Global Policy Forum

Global: Less Money For More Work - the NGO Double Whammy

April 21, 2009

Non-profit organisations and NGOs are laying off staff and cutting back aid programmes as the global recession bites, and the prospects for 2010 also look bleak. "Clearly the impact of the financial downturn on charities is widening and deepening," said Dame Suzi Leather, chair of the Charity Commission, the independent regulator for charitable activity in England and Wales. "Some charities still face that double whammy of a drop in income as well as an increased demand for services."

In its latest update the Commission reported that 64 percent of charities with an annual income of over £1 million (about US$1.48 million) said they were concerned their services or funding might be greatly affected. "In 2009, we're estimating that giving from foundations will decline in the range of the high single digits to the low double digits," said Steven Lawrence, senior director of research at the Foundation Center, a leading US authority on philanthropy, noting that foundation assets declined double that amount, almost 22 percent, in 2008.

"Unquestionably 2010 is going to be another year of decreasing foundation giving, but based on past experience it will still be in a more modest range," he told IRIN. This is going to be felt right through the non-profit world for NGOs in Africa and elsewhere, he said. The overall effect of the crisis on charitable giving both by foundations and individuals is wide-ranging.
"There have been cutbacks in budgets and programmes. Some members have instituted wage freezes, hiring freezes, travel restrictions, etc. There also have been functions eliminated and layoffs," James Bishop, vice-president of Humanitarian Policy and Practice at InterAction, the largest coalition of US-based international NGOs, told IRIN.

Reduced operations

One NGO that has resorted to most of these measures is Catholic Relief Services (CRS), which reaches more than 80 million people in over 100 countries, and is now facing a 13 percent shortfall in revenue from its private US donors for the first six months of the 2009 financial year. "In a normal year our private revenue coming into the agency from mainly American Catholics would be $150 million - we expect that to be reduced by $16 million to $17 million and we've lost an equal amount in equities," Executive Vice-President of Charitable Giving Michael Wiest told IRIN. CRS already had in place plans to reduce - over a three-year period - its operations in East Asia, Eastern Europe and South America in favour of increased growth in Africa, South Asia and the Middle East.

"But because of the financial situation we had to move in that direction very quickly," Wiest said. "We've reduced our programming in those three areas sharply over the past six months so as to maintain to the degree possible our efforts in Africa, Pakistan and Afghanistan." Programmes cut include economic development in agriculture, micro-financing and maternal child health, while the programmes benefitting Africa range from anti-retroviral therapy and other AIDS projects such as care for orphans, to agriculture, microfinance and water development.

Cuts, cuts...

CRS has not laid off any international staff but has eliminated several hundred national personnel from its overall staff of 5,000-6,000, mainly in countries where projects were cut.
It has imposed a sliding pay cut on international staff, ranging from 1.5 per cent for the lowest salaries to 10 percent at the top. It has also suspended agency contributions to the US 403B retirement fund and abolished 15-day leave carryovers from one year to the next, this latter saving about $2.2 million.

"On the revenue side we've approached some of our very wealthy donors and asked them to make a special effort to help," Wiest said of renewed efforts to raise revenue. "We're looking to raise, hopefully from a handful, three or four or five or six of these people, maybe $10 million, and we will be making a special appeal through the American Catholic community through the mail to match that."

But CRS is fortunate in that it gets most of its funding from the US government and the mainly officially financed Global Fund to Fight AIDS, Tuberculosis, and Malaria, which has so far not cut back donations, as well as from the Bill & Melinda Gates Foundation, which virtually alone among foundations has pledged to increase its grants this year. Moreover, it has not been forced out of Sudan as have many other NGOs, and is hoping to receive increased funding from the US government and the UN World Food Programme for its work there. "We were requested by the US, the UN and our sister agencies to ramp up our efforts because we were not thrown out of Sudan as were these other agencies, so we will see a dramatic upscale in the size of our Darfur programmes," Wiest said.

Hiring freeze

Other NGOs which receive government funding are also in a less dire situation. The International Rescue Committee (IRC), which helps relocate refugees and rebuild lives in the wake of disaster in 42 countries, receives over 75 percent of its funding from European governments, the US government, the UN and the World Bank, and this funding has increased since October 2008.

So far it has not had to cut back programmes or lay off staff, but it has imposed a hiring freeze, only filling critical positions. "We have done what most organisations have done - we have reviewed all budgets and reduced or eliminated any expenses that were considered non-essential, such as travel," IRC Chief Financial Officer Patricia Long told IRIN.

Others have already projected lay-offs. The UK affiliate of Oxfam International is cutting about 50 posts in its 2009-2010 budget, beginning next month, with consequent job losses. "The figure is still somewhat fluid because we continue to make arrangements wherever possible for transfers within Oxfam for people in posts identified for cuts," Acting Head of Public Relations Magda Walter told IRIN.

Many NGOs are looking for new ways to raise money. "Some groups are looking to raise money from donors overseas in places like China and India, but obviously the recession has had an impact too on donors overseas," Caroline Preston, staff writer of the Chronicle of Philanthropy, a Washington-based fortnightly newspaper of the nonprofit world, told IRIN. "The other big thing is government money; groups are continuing to pursue government grants."

CARE, one of the world's largest private international humanitarian organisations, is trimming its budget but not yet cutting entire programmes. "Instead, we are reducing staff travel and other expenses that result in some streamlining in the programme arena," Public Relations Director Lurma Rackley told IRIN. "We have taken the measure of a pay-cut across the board in the hope of avoiding any lay-offs."

Getting the word out

Seeking new sources of financing, CARE recently launched a project - A Powerful Noise Live - in 450 theatres across the USA, featuring three women making a positive difference in the lives of other women in Bosnia, Vietnam and Mali, thus introducing CARE to new audiences and raising money.

"We're also planning innovative efforts with corporate allies to generate funding for our mission," Rackley said.

Another of those looking for new financing is Save the Children UK. "For a start we are being cannier at sourcing funds, looking in new ponds for funding," Director of Fundraising Tanya Steele told IRIN, without being more specific, noting that Save the Children's shops are seeing more customers as people tighten their belts.

"The bitter irony of course is that this very context is making the lives of the people we work with unbearably hard," she said. "The work we are doing now feels all the more vital given the global economic situation. As the world continues to feel the effects of global gambling, our eyes are on the most vulnerable members of society. They might be thousands of miles from the earthquake on Wall St., but they'll feel the tremors for years to come."



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