CSOs do have the savings but the savings can’t be used for endowment fund as it will be used for some other activities and purposes,” Passang Tshering said.

Cueing up examples of other countries where they set up maximum ceilings on endowment fund, he said it is otherwise in Bhutan where the minimum ceiling is fixed.

The Executive Director of Lhak-Sam, Wangda Dorji said that endowment fund is also very important as it will determine the sustainability of the CSOs. However, since 2007 the CSOs in the country neither pushed for the endowment fund, nor took it seriously though it is in the Act. “Most of the CSOs, especially those without patrons will be affected immediately by the sudden decision from the Authority,” he lamented.

“I feel that the CSOA is indirectly trying to wipe out those CSOs who will not be able to create the endowment fund since the Authority has been telling us that the number of the CSOs in the country is very large,” a dispirited Wandga said.     

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

It is also in line with Section 16 of the CSO Act (Amendment) 2022, which states that “The Authority shall prescribe endowment fund for the CSOs from time to time.”

Meanwhile, the minimum endowment fund for CSO’s has been set at Nu 3mn for the Public Benefit Organizations (PBOs) and Nu 1.5mn for Mutual Benefit Organization (MBOs).

In addition, the CSOs are also mandated to submit an operational fund reserve of Nu 1mn for PBOs and Nu 0.5mn for MBOs to meet the recurrent expenses. The funds are to be secured in the accounts of the CSOs in any registered financial institutions within the country.

The availability of the funds shall be substantiated by bank statements and will be one of the criteria for the renewability of CSO registration certificate.

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

Sherab Dorji from Thimphu