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Recession threatens Africa charities

  • Story Highlights
  • Charities in Africa suffer, as recession bites in rich countries
  • One school trying to cover costs for pupils has seen donations fall by 25 percent
  • Philanthropy writer says non-profits must think creatively to encourage donors
  • Rwanda farming project is looking at investor donors who want some returns
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By Megan Zingarelli
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WASHINGTON (CNN) -- The world has seen banks and businesses fail spectacularly since the recession began, but other vulnerable organizations in the developing world face devastation.

Lunchtime for kids, but it's expensive for the school.

Pupils in one of the St. Jude classrooms in Tanzania

The recession is hitting the flow of money to charities across sub-Saharan Africa and organizations are facing tough choices in an effort to continue desperately needed work

"We were preparing for [the crisis], but I didn't realize it was going to be that bad, and I think that's like most people around the world," says Gemma Sisia, founder of The School of St. Jude, a school for the poor in Tanzania.

Assistant Professor Josh Ruxin, of Columbia University, says nonprofits across eastern Africa are failing during this recession. Ruxin lives in Rwanda where he develops health centers and agricultural jobs.

"What I've seen on the landscape is that a lot of the smaller nonprofits are going out of business," he says. "Today those who are not either extremely well connected or with a great strategy are going under by the dozens."

CNN could not independently confirm Ruxin's numbers. But international organizations including the International Monetary Fund warn of foreign aid decreases across the region.

At an IMF conference in Tanzania in March, participants gloomily assessed Africa's needs. They called on rich countries to keep the aid flowing.

"According to the World Bank, over 50 million people in low income countries, many of whom live in Africa, could be thrown back into absolute poverty -- with obvious consequences for other social ills, like sickness and infant mortality," said Dominique Strauss-Kahn, IMF Managing Director. "The economic and political challenges facing Africa are clearly enormous."

Sisia, the daughter of an Australian sheep farmer with no school administration experience, named The School of St. Jude after the patron saint of hopeless causes.

But since St. Jude's founding it has ballooned from three students to more than 1,000, and it has provided jobs for local Tanzanians. Two campuses operate in northern Tanzania near Arusha. The sites include multiple buildings for classrooms, administration, boarding and dining.

Now this setup is in danger due to the worldwide financial crisis. International donations, the school's livelihood, have tumbled by about a quarter, so Sisia has had to cut jobs and cut pay for staffers including herself.

Sisia usually finds sponsors for all children, but now she says she needs to cover costs for about 200 children at about $2,000 a head per year.

Most donors are middle class people from Sisia's native Australia. Sisia says some have lost their jobs during this recession and can no longer contribute.

St. Jude gives food, housing, uniforms, and school supplies at no cost to the children or their parents. Providing food alone cost $100,000 dollars last year.

"Most of our children would not eat if it were not for the meals they receive at school," says St. Jude volunteer Alexandra Schaerrer.

So far all students have passed their national exams in the top 10 percent of the country, says Sisia.

Primary schools in Tanzania have poor primary school graduation rates. Schools like St. Jude provide an alternative to under-funded government schools that many students cannot attend.

"Although primary school education is free and compulsory, the parents have to provide uniforms, stationary, and in some cases desks and chairs before the child is allowed to attend school," says Schaerrer. "In a home where even food for the family is scarce, and most people survive on one or two dollars a day, there is no money for school expenses."

Tanzania's education has been improving overall, according to the World Bank. The national exam pass rate nearly tripled from 2000 to 2006. But a UNESCO study points to teacher and supply shortages as well as poor learning environments.

To get into St. Jude, prospective first-year students must be near the top of their classes in government school, must be able to pass an entrance exam, and must prove that they are "extremely poor."

Sisia says that during the two-month selection season, as many as 2,000 children apply each week for an average of 10 slots per week.

Ruxin says it's critical for African schools to stay afloat.

"When those donations don't come in, it literally means you start to lose the momentum for providing one of the very best investments that sub-Saharan Africa needs, which is a new generation of educated kids," he says.

Ruxin's efforts in Rwanda face similar challenges. He says plans to develop more health centers are moving more slowly now. Some donors are deferring promised funds "until further notice." Ruxin says he's not leaving projects behind, but those projects are moving slowly.

"We're not crippled. We're just not moving as quickly as I'd like," he says.

It's not that donors don't want to give, says philanthropy writer Shelly Banjo of Dow Jones Newswires, but they don't have as much money as they used to, and they must prioritize their giving.

Small nonprofits like St. Jude can benefit by reaching out to donors individually to tell them exactly what their needs are. "If donors care about you, then they'll continue giving," says Banjo.

Banjo says another solution is thinking about how to contribute. Doctors or lawyers could provide free medical or legal services. Groups could urge members to give small sums that could add up to big money.

Ruxin's new project, Rwanda Community Works, aims to create agricultural jobs in one of the provinces hardest hit during the 1994 Rwanda genocide. For this project, he takes traditional donors as well as investors who would like to see small returns.

Ruxin says that African charities face a Darwinian situation.

"I think that while it's survival of the fittest, that doesn't mean that organizations that do extremely good work aren't going to struggle or fail," he says. "The only silver lining is, I think, that the best not-for-profits will come out leaner and stronger and more effective."

Meanwhile, Sisia says she's "working her butt off" to fund St. Jude.

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