Why businesses must step up to sustain global civil society

The impacts of the US government’s aid freeze and reorganization cannot be overstated. The economic shock is likely to exceed 1% gross national income (GNI) in 23 economies, with eight losing 3% or more of GNI in 2025. The consequences for the social sector is arguably even greater.

Data from hundreds of private and civil society organizations worldwide that we have collected and centralized on the Global Aid Freeze website indicates that across sectors, a majority will not survive another three months. Entire civic ecosystems could collapse with serious consequences for lives, livelihoods and stability in many parts of the world.

Many companies have been affected immediately – aid projects require physical inputs, expertise and coordination from the private sector, who have now lost billions of dollars directly. But all of this has really serious consequences for business more broadly.

Civil society supports healthy economic and political environments in which the private sector can operate. It bolsters the rule of law, generates skills and knowledge that are key inputs to development and supports innovation that can revolutionize business practices.

Civic organizations provide governance oversight to ensure a level playing field for economic activities, grow community engagement efforts that bolster resilience, and generate new tech-driven solutions to critical contracting or procurement issues. A large collapse of civil society is a massive problem for citizens and the private sector alike.

We are seeing a fundamental realignment of international development efforts, which was underway in any case but which the current US administration has rapidly accelerated through foreign aid reorganization.

We now need to reimagine what the social sector looks like and businesses must step in to preserve the social, human and economic capital that the sector represents.

In the short term, corporate actors have a key role in understanding which critical parts of the social ecosystem are at risk – particularly those they rely on – and exploring ways to preserve digital, physical and intellectual assets.

If you are a mining company, contact community organizations in the concession areas where you have been given extraction rights to explore continuing dialogue.

Technology companies can help bridge support for civil society organizations engaged in tech policy dialogues and research.

Are you a financial institution? Innovate to create rapid partnerships with civil society to support blended finance options for public goods.

Corporate decision-makers should now deliver more than their planned corporate social responsibility efforts or economic, social and governance priorities to prop up civil society before it disappears. This task has never been more urgent.

As aid budgets shrink everywhere, we also need to think in the medium to long term about the role the private sector can play in transforming development in partnership with civil society, governments and multilateral institutions.

In the broadest sense, we need a “people and planet” fund of $2.4-3 trillion annually by 2030 that provides opportunities for the private sector to step up and answer the call for financing to support poverty reduction, climate resilience and greater equity.

This plan could incorporate tried and tested approaches. For example, supporting micro-finance investment funds, which have a long track record of crowding private capital into small businesses. Or financing trusts that can bring businesses into revolving funds to mitigate big challenges such as climate change.

Impact investment funds that can support companies generating social and environmental returns are another option, as are creative efforts to harness remittances to support civil society through mechanisms such as civic diaspora bonds.

The multilateral system will also play a central role. For example, the World Bank is currently setting up a new Civil Society and Social Innovation Alliance facility that could lead on mobilizing institutional investors and impact capital for the social sector, including through lower-risk AAA-rated social bonds.

In terms of opening up financing for development, performance-based contracts, results-based financing and debt swaps or buy-downs to reduce interest payments on loans offer real promise.

Rather than charity, these efforts are in the interests of the private sector and inclusive market-building. Consumer spending in Africa is set to hit $6.7 billion by 2030. Global gross domestic product could increase by $12 trillion by advancing gender equality.

Measuring the costs of corruption is notoriously difficult – but there is little doubt that concerted effort from the private sector to improve transparency and integrity could help redirect trillions of dollars to economic development.

None of this is possible without civil society partners who can hold space for critical discussions, push those in power to be more responsible and find new ways to solve intractable problems that the private sector cannot do on its own.

The global civic ecosystem is at risk and corporations can build bridges to support it until a new equilibrium emerges. Undoubtedly, much of the non-profit and charity worlds have become too dependent on aid funds; however, the sector is simply too big to fail.