Review of post-coup CSO funding submitted to UN
FEM has submitted a report to the United Nations Special Rapporteur on freedom of assembly and association documenting the post-coup funding of CSOs in Myanmar.
The report covers Myanmar’s association regulations, their effect on fundraising, and the military’s crackdown on CSO funding. It also highlights some donor practices before and after the coup.
CSOs in Myanmar have faced severe financial challenges since the coup on 1 February 2021.
The first wave of challenges came from the military, which has attempted to identify, undermine, and attack CSOs and their financial streams, as it sees them as opposed to their power grab. The military’s attempts have mirrored the tactics used globally to undermine the right to freedom of association.
The second wave of challenges came from donors themselves, which were not adequately prepared for a coup, despite all risk assessments highlighting the likelihood and severity of a potential threat to the democratic transition. Each of the challenges faced by CSOs working with donors in other similar countries has been compounded by the coup.
As a result of the pressure from the military and the donors’ response to the coup, CSOs have seriously struggled with accessing resources, including foreign funding, at a time when they needed it most.
Myanmar’s association regulations
The Myanmar government committed in its second UPR to, “continue to create a safe and enabling environment for civil society to help the country’s ongoing transition to democracy.” There has been no evidence of the previous NLD government or the military taking any steps to fulfil that commitment before or after the 2021 coup.
The 2008 Constitution, which was abolished by the parallel government following the coup, gave some guarantees to the right to freedom of association under Article 354(c). However, these guarantees were vague and included significant and overly broad limitations which seriously undermined the right. For example, the right to association is only guaranteed if it is not contrary to other unspecified laws. The right is also limited by vague references to the prevalence of “peace and tranquillity”.
The 2014 Associations Registration Law establishes a regulatory framework for the registration of CSOs. The law ended the requirement for CSOs to register with the government but does not establish real safeguards for those CSOs that do not wish to register.
The Associations Registration Law conflicts with and does not repeal the colonial-era 1908 Unlawful Associations Act. The Unlawful Associations Act criminalises any form of assistance to associations that have been banned by the government. Banned associations include ethnic groups. Since the coup, the military has added the parallel government and CSOs to the list of banned associations. The concept of assisting is vaguely defined to include communication, participation, and offering support.
There have been reports that the military is planning to amend the Associations Registration Law in early 2022, to bring back mandatory registration for all CSOs. The military has not circulated proposals, but in the recent past, similar proposals have been adopted quickly without any consultation. The military-controlled ministries have allegedly paused all registration and renewal requests.
Association regulations impeding access to funding
Successive Myanmar governments have used association regulations to obstruct and impede CSOs’ access to funding. The association regulations enable funding flows for registered CSOs but obstruct funds for unregistered CSOs including those in the process of registering. Registering is hard and relies on arbitrary authorities. Therefore, the barriers to registration are barriers to access to funds.
There are multiple barriers for CSOs that wish to register. Firstly, the process is complicated and requires significant resources. The Association Registration Law is vague and this vagueness is misused by the authorities to create confusing and bureaucratic processes. The department responsible for processing CSO applications requires CSOs to get letters of support from relevant authorities, but the law does not require this.
For example, before registering, the department required FEM to get letters of support from the quasi-governmental Myanmar Press Council as well as the Minister for Information. Getting a letter of support from the Minister of Information was expensive, time-consuming, and bureaucratic. Failing to get letters would have prevented the application from proceeding.
CSOs working on more politically sensitive issues, such as political rights or land rights, are less likely to be given letters of support from the government. In many cases, there are significant conflicts of interest between the relevant officials and CSOs, particularly at the township and district levels.
The department can reject applications for vague, arbitrary, and discriminatory reasons. CSOs do not have a right of appeal, but only a right to be given a reason for the rejection and to reapply. A common reason given is that a CSO is “damaging the rule of law and state security”, which is effectively impossible to address in any reapplication.
Many CSOs are “advised” by the department to change key elements of their constitutions to be approved. Certain words are not allowed in the CSO name. For example, CSOs are not allowed to have the word “Myanmar” in their name, unless they have branch offices across the country. Politically sensitive words like “human rights” are also problematic. As a result, many CSOs have registered names that are very different from their public brands.
The registration is only valid for five years, after which the CSO must re-apply, facing the same barriers once again.
Once registered, CSOs have the right to open a bank account and to accept funding from donors. The Association Registration Law does not say whether unregistered CSOs have the right to accept funding, but no bank will open an account for an unregistered CSO. Being denied a bank account is a serious barrier for CSOs to access funding, particularly from large or international donors. Most unregistered CSOs rely on using joint personal bank accounts to operate.
Utilising funds is easier once registered, but not always. CSOs face harassment from the authorities when trying to implement funds in Myanmar. Before the coup, CSOs could fairly freely implement activities in the largest cities of Yangon and Mandalay. However, activities elsewhere required prior permission from the local authorities. Unregistered CSOs were rarely given permission. Even for registered CSOs, many authorities refused to give permission or delayed to undermine planning.
Since the coup, many CSOs have either closed or moved underground. As a result, the association regulations have become less important in the overall barriers preventing CSOs from accessing funds. Nevertheless, reports that the military is going to bring back mandatory registration of CSOs indicates that the military will continue past governments’ use of the association regulations to obstruct and impede funding.
Military crackdown on funding
The military has actively tried to identify, impede, and obstruct funding for CSOs. The military has utilised its control over the banking system to do so. They ordered the Central Bank of Myanmar to instruct Myanmar’s banks to monitor and collect information about funding to CSOs and their expenditure. Any large domestic transactions or international transactions of any size are flagged by banks which require CSOs to complete paperwork explaining the source of funds, the reason for receiving them, and how they will be used.
The military has also placed pressure on banks to freeze CSOs’ bank accounts in perpetuity. At first, the accounts of politically sensitive CSOs were frozen. More recently, the banks have frozen other CSOs accounts. The banks have requested that CSOs, including FEM, complete new paperwork explaining their mandates, and more recently have requested CSO staff to come to ominous meetings inside the bank branches.
Using Myanmar’s banks is now a high risk for CSOs. Many CSOs still have funds inside banks that are practically inaccessible. Almost all CSO funding and expenditure is now done using alternative methods that are less visible to the military. Alternative methods are both costly and have their issues, and therefore it is likely that funding flows have significantly decreased in scale.
Causes and responses
Before the coup, the main driver for the authorities to obstruct or impede CSOs from accessing funds was to undermine the capacity, stability, and security of CSOs that threatened the authorities’ power. Association registration in particular was a political process rather than a legal one. Those CSOs that conducted non-politically sensitive activities, such as support for health and education, were generally freely registered and unimpeded from accessing and using funds. Any CSOs that worked on more politically-sensitive issues were obstructed at every level.
Politically-sensitive issues include land rights, labour rights, minority rights, political rights, and human rights more generally. Anti-corruption CSOs and trade unions were also at risk. Obstructions were probably more acute for local CSOs than national ones, given that local CSOs were perhaps more threatening to individuals within the local authorities. For example, local land rights CSOs.
Since the coup, the driver has been the same. The major difference is that almost all CSOs are now a threat to the military’s power. The pre-coup authorities tolerated more civic activity including oppositional and critical elements. The military does not tolerate any civic activity whatsoever, deeming all to be a potential oppositional threat to its totalitarian mindset. Even CSOs offering COVID-19 support have been threatened and shut down by the military.
CSOs did not significantly challenge the association regulations or obstacles to accessing funds in the courts before the coup. For the most part, this was because the courts were not regarded as independent arbitrators and would not protect justice or the rule of law. Instead, CSOs looked to public pressure to try to influence the authorities and their decision making.
Donor practices before the coup
Before the coup, some donors’ practices often obstructed and impeded CSOs’ access to funds and CSOs’ ability to utilise those funds effectively.
Application processes, financial procedures, and financial rules are important for holding CSOs accountable for any funds received. However, some donors’ practices are overly resource and capacity intensive. These practices are both unnecessary and, where necessary, disproportionate. For example, some donor applications are designed by well-resourced staff who create complex processes for comparatively small funds for small CSOs. As a further example, some donors employ highly-skilled finance professionals to interact with CSO staff with comparatively basic training. Both examples demonstrate unnecessary and disproportionate practices that serve to alienate and exclude CSOs from funding. FEM has experienced donors who have 18-month-long application processes for 12-month-long funds. FEM has also experienced donors who take upwards of eight months to approve contracted payments.
Some donors’ unnecessary and disproportionate practices encourage CSOs to invest a greater proportion of their capacity and resources into servicing the donors themselves, rather than servicing their beneficiaries. In effect, some donors’ practices make the donor itself a significant beneficiary of the capacity of a CSO. This reduces the potential impact of any funds received.
One potential cause of this is some donors’ lack of understanding of CSOs, what they do, and how they operate. Donors may have high skills but in some cases, they lack experience as a CSO recipient. Often, if they do have experience as a recipient, it is from within an INGO, which operate in a very different way to CSOs. This inexperience creates the risk that such donors will establish systems that are unsuitable for the needs of the parties involved, and undoubtedly impede CSOs access to funds.
Some donor practices also negatively disrupt the general CSO funding situation. For example, some donors change their funding priorities, introducing new funding, and intentionally or otherwise encouraging their CSO recipients to adjust their priorities too. Sometimes disruption can be positive, bringing in new CSOs with different approaches or diverse representations. However, disruption can also be negative, increasing inexperience, undermining strategies, and splintering partnerships.
Donor practices can also be harmful to CSOs too. Some donors require CSOs to be registered to receive funds. While this may be intended for better financial accountability, it also encourages potential recipients to take unconsidered risks by force rather than by informed choice. Some donors worryingly put out calls for funding proposals on politically sensitive subjects knowing that most CSOs operating on those subjects are unregistered due to increased risk from the government. If a CSO has invested resources in applying for funding, and then at the end is told only registered CSOs can receive funds, there is significant pressure placed on the CSO to take the risk.
Over the past decade, some donors have also prioritised the creation of donor intermediaries. Intermediaries may be either private companies or INGOs, and they receive funds from a donor and distribute those funds to CSOs. They are not similar to INGO-CSO partnerships, because intermediaries do not support or add value to the CSO’s work. In many cases, intermediaries have no experience in the CSOs’ field of work. Instead, intermediaries only act as outsourcing for donors’ application processes and financial management to reduce overheads.
Intermediaries impede CSOs’ access to funds because they disrupt the relationship between donor and recipient, filtering information flows and preventing the development of sustainable relationships. Intermediaries are often comparatively opaque and unaccountable too. Intermediaries often significantly slow down funding and make funding processes more inefficient and inflexible.
Donors since the coup
Since the coup, access to funding reportedly declined significantly in the first few months. Generally, donors’ responses could be separated into two distinct categories. The first category of donors was quick to react, bringing in flexible and responsive funding for CSOs within the first couple of months after the coup began. These donors were able to inject small amounts of funding to cover CSOs’ contingency needs resulting from the military’s power-grab. They were also able to use lower risk means to transfer funds and were more willing to agree to different reporting requirements commensurate with the context.
The second category of donors was extremely slow to react. In many cases, a year after the coup began, these donors are still unable or unwilling to fulfil their previous commitments to CSOs, let alone make new commitments. This second category of donors has contributed significantly to facilitating the military’s attack on CSOs’ access to funding.
The difference between the two categories of donors was not the result of the type of donor. Some governmental donors were quick to react and supportive, and others were slow. Some INGO donors were flexible and responsive, and others were extremely blind to the context. In many cases, it was donor intermediaries who most impeded CSOs’ access to funds.
- All States should protect and fulfil the right to freedom of association, and all third parties including other States should hold them accountable.
- All States should avoid any form of interference with CSOs and their work. Only laws of general application should apply to CSOs, and only when necessary for the public interest.
- All States should actively support CSOs by removing obstructions to their operations including fundraising.
- Donors should prioritise supporting CSOs above and beyond all other areas of civil society. CSOs are the lifeblood of democracy and human rights.
- Donors should establish necessary and proportionate systems for working with and managing CSOs, including applications, finances, and reporting. Wherever possible, donors should establish direct and sustainable relationships, avoiding intermediaries unless those intermediaries provide real added value to the work of CSOs.
- Donors should ensure proper systems of accountability that are accessible to their beneficiaries.