Analysts have pointed out that despite growth in remittances, they cannot be assumed to be an alternative for development. In fact, remittances do not directly contribute towards poverty reduction. On the other hand, they can only lead to more inequality in society when the families whose migrants have settled abroad continue to accumulate assets, the families who do not have such migrant support would get poorer and poorer. Nevertheless, there are other prospects with remittances that not only help in reducing this inequality, but they can also ensure some sustainability for NGOs themselves.
Remittance is the money sent by a migrant to his or her family back in the home country. This money is entirely consumed by the family for various purposes. It could be for buying assets, building houses, making family investments, undertaking start-up businesses or financing health and education of the family members. There are also limited examples of migrants providing donations at large to fund a school or a charity back in their home countries. This has been a general scenario of a family in a developing country, which depends upon the income of the migrants for its growth and sustainability.
However, after Orozco’s comparative study of remittances and developmental aid, many multilaterals and bilaterals have started thinking in terms of using the remittances as part of developmental aid practicies. The IFAD’s pilot project in Latin America was successful and it has now decided to upscale it around the world in partnership with NGOs.
Now the question is whether remittances can help support NGOs to ensure their sustainability. It is for the NGOs themselves to think creatively on this aspect of positive change. Remittances are now being increasingly used for making investments in microfinance activities. Migrants are encouraged to invest their capital in microfinance so that credit is rendered to the poor people in their own home countries with an assurance of return-on-investment. Here NGOs can work as intermediaries to identify potential investment opportunities in the poorer areas and report them to the higher level. International organizations need to build the capacities of NGOs in this area and also enable an environment of confidence among migrants about thier money. Microfinance, microenterprises, agri-business ventures etc can be potential sectors where investments can be made and NGOs can manage the operations to enhance skills of the local community in using the resources for productive purposes and also ensure return of the loans undertaken. NGOs can earn some income out of these activities and also provide employment to the local youth to organize these operations. Over time, with a focused strategy and consistent efforts, NGOs can ensure sustainable incomes to cover their administrative expenses.