How COVID-19 Is Forcing NGOs & Governments to Modernize

Design Credit: Caroline Fife MD

Over the past several months amidst the spread of the COVID-19 pandemic, a looming economic recession, and even potential depression have begun to impact those most in need. According to the International Labour Organization (ILO), some 1.6 billion people employed in the informal economy — or nearly half the global workforce — could see their livelihoods destroyed due to the continued decline in working hours brought on by lockdowns to curb the spread of COVID-19 (UN News). Such a massive loss of income for many individuals that are already food and / or housing insecure has caused an increasing strain on social protection systems built to provide temporary relief for people to get back on their feet. With hundreds of millions of people affected, many out of work, people are unable to rely on the effectiveness of these systems to feed their families and keep the lights on at night. The scale and speed of recent events have, by and large, outpaced the capacities of multiple governments, NGOs and other humanitarian agencies to respond and meet these rising needs.

Pressure for Government Support

In response, the Center for Strategic & International Studies (CSIS) estimates that G20 countries are providing $6.3 trillion in fiscal support (as of April), representing 9.3 percent of 2019 G20 GDP. Of course, the effects of this massive allocation of capital is limited by how the money is being distributed — often with outdated systems built over a decade ago. For example, in the United States, many regions leverage unemployment systems built using a legacy programming language called COBOL, which was co-created by Grace Hopper 61 years ago — a time when Steve Jobs was a four-year-old and computers took up the whole side of a room (PBS). Likewise, developing nations — with limited resources, capacity and systems — suffer from a decades long inability to expand what limited social protection systems and payments they have. With millions of citizens in the developing world without bank accounts, formal identification, and access to the internet, the ability of governments to reach them — should resources exist — is extremely challenging.

Without the ability to support millions of people simultaneously in need and having to spend hundreds of millions of dollars to simply deliver currently allocated aid, it has become clear that governments and other agencies must modernize social protection systems to prevent the ongoing economic crises pandemics and climate change are poised to create. Current global policy and the outdated systems to deliver cannot handle the increasing size of global disasters, leaving many marginalized communities to be directly affected and be the first to lose their lives. The ILO stated that “without the appropriate policy measures, workers face a high risk of falling into poverty and will experience greater challenges in regaining their livelihoods during the recovery period.”

The Effect on Emerging Economies

We are already seeing the disastrous effects the pandemic is having on emerging economies. In Venezuela, the president estimates 15,000 Venezuelans will return to the country due to the outbreak. Despite Venezuela’s preventative measures, the nation is desperately battling widespread infection within local communities. The country is home to over 7 million people, many of whom were long struggling with food insecurity as a result of hyperinflation and political turmoil the nation has faced over the last six years.

The economic inactivity of global ‘social quarantine’ has contributed toward the loss of income for working Venezuela families and a significant price drop of oil, the country’s leading export. National supply chains for essential products such as food, medicine and hygiene products have been disrupted by supply-and-demand imbalances, causing shortages of basic cleaning and personal hygiene products. Lastly, food insecurity has been worsening due to a decrease in food production, as farmers can no longer access fuel.

For many emerging economies, the majority of economic activity relies on extensive networks of informal labourers and entrepreneurs; these individuals are the most likely to be exposed to risks similar to those of Venezuela — eroding food security, increasing poverty, and decreasing access to income (IADB).

How the Pandemic Has Changed NGOs

In the social sector, many NGOs are losing their income — funded principally through voluntary contributions — to fund staff salaries and humanitarian aid programs essential to supporting the world’s most vulnerable populations. According to a 500-organization survey made by the Institute of Fundraising (IoF), 48% of UK charities risk losing their voluntary income because of the coronavirus (Covid-19) pandemic. The impacts of these risks are already clear — Oxfam International recently announced that a rapid decline in resourcing in 2020 will now result in the closure of offices across 18 countries — which translates into job loss for 1,500 staff and impacts on over 700 local organisations that Oxfam supports (Devex). Nearly a third of the UK international development sector’s £3.89bn income is at risk (Bond.org). 86% of surveyed NGOs are cutting back or considering cutting back in-country programmes. This includes postponing programme implementation, closing country offices and limiting income to global programmes. The impacts on the families and communities assisted through these initiatives is considerable — recent research indicates that the decline in development and humanitarian aid contributions risks pushing 500 million more people into poverty, and putting up to 40 million people at risk of an early death (Oxfam).

Many of these humanitarian programmes, which disbursed nearly $152.8 billion in 2019 (OECD), are still heavily reliant on applications like excel, wire transfers, and checks to manage and disburse aid, making compliance a constant fear, financial audits incredibly onerous, and accountability virtually non-existent. To this day, it remains close to impossible to trace individual contributions — online or simply dropping change into a contribution box — to the programmes in which they are spent.

With the declining capability of NGOs to deliver life-saving programmes, and the inefficiency of government programming to support people in need more quickly, some of the most marginalized members of society are at high risk of losing their lives during the pandemic. By becoming more efficient and changing the existing paradigm, major NGOs and governments alike may prevent such a systemic collapse of social protection services and other aid infrastructure from happening in the future.

An Unfulfilled Desire to Modernize

To combat the disastrous effects of the pandemic, and increase their capacity to serve people in need, NGOs and government agencies alike have desperately tried to modernize their systems, but to little avail.

A review of agency IT budgets over the last 25 years shows the U.S. government has spent over $1.5 trillion on IT since 1994. In recent fiscal years, the federal IT budget has been over $90 billion annually. Yet while the federal IT budget is huge, it is far from monolithic. Spending is fractured and distributed like large crumbs across all agencies. Meanwhile, according to GAO and OMB, over 80 percent of all IT spending is on the Operations and Maintenance of “aging legacy systems, which pose efficiency, cybersecurity, and mission risk issues, such as ever-rising costs to maintain them and an inability to meet current or expected mission requirements,” equating to $64 billion a year. This is the equivalent of more than three NASAs and more than seven Commerce Departments, annually (FCW).

For NGOs, there just isn’t enough funding to finance technology needs, and many NGOs don’t know what the best solutions to properly modernize actually are. The Chronicle of Philanthropy reported that the average nonprofit technology budget accounted for 3.2 percent of total annual organizational spending, the equivalent to an average of $114,443 per year. The average nonprofit reported having about four-and-a-half technology staff members, each, on average, supporting 30 employees.

The majority of the world’s largest NGOs do not have designated roles for the exploration of innovative technologies to improve existing systems. Despite such a limited investment into using technology, a little more than two-thirds of nonprofits reported that their strategic plan includes technology components, although nearly half said they are not conducting any assessments to figure out their return on investment from technology spending (Philanthropy.com). Paradoxically, these same institutions have extensive reach, presence, and programs in countries where the need for technological innovation and access is most acute.

Leveraging Emerging Technology for Social Impact

Luckily, innovation in technology has kept its exponential pace since the 90s, and much of the software needed to manage public and social sector organization operations are more efficient and cost effective than ever. Blockchain technology, most recently, has played a pivotal role in inspiring lawmakers and nonprofit presidents alike, promising instantaneous disaster aid delivery, lower cost to online education as students continue to learn from home, and more transparent mechanisms for individual donations online.

Of course, how do governments and NGOs keep up to date as to which product and platforms are best, and how to integrate those tools in their programming as smoothly and cost effectively as possible?

Emerging Impact, a benefit corporation dedicated to supporting government agencies, NGOs and international organisations to leverage emerging technology in their social protection programming may have the answer.

With founders that have deployed some of the world’s first social sector blockchain pilots, having worked with entities such as New America, Oxfam International, the Red Cross, the World Wildlife Fund, and the World Food Programme to name a few, the organization is developing a “Product Methodology” framework that empowers technology providers to better support NGOs and government agencies by mapping their software’s capabilities to social and public sector process requirements, stakeholder education needs, and, most importantly, the needs of community members affected by government and NGO programs. In turn, this methodology draws on the inherent strengths of NGOs, local organisations and community members to contribute to a growing space for innovation: a deep understanding of the challenges faced by marginalized communities, complex humanitarian emergencies and cultural patterns and practices that shape how many see the world around them.

“The COVID-19 pandemic has forcefully accelerated the process of modernization for both governments and NGOs alike. Program efficiency and cost effectiveness is becoming essential to supporting communities at scale — and funding is becoming harder and harder to come by for programs with too little oversight and too much overhead,” comments Robby Greenfield, CEO and co-founder of Emerging Impact. Greenfield has been in the blockchain space for over 9 years, and built the social and public sector practice at ConsenSys, serving as their former Head of Social Impact. He also is the co-founder of the Blockchain for Social Impact Coalition (BSIC), the world’s first social sector consortium dedicated to educating and supporting NGOs, impact investors, and social enterprises build solutions for the UN’s Sustainable Development Goals (SDGs).

“We’re currently at an inflection point where climate change events are steadily increasing the number of natural disasters, increasing inequality is fueling poverty, and society is falling behind to at least neutralize our impact on the planet and each other, ” Greenfield says. To better equip social sector leaders to achieve this task, Emerging Impact has partnered with Sempo, Althea, and The Giving Block to modernize the state of global cash assistance, equip marginalized communities with internet access and empower nonprofits to leverage new funding opportunities.

Greenfield commented that “blockchain technology, via digital cash assistance and e-voucher programs alone, will impact over 1 million beneficiaries by 2021 with the expansion of social sector blockchain pilots like that of the WFP’s Building Blocks and Oxfam’s Project Unblocked Cash. Paired with stablecoin liquidity via crypto exchanges operating in emerging markets, the rise of stablecoin-powered mesh networks, and the increasing capability for NGOs to fundraise cryptocurrencies with completely transparency, there’s a massive movement in modernization that could make aid more efficient and accountable — and save the world in the process.”

Hopefully, this existing knowledge gap between NGOs, governments, and technology providers in time enough to proactively save lives and protect against the potential effects of the next global crisis.

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About Robby → Robby is a southern-bred activist and impact entrepreneur. He’s currently CEO of Emerging Impact and served as the former Head of ConsenSys Social Impact. Greenfield is a Brother of ΑΦΑ, a Wolverine Alum, and Emory MBA Alum. Before full-time crypto-life, Robby worked at Goldman Sachs, Teach for America, and Cisco Systems. He commonly writes about crypto-economics and blockchain technology with a social impact focus. Find out more about my projects in the social sector @ http://robtg4.co/

CEO of Emerging Impact, Former Head of ConsenSys Social Impact, @Goldman Alum, @Cisco Alum, @TFA Alum, Activist, Intense Autodidact