It is almost impossible for NGOs to get international funding
Originally published on Global Voices
Image by Tural Tagiyev. Free to use under Unsplash License.
Since the introduction of restrictive amendments to the Non-Governmental Organizations (NGOs) law in 2014, civil society work in Azerbaijan has become a game of cat and mouse. Most NGOs developed self-sustaining mechanisms to continue operating, while others continue working by dodging the law or have chosen to rely on government funding. These new ways of modus operandi meant shifting their areas of focus, switching to humanitarian, environmental, or agricultural issues rather than sensitive political issues such as election transparency, media freedom, corruption, or human rights.
Having invested 18 years in training people and lobbying the Azerbaijani government to provide services to children with disabilities, the NGO United Aid for Azerbaijan (UAFA) eventually ran out of funding opportunities due to the restrictions introduced by the Azerbaijani NGO law in 2014. Since then, its founder, Gwen Burchell, has been developing several strategies to generate income, including investing in social enterprises and partnerships with the government.
Several provisions introduced with the new legislation hampered NGOs’ ability to seek foreign funding. In an interview with Global Voices, Mahammad Guluzade, Director of MG Consulting LLC, who spoke in his capacity as an independent expert, explained that although the requirement to register grants has been in place since 2004, it was not until the 2014 amendments that the new requirements forced NGOs to register their donors and donations information with the Ministry of Justice.
In addition to registration requirements, the law imposed a de facto prohibition on NGOs receiving cash donations and made it nearly impossible to receive anonymous donations or solicit contributions from the public. There are other constraints as well, says Guluzade, such as restricting bank account access as “dozens of NGOs are unregistered as a legal entity, making it quite difficult for them to receive foreign funding because they cannot have bank accounts.”
For years, NGOs faced bureaucratic hurdles for years, which often delayed the registration process, due to the Ministry’s multiple refusal letters, based on ever-changing requirements. These requirements often meant requests for further information about the organization itself, the project, or organization documents and further updates. In some cases, it took months, if not years, to complete the process, if it was finalized at all. This was especially common among NGOs working on matters related to democratic development, according to the Civil Society Organization Sustainability Index for Azerbaijan 2021, published in November 2022.
Probably, as a result of the international pressure to address this issue, the government implemented the “Individual e-cabinets,” an online platform to submit grant registration, service packages, contracts, and donation packages. The results of the survey conducted by MG Consulting LLC within USAID's Empowering Civil Society Organizations for Transparency (ECSOFT) project in April 2022 showed the timeline for registering grants had significantly reduced when applications were submitted online; in most of the cases, no additional documents were requested.
Yet, today to avoid the Ministry of Justice's jurisdiction, donors often prefer to work through individual service contracts. As a result, NGOs engage more in research-oriented activities rather than directly assisting targeted groups and communities, such as women, internally displaced persons, people with disabilities, and so on. Another practice to navigate the restrictive legislation has been providing funds to affiliated commercial entities, an alternative less appealing for donors due to the tax and VAT deductions businesses are subject to in Azerbaijan.
NGOs finding ways to survive
According to the most recent report on “Social Economy in Eastern Neighborhood and in the Western Balkans” by AETS Consortium and the European Union, there are a few hundred organizations specializing in providing social and health services to vulnerable groups in Azerbaijan. An estimated 10 percent have established social enterprises to reduce their dependence on foreign funding and strengthen their financial sustainability. These micro and small enterprises employ fewer than 25 people with an annual income below AZN 200,000 (EUR 100,000).
UAFA, the NGO United Aid for Azerbaijan, is among that 10%. Gwen has created four social business models; the online shop ENJOY Chocolates; the foundational course implemented in partnership with Georgetown University; “Mektebim” (My School), a child-oriented and inclusive preschool education model run by women entrepreneurs all over the Country, and “Braille Teach,” a device that teaches the Braille alphabet in any language. Another NGO focusing on the social business model is Birgə və Sağlam (Together and Healthy). The organization provides social services to children with autism and their families, and in 2017, it launched Kashalata, a cafe workshop where teenagers and young people with autism take vocational classes.
Non-Governmental Organizations Funded by the Government
While the government has restricted NGOs’ ability to obtain foreign funds, government agencies have increased the state funds available to provide small-scale grants. As such, the state-funded NGO Support Agency financed 415 grants worth AZN 3.7 million (approximately USD 2.18 million) in total, according to the Civil Society Organization Sustainability Index for Azerbaijan, in 2021. Other state-affiliated institutions followed suit. The Ministry of Education allocated grants to 179 projects in 2021, while the Youth Foundation supported 66 local and three international projects.
Some 3,000 NGOs that receive this funding are known as Government-Organized Non-governmental Organizations (GONGOs) but are often criticized by remaining independent Azerbaijani civil society. One of these GONGOs is the Dilara Aliyeva Society for Protection of Women's Rights, which has been stigmatized for receiving government funds while representing the civil society on the Joint Working Group for Human Rights, a space for negotiating with the government the sector's requests. However, this GONGO is also one of the few organizations that can still count on funding from foreign donors, including the Marshall Fund, the Norwegian Human Rights House, IDEE (Institute for Democracy in Eastern Europe), NDI (National Democratic Institute), the Embassies of the US, UK, Norway, and several other international organizations.
The national law only allows organizations to receive one grant per year, making it nearly impossible for the NGOs heavily reliant on government funding to have a significant impact. Plus, the limited sums they receive barely allow them to survive and force them to focus on cheaper projects. The latter was also reflected in the US Department of State 2022 Country Report on Human Rights Practices report, which said state grants allocated in 2021 mainly supported “projects on awareness raising; training for disabled people, veterans, and low-income families; training of new skills, such as using computer technology; and addressing the impact of the COVID-19 pandemic and the Second Karabakh War.”
Hostile Environment for International NGOs
Azerbaijan’s record on freedoms and rights witnessed a dramatic deterioration since mid-2012. As a result, the country witnessed an exodus of foreign NGOs and donors from Azerbaijan. Between 2012–2017 more than 50 international organizations closed their offices. According to Guluzade, “The legislation included the obligation for foreign donors to register an office in Azerbaijan and sign a special agreement with the Ministry of Justice in order to continue providing grants to local NGOs. The definition of a donor was also narrowed, making it difficult for foreign donors to fit this requirement. It took the Cabinet of Ministers more than a year to adopt new rules on registration of grants, slowing down the process even more.”
The law also grants the government unlimited discretion in its decision-making process on NGO registration. It does not specify a time limit for the registration procedures. Indeed, according to Guluzade, successful cases can take up to two years, as the Ministry is checking its grants and beneficiaries in great detail. The US Department of State Country Report mentions one international NGO that was able to register in 2021. However, the report does not indicate specific projects that have been successfully implemented; it is known that at least one project from an international NGO was closed due to the inability to register.
The Civil Society Organization Sustainability Index refers to other restrictive measures regulating the management of NGOs. Among them is a requirement for the foreign managers of representative offices or branches to have at least a temporary residence permit, which is a complex and lengthy process with no guarantees of success. The deputy heads of NGO branches must also be citizens of Azerbaijan if the branch director is a foreigner.
As a result, these subjective procedures and the risk of a sudden closure of operations discourage international NGOs from launching projects in Azerbaijan. To operate in this environment, some organizations work through their home offices abroad, managing many key processes from there rather than from Azerbaijan. For example, foreign NGO headquarters may directly conduct financial and contracting operations with local consultants and vendors. In such cases, foreign project managers may not even seek temporary residence in Azerbaijan but simply travel to the country on limited-term visas, if at all.
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