Millions from global Aids fund not forthcoming

by Sally Evans

CHARITIES and non-profit organisations (NGO) are in for a rough two years.

Economists say organisations that rely on corporate funding will need to brace themselves for a reduction in cash over the next two years at least.

This comes a few months after one of the country’s most prominent non-governmental organisations, the Treatment Action Campaign, said it was feeling the pinch of the global economic recession.

The TAC said the crisis had led to a drop in donations, adding that about R7-million from the global Aids fund had not been received.

David Barnard from The Southern African NGO Network said that the situation was “unfortunate” because the harsh economic situation meant charitable organisations wouldn’t be able to help those in need as much as they would like.

“The substantiality of NGOs ultimately relies on other peoples’ money. If people and businesses don’t have money, NGOs suffer,” he said.

Barnard explained that non-profit organisations rely heavily on international funding, which rely on endowments.

“In most cases endowment funds have suffered because of the economic situation. It is a snowball effect, which means that NGOs will ultimately be affected,” said Barnard.

Barnard added: “NGOs should rather develop an income-generated means of getting along.”

Economist Tony Twine explained that larger companies usually donate a percentage of their after-tax profit to corporate social investment which (CSI) assists in development in the country.

“A good indicator of the shrinking economy is the South African Revenue Service’s receipt of corporate tax. SARS has already noted a decline in tax. Less tax means less profit, which in turn means less money for CSI budgets,” he said.

But non-profit management consultant, Ann Bown, told The Times that organisations reliant on corporate funding “need to spread their risk in terms of where funding is sourced from.”

She said that about 20 percent of funding is dependant on corporate social investment.

“The NPO sector generates about R16-billion annually. This is not enough — what we really need is R25-billion. So even before the current economic situation, the sector was battling. “

CSI director for the Jim Joel Education and Training Fund in Johannesburg, Giuliana Bland, also warned that funding generated from investments would be cut due to the global economic slump.

“It is going to be a rough time for NGOs, but especially from corporate social investment departments who work with stocks and give a percentage of their stock profits to NGOs, as these percentages will be cut back.”

Some funders, like Tshikululu Social Investments’ chief executive officer, Tracy Henry, said cutting funds was a last resort.

She urged companies to think of alternative sources of money which could be donated.

“From a developmental point of view we need to be extremely conscious of cutting back on budgets because if anything, people need funding now more than ever.”