Challenges Faced by Civil Society Organisations in Policy-Making

Civil society organisations (CSOs) have long been the bridge between citizens and the state, voicing concerns, shaping welfare programmes, and holding governments accountable. Yet the path from grassroots advocacy to meaningful policy influence is rarely smooth. From shrinking funding channels to regulatory bottlenecks and internal governance failures, CSOs today navigate a maze of structural and political obstacles that often dilute their impact. Understanding these challenges is essential for anyone studying public policy, because a weakened civil society almost always signals a weakened democratic process.

The changing landscape of civil society participation 🔗

The space available for CSOs to operate, consult, and dissent has visibly narrowed in recent years. According to the V-Dem dataset referenced in recent governance analyses, the Civil Society Participation Index fell from 0.671 in 2022 to 0.606 in 2023, indicating reduced consultation of major CSOs by policymakers and lower levels of citizen involvement in these organisations. This shrinkage is not merely statistical. It reflects a deeper structural problem where voluntary organisations find themselves excluded from the very policy conversations they are meant to inform.

A healthy democracy depends on CSOs being active co-creators of policy, not passive observers. When that participation weakens, so does the feedback loop that makes policymaking responsive to ground realities.

Government paternalism and bureaucratic hurdles 🔗

One of the most persistent challenges is the paternalistic attitude of the state toward civil society. Governments often view CSOs as junior partners rather than equal stakeholders, expecting them to implement pre-designed schemes rather than help shape policy. This dynamic plays out most visibly through registration and compliance procedures that are notoriously complex.

NGOs must comply with a maze of requirements that consume significant time and resources, including maintaining precise records, filing regular reports, and following strict accounting guidelines. Compliance with complicated rules often diverts attention and funds from the organisation’s primary social mission. Small CSOs with limited staff are hit hardest – every hour spent filing returns is an hour taken away from fieldwork, community outreach, or advocacy.

Bureaucratisation of the voluntary sector 🔗

A subtler but equally damaging problem is the bureaucratisation of CSOs themselves. As organisations grow and take on government contracts or donor-funded projects, they begin to mirror the procedural rigidity of the state. Decision-making slows down, hierarchies harden, and the nimbleness that once defined grassroots work gets lost. This transformation can alienate CSOs from the very communities they were created to serve.

Funding constraints and the FCRA challenge 🔗

Few regulatory changes have affected Indian civil society as profoundly as the 2020 amendments to the Foreign Contribution (Regulation) Act. The amended law introduced sweeping restrictions that fundamentally reshaped how foreign-funded CSOs can operate.

According to the International Center for Not-for-Profit Law, the 2020 amendments banned subgranting among FCRA-registered organisations, set a severe cap on administrative spending, and further centralised control of FCRA funding with the State Bank of India and the Ministry of Home Affairs. The prohibition on subgranting has been especially harmful to smaller grassroots NGOs that traditionally received resources from larger, better-networked organisations.

The scale of impact has been staggering. As of March 2026, official data indicates that 21,933 organisations had lost their FCRA licences, depriving them of essential funds and often leading to closure or severe restrictions on their work. The cascading effect is that entire domains – human rights reporting, environmental advocacy, minority welfare – have seen their institutional backbones weaken.

Dependency and the domestic funding gap 🔗

CSOs face a dual bind: foreign funding is constricted, but domestic philanthropy has not grown fast enough to fill the gap. While Corporate Social Responsibility funds under the Companies Act have emerged as a partial substitute, they come with their own limitations. CSR funding tends to concentrate in a few economically advanced states, leaving organisations in states like Mizoram, Arunachal Pradesh, and Chhattisgarh struggling for resources. Additionally, CSR donors often prefer short, measurable projects, which sidelines long-term work such as conflict resolution, peace building, and movement building, which are inherently long-term and harder to measure.

Political interference and shrinking civic space 🔗

Politics and civil society have always been intertwined, but the relationship has grown increasingly adversarial. CSOs that question government policies, particularly on human rights, environment, or minority welfare, frequently find themselves labelled as acting against “national interest.” Increasing political polarisation has created a challenging environment for CSOs, with concerns about lack of accountability and transparency also eroding public trust in some organisations.

The UN High Commissioner for Human Rights has previously voiced concerns that regulatory tools are being used to deter or punish NGOs engaged in human rights reporting and advocacy. High-profile organisations such as Amnesty International India, Greenpeace India, and the Lawyers Collective have all faced operational freezes, and the ripple effect has created what researchers describe as a “chilling effect” – where organisations self-censor out of fear of regulatory retaliation.

The accountability paradox 🔗

Ironically, CSOs that advocate for state transparency often struggle with their own. Only about 10 percent of NGOs in India file their annual income and expenditure statements, a figure that underscores a serious governance gap within the sector itself. This opacity gives governments easy grounds to target CSOs while also weakening the moral authority CSOs wield when demanding accountability from others.

Limited sustainability of projects 🔗

Many CSO-led interventions struggle to outlive their funding cycles. Projects are often designed around donor priorities rather than community needs, and once funds dry up, the initiatives fade. This pattern – sometimes called the “project cemetery” effect – leaves communities with half-finished wells, abandoned training centres, and unfulfilled expectations.

Part of the problem is the short-term grant culture. Donors typically fund 12 to 36 month cycles, which is rarely enough time to produce durable social change. Building a functional village-level institution, changing attitudes toward girls’ education, or restoring a degraded watershed takes decades, not quarters. When sustainability is treated as an afterthought, even well-designed projects collapse soon after the final tranche is disbursed.

Corruption and trust deficit 🔗

The CSO sector is not immune to the governance failures it often criticises. In 2009, 883 NGOs were blacklisted after being found to have indulged in misappropriation of funds, a figure that continues to cast a shadow over the sector’s public reputation. High-profile cases of fund diversion, “briefcase NGOs” set up solely to capture grants, and weak internal audit mechanisms have all contributed to a trust deficit.

The Pune International Centre has observed that a large majority of the NGO sector has remained “disorganised” or “insufficiently organised” in governance terms, creating a lack of transparency that affects regulators, donors, and impact groups alike. This governance vacuum is exploited both by unscrupulous operators within the sector and by state actors looking for justifications to tighten control.

Capacity and professionalism gaps 🔗

Many CSOs are founded by passionate individuals who lack formal training in management, finance, or monitoring and evaluation. Limited skills in project management, data collection, and impact measurement make it difficult for organisations to demonstrate value to donors and policymakers. As donor expectations shift toward evidence-based outcomes, CSOs without professional systems get left behind.

This capacity gap also affects advocacy. Engaging meaningfully with policy processes requires legal literacy, research capabilities, and communication skills that many smaller organisations simply cannot afford to develop in-house.

Remedial measures and the way forward 🔗

Addressing these challenges requires coordinated action from the state, donors, and CSOs themselves.

Simplifying regulation and strengthening trust 🔗

A starting point is rationalising compliance frameworks. Streamlined registration, digital filing systems, and clearer definitions of “political activity” would reduce the arbitrary discretion that currently burdens the sector. Government agencies such as the Development Monitoring and Evaluation Office, formed in 2015 by merging earlier program evaluation units, can play a constructive role in creating standardised impact assessment protocols that reduce the documentation burden on smaller CSOs while still ensuring accountability.

Promoting partnership over paternalism 🔗

Governments need to treat CSOs as genuine partners in policy design, not merely as delivery agents. Institutional platforms for structured dialogue – think tanks, advisory councils, and participatory audits like those pioneered by the Mazdoor Kisan Shakti Sangathan – have shown that collaboration produces better policy outcomes than confrontation.

Improving internal governance 🔗

CSOs must hold themselves to the same standards they demand from others. Voluntary accreditation bodies such as Credibility Alliance and GiveIndia have been pushing for codes of conduct, annual disclosures, and independent audits. Stronger adoption of these standards would not only improve public trust but also give CSOs a stronger moral platform when challenging state overreach.

Diversifying funding 🔗

Sustainability requires reducing dependence on any single source. Domestic philanthropy, crowdfunding, social enterprise models, and carefully designed CSR partnerships can together create a more resilient funding ecosystem. The goal is not just more money, but money with fewer strings attached to political or ideological conditions.

What do you think? If you had to pick one reform – regulatory simplification, stronger internal accountability, or more diversified funding – which do you believe would most meaningfully strengthen civil society’s role in policy-making? And how can CSOs balance the need to cooperate with the state while retaining the independence to critique it when needed?

References

1. https://www.nimbusias.com/civil-societies-and-their-role-in-the-governance-of-india/
2. https://justicealive.org/legal-aid/empowering-ngos-in-india-legal-framework-and-challenges/
3. https://www.icnl.org/post/analysis/indias-2020-fcra-amendments-impact-on-association
4. https://www.jurist.org/news/2026/03/india-faces-criticism-over-proposed-expansion-of-foreign-funding-rights-on-ngos/
5. https://www.scobserver.in/journal/fcra-judgment-assessing-the-impact-on-ngos-noel-harper/
6. https://www.drishtiias.com/daily-updates/daily-news-editorials/reimagining-the-role-of-civil-society-organizations
7. https://www.icj.org/resource/india-repressive-law-on-foreign-contributions-stifles-nghos-must-be-revised-or-scrapped/
8. https://puneinternationalcentre.org/publications/governance-and-effectiveness-of-ngos-the-way-ahead/
9. https://qz.com/india/1611326/india-has-been-hostile-to-ngos-for-decades-modi-made-it-worse
10. https://dmeo.gov.in/sites/default/files/2022-04/Thematic_Report_Accountability_and_Transparency_22042022.pdf