Trickle Down Funding from Aid Agencies an Ugly Problem

March 27, 2017; IRIN News

At the World Humanitarian Summit in May of 2016, 14 governments and 20 organizations signed a covenant they called the Grand Bargain, a shared commitment to better serve people in need. Among the tenets of the agreement, the signees—including several United Nations agencies—agreed to work more with local organizations in the communities they serve, passing along a bigger share—at least 25 percent—of the funding they are allocating to local aid groups.

The [25 percent] target is a response to the recognition that a small handful of large UN agencies and international NGOs receive the lion’s share of all international humanitarian funding, leaving local agencies feeling misused, unfairly exposed to risk, and unable to mature institutionally.

Advocates say, however, that little progress has been made on this point.

According to the document, “The Grand Bargain is about harnessing the vast experience and expertise from across the humanitarian ecosystem and bringing it into a realignment which is better prepared for tackling the emergency needs of more than 125 million people.”

But a year later, the signatories of the Grand Bargain are still struggling with three key points: the definition of “local” when it comes to organizations, what should be counted in the 25 percent of aid pledged directly to local groups, and how direct “directly” needs to be. For instance, do pooled funds given to local agencies count? What about subcontractors?

Anne Street, head of humanitarian policy at CAFOD, the official Catholic international development agency for England and Wales, objects to the massaging of numbers and the quibbling over classification “because the objective was not to show you’re already doing it, but to do things differently in order to enable more effective and efficient humanitarian response, which is more locally led.”

Often, large funding agencies, particularly international ones like the World Health Organization or United Nations agencies, do not do a great job of tracking local contractors and building networks of local partners. This often means that the people doing the work on the ground aren’t the ones deciding where the resources go. For instance, according to the Local to Global initiative,

While Syrian humanitarian actors were responsible for delivering 75% of the humanitarian assistance in 2014, they received only 0.3% of the direct and 9.3% of the indirect cash funding available for the overall Syria response. Despite their crucial role, Syrian NGOs struggled to get their most basic costs covered in the sub-contracting and partnership agreements they have with international agencies.

The U.S. Agency for International Development (USAID) provides humanitarian support all over the world, but in many countries, they work with few or no local partners. In Ethiopia, only one of the top 10 regional partners is an NGO based in the region; in Kenya, which is home to the largest African-based health development nonprofit, the only local partner in the top 10 is the Kenyan government. In Pakistan, about half a percent of aid goes to local agencies, while in Malaysia only about a tenth of a percent does. The 2015 Agency Financial Report details expenditures but gives no indication of how much went to organizations in the countries where work was being done.

A 2007 study from Harvard Business School noted that “the strengths of the NGO model also produce corresponding weaknesses in agenda-setting, decision-making, and resource allocation,” which are exactly the areas in which local voices can provide insight. The researchers also noted that “NGOs have achieved increasing political influence: for example, the share of World Bank projects with some degree of “civil society” involvement (encompassing NGO participation) increased from 6 percent in the late 1980s to over 70 percent in 2006.” If billions of dollars are being spent building up society, shouldn’t the people who live in those societies be involved?

NPQ readers may remember that similar issues have been surfacing for some time in disaster relief. Senator Chuck Grassley’s recent investigation of the Red Cross raised questions about the group’s strategy of subcontracting in Haiti through local groups while taking multiple cuts off the top. In that investigation, Grassley objected to what he called obfuscation in accounting that blockaded a real clear view of the disaster spending.

It is up to the decision-makers at NGOs and the UN to find a way to reframe their work to create not just the appearance of local partnerships but actual relationships that help local communities build capacity for self-directed humanitarian aid.—Erin Rubin