“At the end of the day, the biggest risk is to the people we serve,” says Clara Miller, founder and CEO of the Nonprofit Finance Fund, a New York City-based nonprofit that provides financial and advisory services to nonprofits and their funders.

Nonprofits should take a hard look at their finances to be sure their bank accounts are safe and their cash is accessible, and they also should assess their revenue streams, she says.

While the looming recession may cause giving by individual donors to dip, for example, and while causes like the arts that depend on discretionary giving could suffer a bigger decline than social-services, she says, individual giving historically has not declined as much during recessions as some nonprofits may fear.

Government funding could decline, Miller says, and while some nonprofits actually could see an increase in government support to cover rising demand for services, the reimbursement rate for the services nonprofits provide could decline.

So while a nonprofit that makes home-care visits might receive more government dollars to cover more visits, for example, it might receive fewer cents per dollar on the cost of each visit.

The expected tightening in government funding for nonprofits likely will increase the need for charitable giving to fill the gap, “and that’s a tough place to be,” Miller says.

So nonprofits should move carefully and not look for quick fixes.

“It’s important not to panic and over-diversify lines of business,” she says. “This is a time to be watchful and keep the powder dry.”

Uncertainty about the economy represents an opportunity for nonprofits to “reach out and communicate with the board, staff, and funders,” Miller says. “That will make everybody feel better. Information is important.”

Nonprofits “do have a tendency to grit their teeth and make it through bad times,” she says. “That’s a strength. But it can be a weakness if in fact it’s so bad that we need to be talking to one another and making contingency plans.”

And in working with foundations, which often make grants based on a “two-year rolling average” and “often, especially in bad times, maintain their giving levels,” she says, “conversation is very important, reaching out is very important.”

Still, nonprofits should recognize that “foundations are not going to fill the breach lost by government cutbacks,” she says.

“If you get most of your revenue from fundraising from government sources, it’s unrealistic to expect philanthropy to replace those funds,” she says. “If government is looking at very bad economic times and cutbacks in direct services, that’s where we are going to feel some pain.”

And instead of working on strategic plans for the long-term, nonprofits should focus on contingency planning that looks at specific financial scenarios, Miller says.

Ultimately, surviving and thriving in tough economic times requires leadership, she says.

“We want to be here for people who need us, so part of what we’re trying to do is live to fight another day,” she says. “This is about making sure we preserve our programs and services for the people who absolutely need them.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Investment

It is no surprise that most Africans are welcoming Chinese investment and products. The history of traditional Western aid and investment in Africa is one of a nagging “I correct you because I want what’s best for you” parental-like stronghold over the continent. Tired of “the politically motivated, finger-wagging approach of western governments,” numerous sources quote the lack of political motivation, as well as societal or environmental demands, as one of the primary reasons that Africa is welcoming the Chinese investment.

Sahr Johnny, the Sierra Leonean ambassador in Beijing, was quoted as saying the following regarding China’s projects in Africa:

“The Chinese are doing more than the G8 to make poverty history. If a G8 country proposes a project for Sierra Leone, there is an environmental assessment and evaluation of the human rights and governance situation. The Chinese just come and do it.”

Despite the claims of poverty reduction, the reality is that the aid flowing from China is not designed to alleviate poverty, as opposed to aid from the World Bank and the IMF, which falls under the category of “office of development assistance.” Therefore, it is not subject to social and environmental assessment. The assistance from China is purely aimed at promoting trade and development for China. Therefore, when an issue like the Darfur crisis in Sudan arises, China slyly steps aside and claims that its role is not to police other countries.

While this lack of social and environmental benchmarks may worry some, others praise the fact that much-needed investment has been able to flow freely into Africa. Some of the key areas of Chinese investment, which align with improving the efficiency of resource extraction, are telecommunications, energy, and physical infrastructure. These areas have traditionally been ignored by donors in Africa, who have instead favored social development programs such as education and health.

Although the money is flowing in, Africans have expressed concern regarding whether or not these investments will add long-term value in the sense of technology transfer, education, and opportunities for Africans. At the amazing blog Global Voices, a young Malawian girl questioned, “Am I being idealistic in hoping that they will teach us their unique skills in building and pass the construction mantle back soon after?”

Products and Services for the African Market

Not only has China offered investment in infrastructure, but there has also been an influx of Chinese products in Africa, which has rallied critics from both ends of the spectrum. According to the article “The Strategic Entry of China’s Emerging Multinationals into Africa,”

“…the Chinese multinationals have become adept at identifying so-called ‘market blind spots’, market areas that have essentially been neglected and under-capitalised. These are typically cheaper product lines that may not seem to be money spinners, but which would actually stimulate demand once available.”

Examples of these are Haier’s smaller refrigerators and Lenovo’s C100 laptop, targeting small and medium enterprises. Huawei provided the international market with low-end routers that were 40 per cent cheaper than other products, capturing 3 percent of the global market by 2002.

From that, it sounds as if the Chinese products are giving African people more choice, and filling market gaps. However, there are worries about the safety of the extremely cheap Chinese goods. If an exporter can’t pass FDA inspections, it may still be able to slip its products into African markets.

China as a Model for Development

Lastly, if you look beyond the investments and new products, and consider China a model of development that may provide a tutorial for Africa, it is both exciting and worrisome. A working paper issued by the World Bank in February of this year, titled “Lessons from China for Africa” is focused on the fact that “other developing countries struggling to grow and reduce poverty are naturally interested in what has been the source of this impressive growth and what, if any, lessons other developing countries can take from China.”

For those who are looking solely at economic indicators, China has lifted 300 million people out of poverty with unimaginable speed. China certainly did not achieve this success through a dependence on Western aid and structural adjustments.

Could China do the same for Africa?

The situation that has emerged in China, albeit economically prosperous, may not be the pathway that most would like to imagine for Africa. China may have tackled poverty, but what about inequality? While China has started to embrace the market philosophy from the West, the adoption of the freedoms that are usually associated with a democratic system is another story. You could trip over the number of examples of human rights violations in China, from incarcerated activists to the infamous “great firewall.”

What is happening in Africa right now clearly demonstrates a seemingly simple distinction that we may all sometimes forget to make; poverty and inequality are not one in the same. And, if poverty is addressed, will inequality then follow suit?

* For a more in depth version of this article please visit NextBillion.net

Grace Augustine is a research associate with the William Davidson Institute, an educational institute focused on researching and supporting organizations in emerging markets. She writes for the NextBillion blog and has an interest in economic development and clean technology for the world’s poorest citizens.

I think that those of us who are interested in the potential of market-based development need to initiate a conversation around one of the biggest elephants in the room, and that is the role that Chinese foreign direct investment (FDI) and aid is playing in Africa’s development. In particular, how this inflow could fuel potential base of the pyramid (BoP)-focused enterprises and mean new opportunities in both employment and a greater access to choice in goods and services for BoP consumers.

I became interested in doing this piece on a recent trip to Hong Kong, where I was studying strategies that have been taken to propel corporate social responsibility in Asia. One morning at breakfast I came across the headline, “China’s Investments ease Africa’s Poverty, says World Bank report” in the South China Morning Post. This July 12th headline grabbed my attention, as it was clearly at odds with those I had been seeing in the U.S., such as last August’s New York Times story entitled, “China’s Trade in Africa Carries a Price Tag.”

So, which is it? Clearly, the two seemingly opposing articles demonstrate that this is a very divided issue, and the strong journalistic stances risk convincing people one way or the other, when the reality of the effect is probably somewhere in the middle.

As China and Africa’s economic relations have strengthened, on some indicators, life has improved for those Africans at the BoP. Some are able to access cheaper, “Made-in-China” products, while others have benefited from the much-needed investment in infrastructure, which has contributed to everything from energy to ICT development. However, many argue that China’s no-strings attached aid packages ignore some of the structural changes that need to occur to ensure long-term peace and prosperity in the region, and that cheap Chinese goods have crowded out native industries.

The World Bank seems to be optimistic, saying that China’s “newfound interest in substantial international commerce with Africa—home to 300 million of the globe’s poorest people and the world’s most formidable development challenge—presents a significant, and in modern times, rare, opportunity for growth, job creation, and the reduction of poverty on the Sub-Saharan continent….”

While the prospects for job creation and poverty reduction surrounding greater exports are promising, there should be valid worries when it comes to the social and environmental implications of this resource plunder. According to the World Health Organization, developing nations, which emit the fewest greenhouse gases, will have the most serious problems associated with climate change. The jobs afforded to those in extractive industries are dirty, dangerous and unpredictable.

In addition, from a long-term poverty-reduction standpoint, the tiny percentage of value-added goods being exported, the minimal technology transfer, and the lack of skill development does not bode well for the hope of sustainable change. And while U.S. and European companies certainly do not have a clean history in Africa, they are now under much greater social and environmental scrutiny, while Chinese firms appear to be operating with little or no oversight.

One of the most comprehensive journalistic pieces on this topic that I came across was the May 2008 Fast Company Series Special Report: China in Africa. Author Richard Behar traveled to Mozambique, Zambia, The Democratic Republic of the Congo, and Equatorial Guinea in the six-part special. After all of his travels, he came to the conclusion (primarily through visiting extractive resource sites) that Africa is bearing the brunt of China’s massive energy and resource needs that are fueling the established Western and newfound hyperactive Eastern consumer economies. He compared China to a parasite infesting the Sub-Sahara, saying that the Chinese are, “there to get what they need to feed the machine.”

What Behar found was that, “while flat-footed Western governments largely watch from the sidelines, cash-flush Chinese firms—many with state-directed financing—are cutting deals at a dizzying pace, securing supplies of oil, copper, timber, natural gas, zinc, cobalt, iron, you name it.”

China needs Africa, and it has offered much in return for the resources that are driving its booming economy. However, the questions that we need to consider are, what does this means for those living at the BoP and, what role will the civil sector take in this changing landscape of south-south development relations? Should we point a finger at Chinese companies for potentially stripping Africa of its natural resources, or should we instead encourage this much-needed investment and potential job opportunity?

Or, in this case, should we step aside and suppress our White Man’s impulses to apply what Easterly would call the “intellectual hubris at the top that disdains the messy realities at the bottom?” According to some Africans, they welcome the partnership with China because China “treats them like a peer.”

* For a more in depth version of this article please visit NextBillion.net

Grace Augustine is a research associate with the William Davidson Institute, an educational institute focused on researching and supporting organizations in emerging markets. She writes for the NextBillion blog and has an interest in economic development and clean technology for the world’s poorest citizens.

Investment

It is no surprise that most Africans are welcoming Chinese investment and products. The history of traditional Western aid and investment in Africa is one of a nagging “I correct you because I want what’s best for you” parental-like stronghold over the continent. Tired of “the politically motivated, finger-wagging approach of western governments,” numerous sources quote the lack of political motivation, as well as societal or environmental demands, as one of the primary reasons that Africa is welcoming the Chinese investment.

Sahr Johnny, the Sierra Leonean ambassador in Beijing, was quoted as saying the following regarding China’s projects in Africa:

“The Chinese are doing more than the G8 to make poverty history. If a G8 country proposes a project for Sierra Leone, there is an environmental assessment and evaluation of the human rights and governance situation. The Chinese just come and do it.”

Despite the claims of poverty reduction, the reality is that the aid flowing from China is not designed to alleviate poverty, as opposed to aid from the World Bank and the IMF, which falls under the category of “office of development assistance.” Therefore, it is not subject to social and environmental assessment. The assistance from China is purely aimed at promoting trade and development for China. Therefore, when an issue like the Darfur crisis in Sudan arises, China slyly steps aside and claims that its role is not to police other countries.

While this lack of social and environmental benchmarks may worry some, others praise the fact that much-needed investment has been able to flow freely into Africa. Some of the key areas of Chinese investment, which align with improving the efficiency of resource extraction, are telecommunications, energy, and physical infrastructure. These areas have traditionally been ignored by donors in Africa, who have instead favored social development programs such as education and health.

Although the money is flowing in, Africans have expressed concern regarding whether or not these investments will add long-term value in the sense of technology transfer, education, and opportunities for Africans. At the amazing blog Global Voices, a young Malawian girl questioned, “Am I being idealistic in hoping that they will teach us their unique skills in building and pass the construction mantle back soon after?”

Products and Services for the African Market

Not only has China offered investment in infrastructure, but there has also been an influx of Chinese products in Africa, which has rallied critics from both ends of the spectrum. According to the article “The Strategic Entry of China’s Emerging Multinationals into Africa,”

“…the Chinese multinationals have become adept at identifying so-called ‘market blind spots’, market areas that have essentially been neglected and under-capitalised. These are typically cheaper product lines that may not seem to be money spinners, but which would actually stimulate demand once available.”

Examples of these are Haier’s smaller refrigerators and Lenovo’s C100 laptop, targeting small and medium enterprises. Huawei provided the international market with low-end routers that were 40 per cent cheaper than other products, capturing 3 percent of the global market by 2002.

From that, it sounds as if the Chinese products are giving African people more choice, and filling market gaps. However, there are worries about the safety of the extremely cheap Chinese goods. If an exporter can’t pass FDA inspections, it may still be able to slip its products into African markets.

China as a Model for Development

Lastly, if you look beyond the investments and new products, and consider China a model of development that may provide a tutorial for Africa, it is both exciting and worrisome. A working paper issued by the World Bank in February of this year, titled “Lessons from China for Africa” is focused on the fact that “other developing countries struggling to grow and reduce poverty are naturally interested in what has been the source of this impressive growth and what, if any, lessons other developing countries can take from China.”

For those who are looking solely at economic indicators, China has lifted 300 million people out of poverty with unimaginable speed. China certainly did not achieve this success through a dependence on Western aid and structural adjustments.

Could China do the same for Africa?

The situation that has emerged in China, albeit economically prosperous, may not be the pathway that most would like to imagine for Africa. China may have tackled poverty, but what about inequality? While China has started to embrace the market philosophy from the West, the adoption of the freedoms that are usually associated with a democratic system is another story. You could trip over the number of examples of human rights violations in China, from incarcerated activists to the infamous “great firewall.”

What is happening in Africa right now clearly demonstrates a seemingly simple distinction that we may all sometimes forget to make; poverty and inequality are not one in the same. And, if poverty is addressed, will inequality then follow suit?

* For a more in depth version of this article please visit Grace Augustine is a research associate with the William Davidson Institute, an educational institute focused on researching and supporting organizations in emerging markets. She writes for the NextBillion blog and has an interest in economic development and clean technology for the world’s poorest citizens.