With the US going through the most significant financial restructuring since the great depression, international aid agencies and NGOs have reason to be wary, observers said.
The likelihood that the US administration will need to divert up to US$700 billion or more to keep US banks afloat seems almost certain to diminish US enthusiasm for large-scale funding of projects abroad. At the same time, rising food and fuel prices are hitting the world’s poor hardest. The World Bank reports that in many developing countries, food prices have risen 83 percent over the past three years.
Liliana Rojas-Suarez of the Center for Global Development, wrote that the ripple effects of the slowdown were likely to be protracted and would not all show up at the same time. She warned that the crisis would cut demand for many goods and commodities that developing countries needed to export to sustain their own economies. The squeeze on international credit was also likely to make investors much more cautious about involvement in new projects.
Photo: International Federation |
Red Cross volunteers loading water storage containers for distribution in the worst-hit areas after the May 2008 cyclone in Myanmar. Much of the aid came from private donors |
Pressure
“It seems inevitable that there is going to be increasing pressure on international development organisations coming from all directions,” Tom Pollak, programme director for the Urban Institute’s National Center for Charitable Statistics, told IRIN. In 2007, the US recorded a record-breaking $306.39 billion in charitable donations. Of that, roughly $10.6 billion went to not-for-profit organisations with international development activities. Another $2.3 billion consisted of corporate international donations of pharmaceuticals and medical supplies.
Jim Yunker, who heads the editorial board of Giving USA, another non-profit group that charts charitable giving, pointed out that US foundations, which are mandated to give 5 percent of their profits from investments, may drop off as their portfolios lose value. However, US foundations only account for around 12 percent of charitable donations. In nearly 53 years that Giving USA has monitored non-profits, Yunker said, there has been a steady increase in philanthropic donations, despite numerous recessions. The greatest drop followed the attacks on the World Trade Center in 2001 but by the end of that year, donations had returned to normal.
Photo: Julius Mwelu/IRIN |
Waiting for food aid in Tana River district, Kenya |
For US NGOs, the downturn on Wall Street is threatening.
"Am I concerned?" says Marshall Burke, senior vice-president for resource development at CARE USA. "You bet! Anyone in the not-for-profit world who isn't concerned is probably asleep at the wheel." Burke said that while CARE was only slightly below its fundraising targets, he had already received messages from a middle-sized foundation that it would decrease allocations because of losses in its investment portfolio.
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This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions