| | |  Americas & Beyond 
Financial Crisis Not a Thing of the Past for LatAm NGOs
 Mario Osava - Inter Press Service
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September 20, 2010
| | Protesters demonstrate against direction taken by climate change talks. (Ana Libisch/IPS) | |
Rio de Janeiro - The countries of Latin America, with few exceptions, have weathered the global recession of the past two years relatively well, while they simultaneously continued the process of shedding neoliberal policies in their most fundamentalist form. But in financial terms, non-governmental organisations have not fared so well.
Many of these groups are going under, as they have failed to adjust to the partial drying up of the flows of funding from large donors both at home and abroad to which they became accustomed in the years of democratic reconstruction after bloody dictatorships or authoritarian governments, says Cándido Grzybowski, director of the Brazilian Institute for Social and Economic Analysis (IBASE).
In Mexico, there are an estimated 30,000 NGOs, most of which have religious affiliations. Many of them are facing serious financial difficulties, and "the national economic crisis is the underlying problem," says Lorena Cortés, head of research at the Mexican Centre for Philanthropy.
Its proximity to the United States and intense bilateral trade with that country mean Mexico has suffered more sharply than the rest of Latin America the economic crisis that has plagued the U.S. since 2008, which has blindsided the government and business here, and consequently civil society as well, she told IPS.
But NGOs in Chile, much farther to the south, are also suffering heavily. Martín Pascual, president of the Chilean Association of NGOs (ACCION), said the situation is due to "our lack of stable public financing," and to the fact that international donor funds are steadily shrinking.
The priority put on Africa by aid agencies, especially European associations, was mentioned by the sources interviewed by IPS as a fundamental cause of the drop in funding for Latin American NGOs in recent years, after three decades of steady growth in terms of the number of organisations and their political and social influence.
A study by Articulação D3 Diálogos, Direitos e Democracia (Dialogue, Rights and Democracy), a coalition of national and international NGOs, private foundations and institutes focusing on Brazil's impoverished Northeast, and by Brazil's Fonte Institute points out that of 41 European and U.S. donors that responded to the survey, one has already stopped investing in Brazil and six plan to do so by 2015.
Although preliminary data show an increase in international donor funds for Brazil between 2007 and 2009, they indicate a nearly 50 percent drop in the funds promised for 2010.
Explaining the decline in assistance for Brazil, most of the donors surveyed mentioned a change in regional priorities, a change in strategy, Brazil's relatively high level of development, and the country's increased funding capacity.
But the primary reason cited was the economic crisis.
"The category of middle-income country" that is cited by the rich world to justify removing Brazil and the rest of the region from the list of aid priorities is questioned by the Mesa de Articulación de Asociaciones y Redes de ONG de América Latina y el Caribe (a network of NGOs from Latin America and the Caribbean, which ACCION forms part of)," Pascual said.
"Latin America's main problem may not be poverty, but it is inequality," which reflects vulnerabilities that can give rise to "setbacks," and even a weakening of democracy, he told IPS.
The crisis facing NGOs has been aggravated by the appreciation of local currencies, especially the Brazilian real.
The rise in the value of the real with respect to the dollar represented a 30 percent loss in the last 10 years for organisations that receive donations from abroad, said Vera Masagão Ribeiro, general coordinator of Educational Action and director of Brazil's association of NGOs, ABONG.
Brazil's economic ascent and the strengthening of its democracy have not spurred the state or society to generate mechanisms to finance NGOs, which could have compensated for the cuts in foreign aid, said Carlos Afonso, who founded IBASE in 1981.
To increase funding at a domestic level, "an adequate framework for the regulation of public funds" is needed, to guarantee "transparency" in donations and use of funds, said Masagão Ribeiro. She also said tax incentives are needed, to encourage Brazilian citizens to make donations.
Several reports of irregularities, which have even prompted parliamentary investigations, "triggered a wave of demoralisation among NGOs" in Brazil, making the need for legislation that offers "legal security" for both the government and the organisations that receive such funds even more urgent, she said.
The lack of regulation has led the government to "freeze" projects, she said, citing the example of an Educational Action programme aimed at encouraging reading among young people and adults, which has been waiting for two and a half years for the disbursement of public funds assigned to the NGO through a public bidding process that has never been questioned.
In Brazil there are an estimated 330,000 non-profit entities, but that figure includes everything from schools and churches to clubs and hospitals, as well as NGOs.
Although activists acknowledge the difficulty of addressing the needs of so many entities with such a wide variety of specific interests and target issues, the country's NGOs are designing a legal framework that takes into account the diversity, to present to the candidates running for president in the Oct. 3 elections, Masagão Ribeiro said.
A tax system that foments individual donations, as well as donations from companies, is also needed, along the lines of legislation in some countries that heavily tax personal fortunes, she said.
Chile, meanwhile, is getting ready to pass a bill on "associations and citizen participation in public affairs", which has a chapter on financing of social organisations, but it will fall short of overcoming the crisis and strengthening "social capital," Pascual said.
Donations to human rights, welfare and cultural organisations made by the Chilean government towards the end of the administration of socialist president Michelle Bachelet (2006-2010), which were considered discretional, drew criticism and spurred investigations in Congress.
In Mexico, the NGOs that have been hit hardest by the crisis "are the newest, most recently created ones, because they tend to depend exclusively on some specific source of funding," whether governmental or private, Cortés explained.
Above and beyond specific problems, having strong institutions, networks and "concrete projects" are important factors when it comes to the strength of social organisations, she said.
In Brazil, small NGOs from the impoverished, semi-arid Northeast have suffered the most, Masagão Ribeiro said. And that trend has been accentuated by the growing concentration of support from abroad in a few large organisations, as noted by the study by D3 and the Fonte Institute.
In Colombia, in the meantime, it is mainly political reasons that lead to discrimination against NGOs when it comes to funding, according to Lilia Solano, director of the Justice and Life Project. Human rights groups and social movements have borne the brunt of the decline in donors, who prefer "a depoliticised agenda," she said.
As a result, associations of families of the detained-disappeared and movements of people displaced by the civil war, campesinos, indigenous people and blacks, as well as the Justice and Life Project itself, are facing the greatest difficulties in raising funds, Solano said.
Daniela Estrada in Santiago and Emilio Godoy in Mexico City contributed to this article.
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