"All charities in the area depend on businessmen and companies for funding. If this sector is affected by a fall in financial markets, liquidity will be reduced and real asset values will go down, affecting the amount of money it might donate to NGOs [non-governmental organisations; in the region]," Abdulwahab Noorwali of the Jeddah-based World Assembly of Muslim Youth (WAMY) told IRIN.
He said public donations would also be affected. "There are two reasons for this: the first is inflation and living costs [in the region] which have increased 25-30 percent over the past 18 months. The second is that many people in the area trade in stocks and shares and any fall in the markets will reduce their donations," he said.
Noorwali said it was important for regional NGOs to start thinking about the repercussions of the international financial crisis, re-evaluate their policies and plan long-term strategies. "They should look for sustainable sources of funds rather than depend on timely short-term ones," he said.
Noorwali said many NGOs would be cutting back the number of staff and/or projects, but governments should support these organisations and "ensure the continuity of their humanitarian projects", he said, adding that Arab governments provided minimal financial support to regional NGOs. "Support is confined mainly to logistics."
Some humanitarians in the Arab world fear the credit crunch will increase the cost of humanitarian projects: "Prices of building materials will go up as a result of the crisis," said Asim al-Khalifa, a Dubai-based regional manager of Waqf Foundation (Holland).
Other NGOs have different views. Ibrahim Hassaballah, director of the Qatar-based International Islamic Charitable Organisation (IICO), said he believed regional NGOs would only be minimally affected by the global credit crunch. "Donations come from 'zakat' (alms) will not be affected because they are obligatory."
In Iraq, Basil al-Azawi, head of the Baghdad-based Commission for Civil Society Enterprises, an umbrella group of over 1,000 NGOs, told IRIN on 16 October that the country was "not directly linked to the global financial crisis. But the crisis could affect us indirectly as a result to falling oil prices."
"We receive very little global financial support. Most of it is lost to corruption in Iraq so we will not feel such a difference," he added.
"The biggest concern for us now is the impact of the situation on the vulnerable [in the developing countries]," Abdul Aziz Muhammad Arrukban, special humanitarian envoy of the UN Secretary-General, told IRIN. "Many countries have pledged large amounts of money and we hope to see these pledges turn into cash."