Inyathelo in the Headlines

NGOs' shrinking funds myth becomes self-fulfilling prophesy - 28 Aug 2013 - Cape Times

ON SEPTEMBER 11, Cape Town NGO Inyathelo will host a round-table debate with the theme "The End of International Aid?".

This debate builds on the misperception that international donors are fleeing South Africa and this is the primary reason why our NGOs are struggling. This narrative was used by Idasa earlier this year when it cited "funding issues" as the primary cause for its bankruptcy

A few months later we heard that the UK will end aid to South Africa, with many commenting that this is the beginning of aid to South Africa as a "middle income country". While the story of decreased funding resonates in the NGO sector, it is incorrect: donor funding to South Africa is at an alltime high.

The Organisation for Economic Co-operation and Development (OECD) that monitors 95 percent of the world's aid flows - reports that donor funding to South Africa has quadrupled in the last decade from $337 million in 2002 to $1.34 billion in 2012. South Africa is no outlier: this trend is repeated throughout the region. The truth is that much of South Africa's NGO community has failed to analyse, lobby or compete for these donor funds.

These NGOs cling to the notion that funding is decreasing rather than analyse the data or position themselves to better compete. If they looked closer, they would see that donor payments to NGOs in South Africa have actually never been higher. The data shows that in 2002, the largest payment to an NGO in South Africa was R18m at today's exchange rate.

By 2010, that payment had grown 30-fold: PACT South Africa received R650m from donors, Right to Care R310m, the Wits Aids Consortium R550m and Johns Hopkins University SA R150m. Clearly a lack of funding is not the simple issue it is claimed to be. At the same time, the widely held belief that donors are cutting aid to middleincome countries also doesn't bare scrutiny Despite official policies to the contrary the OECD's latest analysis of donor data reports "a noticeable shift in aid allocations away from the poorest countries and towards middle-income countries".

What appears to be going on is that South Africa's civil society is using this story of reduced aid to mask their inability to professionalise their organisations and compete. In South Africa, many NGOs seem to take pride in a policy of paying below-market salaries, thus causing a constant departure of experienced professionals to the government, the UN and better paying international NGOs that all compete for the same donor funding.

While these other organisations are able to recruit the best in the sector, many South African NGOs have failed to translate their lower-cost structures into a competitive advantage and are simply unable or unwilling to compete with their international or more established competitors.

Make no mistake, large NGOs are now something of an industry unto themselves, and this trend has largely passed South Africa's NGOs by While Idasa went bankrupt, Save the Children has grown to be an R18bn-a-year organisation, PACT is now running on a R2bn budget and some international NGOs like Family Health International have grown as much as sevenfold in the last decade, from a budget of about R800m in 2001 to R5bn in 2011.

In my experience, many South African NGOs too often accuse international NGOs as being too mercenary in their pursuit of funding. There remains the idealistic notion that funding should go to NGOs that have a demonstrable constituency, rather than to those that can write the best proposal or field the strongest team. Unfortunately, this notion is fast becoming outdated, and that is why NGOs often perceive funding as shrinking when, in fact, it is expanding.

The simple reality is that South African NGOs need to evolve, they need to learn from their competitors, they need to professionalise and compete, or they will not survive. Some have already recognised this and are successful in receiving large grants such as the R310m reported disbursed to Right to Care in 2010.

It is time for the sector as a whole to stop peddling the fatalistic narrative of diminishing funds and instead work to make South Africa's NGO sector internationally competitive.

Written by Alexander O'Riordan, an Aid and Development Effectiveness Researcher and PhD student at UCT

Click here to view the fact sheet on NGO disbursements created by Alex O’Riordan for Inyathelo