Why the aid business must not fail

NGOs that are reliant on private donations may be impacted by the financial crisis [GALLO/GETTY]

The IMF and World Bank have called on wealthier nations to honour their commitments to increase aid to developing countries, which are expected to be particularly hard hit by the global financial crisis.

However, based on the assumption that less cash at home equals less cash to spare for ‘charity’ elsewhere, one might expect the global economic crisis to have a major impact on the business of aid.

But ‘aid’ is a complex, multi-billion dollar affair that is concerned with more than just ‘charity’ or even ‘need’ and its relationship to other factors is not always so straightforward.

Per capita provision of aid is, for example, far higher for some countries in the Middle East than it is for Sub-Saharan Africa.

And the rise and fall of global aid resources has not necessarily followed the pattern of rising or falling prosperity in donor countries over the past 50 years or so.

The biggest fall in the level of official aid resources in recent decades followed the collapse of the Soviet Union.

Political considerations loom large in the aid business, and it took a major concerted effort throughout the 1990s to get the ball rolling again by the new millennium and the advent of the Millennium Development Goals (MDGs).

New donors

However, in looking at the impact of the current crisis, we need to differentiate between the various types of aid.

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Official aid at the inter-governmental level is unlikely to change much.

If anything, some organisations such as the World Bank may grow in funding and stature, and emerging economies like China, Brazil and India may increase their contributions – particularly in the field of ‘South-South Co-operation’ which sees increasing collaboration between emerging economies and less developed countries.

Healthy competition among the old and new donors could alleviate the negative impact of the crisis on official aid resources.

Similarly, official military aid is likely to continue to constitute a significant share of global aid resources in the current political climate, as this is concerned with global power relations and spheres of influence.

Private donations shortfall

Private donations to local and international charities may be affected significantly, especially if compounded by other negative factors such as corruption, but religious charities may see an increase in resources during times of crisis.

Furthermore, volunteerism is likely to be boosted by rising unemployment, at least in some countries.

Moreover, corporate aid by the likes of Microsoft and the private aid foundations of the super-rich are expected to continue at a time when image is more important than ever.

Corporate aid to governments could see a reduction in total value, but this remains to be seen.

Each one of these categories of aid is expected to experience a different reaction to the current crisis.

Perhaps the most vulnerable group will be those aid agencies most dependent on charitable donations by private individuals.

Aid organisations have a near-global outreach, and their impact in parts of the poorest countries in the world can rival and surpass that of the local government – the provision of basic social services by NGOs in Darfur is one example.

In cases where these NGOs are dependent on private donations, the global recession could pose a very real risk for some of the world’s poorest people.

Lessons

The lesson here may be in the long-term effectiveness and sustainability of the architecture of this type of aid.

Many of the most successful economies have strong redistribution policies on the one hand, while they have relied heavily on their productive capacities for economic prosperity and the generation of resources to be redistributed on the other.

Developing countries, however, are often pushed to reduce their redistribution programmes.

While the global motto of aid can be said to be ‘fighting poverty’, redistribution policies and programmes are surprisingly low on the list of priorities, except at times of natural disasters. This was evident in the case of the Asian Tsunami that saw unprecedented levels of private donations to international NGOs.

It is therefore necessary to consider the reasons why ‘giving directly to the poor’, be it in the form of food subsidies or the provision of basic social services, can so easily fall by the wayside in times of economic crisis and precisely when this is most needed.

In some respects, just as it is ‘accepted’ that Western financial organisations cannot be allowed to fail, the political, economic and social consequences of allowing aid to fail may have unacceptable consequences.

International agreements on human rights, trade, climate change and shared global targets such as the MDGs are to varying degrees dependent on and closely tied to the aid business.

It can be argued that the world cannot afford to allow the system to collapse.

Massoud Hedeshi is a staff member of the UN with 14 years experience in aid work.

The views expressed by the author are not necessarily those of Al Jazeera or the UN.