How will the Economic Crisis Change Global Health?
I feel compelled to throw out some slightly disjointed thoughts about the global economic meltdown, especially since the discussion with respect to global health is just beginning. One of the other voices discussing this is Lucy Bernholz, she has a series of fantastic posts on the impact of this downturn on philanthropy and I link to some of her posts below which is must reading.
Global wealth has been destroyed to the tune of 50%; Microsoft and NPR are laying off people for the first time in a long time; Google, Disney, WSJ and the NY Times are laying off and NYC Mayor Bloomberg is suggesting he might have to cut 20,000 city workers; the nation of Iceland has declared bankruptcy and tens of millions have been laid off in China where they are facing a gargantuan commercial real estate bust in Beijing coupled with dwindling job prospects. And if you think the US is in bad shape, Europe is facing a whole lot more pain. The point is that the economic meltdown is having an impact far beyond the usual suspects; this economic crisis is wide and deep and no one knows how long it will last. There is no question that we are entering a fundamentally different world on many levels – dialogue is needed now on what can be done and how this will reshape giving, accountability, fiscal responsibility, priority setting, and of course what counts at the end of the day – health and poverty. The global health community should have discussions on how we can all be more accountable and how we are using funding. We need to be aware of the coming impact on global health funding and beyond.
Pillars of the Global Health Complex
Capital flows and financial support for global health comes from a spectrum of actors (governments, foundations, NGOs, private donations, and many others – see our previous post here on R&D funding flows). These agents are the threads that provide patchwork netting for funding and capital injections through a range of channels, whether that is via medical donations, immunization campaigns, pilot projects, research, education, training programs or remittances. Make no mistake, all of these channels have been or will be impacted. “CGD fellow David Roodman has shown that after each previous financial crisis in a donor country since 1970, the country’s aid declined…“Aid for health is no exception.” But don’t expect governments to announce cuts in foreign assistance; the contraction will be invisible, with disbursements quietly dragged out and a contracting seeing a slowdown…” (Source: Global Health Magazine). With regards to US based foundations, a March 2009 research report found that “of the largest 100 foundations ranked by total giving, only two with announced intentions to grow their funding in 2009–the Gates Foundation and the MacArthur Foundation…six of the largest 100 foundations have so far announced plans to reduce their giving in 2009.” (Source Foundation Center).
I have blogged previously on the University based global health bubble (?) and I would like to see some hard numbers on global health jobs placement, impact on these new programs, whether the programs are halting building construction and staff hiring (as many universities are). Endowments at top universities in the US have taken a beating, so much so that some are considering selling prized art collections. Even one of the world’s richest business schools, with a $1 billion endowment, is cutting back. What will be the impact on schools of public health or all the newly opened schools of global health? Will all this promised global health funding actually materialize? Will students rethink spending tens of thousands on graduate programs in global and public health? Will there be scholarship funding for international fellowships and the development of new ideas and products for global health populations? The university system is of course just one corner of the global health complex but an important one – one that is a foundation for research into neglected diseases or developing human resource capacity in developing countries through education and exchange programs. Steven Davidoff, a professor at the Univ. of Connecticut, has a must read breakdown of why schools like Harvard are cutting back and are facing a worsening economic picture in 2010 and beyond (NY Times, 3/3/09, Harvard, Private Equity and the Education Bubble). In short, below are five obvious trends to watch, by no means is this a comprehensive list.
Impact on pillars of the global health/development sector:
1. Foundations/Philanthropy – many will suffer due to unprecedented (poor) investment returns and reduced donations.
2. Corporate Sector – reduced giving and less leverage to engage in partnerships or development of new products (drugs, etc).
3. Government Aid – some countries rely on massive amounts of aid for even basic things like immunization programs.
4. Remittances – with global job losses this will continue to erode.
5. Universities – endowments have been drastically reduced, classes cut and hiring freezes implemented.
Reorientation to Infrastructure Spending
This crisis is an opportunity to recognize bigger picture global health issues and perhaps with the relatively recent shift in thinking and the push to reshape the global health agenda to emphasize health system infrastructure and workforce development, there may be more interest in funding long range macro level projects (as with some of items included in the US stimulus package for infrastructure). Even small amounts of money for infrastructure can have large impacts, like building bridges to reduce malaria, for example.
And let’s not forget, that one of the best things Cuba did for population health after its economy collapsed was to invest in its health system. Obama has called for massive infrastructure spending and I am wondering if poor economies will be able to do the same. There is some hope for this because low income nations know they must continue to build roads, bridges, and highways in order to continue “development”. Hopefully this will largely be positive for global health efforts (especially if some of that includes public health and medical infrastructure). Perhaps this economic meltdown will be an opportunity to take stock and shift some funding towards long term capacity building.
Reason for Hope
On the positive side, the Gates Foundation is actually increasing their payout, not decreasing it by $300 million as we first discussed a few months ago. Additionally the new center of gravity for global health (Seattle) is going to be adding 2400 global health jobs over the next few years. The World Bank is going to double their health loans and as of now very few ministries of health are reporting they will cut back on health spending (although I am not sure I believe this entirely). There is also some evidence that giving actually rose through the depression, perhaps because people still give to causes that are part of their core belief sets (as opposed to nixing discretionary spending like holidays or eating out).
I believe the pain is going to be severe (with 2010 being worse) and we are already seeing major cracks in the social fabric in various locations. The velocity and violence of this global economic downturn will have serious widespread impacts. Over the past decade the Gates Foundation along with others have brought unprecedented financial resources that helped fuel a boom in certain sectors and innovation in the development of appropriate technology, social ventures and the growth of areas like microfinance, all of which generated tremendous energy and buzz. We have now entered a new era with a drastically different macroeconomic backdrop, yet we are equipped with these new tools (think Kiva) developed during what might be have been a golden age of global health funding/philanthropy in comparison to what might happen over the next decade. A discussion is needed on how to prepare for the worst, how to fund and spend more wisely, how to allocate resources, and how to spot vulnerabilities (e.g. what areas or diseases are especially sensitive to funding flows). I welcome your thoughts and discussion on this.
1. Some nonprofits can’t touch their money, link
2. Global Financial Crisis, Global Issues
3. How to Get Funding for Your Global Health Activity, Change.GlobalHealth.Org (my new favorite blog)
4. Economic crisis fueling social unrest, link
5. Aid Agency Budgets Go Bye-Bye, Change.org
6. Global Health tv: Global Economic Downturn, video
7. Philanthropy in a Global Economic Crisis, link
8. The Economic Crisis: A Generation of Reproductive Health “Horror Stories”, RH Reality Check
9. Migration in light of the economic crisis, NextBillion
10. Hard Times for Health Charities, link
11. WHO on the crisis, WHO
12. The global financial crisis: an acute threat to health, Lancet
13. No relief: Red Cross hit with tough times, ChemistsWithoutBorders
14. World Bank offers dire forecast for world economy, link