Global Economic Crisis: What does it mean for Civil Society Organisations?

AWID - Civil society organisations (CSOs) have been hit hard by the global economic crisis, not only because it has restricted their access to money, but also because the demand for their services has increased as a result of the crisis. In the light of a report commissioned by the United Nations secretariat, we reflect on the global economic crisis and what it means for civil society organisations.

Access to money

A study by the NGO Committee for Social Development reveals that overall, between 2008 and 2009 the financial situation for CSOs worsened due to decreases in grants for their work, with CSOs in Africa experiencing the greatest cutbacks. The crisis threatens to undermine or halt the critical achievements that CSOs have made in the areas of human and women’s rights, peace building, education, humanitarian relief and other aspects of social development.

In recent years there has been an upward trend towards increased overall funding for women’s rights. However, this has not benefitted as many organisations as it should; small and medium sized organisations have found it difficult to access the increased funding.[1] The economic crisis will make it that much harder for women’s organisations, most of which are already under-funded. Official Development Assistance (ODA) support for gender equality is one of the sectors that has contributed increased resources for women’s organisations, and while there is not likely to be any deliberate action to cut back on the levels of support, overall decreases in ODA because of reduced gross national incomes for donor countries are likely.[2]

Two thirds of women’s organisations sampled in AWID’s action-research Initiative “Where is the Money for Women’s Rights?” had annual budgets of less than USD 50,000. The research showed that to function at an optimal level, women’s organisations on average need twice the amount of financial resources that they currently get.[3] The fact that there is less money coming from certain quarters does not augur well for women’s rights work.

Increased poverty

Even before the crisis, over one billion people in the world were living below the poverty line. The economic crisis can only have exacerbated the situation of the poor, most of whom live in developing countries. According to the report by the NGO Committee for Social Development, since 2002, a majority of developed countries had experienced robust growth, but beginning “late 2008, the financial and economic crisis … reversed … positive economic trends in both advanced and developing countries.”[4] Developing countries that can barely make ends meet cannot find the resources to provide social security or promote human development.

Developed countries and some developing countries responded to the crisis with stimulus programmes that helped to avert a global depression. Many economies including those of India and China consequently experienced growth in 2009, but according to the report, “this growth will not translate into broad-based poverty reduction unless it spreads to more countries.”[5]

Twenty million jobs were lost as a result of the economic crisis. Of these, more than half were in middle and low-income countries, countries that for the most part are not able to provide welfare payments, health care, pensions and other social safety nets to their citizens. CSOs fill in many of the gaps that governments cannot. Before the global economic crisis, almost a billion people worldwide were hungry. This situation can only get worse with increased food insecurity and climate change. Again, where developing countries’ governments fail to meet their citizens’ needs, CSOs rise to the challenge; they do their best to meet humanitarian needs for food and agricultural development[6] - on reduced budgets. What this means for CSOs is that the global economic crisis has stretched them beyond their limits.

Coping

The decrease in funding available has meant that CSOs have had to find coping strategies. They have developed collaborations with other organisations, and intensified fundraising particularly from hitherto unexplored areas such as local philanthropy. Some have had to scale back on their interventions- closing down nutrition centres or reducing the amount of education support they offer. Others have reduced the number of staff they employ, leaving one person to do the work of three. Still others have increased their use of internet tools. According to the report, ‘most of them … [have] intensified their advocacy work to ‘reform the system of sporadic aid.’[7] Again, CSOs are overstretching themselves in order to fulfil their mandates.

Whither ahead?

Respondents to the NGO Committee for Social Development’s survey had a number of suggestions to address the global economic crisis. One of them was to staunch financial leaks by “fighting corruption, reducing opportunities for tax evasion and recovering illicit financial flows.”[8] Corruption is endemic[9] to many financial and political systems, and well-meaning development and humanitarian moments and initiatives provide opportunities for the siphoning off of money to pockets it was not originally intended to fill.

CSOs have also called for redistributive national tax systems: those who can pay should pay. They want heavier taxation of capital and resource extraction transactions as compared to earnings from labour.[10] There have been increased calls for the introduction of financial transaction tax (FTT) which would collect revenue on any transaction that involves the transfer of money. Proponents of the FTT say it would have a three-fold benefit: it would be a new source of public revenue, it would contribute to the stabilisation of financial markets, and it would be a valuable contribution to the tax justice movement.[11]

CSOs surveyed suggested basic income grants for the poor and vulnerable that would ensure a decent minimum income for every individual. They also suggested the establishment of a global pension fund, adoption of the International Labour Organisation’s Decent Work Agenda and the Global Jobs Pact, which is “aimed at generating jobs and providing protection to working people and their families.”[12]

CSOs call on donor governments to increase ODA and –particularly where local governments have demonstrated corruption and policy indifference - for more development aid to be channelled to CSOs that work on the ground.

As an overarching concern, CSOs that participated in the study called for a “UN Charter for a sustainable and socially oriented economy.” A normative framework of global governance would establish “principles for the world economy and for mechanisms of international cooperation in response to shared economic vulnerabilities.”

The global economic crisis has served to highlight the crucial role of CSOs in achieving social justice, and the increased burden that the global economic crisis has placed on them. While they have ably stepped into certain social development gaps, some important measures need to be put in place to ensure that development happens equitably and is not so dependent on the markets.

[1] See “Where is the Money for Women’s Rights? Select 2009 Research Highlights and Trends.

[2] See note 1.

[3] Factsheet on the “The State of Women’s Organizations.”

[4] Impact of the Global Crises on Civil Society Organizations.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] See Alemayehu G. Mariam “Grow up Bob Geldof!”

[10] See note 4.

[11] Bodo Ellmers, “Big Push In Europe for the Financial Transaction Tax.”

[12] See note 4.