Wed 14 December 2016 Download Pdf

Funding to Civil Society: Degan Ali's Speech at Norad Conference in Oslo

9th December 2016

There is a new term in the humanitarian system that is quickly becoming a hot buzzword, localization.  The word encompasses much but at the same time is very loaded and doesn’t fully articulate what we are trying to achieve.  It is about genuine call for equity and justice in an unjust and unequal aid world where the local organizations followed by the communities and affected people are at the bottom of the pyramid or the last in an expensive supply chain.  How does your one Krone as a tax payer get from Oslo to the person it was intended for in Kenya, Nepal, Philippines, etc.?  That supply chain means that that Krone or Dollar is given most often to a UN agency who then gives it to a northern INGO who sometimes gives it to a sister affiliate or the country office of that INGO who then give that Krone to local NGO who then gives a portion to the affected person or “beneficiary”.   In each step of this chain, a portion of that Krone is taken by each group for its operational and overhead costs.  We estimate that only 20-30% of that Krone is finally given to the affected person in the end.   The local NGO receives the smallest share of the operational costs in this supply chain for doing the ultimate work of delivering the aid to the affected person. 

This supply chain serves several purposes for the donor, who values accountability and reliable financial reporting so that it assures the tax payer that his/her money has been spent wisely.  It serves a purpose for northern NGOs who use this supply chain as a means to demonstrate their capacity and credibility and thus further expand their operations.  The HQs and global presence of northern NGOs has expanded by more than 100% in the past 20-30 years.  

For local NGOs this supply chain serves absolutely no purpose but to reinforce colonial power dynamics.  The local NGO feels that there is 100% risk transference in delivering the aid often in insecure environments with absolutely no real substantive return. They are the frontline workers risking their lives every day to work in war zones where the UN or the northern NGO that was entrusted with the funds cannot work.  If something goes wrong in the delivery process, then their organization is blacklisted and not the UN agency or the northern NGO who received the funding because they claimed to be doing the work of delivering the aid to the affected people. 

The local NGO is often a subcontractor and not a real partner that can contribute in the design of the project.  The local NGO rarely receives a decent overhead rate as it is the funding from these projects that pays for all its operational costs and not their national governments, unlike northern NGOs who are heavily subsidized by their national donor governments.  Some UN agencies and northern NGOs actually give zero overhead to a local NGO while they have taken 15-25% of that Krone or Dollar to fund their operational costs. 

Because these local NGOs also don’t have the funding to pay competitive salaries, their staff that they have invested in over many years is poached by the UN and northern NGOs.  In Nepal, one local NGO had 75% of its staff leave for higher paying jobs at northern NGOs and UN agencies in one month.  This is a series and systematic erosion of capacity that takes place constantly in the global south.  We are told that we don’t have capacity and there is a risk of corruption but our ability to develop capacity is undermined by refusals to pay our operational and overhead expenses and then subsequently hiring our staff. 

Also the capacity that we do have, our intimate knowledge and understanding of the socio-economic and political dynamics of our communities which allows us to design relevant and often innovative programs is not valued.  This knowledge is what allows us to serve aid in insecure conflict settings.  This knowledge is what has spurred innovation such as when Adeso pioneered cash transfer programming in Somalia.  It is this knowledge and intimate understanding of the context that creates quality aid programs and ultimately impact.  But there is no Dollar amount or metrics designed to value this most critical ingredient in the design of impactful and innovative aid programs.  

For the communities, they are rarely ever consulted in the design of the aid package.  Their voices are rarely heard other than a year or more after the aid has been delivered when an external evaluation team visits them.  Sometimes if they are brutally honest and express their negative feedback, then they are blacklisted from receiving further assistance.  I know, this is shocking but this does happen.  They are relegated to the role of passive recipients and basically told to be grateful and be happy. 

Further, in addition to the supply chain, the presence of national governments, local NGOs and affected people in any decision making forums is almost zero.  Decisions around the response in Nepal or Philippines or South Sudan are made by the Inter-agency Standing Committee (IASC) in Geneva or NY.  They are not made in countries with meetings run in local languages led by national governments and in the presence of local NGOs and community groups.  

Now it won’t surprise you to learn that anywhere from .2% to 2% of humanitarian funding goes directly from donors to local NGOs.  In the development sector that % increases slightly to 4%. 

A new global movement has emerged of southern civil society organizations working across the humanitarian and development divide who believe this model of aid delivery perpetuates inequality and is not serving its purpose of lifting the affected person out of poverty or supporting their resilience.  That movement is called NEAR (N.E.A.R.) and this network of NGOs from the global south and east was launched in Istanbul at the World Humanitarian Summit.  It is NEAR that was advocating for 20% of aid to be given directly to local NGOs by 2020.  We not only won that battle with the Grand Bargain commitment but the target increased from 20% to 25%. 

But how do donors meet their 25% commitment? How do we get more funding directly into the hands of southern civil society?

As NEAR we are suggesting one solution which is re-designing the pooled funding models so that we move away from the UN managed pooled and northern driven/managed pooled funds to national pooled funds that are locally branded that are managed by the national NGOs and exclusively for national organizations.  These funds will have different windows for different sectors from a humanitarian window, to a human rights or education or health or environmental justice window.  The various windows will be determined by the context in that particular country.  The fund will do a capacity assessment of a local NGO and allow funding to be disbursed based on the absorption capacity of that NGO.  If the NGO can only absorb $10,000 then the fund will give only that amount but will develop a long term capacity strengthening strategy for that NGO so they can absorb higher and higher amounts over time to be able to reach a $1 million absorption capacity.  When the fund feels that this organization can meet the due diligence standards of northern donors, then at that point it can fully “graduate” from the fund and be directly introduced to the donors.  The fund will create a pool of national partners in country that have the capacity and the credibility to deliver aid. 

Furthermore, the fund is also about galvanizing southern funding in order to achieve a form of aid independence.  The fund will mobilize resources from private sector, high net worth individuals, and the public in that country.  The fund will galvanize southern funding that exists in more and more countries such as India, Philippines, Nigeria, and Kenya.  Over time the funds in such countries will demonstrate that money from in-country could be higher than outside donor funds.  Yes we need to meet the Grand Bargain commitment and move from 2% to 25% to 50% but we also need to demonstrate amongst the south that we are capable of providing aid to our own people ourselves.  Shifting the power is not just about moving money from Oslo or London to Nairobi and Delhi but it is also about shifting resources from Kenya to Kenyan civil society and from India to supporting Indian civil society.   

Moving in this direction also requires a level of sophistication and appetite for risk in a digital/information age.  Nordic NGOs when they started 50 or 60 years ago were a risky partner to invest funding in with weak organizational systems.  It is the investment made by Nordic national governments in their civil society organizations that has allowed these organizations to become professional aid organizations.  It is through multi-year guaranteed partnership frameworks where each NGO can expect to get millions of Krones from their national governments for operational and program expenses.   We in the south have never had this investment nor will we ever have this from our own governments or any other group.  Therefore, donors and tax payers need to be more risk willing as we will not achieve the level of professionalization that northern NGOs have achieved in the past 50 years without some challenges along the way. 

Financing and capacity strengthening go hand and in hand – capacity strengthening cannot happen without funding.  It’s like asking someone to learn how to swim without going into the pool.  Southern NGOs capacity will not grow without direct funding to implement programs and long term investment.

Currently 96% of Norwegian humanitarian funding is tied to Norwegian NGOs, 70% of Danish funding and 55% of Swedish funding.  While Sweden is on the surface performing much better but 45% of its humanitarian funding is going to non Swedish NGOs who are large American or European NGOs and not NGOs from the global south.  So for Nordic countries and in particular Norway, there is a need for a fundamental shift in how aid is delivered and this requires both political will but also public will.

Lastly, I hope that you as a tax payer will be our biggest ally in creating a more just and dignified aid system that will allow us in recipient countries to take power back into our own hands.  An aid system that is focused on quality and impact and not purely on reporting and accountability.  An aid system that creates efficiency so tax payer dollars are spent as close to the communities and affected people as possible. An aid system that creates solidarity between northern tax payers and southern tax payers whereby southern tax payers become visible and counted as DONORS for the first time.   We cannot let this issue stagnate as a buzzword but we must turn rhetoric of localization into a global movement of action for aid justice.  I hope we can count on you as an ally in this movement.

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