Giving Around the World Faces Recession Snags

Economic woes threaten fledgling philanthropic efforts in Africa, Asia, and Latin America — but the crisis may also contain opportunities

As global wealth grew during the last two decades, so did philanthropy. New wealthy donors emerged in Africa, Asia, Latin America, the Middle East, and other developing regions, while many governments sought to create laws to spur charitable efforts. In a sense, modern philanthropy was no longer an American commodity.

But today, with the world reeling from the financial crisis, nonprofit observers wonder if those nascent efforts will cease or slow down.

With newly established grant makers abroad, “what you can expect is a greater propensity to reduce giving because the institutions themselves are less experienced and more fragile in the face of the economic downturn,” said Susan Raymond, executive vice president of Changing Our World, a nonprofit consulting company in New York.

While Ms. Raymond and others say it is too early to predict exactly how the development of philanthropy around the world will change because of the recession, charities overseas report that fund-raising revenues are falling while social needs are rising.

The economy “seems to be decreasing the amount of giving, and slowing the giving dramatically,” said Nora Lester Murad, executive director of the Dalia Association, a charity in the Palestinian territories that relies on supporters from Saudi Arabia, the United States, and elsewhere.

She said Dalia recently requested grants for operating support from three foundations, but only one, the Open Society Institute, awarded her a grant, worth $25,000. With such a small budget, her charity is unable to pay staff members or dedicate time to raising money in the United States. “We’re really doing badly. We’re struggling hard,” Ms. Murad said.

In addition, the bad economy has prompted several countries in Central America, Africa, and elsewhere to impose or promote new restrictions on nonprofit groups, especially ones supported by foreign governments and philanthropists.

Trading Ideas

To be sure, the troubled economy has not hurt some nations — or their charities — as badly as in America. And nonprofit experts contend that the downturn will not reduce giving over the long term but instead cause donors to do more to examine the groups they support and exchange ideas about international projects.

“The global recession has been yet another reminder of just how interconnected we are,” said Jane Wales, president of the World Affairs Council of Northern California, in San Francisco, and director of the Program on Philanthropy and Social Innovation at the Aspen Institute, a think tank in Washington. “We have found that some philanthropists are taking even greater care to identify programs that have worked in one setting and consider ways that may be replicated to fit a new setting.”

This week hundreds of donors interested in international causes will gather in Washington at the Global Philanthropy Forum, which was co-founded by Ms. Wales. The participants will discuss domestic programs that could be successful overseas, and international efforts, like microfinance and rural health-care projects from South Asia, that could be imported to America.

“I would not be surprised, for example, if we saw increased interest in providing financial services to the poor in the United States, along the lines of the microfinance models that have been developed and applied in the developing world,” said Ms. Wales.

Seeking Support

For fund raisers around the globe, the economy may trigger a similar trading of ideas, though also increased competition, said Jon Dushinsky, a fund-raising consultant who lives in France and is the author of Philanthropy in a Flat World: Inspiration Through Globalization.

He said the downturn may push local affiliates of international aid groups to do more to seek “in-country” donations. For instance, charities in Thailand report they are doing more to seek support from Thai donors as grants from America have declined.

“The feeling I’m getting is a lot of the central offices are seeing less cash come in so they are cutting back, which means they’re putting more pressure on their local offices to become not just program but fund-raising offices,” he said.

At the same time, some charities in Latin America and elsewhere say they will seek money from U.S. donors as philanthropy stagnates at home.

Despite the rough times, there are some global opportunities, observers say.

Many companies in the United States and abroad may curb their giving, but will want to find new ways to work with charities, said Robert S. Harrison, chief executive of the Clinton Global Initiative, an organization in New York that tracks pledges made by philanthropists and corporate leaders from around the world. He said “pure philanthropy” may drop this year, but companies will continue to want to make changes in their business practices to be environmentally friendly or benefit antipoverty programs.

“That approach — changing a business model — I think we’ll see a lot more of going forward, to allow companies to be philanthropic, to be socially responsible, while at the same time address shareholder concerns,” he said.

Mr. Harrison expects more of those types of commitments at this year’s Clinton Global Initiative, which meets in New York in September and requires participants to make pledges to fight poverty, curb climate change, improve education, or reduce civil conflict.

A few governments are also trying to spur support for nonprofit causes in the recession.

Singapore, for example, increased for one year how much its taxpayers can receive in deductions for charitable gifts, while in New Zealand, the prime minister recently suggested that wealthy citizens should donate tax refunds to charities.

But Douglas Rutzen, president of the International Center for Not-for-Profit Law, in Washington, said most countries are not making such moves.

Since the financial crisis hit last fall, he said, his organization has been tracking a “spate” of new policies or proposed regulations to curb nonprofit groups, especially advocacy efforts. While local and international politics plays a role in those policy decisions, Mr. Rutzen said, the bad economy may trigger them, since governments, especially authoritarian ones, often want to “close civic space” and reduce the influence of foreign donors during possible periods of economic unrest.

Ethiopia, for example, passed a law this year that prevents organizations that receive more than 10 percent of their income from foreign donors from supporting human rights. In Ecuador, officials have proposed new registration requirements for charities, saying the country needs to do a better job of tracking their work. “There are many NGO’s [nongovernmental organizations] that do whatever they feel like doing. They get mixed up in politics; they don’t submit schedule reports; they don’t present their finances,” Rafael Correa, president of Ecuador, told a local newspaper last month. “It’s chaos, but now we are putting order to that chaos.”

The International Center for Not-for-Profit Law says the proposed charity vetting process has vague procedures and timelines for certification and could be used to quell nonprofit organizations that speak out against the government or receive support from abroad.

“When there are economic difficulties, there’s the rise of protectionism,” Mr. Rutzen said about the new policies. “To a certain extent we’re witnessing the rise of philanthropic protectionism.” While some governments may be casting a wary eye at nonprofit efforts, leading philanthropists around the world are pushing their peers to continue giving despite volatile world markets.

“For seriously wealthy individuals, this might actually be a great time to re-examine their priorities and to show that they believe — as two very different people, Andrew Carnegie and Mahatma Ghandi, did — that wealth is merely held in trust for society and must be given away by the wealthy in their lifetimes,” Rohini Nilekani, an Indian philanthropist, wrote in a January opinion article that appeared on a Web site operated by The Hindustan Times and The Wall Street Journal.

In an e-mail message to The Chronicle, Ms. Nilekani said she and her husband, Nandan, co-founder and co-chairman of Infosys Technologies Limited, an information-technology company, will continue giving and will fulfill the pledge they made in November to give Yale University $5-million to expand its academic programs in India. She said she hopes other Indian donors will follow their lead.

“Numbers and facts on Indian philanthropy, both corporate and personal, are notoriously hard to come by. I have some anecdotal evidence that things are slowing down on this front,” she said. “Hopefully, though, as modern Indian philanthropy was just developing strong roots, there will be no long-term reversal of this trend.”

In Hong Kong, one of Asia’s wealthiest men, Li Ka-shing, is giving more money to charity despite financial losses. According to Forbes magazine, the entrepreneur lost $10-billion in 2008.

Mr. Li will still meet his pledge to give one-third of his wealth to higher education and other charitable causes and will give at least $6-million more this year to medical programs that help poor people in China, said Solina Chau, chief operating officer of his foundation.

“Upon his instruction, we have increased our spending to fund more health-care and community projects by nearly 40 percent,” she said. “There are a lot of dire needs in this part of the world.”

Despite Mr. Li’s high-profile example, she said, wealthy business people in China and Hong Kong may be reluctant to give this year — but not because their wealth has plummeted.

With the global recession devastating the assets of so many charities and exacerbating already deep social needs in the region, many donors may feel overwhelmed by appeals, she said. Requests for money have increased 40 percent since August at Mr. Li’s foundation, she said.

“There are suddenly too many causes needing help,” Ms. Chau said.

Despite such concerns, said Mr. Dushinsky, the fund-raising consultant, whatever downturn global philanthropy faces in 2009, giving worldwide will increase in the coming years as the middle classes in China, Eastern Europe, and India grow.

“There has never been more money in the world than there is today and there has never been a greater understanding of the need to do good things with that money,” he said. “That’s not a trend, it’s just an absolute fact.”

Caroline Preston contributed to this article.