Aid in Crisis: Who is helping whom?

International aid agencies are under attack – rich countries are cutting their budgets and African governments are questioning their motives

Ethiopia’s non-governmental and civil society organisations (NGOs and CSOs) are assessing the damage.

Under a new law passed by parliament in early January, it will soon be illegal for local civil society groups working on human rights, peace and democracy to receive more than 10% of their funding from abroad.

The CSO law has sparked protests from human rights groups worldwide who see it as a ploy by the Ethiopian government to silence critics, and from international NGOs (INGOs) working in the country, who will be banned from advocacy work.

Even NGOs not directly working in human rights will be hurt.

The director of one NGO, which works in Addis Ababa’s poor neighbourhoods, says it will stop work on the rights of children because it receives most of its funding from European-based charities and, under the new law, such advocacy will be illegal.

Though he says raising money within Ethiopia is “not easy”, the director, who asked not to be named for fear of repercussions, thinks the new law may give NGOs impetus to start raising money locally: “People will try to be self-reliant instead of depending always on foreign sources. NGOs have to find ways and means to devise systems to raise funds from within.”

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His plight echoes wider questions being asked by both local NGOs in Africa and their partners in the donor countries of the North about a system where African aid bodies are funded largely by Northern governments and little old ladies who send off cheques at Christmas to their favourite charities.

Critics of the global aid industry tend to focus on official assistance from donor governments, leaving debate about NGO funding and activities to the NGOs themselves.

The money flowing through the international NGO industry – estimated at $26.9bn in 2005 – is substantial, but much less than the $103.7bn in official aid of OECD countries in 2007.

And it is hard to question the work of humanitarian organisations that save lives in war zones, feed and educate poor children, and campaign for human rights and against corruption.

Many of the largest INGOs grew out of responses to specific conflicts – for example Médecins Sans Frontières (MSF) during the Biafran war and Oxfam in World War II – and, like it or not, have now become integral to how the world talks about development, emergencies and Africa.

Playing the donors

Accountability is the watchword of the modern INGOs. Proof of impact means a good story to tell donors and the chance of more money.

MSF, for example, knows that in 2007 it treated 1,201,358 people for malaria and delivered 111,292 babies.

Attention to detail does not protect charities from criticism, though stories of ‘briefcase NGOs’ doing the donor rounds with a fake portfolio of projects may be over-exaggerated.

The critics can also pick on high administration and fundraising costs. Save the Children’s International Alliance, for example, spent 20% of its expenditure, or $197m, on administration, fundraising and other governance costs in 2007.

More INGOs now partner with local NGOs as a condition of the funding they get from donor governments.

“The international NGOs cannot operate effectively without the support of the local NGOs here, because the local NGOs are the grass roots,” says Mohammed Attah, African Regional Coordinator for the World Association of NGOs, based in Nigeria.

This has left INGOs acting almost as mini-development agencies. They have business plans that change according to trends (right now climate change is a big theme) and African NGOs have to change direction to fit.

“They have to learn to play a game, and they have to learn to play the donors,” says William Elbers, a researcher and NGO specialist at the Radboud University of Nijmegen in the Netherlands.

“Strong organisations get what they want without losing their organisational integrity, while for others, the most extreme and oft-observed cases, they simply blow along with the wind.”

African NGOs spend large amounts of time scanning the project announcements of INGOs or development agencies, packaging their activities to attract funding.

“Most of the time we spend writing proposals,” says Adam Kabonge, a fundraiser for the Kampala-based Uganda Coalition for Crisis Prevention.

Attracting funds from international donors will be tough because it has had to cast a wide net; in order to attract the widest spread of possible funders who look for specificity, its themes are – as Kabonge admits – “quite broad” and include climate change, disaster prevention, agriculture and HIV/AIDs.

Think local

“There is clear realisation among ourselves now that we have what you call over-reliance on international funding,” says Attah.

“The only route that we have is to rely on international funding in order to implement our projects locally. This over-reliance has cost us.

Now we cannot locate our funding base locally and that is a very big problem for us.”

NGOs have not concentrated on creating formal structures for giving that other countries, such as India, have successfully used to fundraise from a wealthy middle class.

One solution suggested by Attah is for more funding from African governments to their local NGOs.

Whereas this is normal in developed countries, Attah says that in Nigeria, if an NGO is given even N200,000 ($1,350), “there’s an outcry, people begin to ask where did they get this money?”

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INGOs that pride themselves on their independence still face a difficult balancing act when accepting government funding, especially in the US, where USAID makes no secret that it sees foreign aid as aligned to US national security.

Different branches of NGOs are able to do things differently: CARE USA, for example, receives 48% of its funding from state sources, while CARE in Japan receives 34%.

Private donations surged in recent years but may be on their way down again as the financial crisis hits. Sam Worthington, chief executive of InterAction, an association of 165 US-based NGOs working in international development, points to a tripling of money from the American public from $2bn in 2000 to $6bn in 2006.

“At this point in time, two-thirds of InterAction’s members’ resources are from the public, and one-third from the government,” he says.

Donor governments have not stopped giving. The Department for International Development (DfID), the UK development agency, handed out £163m ($234m) of its £1.3bn bilateral aid expenditure in Africa through NGOs in 2007/08.

While this percentage has been gradually falling, from 14.1% in 2003/04 to 12.1% in 2007/08, DfID’s funding of a select core of the UK’s biggest NGOs has risen steadily, from £59m in 2003 to £89.7m last year.

With this money, the INGOs call the shots and local NGOs can only follow.

“The claim of the southern NGOs is that ‘we don’t know how much money stays in the north’ and ‘why can’t we just access or write those proposals directly without you taking your 9-10% cut?’,” says Dirk-Jan Koch, an advisor to the Dutch government who has written a book on what he calls the “blind spots” in aid allocation.

Orphan shortage?

The geographical spread of development NGOs (see map page 25) is patchy, adds Koch, with INGOs clustering around countries with skilled labour and better infrastructure.

In Tanzania, popular with donors, he found competition for target groups.

“I encountered two directors of orphanages; one of those orphanages was at full capacity but the other was only at 20%. The director of this orphanage where only 20% of beds were taken was asking the successful director of the orphanage, ‘But where do you get your orphans?'”

In countries with arguably more critical needs, such as the Central African Republic, there is a marked absence of INGOs.

There are changes afoot. The EU has recently altered the criteria for its co-financing programmes, opening them up to applications by all ‘non-state actors and local authorities’, including CSOs such as trade unions in developing countries.

This will mean more competition for INGOs who used to have privileged access to this financing. In the Netherlands, a new minister for development cooperation is pushing for all Dutch NGOs working abroad to have southern representation on their boards.

INGOs know they need to build better partnerships with local communities, and some have gone so far as to move their headquarters to Africa. Action Aid International created a secretariat in Johannesburg in 2003, and the Dutch Interchurch Organisation for Development Cooperation plans to cut staff by 75% and transfer decision-making to councils of southern stakeholders.

Downturn go-slow?

The financial crisis creates new uncertainties. UK charity Voluntary Services Overseas says its funds have lost 20% of their value because of the collapse of the British pound.

In the US, InterAction’s members expected to see a 15% drop in private funding in 2009, a loss of $1bn.

“The impact of this is significant,” says Worthington, “because those private resources tend to be the resources that are most flexible, that are less directed by a particular donor and are more able to work in longer-term partnership relationships with NGOs and community-based organisations in the South.”

US NGOs are already feeling the pinch and are cutting back on foreign travel, decreasing staff costs and considering mergers.

Mandisa Kalako-Williams, secretary-general of the South African Red Cross Society, says the crisis could affect an evolving focus on community needs.

Although the International Federation of Red Cross and Red Crescent Society’s (IFRC) 2008/09 budget is safe, raising the $80.4m it needs for Africa in 2009 will be tough.

In October 2008, the IFRC renewed a commitment to make communities part of the design and delivery of its programmes.

In a similar way to the financial constraints put on Ethiopian NGOs by the new CSO law, Kalako-Williams says the financial crisis could act as a catalyst for communities to take responsibility and find solutions to their problems.

“In a very strange way, it should actually strengthen our resolve in working with communities in finding solutions because communities are also aware… that generally in the world, money is shrinking.”

Instead of relying on food aid, communities will be shown the skills to plant their own gardens. And this, she says, is the ultimate goal of the INGO. “We want, as the Red Cross, to work ourselves out of a job.”