With USAID gone, do foundations still care about localization?

Last year, one of the very top priorities for the aid sector was localization — the transfer of power and resources to organizations based in the country where development work took place. Since then, many of those organizations have seen existential threats to their funding or even their legal right to exist. But foundations are sticking to their localization commitments despite those challenges, a new Council on Foundations, or COF, survey has found. The survey, released during the 80th United Nations General Assembly, polled a small group of global grantmakers, including those that signed onto a donor pledge to advance locally led development in 2022. While much of the development landscape has become unrecognizable in the two years since the pledge was released, the survey confirmed that, at least among its voluntary respondents, the commitment to channel more resources and decision-making power to local players has not wavered. “To us, that's a sign of hope,” Natalie Ross, COF’s vice president of membership, development, and finance, told Devex — an indication that prioritizing locally led development was not a fleeting commitment, but an embedded, long-term strategy. Among nine grantmakers whose collective annual giving amounted to $1.7 billion, and whose combined assets totaled $40 billion, three reported directing more than 90% of their funding to local organizations, while the majority said they give at least 20% directly. Several also said they had made changes to standard practice within their institutions, from translating grant documents into more languages to expanding general operating support, as part of broader efforts to shift power to local partners. Ross noted that the survey is not comprehensive — only 29% of those invited to complete the survey actually did — nor did COF independently verify the self-reported data that was submitted. And in the past year, only two pledge signatories — the Conrad N. Hilton Foundation and the David and Lucile Packard Foundation — have publicly released their targets for localized funding. Even so, the survey is a point of optimism in the months following the dismantling of USAID, which was instrumental in facilitating the 2023 donor pledge. Samantha Power, who served as the agency’s last administrator before its demise, was particularly committed to expanding locally led development, setting the ambitious goal of funneling 25% of its funding directly to local partners; during her tenure, the U.S. was the only one of five major bilateral donors — including Australia, Canada, Netherlands and the U.K. — to publicly release a localization strategy and targets. While USAID’s actual progress toward its goals was halting at best, it provided significant leadership to other funders in the space. Its shuttering created a swirl of uncertainty about the future of locally led development. While small, COF’s survey nevertheless indicated that efforts among funders will continue to persist. “We support local partners because they deliver. Local partners drive solutions in their own countries and communities that are often more effective, efficient, and lasting,” Peter Laugharn, Hilton Foundation’s president and CEO, wrote in a statement to Devex. The Hilton Foundation, along with the Packard Foundation, identified itself as among the nine foundations that participated in the survey. In 2024, both met the 25% commitment originally set by USAID, according to the foundations. Still, cumbersome regulations, both in the U.S. and abroad, remain key obstacles for funders seeking to make good on their localization goals. Stateside, the Internal Revenue Service requires private grantmakers to follow one of two processes — equivalency determination or expenditure responsibility — when making charitable payouts to foreign entities. Each comes with its own set of obligations and requirements, and “both are very time-consuming and expensive,” explained Brian Kastner, COF’s director of engagement. “It’s not like you can just send money to whoever you want overseas.” For recipients, the phenomenon of closing space, in which countries block foreign support for domestic civil society programs, is increasingly problematic. A report released earlier this year from Indiana University found that democratic backsliding and foreign agent laws have also had a chilling effect on cross-border giving. In total, around 40% of the economies studied have what are considered “restrictive” philanthropic environments. The term “localization” has long been derided for its vagueness, with different entities employing different definitions. But Ross argued that given the hurdles of cross-border giving, there are benefits to a more expansive interpretation. In some cases, “locally led” has simply meant allocating more power to stakeholders. “It’s not just about the grant dollar and the grant recipient being more locally led,” she said. “It’s thinking about all of the ways that we allow and center different voices in our processes to help us understand how best we can help communities we want to serve.” The survey’s respondents seemed to agree. While some highlighted the importance of ensuring that unrestricted grants are placed directly in the hands of grassroots organizations, others emphasized the bigger picture. More than just providing support to local groups, “it’s supporting the infrastructure necessary for those groups to thrive,” one respondent wrote. “Working on locally led development in a vacuum is not sufficient — you need to address the systems in place that contribute to the need for locally led development in the first place.”