Will the World's Virus-Hit Nonprofits Get a Bailout?

Will the World's Virus-Hit Nonprofits Get a Bailout?

By Eromo Egbejule

They're the first line of defense for many of the world's most vulnerable people, and they're proud of their independence. Now the virus is forcing nonprofits to turn to governments for help.


The world's most vulnerable people could soon find themselves even more disadvantaged.

By Eromo Egbejule

Dr. Ayoade Alakija, Nigeria’s former chief humanitarian coordinator, is worried.

For decades, millions of vulnerable people across the world escaping conflict and natural disasters or lacking basic social amenities or simply needing humanitarian assistance have depended on charities. Now, the coronavirus pandemic is turning a global nonprofit sector that traditionally supports others into a desperate seeker of help itself from an unlikely source: governments.

With a near-global lockdown, charities — which pointedly also call themselves nongovernmental organizations — are struggling in the face of canceled fundraisers and the prospect of a sharp cut in donations. There’s precedence. Between 2007 and 2009, during the Great Recession, charitable giving in America dropped 15 percent from $376 billion to $321 billion. A similar fall globally could force critical nonprofits to scale back — or even withdraw — from vulnerable regions like West Africa that depend on them, fear experts like Alakija.

That’s prompting nonprofits, which ordinarily do not depend on government funding, to do what the private sector usually has at such times: seek bailouts. In the U.S., more than 200 nonprofits — big and small — have together written to Congress, seeking an “immediate infusion of $60 billion in capital to maintain operations, expand scope to address increasing demands and stabilize losses from closures throughout the country.” They’ve also asked for payroll tax relief, pointing out that they’re responsible for 12 million jobs — 10 percent of America’s workforce.

Some of Israel’s most respected NGOs, which — among other things — feed elderly Israelis and others living below the poverty line, say their financial capability and personnel strength is severely stretched. The leaders of nonprofits Leket Israel, Pitchon Lev, Latet, Rabanim L’Zchuyot Adam, Shatil and Mazon Israel have written to their country’s government asking for help.

Many [nonprofits] are evacuating their staff [from vulnerable West African nations].

Dr. Ayoade Alakija, Nigeria’s former chief humanitarian coordinator

And in Hong Kong, women leading seven charities have created a task force and sent a letter of appeal to the government after a survey of tax-exempt nonprofits found that a vast majority have seen a drop in funding by at least 30 percent. The charity sector employs about 52,000 people on the island.

“Without funding coming in, people’s jobs will be at stake, but those people are out serving Hong Kong’s most vulnerable,” Sue Toomey, executive director of HandsOn Hong Kong, said in a statement to journalists in March. “It’s a double hit.” 

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President Donald Trump signs H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Source Erin Schaff/Getty

American nonprofits have already been promised some of the relief they’ve sought. The $2 trillion CARES Act signed into law by President Donald Trump in late March offers three provisions for loans that nonprofits can apply for to ride out the crisis. One, aimed at both for-profit and nonprofit firms with fewer than 500 employees, offers limited loans that might even be forgiven in whole or in part, according to an analysis of the law by Tom Delaney, president and CEO of the National Council of Nonprofits, America’s largest network of charities.

But NGOs will have to compete for those funds — meant to pay staff and cover operating costs — with for-profit firms, and it’s unclear how many small charities will benefit. And while smaller nonprofits are likely to be hit hardest, it might be only a matter of time before even those with emergency funds for such crises start reaching their breaking point, especially with multiple fundraisers canceled.

Already, donors have begun reviewing grant processes or, in some cases, pausing fund disbursement as their own staff go on compulsory leave. Consequently, projects that should ordinarily be prioritized are being put on the back burner. A grants manager in a war-torn country in West Africa — home to some of the world’s most brutal conflicts and its largest population of people in poverty — tells us about how they’ve received a note from the Dutch government, which funds some of their projects. The note asks “all of us in different places around the world — Indonesia, West Bank — how corona is affecting our implementation,” says the manager, who doesn’t have authorization to speak to the media and so requested anonymity.

In crisis zones like the Sahel and Horn of Africa, assistance from charities is critical to supplement available aid for tackling the aftermath of conflict, locust swarms and outbreaks of cholera and lassa fever. But restrictions on travel and general movement are affecting their ability to influence private-sector funding, administrative staff of nonprofits say. Cargo shipments and flights are now also being delayed or denied passage to some of these areas.


Dr. Alakija

As international NGOs leave, Alakija fears that vulnerable sections of the population already lacking social support networks will be at the mercy of nature in facing the virus threat. Experts like her are worried that shoddy conditions of health care systems in developing countries could make survival chances bleak. “Many [organizations] are evacuating their staff, but some are leaving skeletal staff,” Alakija says. “[The situation now] is the tip of the iceberg, but there could be a potentially high death rate.”

That’s a reality governments appear to be recognizing as they increasingly ban visitors to camps for refugees and displaced people to avert an outbreak there.

It’s a looming disaster the U.N. is beginning to acknowledge too. It has asked the world’s wealthier nations to help fund a $2 billion kitty for countries needing critical humanitarian assistance. “To leave the world’s poorest and most vulnerable countries to their fate would be both cruel and unwise,” U.N. relief chief Mark Lowcock has said. “If we leave coronavirus to spread freely in these places, we would be placing millions at high risk … and the virus will have the opportunity to circle back around the globe.”

And if by then the global support system that nonprofits offer to the most vulnerable has frayed, the virus could be with us even longer.