What a tumultuous year 2008 has been.

Donor organisations which receive their funding in the Euro, Sterling, Australian and New Zealand dollars have suffered a double whammy. Not only has the global economic downturn created a constriction of their sources of income, they have also witnessed the depreciation of their currencies by as much as 25% over a four month period. US dollar denominated funding has not been spared either, with the deepening recession and loss of asset values in the United States, resulting in the tightening of the charity dollar.

All this could not have been envisioned as recently as July 2008, thereby adding the speed of onset as a new dimension to the current funding crisis facing many NGOs.

After this, what next?

An obvious knee jerk reaction to compensate for the income loss would be to cut project budgets across the board. This would be a mistake. Projects traditionally respond to this short-term type of request by cutting activities, while leaving spending on payroll, headcount, and capital expenditure intact. The global economic crisis is going to be prolonged, lasting at least two or three years, requiring a longer-term response. NGOs need to be both pragmatic and judicious by cutting projects which have not been performing, as well as those which do not fit their strategy. This course of action would then permit these NGOs to have the leeway in their funding to consider new project opportunities, rather than just maintaining the status quo.

Viewed positively, the global economic crisis has the effect of compelling decision makers to take a careful look at their current portfolio of projects and move forward by only continuing to support existing or new projects which are aligned with their global strategy. Improvements to the assessment of project outcomes, as well as the measurement of effectiveness and efficiency, take on added importance as donor and implementer NGOs alike struggle to be able stewards in the wake of the shrinking charity dollar.

James Meyer