By Dima M. Toukan

The developed world is gearing up to offer new aid packages to the Middle East, doling out billions of dollars in assistance funds in support of democratic transition in countries like Egypt, Tunisia and Libya. Arab private donors now have a rare opportunity to affect this transition and its outcomes, and to rebuild trust in the private sector as a key driver of economic recovery.

With Egypt’s parliamentary elections scheduled to start today, a populist current is affecting the country’s political environment. Populists are feeding the fears and uncertainties of ordinary people, making unrealistic promises that could damage economic recovery. Widespread allegations of corruption and association with the old regime are tainting the private sector, provoking fears of capital flight.

The Arab donor community, which hails from the private sector, can do much to reverse this trend. Arab donors traditionally provide welfare, and have been unintentionally helping to bail governments out of quandaries by providing assistance that cushion the effects of dire economies and illiberal politics. A narrow definition of the public good, built on religious foundations, did not help push private giving agendas, and a private sector heavily invested in the status quo left most donors reluctant to endorse reform that would jeopardize stability. Instead, donors opted, safely, to fill gaps left by governments.

Recently however, Arab private donors have been moving toward a more institutionalized and strategic model of giving in the region, reflected in the rise of endowed foundations and corporate philanthropy. Even though the fledging sector has not yet learned to punch above its weight, it does possess today three important forms of power: It has the money to carry out projects; the influence in terms of its strategic positioning in different sectors and its closeness to power centers; and beyond providing access to capital, Arab donors and forward-thinking philanthropists bring with them the skills and knowledge gained from participating in mainstream industry.

Populist urges in Arab countries undergoing transition can be resisted through education reform and support fr

om informational and educational organizations, particularly think tanks and universities, that can help frame the public debate on reform. These urges can also be resisted if donors support civic organizations that aim to deepen democracy through civic education and political participation, or that engage Arab youth civically and economically.

To effect change, Arab donors can support organizations doing reform work on the ground or support specific programs within these organizations. They can also take a more proactive approach by designing and spearheading interventions where they see fit. Such interventions can consolidate recent gains and help restore confidence in the private sector as a key partner in reform.

The philanthropy sector, however, remains fragmented. It suffers from many of the challenges common to Arab civil society with respect to capacity needs and accountability. It also suffers from a lack of linkages and databases. More important, donations by Arab high net-worth individuals remain, at best, modest.

However, as donors take stock of ongoing changes, the sector should begin to prioritize long-term actions for social needs, as opposed to quick fixes. The donor sector should build bridges to civil actors working in different sectors and scan the field for lessons learned and best practices. Collaborations and partnerships across countries or fields will help enhance donors’ visibility and increase their impact as donors pool resources and core competencies.

Foreign donors continue to reprogram resources to respond to regional changes. However, one must remember the mixed record of such efforts and how foreign donors have often suffered from branding woes that made Arab non-governmental organizations shun their funding. Egyptians, for example, recently refused a $3 billion International Monetary Fund loan, and American assistance to civil society organizations has created such a controversy in Egypt that even liberal parties have come down against it.

Moreover, bureaucracy has, at times, impeded the quick dispatch of funds for projects meant to provide immediate financial or technical assistance in Arab countries. If freed from government bureaucracies and conspiracy-laden criticisms, Arab donors can help support the quick rolling out of projects that meet constituents’ needs.

At a minimum, and given the current influx of foreign funds, Arab donors should engage international donors, even where officials dictate spending priorities, to track incoming aid, offer guidance on pressing issues, and identify local groups to carry out projects.

Smooth transitions in Tunisia, Egypt and Libya are critical for the whole of the Middle East and North Africa. Arab foundations, individual donors, and corporate philanthropists must be ahead of the curve, probing a new role for civil society that supports these transitions. While change is inevitable in the region, it is hard to project how recent developments will play out. What is certain is that Arab donors can better leverage their influence to shape such change. Whether they have the will or capacity to do so will soon be revealed.

Dima M. Toukan is a Jordan-based consultant at ISIS, a socio-economic development consultancy providing services in the Middle East. She wrote this commentary for THE DAILY STAR.