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discusses the challenges of Malaysian NGOs funding, specifical dependency on donors funding. The
discussion on donors funding challenges would navigate a new strategic approach for NGOs for
funding.

Challenges 1: Inconsistent and Limited Funding
Donors often change their funding patterns in response to the global economic condition, affecting
NGOs funding in the world (Parks, 2008). The donors funding commonly depends on their economic
condition, which they are exposed to external control. The donors spend more funding during robust
economic conditions, and otherwise, during a recession, the donors reduced the funding (United
States Agency for International Development (USAID), 2006; Lewis & Kanji, 2009; Broadhurst,
Budd & Williams, 2012; Randel, 2012; Gebreselassie-Hagos & De V Smit, 2014; Maboya, 2016). The
recession has resulted in a downturn in economic activities worldwide, naturally affecting the NGOs’
funding viability. There is growing evidence suggesting that NGOs across countries, mainly from
lower-middle-income countries and emerging economies, face funding challenges (Arhin, Kumi &
Adam, 2018). For example, South African NGOs were financially impacted by the economic
meltdown, which resulted in significant reductions in donor funding. The funding flows into Ghana
and other sub-Saharan African countries, likewise in Malaysia, are reduced due to the recession
(Adams & Atsu 2014; Kumi, Ibrahim & Yeboah, 2017). As reported by the Department of Social
Welfare (2020), the funding trend for Malaysian NGOs has reduced mainly from 2015 (11%) to 2016
(9%) and from 2017 (9.2%) to 2018 (7%). The economic condition in Malaysia for several years were
fluctuated (Department of Statistics Malaysia, 2021). Then, it impacts Malaysia NGOs funding
viability.

Challenges 2: NGOs Rivalry
There has been an increasing number of NGOs worldwide. The most notable increase in NGO
numbers has occurred in India with 3.3 million (Srivastava & Tandon, 2005). The National Center for
Charitable Statistics (2020) reported that the number of registered NGOs in the United States also
increased by approximately 1.5 million. The number of registered NGOs in the United Kingdom
increased by over 200 000 (Clark, 2020), while the number of registered Australian NGOs has
increased to 60 000 (Australian Charities & Not-for-Profits Commissions, 2020). The number of
registered NGOs in Malaysia also experienced an explosion. The Registrar of Society (ROS) Malaysia
(2021) reports that the NGOs number has increased by over 20 000. Due to the increasing number of
NGOs worldwide, including Malaysia, they experienced intense rivalry to get donor funds (Arhin,
2016). Then those NGOs struggle to get limited funding (Werker & Ahmed, 2008). For example,
NGOs conduct a humanitarian mission for flood victims (Sheate & Partidário, 2010). Donors
nowadays have a great demand from NGOs to provide funding, such as the donors required for proper
paperwork and transparency funding flows. However, some NGOs lack knowledge in preparing for
paperwork and are unable to provide a proper funding statement (Abouassi, 2013). Considering this
situation, NGOs have to compete with other NGOs to attract donors in providing funding. Thus, the
NGOs rivalry is a part of the most significant challenge for NGOs to obtain the donors’ funds.

Challenges 3: Restrictive Requirement of Donor Funding
Donors are becoming increasingly selective in their funding of NGOs. Donors have the requirements
to spend their money on NGOs (Doornbos, 2003). Among them are Malaysian NGOs should be
registered in the Malaysian ROS, NGOs programs must have an enormous impact on the community
and good financial reports. First, registered NGO programs are legal; thus, the donor has more
confidence to spend their funds on NGOs (Fafchamps & Owens, 2009). Second, NGOs provide
programs that have a beneficial impact on communities. For example, NGOs support single mothers
with training and skill.

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