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Why do donors who support international causes fail to directly fund local civil society organisations?

Photo: © baona/iStock

From rhetoric to reality – how do we move beyond intentions when it comes to funding local CSOs directly?

26 July 2016
Author: Rose Longhurst

Why do donors who support international causes fail to directly fund local civil society organisations, despite championing the benefits of funding locally-led solutions?

In June, we convened a group of more than 50 donors and representatives of civil society to consider why more progress has not been made in the area of direct funding to so-called "southern" CSOs. Despite the efficacy and legitimacy of local actors, the numbers paint a stark picture:

  • Less than 1% of humanitarian aid goes directly into the hands of frontline organisations.
  • Only 26% of foundation funding for Africa goes to organisations with headquarters on the continent.
  • One attendee spoke about the frustrations of a bilateral aid agency that gives 90% of their funding to their domestic organisations.

There is a lot of hand-wringing about the need to change this dynamic. The quest for local ownership is not new; as an agenda, it is one that the sector has been attempting to fulfil since the Paris Agenda for Action. Although changes continue to be made in the way that official aid is spent there seems to have been less progress in the philanthropic sphere, despite the proliferation of strong southern CSOs and the introduction of new technologies that could help smooth progress.

Reasons for this have been detailed elsewhere, but the reality is that donors face as wide a range of barriers to funding local CSOs as local CSOs have in accessing resources. Some are practical: we are acutely aware of the shrinking space for civil society, and how this affects donors as well as the organisations they intend to support. As legislation on "foreign agents" restricts even the most well-resourced donor, it’s no surprise that smaller agencies may experience a "chilling effect" when they hear about the challenges of cross-border philanthropy, and decide against even attempting it.

But while there are several initiatives supporting donors to overcome the technical, legislative or financial barriers, what of the less tangible barriers? Many foundation representations talk of the need to change mindsets. It seems that the biggest barriers to direct funding of local CSOs are in the form of decision-making models that are trapped in the paradigm of what one attendee called "the development industrial complex", or a "neo-colonial approach" to funding. If stakeholders in the so-called "global north" perceive local CSOs to be lacking in capacity, more susceptible to corruption, or simply too hard to engage with, then all the legal changes imaginable will not increase the likelihood of direct funding.

We need to seek solutions to overcome these intangible barriers: inertia from staff who don’t see why they should change their approaches; fear of unknown risks from trustees who worry about their reputation; pressure from current grantees who benefit from the status quo. Yet the transition is already happening. Many donors are already modelling the type of funding that empowers local civil society to be resilient in the face of manifold threats: flexible, long-term, core support for organisations with causes, rather than project with outputs.

A large number funding agencies – often the largest – are currently unable to mimic these partnership models, due to the accountability demands of spending public money which requires tangible and often short-term "results" that resonate with taxpayers. Yet despite this, many are keen to engage with the agenda of locally-led development, and are seeking work-arounds to ensure their funding ends up in the right hands. The revolution from charity to justice won’t happen overnight, but we need to come together to consider how we can evolve thinking.

As power dynamics change and the distinction between "north" and "south" become increasingly redundant, we need to ensure that our funding models keep up:

  • We may not all be participatory grant-makers, but we can scrutinise the power structures within our organisations to ensure that the agenda is being set by those closest to the issues.
  • We may not all be able to set up local offices to build close relationships with partners, but we can ensure that our accountability requirements are proportionate and don’t undermine a CSO’s own learning practices.
  • We may not be able to offer unrestricted funding, but we can ensure that we are flexible where we can be, supporting CSOs to adapt and respond.

Even the most constrained donor can make these incremental steps towards supporting local CSOs to set the agenda, but we have to move beyond intentions into action. As we work towards a world where philanthropy and charity are replaced by solidarity and justice, we must all question whether our attitudes themselves are acting as a barrier to transformational change.

This post was first published on the Alliance Blog. A report of the event, including a video of the initial session, can be downloaded from the link below.

Future Funding Forum report

About the author

Rose Longhurst
Bond

Funding Policy Manager at Bond