Latin America and the Caribbean in the World Economy

Introductory Background Southern Development Non-Governmental Organizations (SDNGOs) rely heavily on funding from northern donors inclusive of foundations, governments, corporations and NGO Partners. The last two years however, have witnessed interesting phenomenon whereby local and international media have been preoccupied by analysis of the scope and implications of the global financial crisis. The meltdown followed a 'housing bubble' that burst in the United States in 2008, which itself was attributed to a rise in credit risk between 2007 and 2008. This resulted in a liquidity crisis that prompted a substantial injection of capital into financial markets by the central banks of advanced economies. The United States Federal Reserve, the Bank of England and the European Central Bank swiftly responded with massive liquidity injections and the mobilization of public resources meant to recapitalize banks; insure deposits; guarantee money market transactions; and buy back troubled assets1. Sources of SDNGOs funding saw their assets decline by almost 22 percent due to the economic meltdown. Consequently, there was a substantial drop in NGO funding as respective donors began to cut down their contributions (IRIN 2009)2. In response, NGOs were forced to scale down both programmes and staff as their income streams flattened3. Fundraising experts of some of the world's top NGOs focused a slowdown in 2009 programming growth because of the squeeze. Predictions made by some of the major SNGO programme funders (Oxfam GB, Save the Children UK and World Vision USA) which between them account for an annual income of US$3.1 billion, were not very rosy at all. According to these giants, the usual goodwill and generosity by Financial Services and Investment Banking sector was expected to decline going into 2009. Other innovative NGOs however, were reported to have resorted to finding and attracting new alternative sources of funding especially from Corporations and Governments, albeit with some risk or at a cost. The concern was that NGOs that accept and rely on government funding are more secure, but at a cost. It is suggested that if major NGOs let governments and corporations dominate their funding, the sector could face problems of independence and credibility, which is even more serious than financial problems. So the above crisis in the end affected the developing countries, in particular their NGO sector, but to varying degrees.download