The Civil Society Organisation Authority recently announced the requirement of an endowment fund of Nu 4 million for all CSOs.

Tashichhoeling MP Dil Maya Rai said that this was concerning and asked the Home Minister for the rationale behind the new requirement. “This is 80 times higher than the previous requirement of Nu 50,000,” the MP said.

She said that CSOs are supposed to be the agencies that fill the gap where government initiatives cannot reach and they have been doing it making a huge difference at the grassroots.

Home Minister Ugyen Dorji said that one of the major challenges faced by CSOs today is meeting their recurrent expenditure. This challenge hampers their ability to allocate funds for capital expenditure, which affects their ability to fulfill their vision and objectives.

To address this challenge, Lyonpo said that during the winter session of Parliament last year, the Civil Society Organisations Act (Amendment) 2022 was enacted, mandating all CSOs to establish endowment funds.

He said that after having further discussion with the Civil Society Organisations Authority and CSOs, it was decided to implement.

Lyonpo also said that the establishment of an endowment fund was in line with the Constitution, where a clause states that the government shall ensure that the cost of recurrent expenditures is met from the internal resources of the country.

Similarly, he said that endowment funds will play a crucial role in supporting the long-term financial sustainability of CSOs, reducing their dependence on external donors to cover their own operational costs.

According to a study, Lyonpo said that a minimum of Nu 1 million per year is required for recurrent expenditure, and to generate this amount in interest returns from financial institutions, a total fund of Nu 10 million to 12 million is necessary.

He also clarified that the minimum requirement of Nu 4 million as an endowment fund was established to ensure it is not burdensome for CSOs. For public benefit organisations, the endowment fund requirement is set at Nu 4 million while mutual benefit organisations require Nu 2 million.

Lyonpo added that about 80 percent of the CSOs can afford this requirement, given that their yearly recurrent expenditure ranges from Nu 3 to 4 million, leaving a balance of Nu 4 to 5 million in bank accounts.

Currently, there are 52 CSOs operating in the country.