Foreign funding dries up for Latin American NGOs

Aid from foreign governments funds about half of Latin America's civil society, but the global economic downturn has affected some of the biggest donors.

Mónica Villota runs a small organization in Colombia’s troubled and violent Cauca region, helping farmers improve crop yields and their market access. The NGO, Esfera Azul (Blue Globe) also works to help farmers organize their communities to demand more schools, better roads, and improved healthcare services.

More than 150 farmers benefit from the NGO’s programs annually, but this year Ms. Villota has had to drop 50 farmers from the pool Esfera Azul serves and reduce her staff. All this because the organization’s main donor – the German Education Ministry – slashed its contribution to Esfera Azul by a third.

“With less money the number of people we can help shrinks,” says Villota. “We used to give the farmers we work [with] some of the raw materials they needed to get their crops growing,” she says. “This year, we couldn’t do that.”

The cutbacks at her organization are part of a wider trend across Latin America that has NGOs, think tanks, and development organizations struggling to keep their programs alive. Most organizations began to feel the pinch this year and are now scrambling.

“The downturn in international aid is just starting,” says Aida Pesquera director of Oxfam’s office in Colombia.

Aid from foreign governments fund about 50 percent of Latin America's civil society, according to estimates from the Inter-American Development Bank. The rest is made up by money from international NGOs and private donors.  But international government contributions are drying up. Between 2005 and 2008, contributions to NGOs in Latin America grew an average of 37 percent. From 2008 to 2011, the donations grew just 3 percent, according to figures from the Organization for Economic Cooperation and Development (OECD). This was well below the average regional inflation of 6.1 percent for 2012.

Part of the stagnation has to do with the financial crises in the United States and Spain, the region’s top two donors. But a worldwide rethink in past years about aid effectiveness has also led international agencies to narrow their scope and target issues and countries they consider most in need.

“The world financial crisis has had a significant impact on donations to civil society,” says Bernardo Guillamón, manager of the Inter-American Development Bank’s Office of Outreach and Partnerships.

Most nations in Latin America are today considered middle income countries, which according to OECD criteria are those whose per capita gross national income falls anywhere between $1,006 and $12,275. Being considered middle income, and especially “upper middle income” – as are most Latin American countries – is generally good news for nations and their citizens. It means the economies are more stable and wealth is on the rise.

But even as macroeconomic figures soar, many areas of Latin America continue to suffer from extreme poverty, inequality, and injustice. And community groups, think tanks, and nongovernmental organizations from Mexico to Argentina that work on such issues are struggling to make more progress.

“Organizations are finding themselves without a source of financing and there is no replacement for those sources,” says César Rodríguez, a professor at the Universidad de los Andes in Bogota who has been studying the retreat of international aid agencies from local NGO funding. Mr. Rodríguez notes that many donors now prefer to funnel what little cooperation funding they do give through national and local government agencies.  

In 2011 Latin America received a total of $12.6 billion in global development assistance; of that only 10.7 percent, or $1.3 million was given directly to NGOs, according to OECD figures. This speaks to the relatively stable and democratic nature of governments throughout the region and a recognition that they now have a better ability to address some key development issues such as hunger, education, and poverty. But they cannot address them all. 

"Organizations like ours shouldn't need to exist," says Aida Pesquera, director of OXFAM's office for Colombia, which focuses on humanitarian and rural development issues. But they do exist because local NGOs that challenge policy on issues such as mining, security, or human rights need funding independent of the government, she says.

Rodríguez, from Los Andes University, says many nongovernmental organizations have tense relationships with the government.

“Unless they conform to the government’s priorities they won’t be seeing those funds,” he says.

Culture of giving

Counting on local private philanthropy is also complicated, analysts say, because it is nearly non-existent in Latin America. Michael Layton, director of a center that studies philanthropy and civil society at the Instituto Tecnológico Autónomo de México (ITAM) says that in Latin America there is a “cultural resistance” to giving.

“People want to take care of their family first. Their responsibility to their communities is clearly secondary,” Mr. Layton says, adding that Latin Americans are more likely to give a few coins directly to a beggar on the street than give to a charitable organization.  

“Within the past decade there has been a call for corporate social responsibility but that sort of philanthropy is new and disorganized,” Layton says. “Companies know they ought to be doing something but they’re not quite sure what.”

Companies, like governments, are likely to stick to issues that are not controversial, such as education or hunger, and that do not go against corporate interests. So NGOs that monitor the environmental impact of extractive industries, for example, are unlikely to attract corporate philanthropy, and even if they did, may not accept it.

Villota's NGO, Esfera Azul, for example, turned down funds from an organization controlled by the owners of large sugar cane plantations, whose development model goes against its principles. She felt it was an attempt to co-opt her group.

Marta Villa, who heads Corporación Region, an NGO in Medellin, Colombia that focuses on human rights and civic education, says that NGOs that challenge the status quo may be forced to close their doors. “Our role as watchdog is in danger,” says Ms. Villa.

Cynthia Sanborn, a researcher at Lima’s Universidad del Pacifico who has studied philanthropy and social change in Peru and the rest of the region, says that to maintain a watchdog role, Latin American NGOs have to get creative. “They have been so dependent on foreign assistance for so long that they’ve never had to develop different sources of funding.”

Corporación Region, whose staff has dropped from about 60 people to just 16 over the past several years, is willing to try anything. Villa says she has held some exploratory meetings with local business groups. They showed polite interest but little else, she says. Her NGO is also soliciting funds directly from the public, something they had never considered trying before.

“This situation forces us to reinvent ourselves,” says Villa.