In the face of simultaneous health, economic and social crises, the demands on civil society organizations around the world are tremendous. Civil society organizations need significant funding to survive this historic situation. Are the funds flowing? And are donors providing what organizations and networks need?
We are seeing many different approaches, but here are a few trends that have caught our eye:
Bilateral Funders: Many bilaterals have been providing emergency pandemic response funding from their existing budgets. For example, the Australian Department of Foreign Affairs and Trade has just announced $1.5 million in response to COVID-19 in Indonesia — a redirection of allocated aid funds.(DevEx)
Outside of the pandemic response however, grants may slow to a trickle. Shrinking economies mean shrinking aid budgets. Moreover, most countries face domestic challenges that now overshadow foreign assistance. Therefore, many bilateral agencies are preparing for recession. This may result in significant declines in funding for long-standing issues such as maternal health, food security and refugee protection.
Corporate Sponsorships: With so many events cancelled and businesses struggling, a lot of corporate funding has seemingly dried up. At the same time, we are seeing a surge of corporate support for local communities. For example, some businesses are paying their workers despite lack of work, supporting healthcare workers, and donating sanitation, technology and educational resources within their local area.
Some corporations are donating to the pandemic response, such as LEGO (Dutch toy manufacturer) who pledged $50 million to help those affected. LEGO launched two initiatives: helping families in urban areas (LEGO’s core customers) with resources to learn and play; and it pledged to help children in war-torn and poverty-stricken areas. Such corporate behaviour may be significant beyond the pandemic if it represents the solidifying of a corporate ethic that recognizes duties beyond shareholder profits.
Private Foundations: The predominant response from foundations seems to emphasize flexibility rather than “more money.” But a mid-June announcement by the Ford Foundation may signal a ground-breaking new approach. Ford took out a $1 billion loan to be paid out over two years in social bonds. Four other U.S.-based foundations also borrowed, providing another $0.7 billion for civil society. (Those foundations are MacArthur, Kellogg, Mellon and Doris Duke Foundations.) This approach makes significant funding available to civil society without the foundations drawing down their (shrinking) endowments.
Does this mark a shift in how the capitalist market system is used to fund social transformation? Will other innovative funding models follow suit?
Civil society has made clear what is needed at this time:
- more money (not just re-allocations);
- more flexibility (indirect cost recovery, longer-term, unrestricted);
- more direct support (to Global South based organizations and networks);
- the decolonization of wealth; and
- more support and space for action.
As the pandemic unfolds, we will continue to monitor whether funders and financiers step up to support real transformational shifts.
Resources:
World Economic Forum: How are companies responding to the coronavirus crisis?
World Economic Forum: Integrated corporate governance: 6 leadership priorities for boards after the COVID-19 crisis.
Ford Foundation: Five Major Foundations to Increase Support with over $1.7 Billion to Assist Nonprofit Organizations in Wake of Global Pandemic.