Foreign aid cuts put funding at risk for 2,200 NGOs: BIDS
Two-thirds of NGOs relying solely on foreign grants reported major financial losses, with their budgets falling by an average of 40%, a BIDS study finds.
Funding for around 2,200 small and medium-sized non-governmental organisations (NGOs) in Bangladesh is at risk as donor countries continue to cut development assistance, according to a study by the Bangladesh Institute of Development Studies (BIDS).
The findings were presented at a seminar titled "Beyond Foreign Dependence: The Future of NGO Financing in Bangladesh", organised by BIDS in Dhaka's Agargaon today (6 October).
BIDS Research Director Dr Kazi Iqbal presented the study.
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Development assistance from wealthy countries fell by 23% in real terms in 2025, marking the largest annual decline on record, according to the study. The United States has shut down USAID, while the UK, Germany and France have also reduced their aid budgets.
Bangladesh has yet to feel the full impact, as funds for previously approved projects are still being disbursed. Foreign grants released through the NGO Affairs Bureau stood at Tk10,480 crore in FY2025-26.
However, the number of newly approved projects fell from 2,063 in FY2021-22 to 1,584 in FY2025-26.
The estimated 2,200 small and medium-sized NGOs that do not operate microfinance programmes are particularly vulnerable as they depend almost entirely on grants, the study said.
The research analysed data from the NGO Affairs Bureau and Microcredit Regulatory Authority, surveyed 46 NGOs, held consultations and group discussions, interviewed experts and reviewed international experiences.
The survey found that two out of three NGOs dependent solely on foreign grants reported major financial losses, with their budgets declining by an average of 40%. For NGOs with microfinance operations, the decline was 12%.
Foreign grant disbursements through the NGO Affairs Bureau peaked at $955 million in FY2018-19 before falling 31% to $655 million in FY2023-24. They recovered to $838 million in FY2025-26, according to Kazi Iqbal's paper.
CSR funding from banks has also declined sharply, from Tk1,129 crore in 2022 to Tk345 crore in 2025.
New financing models needed
The study recommended creating an open list of eligible NGOs for government procurement, corporate social responsibility (CSR) and other funding opportunities.
It also proposed providing funding to small and medium-sized NGOs through the NGO Foundation and Palli Karma-Sahayak Foundation (PKSF), strengthening NGO provisions in public procurement rules, and providing legal recognition and tax incentives for social businesses.
BRAC Executive Director Asif Saleh said NGOs' strength lies in working directly with communities and bringing behavioural change in areas such as girls' education, health, mental health and climate adaptation.
"Where the government cannot directly reach people's homes, NGOs can deliver services at relatively lower costs," he said, stressing the need for a transparent government-NGO partnership framework.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the government plans to develop a formal partnership model involving NGOs and the private sector to implement public programmes and deliver services.
"We are working without a policy. Now we have to work on how to institutionalise this," he said, adding that transparent partnerships among the government, NGOs and the private sector are necessary.
Planning State Minister Zonayed Abdur Rahim Saki said foreign financing for NGOs was declining ahead of Bangladesh's graduation from the least developed country (LDC) category, making alternative sources such as green and carbon finance increasingly important.
"The foreign financing of NGOs is almost coming to an end in view of LDC graduation," he said.
Saki said the government was considering ways to integrate NGOs into the country's development process and make them a supportive force.
He said the government was also finalising guidelines on government-NGO relations and would consider proposals from NGOs.
He further called for greater investment in research and innovation and suggested linking project financing to measurable social outcomes, with further disbursements tied to the achievement of agreed targets.
BIDS Director General Professor AK Enamul Haque chaired the seminar. Planning Division Secretary SM Shakil Akhtar was also present.
