News agency, Cape Town, South Africa
Wednesday November 14th 2018

NGOs face cash crunch due to financial crisis

Yugendree Naidoo and Brenda Nkuna

Over the last year, Eunice Klaasens, who runs a soup kitchen in Manenberg, one of Cape Town’s poorest areas, has faced a difficult job. Not only has she had to contend with rising food prices, but she also has to feed more people with less money.

“I now have to stretch 30kg of rice for two weeks, compared to the past when I used to get 60kg which was even then not sufficient. It’s disheartening for me because every day I have to turn people away,” she said.

Klaasens is a small cog in a Catholic Welfare and Development (CWD) network of 55 soup kitchens around Cape Town that feeds 5,000 people a day. Her predicament is similar to that faced by welfare organisations and NGOs working on the frontlines of fighting poverty.

With the global economic crisis, their sources of funding are under increasing pressure. Individual donors have less money, corporate bottom lines have shrunk and overseas grant flows slowed.

Oxfam Southern Africa regional director Charles Abani said the organisation was taking the global financial crunch “very seriously”.

Abani said from an estimate of one billion poor people living in poverty, the economic crises had produced 135 million new poor people.

“This crisis has created new poverty on top of existing poverty. Poor people are trapped,” he said.
Abani said the crisis had a “direct impact” on poor countries because it had constrained people in developed countries from donating money, leading to lower income levels for charities.

At street level, any cash crisis translates into less services for abused women, children and the elderly.
Cape Town Child Welfare (CTCW) chief executive Niresh Ramklass said since early last year the “donor rand” around the country had slowed.

He said CTCW had a budget of R16,9 million and a 5% to 7% increase in costs was expected due to inflation, which meant they would need to raise more money to do the same amount of work.

Usually the interest from market investments was used for running costs, but this had also suffered because of lower market growth, he said.

The situation had led to them decreasing their staff from 120 to 104, causing an additional burden on remaining staff.

Last year the organisation had dealt with 2,000 emergency cases where children had to be removed from their homes.

This in itself was related to the economic situation as households often had no food. Children became easy targets and were vulnerable to physical abuse.

Action on Elder Abuse director Pat Lindgren said many NGO’s were “feeling the pinch and would soon shrink” if they failed to find additional help.

She said with the shortage of money, NGO’s would restrict their services and cut out some services.

The result would be abused elderly people being forced to move back with their families or even end up on the streets. Workers who felt insecure might have to seek jobs elsewhere.

“NGOs are soon going to feel the crunch. It’s going to be a disaster and we are not ready,” she said.

Barry Smith, senior director of Synergos Southern Africa, a philanthropic organisation, said: “I don’t think there is a reliable overview yet of the South African situation. But there is no doubt there will be an impact in the private philanthropy and the corporate areas.”

He said non-profits in the US estimated that net giving was down by 20% and that 2010 looked like it would be worse.

“I would say the outlook is going to very tight for the non-profit sector,” he said.
— West Cape News

Tags: ngos

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