/ 31 August 2009

In a time of recession, what gives?

In these tough economic times, non-profit organisations have taken a double blow. Not only are they getting less income, but the number of people who need support and services from these organisations has also shot up. And with the new financial year looming, donors are not able to promise the same funds — if any at all — as previous years.

Since the beginning of the financial crisis between three and five NGOs that rely on foreign funding have had to close down each month in each province, says Jimmy Gotyana, national president of the South African NGO Coalition.

He says the largest proponent of funding to South African NGOs comes from foreign governments. ‘We are really battling,” says Gotyana. ‘The funders are giving more directly to countries without democracy, that have less stability.”

The executive director of the Southern African NGO Network, David Barnard, says funding from both the private sector and foundations has dropped dramatically. ‘It’s not that people are funding less,” says Barnard, ‘but that there’s less money available.” And the ones being hardest hit are the smaller NGOs. ‘It’s NGOs that deal with individual donations and fundraising — and require a constant flow of money — that are suffering most.”

Gotyana says the worst affected are those NGOs involved in governance, community development, capacity building and democracy, whereas those that provide social services, such as organisations involved in HIV/Aids and home-based care, are still managing to find some funding.

The larger national NGOs have the benefit of long-term funding and can sustain their operations, though not, he says, to the same scale and scope

The Treatment Action Campaign (TAC) is a large organisation that is feeling the crunch. ‘A number of our funding contracts come to an end at the end of the financial year,” says Stephen Harrison, TAC’s chief operating officer, ‘and various funders have given the indication that we won’t get the same extent of funding next year.”

According to Gotyana, organisations are facing much tougher competition for funding and have to tender for government grants. ‘Some are compelled to do things that are not in their mandate,” he says, ‘to render a service required by government.” It seems the worst is yet to come.

Gillian Mitchell is the philanthropy programme manager at Inyathelo, an NGO that helps other organisations to raise donor investment. Mitchell says NGOs have been surviving on the money raised in the last funding cycle, but it is now that they will be seeking cash flow for next year. ‘NGOs will feel the pinch for at least another two to three years,” she says.

One major organisation that has managed to protect itself relatively well through the crisis is the Cancer Association of South Africa (Cansa). ‘We have never been reliant on one income stream, such as grants,” says Erna Prinsloo, head of sustainabilty. ‘We have multiple income streams and that gives us protection.” But its greatest shield is that it has invested heavily in programmes involving ordinary South Africans, such as the Cansa Shavathon, cause-related marketing and the Sanlam Cansa Golf Challenge.

Prinsloo’s advice to smaller NGOs is to diversify and to make use of volunteers and citizen-focused funding sources. Mitchell agrees that NGOs need to use the potential of volunteers more.

They also need to ‘look at their core values, review what is absolutely necessary and scale down”. TAC is considering significantly downscaling next year. ‘Some of the issues we are looking at are reducing the size of the national office and potentially closing some provincial offices,” says Harrison. ‘At this stage we just need to weather this,” says Mitchell. ‘We should use this time to learn what to look for in the future.”