Editor’s Note: These opening remarks were delivered by Elizabeth Knup, Regional Director of the Ford Foundation, at CDB 2020 Forum: Challenges and Responses for Overseas NGOs in China and Chinese NGOs “Going Out” on the 9th of December, 2020.
Ladies, gentlemen, colleagues, good morning. I am very grateful to China Development Brief for arranging this Forum and am honored to participate. Personally, it is wonderful for me to gather together with you in person after being away for so long.
In terms of the philanthropy sector, this Forum is becoming an increasingly important platform for dialogue, exchange, and for the promotion of the development of the sector.
I congratulate Zhang Gengrui and Liu Zhongliang and all the CDB staff for their innovation and for their efforts to build this important platform.
It has been almost one year since the world became aware of COVID-19. And during the course of this difficult year we began to understand the devastating health impacts of the virus. And we have begun to calculate the economic impact that the pandemic will have on societies around the world. Today, I want to focus my remarks on the economic impact of the pandemic and specifically on what that means for NGOs.
Earlier this summer, the World Bank forecasted that the global economy will shrink by 5.2% in 2020. Since WWII, this will be the most serious global recession. Individual national and regional economies will recover at different speeds. And, different people and communities are affected differently by COVID-19. But, one thing COVID-19 taught us is that we are all interconnected and the economic impact will touch everyone.
We have all, no doubt, seen the research that shows how this economic downturn will affect the NGO sector.
- A few months ago, Research done by the China Development Research Foundation shows that across China 48% of NGOs expect their income to go down.
- CDB research focusing on Beijing shows that 78% of NGOs in Beijing have six-month reserves and 14% have only one month.
- In China 20% of NGOs have already shut their doors and are not likely to return.
- Globally, Candid (formerly the US Foundation Center) aggregated 51 surveys of the sector and found similar numbers: 72% of NGOs will see a drop in revenue.
- This is not expected to be a one-year hit; in fact, many NGOs expect the hardest economic impact to come in 2021 or 2022.
And, most people in this room know the reason for this dramatic drop in revenue:
- Funders — individuals, companies and foundations — are also affected by the economic downturn and behave conservatively or shift resources to address issues related directly to the pandemic
- Government procurement has reduced — governments have less tax revenue as the result of the economic impact of the COVID-19 lockdowns, and less money to spend on services procured from NGOs
- Gov’t resources are redirected to address COVID-19
- Many NGOs’ revenue is linked to projects, and it has been difficult to carry out projects during this period resulting in reduced revenue
- NGOs cannot carry out in-person fundraising activities
This is a somewhat bleak picture. But, as the Ford Foundation president reminds us all the time, in philanthropy “we are in the business of hope.” We believe that people and societies can do better and can be better. And, in China, there are reasons for hope:
First, this philanthropy sector is much larger than when I made my first visit to China in January 1991:
- Then, there were very few independent NGOs in China. And, today there could be millions.
- When I first began working with NGOs, the fields were limited to just a few — today NGOs work in almost every social sector.
- Research on the sector is abundant
- Support organizations are filling out the ecosystem
- Grant making foundations have started to emerge
Second, there is innovation and resilience in the sector.
- Yes, many NGOs are struggling.
- And many are surviving, finding new projects, finding ways to manage costs, and finding new sources of revenue.
Third, there is potential for Chinese foundations to expand their role in supporting the sector.
That said, the COVID period is different and is challenging, and I’d like to say a few things about what Ford believes funders can do at this time:
Funders can give partners and grantees more flexibility in how they use grant funds, allowing them to respond to immediate needs. We can also reduce administrative burdens related to reporting and other requirements during this difficult time. Ford joined with hundreds of foundations in the US to sign the Philanthropy Pledge which asked us all to follow these principles. A similar Pledge was also launched in China.
Foundations and funders can find ways to increase their funding during this period. Ford did this by issuing a social bond. By raising money through this bond Ford was able to double its grant making budget for the next 18 months. We were also able to demonstrate this approach and encourage other foundations to follow suit. Not every foundation can or should issue a social bond, but where possible foundations and funds should dig deep to give as much financial support as possible while the sector suffers the economic impact of COVID-19.
Focus on institutional resilience
Foundations can support their partners to be more resilient in the face of the COVID pandemic, providing a range of non-monetary support to institutions and their teams.
Leverage others and mobilize capital
It is not easy to get funders to work collaboratively, but during this period it is worth a try. Ford has worked with other foundations, and has also sought to leverage investment and private sector funds, as well. Anything we can do to lead the sector to support NGOs and the ecosystem will be well worth it.
And, these efforts should go beyond simply a response to the economic impact of COVID.
Ford is committed to working with all of you to build a strong and healthy philanthropic sector in China. And to do this everyone needs to play their part, and everyone needs to have trust and confidence in each other. The ecosystem needs:
- Solid research so we understand the sector, its needs, and its value to society
- Good policies, laws and regulations that enable the sector to develop
- Government support — financial, regulatory and moral
- NGOs in all sectors to carry out social projects
- Funders to support NGOs
- Capacity building and other intermediaries to support the ecosystem, including legal, financial, and strategic communications support
- Talent — human capital to actively build the sector
Each of these pieces of the ecosystem are bigger and stronger than they were 10-20 years ago, and I believe they will become stronger in the next 10-20 years. We need to work together to get through this period of COVID impact and look to the future with optimism, confidence and mutual trust.