Other NGOs such as Dustho Shasthya Kendro (DSK), Nijera Kori, ASA etc should give an positive steps to follow BRAC, Grammen Bank and Gono Shasthya Kendro (GSK) to develop social business in order to earn fund in collaboration of overseas investors who consider the impact of their investment and profit. The local NGOs should change their mind and reform themselves to attract overseas investments.

1. https://dailyasianage.com/news/180807/fdi-in-ngos----bangladesh-experiences
EDEN BUILDING TO STOCK EXCHANGE
Published: 12:23 AM, 09 June 2019
FDI in NGOs -- Bangladesh experiences
M S Siddiqui
Bangladesh would go out of LDC and all sorts of subsidized funds from donors will no longer
available for investment in all sectors including development programs and NGOs. Bangladesh
should find alternative sources of finance to carry out their development activities.
Bangladesh must look for strategy to generate our own resources through investments and social
enterprises. It may look for overseas investments. The investors may be different categories of
Financial Institutions and private individuals.
Bangladesh should for overseas investment but the investors look into the impact of investment.
According to The Global Impact Investing Network (GIIN), impact investments are investments made
into companies, organizations, and funds with the intention to generate social and environmental
impact alongside a financial return. Impact investors are strong advocates of the fact that social
impact and financial returns are not necessarily mutually exclusive.
Impact investments are "investments made in companies, organizations, and funds with the intention
to generate social and environmental impact alongside a financial return". Impact investing has
become prominent on the global stage as an approach to deploying capital with social/environmental
goals as well as financial return objectives. Deployed in both developing and developed markets,
impact investments are made across a range of sectors and asset classes.
There are three key characteristics of an impact investor are as follows: (1) Expectation of a
financial return that can range from the return of capital to risk adjusted market-rate returns and that
can be derived from investments in a range of asset classes, (2) Intent to generate a positive social
and/or environmental impact through investments. For example, investors may seek to use
investments to increase access to basic services or invest in solutions aimed at mitigating the
negative effects of climate change, (3) Commitment of the investor to measure the
social/environmental performance of underlying investments.
Impact investing has become a widely-used and popular term over the past several years. Those
directly involved have different ideas about what actually constitutes an impact investment. Fiduciary
investors tend to have little or no room to trade impact for return, focusing on opportunities that offer
both impact and return. Given these general features, impact investing presents an investment style
that can be applied across different asset classes. An institutional investor, believes three elements
define impact investing are Intentionality, Measurability and Return.
(1) Intentionality: Every investment has some positive impact: creating jobs, making products
cheaper, etc. In impact investing, achieving a pre-defined goal is part of the investment's objective.

2. The impact is not just a more-or-less random by-product of an existing portfolio of assets. It is
selected because it generates a certain impact. Impact investments are selected to:
(a) Help communities become more resilient in face of social and environmental challenges;
(b) Make goods and services more accessible to underserved populations;
(c) Mitigate and help communities adapt to the adverse effects of climate change
(2) Measurability: In impact investing, data are collected to quantify the positive impact of the
investment. This can be supplemented by case studies. Different frameworks can be applied, for
example, the Impact Reporting and Investment Standards (IRIS) of the Global Impact Investing
Network.1 But there is as yet no generally-accepted standard, and specific frameworks may need to
be applied to specific situations.
(3) Return: While the notion of impact investing is generally related to investments that repay at
least the principal amount of capital, the space covers the whole scope from philanthropists and
program-related investors willing to accept concessionary returns, to market-rate returns.
The NGOs in Bangladesh is in need of huge investment but going through shortage of capital. There
is significant untapped value in NGOs' assets; both tangible assets such as property, equipment,
and distribution infrastructure, and intangible assets including expertise working in developing
markets, knowledge and data about bottom-of-the-pyramid consumers, and tools and resources that
have market value. This presents an opportunity for investments in these assets, which could be
used to generate returns and deliver impact.
The specialized investors and private investors capital differs fundamentally from traditional donor
funding streams because it requires NGOs to pay investors returns; the principal and interest in the
case of a loan, or a share of the profits in the case of an equity investment. The requirement to 'pay
back' resources has significant implications for NGOs.
NGOs need to have the business models and cash flows that are necessary to pay fair returns to
investors. NGOs need to have the appropriate management capacity, culture, and financial and
business skills to successfully implement these business models and engage with investors.
The rate of the return paid to investors is determined by assessing the risks associated with the
investment. Generally, the greater the risks, the greater the return an investor will demand for a
commitment. Given these requirements to use private investor capital, NGOs should only do so
when the additional impact generated by using the capital is greater than the costs associated with
using the capital, i.e. the required returns.
Investing in NGOs of Bangladesh can be complex from governance and legal standpoints. Even
without tax incentives, NGOs have control and governance issues related to legal entities created to
capture returns, regardless of contribution of the investor, thus leading to potential trade-offs
between impact and returns. By addressing the perceived and real barriers confronting NGOs and
impact investors when they try to work together, we hope to spur many new investment-ready ideas
that will eventually increase the scale of the NGO investment market.
There is already substantial literature on impact investing, but there have been few efforts thus far to
document the specific considerations for impact investors and NGOs to successfully engage with
one another. What seems to be missing is a common framework to understand how private investor
capital could increase the social impact generated by NGOs.

3. There is relatively limited support to help NGOs grasp the full breadth of opportunities to leverage
private investor capital from local and overseas investors. Historically, NGOs have a mission to
deliver 'impact' regardless of the sector they focus on e.g., health, education, environmental
protection, or other social programs.
Second, there are different 'impact levers' that each NGO can use to increase their impact, and that
they are often limited in doing so by specific funding challenges they face. The private investor
capital could address some of these funding challenges and thereby enable NGOs to deliver more
impact than they would be able to otherwise.
When considering the current gap between NGOs and investors NGOs must take appropriate first
step to build a framework to understand the challenges NGOs face while attempting to deliver value
to their ultimate beneficiaries -the poor and vulnerable, 'bottom-of the-pyramid' populations.
BRAC has been an active investor in a good number of private companies. It has invested in
companies like BRAC Bank, IPDC, Delta BRAC Housing, Maya, bKASH (through BRAC Bank) and
a few others. And success rate for BRAC is extraordinary.
Impact investments have also triggered the interest of traditional for-profit companies which work
with solving a social problem (for example agribusiness, health services), as an alternative financing
source. One of the success stories of BRAC attracting overseas and local investment in Bangladesh.
It has proven to be a development giant is going through a major transformation and plans to change
its entire financing strategy for its long-term sustainability. Their mission is to turn BRAC into a self-
reliant social enterprise so that it can continue to making impact independent of changes in donor
funding. Over the past years, it has come a long way to achieving that goal.
At present about 70% of BRAC's annual budget, which is about $1 billion, currently comes from its
own resources including microfinance program and the enterprises. The largest NGO in the world is
now considering getting into impact investment in a bigger way.
Their existing success story is bKASH, the financial service arms of BRAC (BRAC Bank) is presently
valued at $640 million with overseas investment from Motion LLC, International Finance Corporation,
and Bill & Melinda Gates Foundation. It is the leading mobile financial services (MFS) provider of the
country, and Ant Financial Services Group, operator of China-based Alipay, announced a strategic
partnership on April 26, 2019.
In less than three years since its inception, shares of bKASH were bought by World Bank's financial
concern IFC and American private organization Bill & Melinda Gates Foundation in 2013 and 2014
respectively. Alipay have purchased of 20 per cent of bKash's stakes by the latter thus increasing
bKASH's financial and technological capabilities. Alipay is the online payment platform of Alibaba
Group. After overtaking PayPal as the world's largest mobile payment platform in 2013, Alipay had
more than 54 per cent share of China's US $ 5.5 trillion mobile payment market by the fourth quarter
of 2016.
Other NGOs such as Dustho Shasthya Kendro (DSK), Nijeta Kori, ASAetc should give an positive
steps to follow BRAC, Grammen Bank and Gonoshasthya Kendro (GSK) to develop social business
in order to earn fund in collaboration of overseas investors who consider the impact of their
investment and profit. The local NGOs should change their mind and reform themselves to attract
overseas investments.
The writer is a Legal Economist. Email: mssiddiqui2035@gmail.com.