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NGOs struggle for survival as donor funds dry out

Many of South Africa’s most vulnerable groups rely on the non-profit sector for much-needed support, from food and shelter, to education and legal services. However, the donor-generated income of many NGOs has dried up due to the COVID-19 pandemic. Salesian Life Choices explains what is at stake if NGOs run out funds.

The economic uncertainty that accompanied the COVID-19 pandemic in 2020 will almost certainly carry through into 2021. The pandemic has left no sector untouched. and the non-profit sector is no different.

The worldwide COVID-19 pandemic has wreaked havoc on the NGO sector as donors diverted funding, originally set aside for NGOs, towards COVID-19 programmes. Resource deprived organisations found themselves on the brink of closing – if they have not done so already. Many NGOs are ending the year with a sense of wariness about their sustained future in 2021 and beyond.

Resource deprived organisations found themselves on the brink of closing – if they have not done so already.

Despite strict lockdown measures to mitigate the spread of COVID-19, some organisations demonstrated agility and resilience by quickly responding to developing needs among their beneficiaries. Organisations that survived at the height of the strict lockdown regulations earlier this year showed flexibility by altering their cost structures to adapt to the new context. For example, many NGOs consolidated their activities and downsized their operations, which in many cases resulted in salary cuts and job cuts.

Furthermore, the uncertainty of the pandemic compromised many NGOs’ ability to set long-term goals and many of them had to adapt quickly to emergent strategies to achieve organisational sustainability and, more importantly, relevance to the beneficiaries they serve.

Non-Profit sector employs more people than the mines

NGOs serve the most vulnerable segment of society and to do this work, the sector employs an average of 1.5 million  people, according to the Cape Argus. As a point of comparison, the mining sector only employs 453,000 people. More than 220,000 NPOs are registered with the Department of Social Development and during the pandemic, these mission driven NPO’s served communities that government and businesses were unable to reach.

NGO’s are accessible to beneficiaries and have proven to be adaptable in response to the needs on the ground.

However, as the NGO funding pipeline is expected to continue to run dry in 2021, organisations that can weather the storm will continue to work with a skeleton staff. Many will not survive and those that do, will most likely have to further consolidate their activities.

It is important to emphasize the relevance of the non-profit sector in South Africa’s already tenuous economic environment. NGO’s are accessible to beneficiaries and have proven to be adaptable in response to the needs on the ground. If NGOs close their doors, the beneficiaries they served will be left vulnerable.

It’s a tough call for donors given the current hostile economic climate, but if donors and government do not respond to the financial crisis that NGOs are facing, it is probable that about 25% of the non-profit sector will close in 2021, resulting in an estimated 300,000 NGO staff losing their livelihoods.

Civil society’s role in building stability and growth cannot be underestimated and the sector has come up with novel ways to contribute to solving society’s issues.

Donor and government efforts to keep the sector going should be intensified as the pandemic persists and continues to threaten the survival of the NGO sector that provides important and sustaining services for the survival of the most vulnerable people in our society.

* The opinions expressed here by Spotlight.Africa contributors and editors are their own and not official statements of the Society of Jesus in South Africa or of the Catholic Church unless explicitly stated.

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