Are INGOs ready to fundraise responsibly and achieve locally-led development?
24 November 2021
Locally-led development is central to achieving the sustainable development goals (SDGs).
Movements like #shiftthepower and Bond’s sector catalyst project have gathered pace over the last few years. The recent announcement by the Administrator of the United States Agency for International Development, Samantha Power, that USAID would commit 25% of its funding to local partners over the next four years is a significant move forward by a key funder. These are all important steps towards achieving locally-led development, but there is still much more to be done, including by INGOs. INGOs need to transform how they operate, particularly how they fundraise.
The fundraising environment is increasingly challenging. The pressure to meet fundraising targets is resulting in many INGOs signing themselves, along with their local partners, up for stringent grant funding requirements. Meanwhile, traditional grant funding tends to maintain existing power relations between INGOs and local communities, so that northern INGOs remain in a position of power, holding the purse strings to projects, acting as an intermediary for funders and responsible for reviewing reporting and due diligence.
There is the very legitimate question as to whether largely white fundraising teams based in higher-income countries can truly understand and reflect the realities of people living in lower and middle-income countries. The continued use of images and language in public fundraising materials that perpetuate racial stereotypes, particularly during humanitarian appeals, suggests they cannot.
At Bond, we’ve been discussing these challenges and asking ourselves how we, as a sector, can make sure that we fundraise in ways that support locally-led development. Earlier this month, we convened a group of UK and international fundraisers to understand the challenges faced by INGOs and local partners who are trying to move towards locally-led development. We wanted to find out how we can better support them through this transformation.
What we learnt from the discussions
Participants were more focused on addressing how funders need to change, to better support locally-led development, rather than what INGOs themselves can do to support this shift. The discussion included participants from lower-income countries, but the majority were from INGOs based in higher-income countries who struggled to understand their role within the system. They highlighted the following factors as some of the key challenges faced in achieving the locally-led agenda:
- Limited timelines for calls to proposals,
- Reporting requirements,
- Project-based funding,
- Due diligence and risk.
While there’s no doubt that the policies of funders pose many challenges, there is still a great deal that INGOs can do. INGOs need to recognise their own potential and position within the system. Together they have the power to push for change, instead of waiting for funders to change how they work.
Another point that was raised was how the fundraising environment has been affected by cuts to the UK Aid budget. There is now greater competition and greater pressure for fundraisers to raise money. Faced with the difficulty of meeting their targets, fundraisers tend to think short-term, from year to year, and don’t take risks.
Having the confidence to say no to institutional funding is difficult and requires senior management and trustees to be onboard. Many of the participants said they didn’t think their trustees understood how their fundraising strategy impacted locally-led development. There was clearly a demand for more senior-level engagement that would allow fundraisers to help set the agenda and fundraising strategy.
Lastly, we learned that most of the participants felt they were further along on their responsible fundraising journey than their organisations were. Many of the participants, as individuals, said they’d done considerable thinking about locally-led development and funding. Whereas their organisations were still motivated solely by securing funds, rather than taking a bold stance to fundraise responsibly. This again signalled the importance of leadership buy-in, not only to achieve responsible fundraising, but also to ensure organisational cohesion. Senior leaders of organisations must recognise that they need to change, otherwise they run the risk of their staff becoming disillusioned.
What was not discussed
Surprisingly, or unsurprisingly, the lack of diversity in fundraising teams didn’t come up in the discussions. Neither did the issue of fair cost recovery, i.e. making sure that a local partner's overheads/core costs are covered, nobody raised the fact that giving real cost recovery is one of the fairest ways to ensure local partners recover their costs. Similarly, we wrongly assumed that new business models, such as enterprise-led development, would come up in the discussion as a way to challenge power.
What happens next?
Responsible fundraising, to aid the shift towards locally lead development, has proved to be a popular topic with fundraisers. Participants in our sessions demonstrated a keenness to discuss further and learn from others. They were particularly interested in understanding the challenges from the perspective of local civil society, within the funding relationship. They also wanted to know who the ‘good’ funders were; the ones who promoted locally-led development in their funding calls for proposals so that they could make better decisions. And lastly, they wanted to discuss the role that INGOs can play in bridging the relationship with donors and civil society.
We need to bring more voices into the discussion on responsible fundraising, especially those from lower-income countries. We don’t have all the answers, but it’s clear to see that as a sector we’re on a journey to fundraise more responsibly.
Bond is planning further sessions on responsible fundraising in 2022, so there’ll be plenty more opportunities to meet and discuss. If you’re interested in learning more about our work on influencing funders to adopt funding policies that support locally-led development, then please email [email protected]. You can also join our working group on changing donor policy and practice. You may also want to join the Bond funding group to keep up to date with all our work on funding.