Social investment hindered in Bangladesh: Study

Social investment in Bangladesh faces obstacles as a result of an unfavourable social environment in which private capital meets societal needs, according to the Doing Good Index (DGI2020) by Hong Kong-based Centre for Asian Philanthropy and Society (CAPS).

The study, published on Wednesday, was based on surveying 2,189 social delivery organisations (SDO) and interviews of 145 experts across 18 Asian economies.

The index divided 18 Asian economies into four clusters – Doing Well, Doing Better, Doing Okay and Not Doing Enough.

Bangladesh got a position in the "Doing Okay" category. This is the first time Bangladesh has been added in this index.

The country did relatively well in the ecosystem sub-index, which maps the supportive environment for private social investment and the delivery of services.

However, the performance in the other three sub-indexes – regulation, tax and fiscal policy, and procurement – are merely good.

There were four other South Asian countries in the study, where Pakistan was placed in "Doing Better," above Bangladesh.

India and Sri Lanka shared the same cluster with Bangladesh and Nepal got the cluster of "Not Doing Enough."

Source of fund and regulations

The study revealed that around 85 percent of Bangladeshi SDO respondents depend on foreign funding, 53 percent are funded by government procurement and 47 percent are funded by individuals.

The index also showed that government grants funded 29 percent of SDOs and 28 percent were funded by the corporate sector.

The data representing both government and corporate funding in the social sector through SDOs is meagre, the study found.

On the other hand, voluntary organisations have to go through a very complex regulatory approval to receive foreign funds.

Around 51 percent of the SDOs that participated in the survey felt that the relevant laws and regulations were difficult to understand and only 10 percent said it is "easy," while 39 percent said that it is "neutral."

Adverse tax and fiscal policy

According to the index, government grants make up only 4 percent of the average budget of the surveyed SDOs in Bangladesh, which is 50 percent less than the average for Asia.

Even Brac, a large SDO in the country, receives only 10 percent of its total funding from the government.

Bangladeshi SDO respondents think there is a lack of tax incentives for donations to SDOs as the country has the lowest (non-zero) deduction rate of around 10 percent for individuals and the corporations.

The study reveals that the right policies and practices can unleash an enormous $587 billion in private social investment in Asia every year to meet societal needs by giving up only 2 percent of their GDP.

Centre for Asian Philanthropy and Society (CAPS)