Egypt quietly stifles NGOs by cutting off foreign cash flow

Civil society organizations in Egypt are struggling to work, and sometimes even survive, as the government is cutting off the foreign funding they rely on.

Employees of nongovernmental organizations say the government is refusing to approve most of the outside grants they receive to run programs in Egypt, forcing some to lay off staff or cut salaries, and keeping them from the work they were founded to do. Many say the situation is worse now, under President Mohamed Morsi, than it was under ousted President Hosni Mubarak, whose regime was notoriously hostile to civil society.

“It's worse, and it gets worse and worse and worse,” says Magdy Abdel Hamid, head of the Egyptian Association for Community Participation and Enhancement (EACPE.) “Under Mubarak there were problems, and sometimes they refused [to approve foreign-funded grants], but in general, under the Mubarak regime we were in better condition.”

Since a military junta took power when Mubarak stepped down, the government hasn't allowed his organization to receive a single grant, Mr. Hamid says. He thought that might change when the junta relinquished power, but the Morsi government has continued to refuse grants; The government refused to allow EACPE to receive one grant it received from a Swedish organization, and has not approved others. 

“We don't submit any new requests because we know what the answer will be,” Hamid says.

Foreign funds make up most of the budget of many civil society organizations here because there's little money to go around locally. Under the law governing such organizations, any grants from foreign organizations to run projects in Egypt must receive approval from the Ministry of Insurance and Social Affairs before they can be disbursed.

Under Mubarak, NGOs faced significant hurdles, including difficulty registering their organizations, long delays for foreign-funded grant approval and sometimes rejections, and interference by the security apparatus. But since 2011, when government officials under the military junta launched a crackdown on civil society organizations, the spigot of foreign funding has been virtually shut off, particularly for organizations that work on human rights issues. 

NGO workers say it is usually Egypt's state security that makes the decision to deny approval, even though the law does not give them a role in the process, and the rejections often come without explanation.

The Egyptian Organization for Human Rights (EOHR) recently laid off more than half its staff because of the lack of funding, says Hafez Abu Saeda, EOHR chief. Under Mubarak, the organization only had one project rejected in its 28 years of existence, he says, while the Ministry of Insurance and Social Affairs has rejected three of its grants in the past six months. They included projects to train young people on how to protect human rights and encourage political participation and to monitor freedom of expression in Egypt.

“I think most of the human rights organizations have the same situation,” says Mr. Abu Saeda.

His organization also recently received a letter from the ministry stating that no “local entity” is allowed to engage with “international entities” without permission from “security bodies,” on instructions from the prime minister.

Financial chokehold

Mohamed Zaree, Egypt program manager at the Cairo Institute for Human Rights Studies, says controlling the funding is the government's way of controlling NGO activities. “This is actually not about the funds itself. It's about the activity.... They are trying to suffocate the activities of the NGOs by permitting or not permitting funds for special activities.”

The Minister of Insurance and Social Affairs said during a press conference in October that the ministry had approved 600 million Egyptian pounds ($89 million) worth of foreign grants to NGOs in Egypt in the previous three months, while rejecting 96.2 million. Those grants were rejected for “sovereign and national security considerations,” the minister said. An adviser to the minister did not return requests for comment. Abu Saeda says most of the 600 million pounds went to charity organizations, most of which were Islamic. 

One of the few organizations that recently received good news is the New Woman Foundation, which works with women in the industrial sector. After the ministry rejected approval for a grant the organization received to promote women's rights at work, New Woman Foundation appealed the decision in court. This week the court ruled in their favor. But it's the first approval for a grant they've received in a year and a half. The organization is waiting to start work on seven grants it has received but which the ministry has not yet approved nor denied.

“For one year we've been obliged to cut salaries of people working at the organization. They work now half-time and half-salary. Lots of people left us because they have to find a way to live,” says Nawla Darwish, head of the organization.

The end game?

Human rights organizations aren't the only ones feeling the pinch. One organization that does not work in the human rights field recently had two grants for media training rejected by the ministry – something that never happened under Mubarak. The organization's employees asked that they and the organization not be identified for fear it would harm their ability to receive future grants.

Even organizations working on the environment have been affected. Nature Conservation Egypt was awarded a grant for core funding, but the ministry has not approved it. NCE executive coordinator Noor Noor says grants targeted at job creation or poverty alleviation seem to be the only ones approved, while most others – even in the environmental field – are either rejected or left to languish at the ministry without approval.

“The whole bureaucratic procedure in itself, and the fear of being left hanging there without knowing what to do, without knowing what the state of your funding is, is disastrous in the sense that you restrict yourself from even applying for certain things because you know you can't get funding for it,” says Mr. Noor. “It's very risky planning out a project and you're not sure when you're going to get approval for the funding. It hinders productivity greatly, and it's quite surprising that these restrictions might become even more stringent in the next law.”

And things could get worse – the Ministry of Insurance and Social Affairs recently submitted to Egypt's legislative body a draft of a new NGO law that would restrict NGOs even more, and the Brotherhood's Freedom and Justice Party has also written a highly restrictive draft. Both would smother civil society, say rights activists.

Restricting the funding, and therefore activities, of civil society in Egypt means fewer jobs and opportunities for Egyptians, said Mindy Baha el Din, development director at NCE, in an e-mail. “The money goes to other countries that are more open and have an active civil society. This lack of opportunities means Egyptians fall behind in development,” she said. “This also means that NGOs can't help to address serious social economic or environmental issues. The government can't do it all alone.… NGOs are some of the best vehicles to address such problems at the grassroots level.”

To get around the restrictions, some organizations have registered as companies, rather than NGOs. But that puts them in a legal gray area that makes them vulnerable to government threats of shutting them down.

If the ministry continues cutting off the foreign funding pipeline, civil society organizations “are going to shut down,” says Mr. Zaree. “Otherwise they are going to operate as a civil company, and if they don't have this ability to operate as civil company … they are going to operate underground, which will lead to more instability.”

He says civil society plays a crucial role keeping government accountable that can't afford to be lost. “Who highlighted the torture done by police and Morsi supporters in Ittihadeya? NGOs. Who highlighted corruption under Mubarak and now? NGOs.”