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The Business of Giving

Exploring philanthropy, non-profits and socially motivated business, from the Gates Foundation to your donation. A fresh look at the economy of good intentions.

November 30, 2010 at 7:03 PM

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Global health spending under pressure of U.S. debt

Posted by Kristi Heim

It's a glass half empty or half full kind of question.

On the one hand, the worst economic crisis in recent memory hasn't quelled generous government and private donors from giving record amounts to improve global health.

On the other hand, that growth in funding is beginning to taper off, cut by more than half between 2008 and 2010.

After jumping 375 percent over the last 20 years, from $5.66 billion to $26.87 billion, the growth slowed to just 6 percent in the last two years.

That trend provides a glimpse of what the future could hold, says Christopher Murray, director of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington. The institute analyzed total health funding from aid agencies and governments in 23 countries, institutions such as the World Health Organization, and hundreds of nonprofit groups and charities and released this report today on the findings.

"Everyone in the global health community is worried about how the economic crisis is going to affect giving," he said.

The main channels of funding are the Global Fund to Fight AIDS, Tuberculosis and Malaria, the Global Alliance for Vaccines and Immunization (GAVI), and the governments of the United States and the United Kingdom.

The U.S. government is the largest single contributor of global health funding, much of which is channeled through nonprofits or non-governmental organizations (NGOs).

globalhealthfinance.jpg

Beginning in 2004, the U.S. government and private donors increased spending by double digits each year to a total of almost $12 billion in 2008, about half of all health assistance to developing countries, according to the report.

"What the U.S. government does, as well as philanthropy and NGOs, makes a huge difference to the trajectory," Murray said.

It also makes a big difference in places such as Seattle, where global health research and other programs have grown, fueled largely by the Gates Foundation but also government agencies such as USAID. (The Gates Foundation's chunk of the funding is pictured above in dark green, abbreviated as BMGF.)

Private donors, including individuals and foundations, gave $1.16 billion in cash to NGOs in 2008. Corporations also donated almost $600 million.

The money from private donors dropped by 33 percent in the last two years, while corporate donations fell by 59 percent.

As their donations and investments shrank, funding through U.S. charities to health programs overseas dropped from a high of $3.1 billion in 2008 to $2.16 billion this year.

A recovery in the stock market and increase in the value of foundation investments will help bring back private money into global health, Murray said.

But with mounting debt, pressure to reduce budgets in the U.S. and other donor countries will be intense.

"Even in a scenario where we see a reasonably strong economic recovery, there's going to be pressure for a number of years on governments to reduce their debt to GDP ratio," Murray said.

Thomas Tighe, chief executive of Direct Relief International, said it remains to be seen how the enhanced pressure to reduce deficit spending in the U.S. will affect global health financing.

Tighe, who served as chief of staff and chief operating officer of the Peace Corps from
1995 to 2000, said one "clear imperative of flattening of global health expenditures is an increasing premium on execution with existing resources."

In other words, he said, "if the past 10 years have been a global attempt to "do more with more" to address pressing health challenges in developing countries, the next several may be "do more with the same."

What's missing from the IMHE report "is the equally important concept of what the expenditures have bought and whether there has been good health value for the dollars spent," he added.

HIV/AIDS receives the most funding of any health area, according to the study. Funding for maternal, newborn, and child health received about half as much as HIV/AIDS through 2008.

But many competing needs vie for support, and balancing all of them is becoming harder.

"More than 300,000 mothers still die every year, and more than 7 million children die before the age of 5," Murray said.

The intensified focus on maternal, newborn, and child health, chronic diseases like cancer and heart disease, and support for health infrastructure "is likely to magnify the competition for limited resources and exacerbate the effects of any downturn in aid," the report said.


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