Foreign Funding or Foreign Influence: The New Weapon Against Dissent

Image: Katt Yukawa (UNSPLASH)

The death of a democracy used to be a sudden and dramatic event. A grizzled army general seizing the national TV station, or a clatter of tanks rolling up to the parliament building. Today democracies are in worrying decline, but there’s less drama: It’s an incremental, almost imperceptible process. Liberties are progressively eroded, opponents discredited and restrictions introduced that make it harder for challengers to contest incumbents. Over the last few years, a little noticed tactic has accelerated that trend; the introduction of laws that target foreign-funded non-governmental organisations (NGOs).

Non-governmental organisations are a cornerstone of healthy democracies. They are independent groups that are purposed with improving society. At their best they serve the public, representing people and issues that are otherwise excluded. NGOs complement, supplement, and at times challenge the work of the government. That challenging role helps the public see whether politicians are misusing public money or breaking the law. They help the public get organised and make their opinions known to governments through campaigns and peaceful protests. NGOs can also take governments to court when they break the law or take away people’s rights. Foreign funding of NGOs is not unusual. Indeed, most well-known international NGOs work by raising funds in wealthy countries to help people in poorer countries.

Georgia is a small country in the southern Caucasus. It was once seen as a beacon of democracy amongst former Soviet states. But since Russia’s invasion of Ukraine the country’s government has been accused of backsliding towards autocracy.

In May 2024, Georgia’s parliament voted to introduce a law labelling NGOs that received funding from overseas as foreign agents. NGOs that receive foreign funding are obliged to either register on a foreign influence registry or stop receiving foreign funding. Nobody is under any illusion that being on the foreign influence registry is likely to lead to adverse consequences in the future. The law divided society. Over the summer, western TV screens were filled with reports of protests on the streets of Tbilisi by people who feared the law was attempting to cut off scrutiny of an increasingly autocratic government.

Georgia’s turmoil has not gone unnoticed, but similar crackdowns in other countries have. Over 60 countries, that collectively are home to nearly two thirds of the world’s population, have in the last few years introduced laws with similar effects.

The first signs of anti-NGO laws emerged after the financial crash of 2008. They proliferated after Russia’s invasion of Ukraine. Across the world, countries (largely those aligned with Russia) began adopting a range of laws that in their eyes reduced western influence within their borders. One facet of this was to restrict the activities of NGOs and limit their ability to be funded from overseas.

The objectives of these laws may be similar, but the method varies from country to country. Georgia’s registration approach is a common one. China has taken the approach a little further with a new law that imposes significant restrictions on NGOs barring them from any work that harms China’s national interests, spreads “rumours,” or results in obtaining state secrets. Chinese NGOs are required to register with the government and report on all their funding sources and activities. The law prohibits organisations that are unregistered from receiving foreign funds.

These laws also feed nationalistic views. It is common for NGOs that register to receive foreign funding to be portrayed as having questionable loyalties. In Russia a new law allows the authorities to label organisations that register to receive foreign funding as “undesirable organisations”. In 2023 the Kazakhstan government began publishing its register of recipients of foreign funding along with communications that equated receiving foreign funds with being unpatriotic and untrustworthy.

Governments have also given themselves more power to manage foreign funding. The Indian government has prescribed that registered NGOs must open a new account in a designated New Delhi branch of a state-owned bank in order to receive overseas funding. All other routes of receiving funding have been banned. The government granted itself the power to scrutinise funding received and only pass it on to the NGO if approved. The act also banned registered NGOs from passing foreign sourced income to non-registered NGOs, preventing large international NGOs funding smaller Indian NGOs by making sub-grants.

In Venezuela all foreign donations are deposited in a government bank account before being distributed to NGOs at the government’s discretion. Funds are distributed at a fixed exchange rate that is far below the market rate meaning NGOs only receive a fraction of the amount donated.

In Eritrea the government has made it so difficult for NGOs and international donors to operate that virtually all have closed or moved away. The Eritrean government requires that all donor funds must be passed through government ministries. They only permit funds to be paid through to local NGOs if they consider that the capacity of the ministries is insufficient to carry out the work themselves. If they don’t, the ministry pays the money into their own coffers.

Governments frequently justify these laws on the basis of increasing transparency or in the name of safeguarding against external influence. Few would argue that those are unreasonable aims, but it’s questionable whether such laws achieve those objectives. In many countries they have closed down much of civil society. In 2020 Amnesty International announced it had halted its operations in India and laid off all its staff. Two years later Oxfam announced its Indian operations were to be wound down.  These, and over 6000 other closures of charities and NGOs in India were a direct response to the Indian NGO laws.

Whilst the desire to restrict western influence is clear, there is also a cost to the recipient country: They lose the benefits that many NGOs undoubtedly bring. They miss out on significant amounts of international aid and damage relationships with western governments and international institutions.

What is behind this trend? Part of the reason lies in a global rise in populist governments. The post war spread of democracy has gone into reverse and has been replaced by an increase in less democratic and more authoritarian forms of government. These governments are generally attracted to more protectionism and less free trade. Many have applied a similar approach to international aid.

Authoritarian governments tend to be led by people who seek total control over messaging. So-called ‘strong man’ leaders like Valdimir Putin in Russa, Xi Jinping in China or Nicolás Maduro in Venezuela demand total loyalty. It’s little wonder that they are intolerant of scrutiny. NGOs often represent discontent about government policy and actions, so unsurprisingly authoritarian governments are drawn towards reducing their influence.  Suppressing NGOs with international affiliations and reminding the domestic population about the foreignness of NGOs, is an easy way to reduce unwelcome scrutiny.

But do International NGOs and foundations also share some responsibility for this direction of travel?  Public opinion of international NGOs in many countries (particularly in the global south) has plummeted in recent years. This has been driven in part by misinformation from authoritarian governments. But indisputably scandals around mismanagement, staff behaviour and inappropriate relationships have damaged the sector’s reputation. Haiti has more experience of international NGOs than anywhere else.  In 2010, 10,000 were operating there, more per capita than anywhere else in the world. That year the country was hit by a devastating earthquake. Thousands were killed and many more made homeless. There was an international outpouring of compassion with billions of dollars donated towards the rescue and rebuilding effort.  Logic would suggest with so many humanitarian organisations and so much money, the recovery should have been amazing. It was anything but.

The aftermath of the earthquake is seen by many as a textbook case of how not to intervene in an emergency. Ninety nine percent of the funds donated were funnelled through NGOs, with little obvious benefit. Money was routed to expensive western consultants and contractors. Huge chunks were syphoned off to pay NGOs core costs. Much of the rest was spent inappropriately, and some was simply stolen. Today nearly a decade and a half later, the country is weaker, more vulnerable and dependent than ever. It is only natural for Haitian’s to question who’s benefit the NGOs served.

These stories have fed a populist narrative that portrays NGOs as corrupt and self serving. The narrative was used by the Trump administration as it dismantled United States Agency for International Development (USAID), and no doubt made it easier for the UK government to announce that it would reduce Official Development Assistance for international development from 0.5% to 0.3% of gross national income.

In the face of censure from two thirds of the world, how should international NGOs and their funders react? An understandable response would be to accept the rebuff and focus where they are wanted. But to do so would leave much of those countries’ population unrepresented and excluded, and leave their governments’ freer to dismantle what is left of their democracy with impunity.

At World Habitat we have adopted a few principles that guide how we respond, and enable us to work in as many countries as we can.

We have a duty of care to those we help. We don’t act in a way which puts them and their work at risk.  We take a lead from local NGOs and beneficiaries and how they want us to act. If possible, we seek advice from government representatives before acting. Authoritarian governments often still have reasonable and helpful people working for them.

We don’t break the law, even if we think the country’s laws are unreasonable. Not complying with the law whether intentional or not could have legal and reputational consequences to us, local NGOs and their beneficiaries. We adapt our programmes to stay inside the law. We only withdraw from a country if absolutely necessary.

These are small steps, and as the list of countries that have adopted anti-NGO laws grows, the task gets harder. As the democratic skies darken, NGOs’ role helping the most unrepresented people is needed more than ever. International NGOs need to be attentive and responsive to laws and diktats from governments that would rather that they weren’t there at all. Equally, international NGOs need to earn credibility and their moral authority to operate from local populations. If anti-NGO laws are going to be resisted, people need to feel that NGOs are a key part of a democratic future that’s worth fighting for.

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