As USAID looks to define 'local,' here's where it can start

The U.S. Agency for International Development has prioritized spending more of its aid through local organizations — with Administrator Samantha Power setting the goal of directing 25% of its funding to such groups, up from what she reports is about 6% now.

But a key question that remains is how exactly the agency will define “local.” Devex has reported that the agency is working on a definition as part of its localization push, and the public comment period for USAID’s Local Capacity Development Policy closed last week.

The U.S. government currently uses a few different definitions for local organizations, and advocates say settling on one description could go a long way toward improving clarity, effectively tracking progress on localization goals, and ensuring consistency across agencies and initiatives. USAID, given its size and influence, could help set the standard definition across the U.S. government.

The Modernizing Foreign Assistance Network, a group that advocates for more effective and accountable U.S. foreign assistance, last week called for USAID to “create a clear and consistent definition of ‘local entity.’”

The definition should be applicable to all the agency’s bureaus and initiatives, MFAN said. “Inconsistent definitions of ‘local’ across various USAID initiatives, as well as insufficient visibility of sub-awards, mean it is currently far too complicated to measure funding going either directly or indirectly to local development and humanitarian entities,” the organization said.

MFAN’s campaign has also urged USAID to prevent the category of “locally established partners” from qualifying for funding that is targeted to local organizations.

Locally established partners, as defined under USAID’s New Partnerships Initiative — which works to create funding opportunities so the agency can better engage with new, nontraditional, and local partners — should not be counted as local entities, according to MFAN. “Including the LEP category as local would allow organizations that are actually international to access funding specifically geared towards national- and community-based organizations,” it wrote.

Here are some of the existing definitions of “local” that are used by the U.S. government and international groups:

USAID. The Automated Directives System, which lays out USAID’s policies and procedures, includes a few definitions related to local organizations.

• A “local entity” is defined as an individual, corporation, nonprofit, or other group that is “legally organized under the laws of” a recipient country, has “its principal place of business or operations in” the country, “is majority owned by individuals who are citizens or lawful permanent residents” of the country, and is “managed by a governing body the majority of who are citizens” or residents of the country.

• A “locally established partner” is defined as a “U.S. or international organization that works through locally-led operations and programming models.” It needs to have “maintained continuous operations” in the country for at least five years, at least 50% of the office personnel should be local, and it must maintain a local office, be registered with local authorities, have a local bank account, and have “a portfolio of locally-implemented programs.”

An LEP is also required to have links to the community. If it has a governing body or board of directors, the majority of representatives must be local. This also includes having a “letter of support from a local organization to attest to its work” and “Other criteria that an organization proposes to demonstrate its local roots.”

The New Partnerships Initiative has similar definitions, though proposed federal legislation to codify that initiative drops the requirement for locally established partners to demonstrate links to the community.

PEPFAR. A local partner can be “an individual, a sole proprietorship, or an entity,” according to guidance from the U.S. President's Emergency Plan for AIDS Relief, or PEPFAR. But to be considered a local partner, an applicant has to provide documentation proving that it meets at least one of three criteria.

First, an individual “must be a citizen or lawfully admitted permanent resident of and have his/her principal place of business in the country or region served by the PEPFAR program with which the individual is or may become involved, and a sole proprietorship must be owned by such an individual.”

Second, a corporation or not-for-profit must meet three requirements.

1. It “must be incorporated or legally organized under the laws of, and have its principal place of business in the country served by the PEPFAR program with which the entity is involved,” or it “must exist in the region where the entity’s funded PEPFAR programs are implemented.”

2. It “must be at 75% beneficially owned at the time of application by individuals who are citizens or lawfully admitted permanent residents of that same country,” or “at least 75% of the entity’s staff (senior, mid-level, support) at the time of application must be citizens or lawfully admitted permanent residents of that same country.”

3. And “where an entity has a Board of Directors, at least 51% of the members of the Board must also be citizens or lawfully admitted permanent residents of such country.”

Third, local partners may be “Partner government ministries (e.g. Ministry of Health), sub-units of government ministries, and parastatal organizations in the country served by the PEPFAR program.”

U.S. Government Global Food Security Strategy. Under this strategy, “A partner is considered a local entity” if it meets four criteria.

These are: “(1) [it] is legally organized under the laws of a country that is receiving assistance from the USG [U.S. government]; (2) has its principal place of business or operations in a country receiving assistance from the USG; (3) is majority-owned by individuals who are citizens or lawful permanent residents of a country receiving assistance from the USG; and (4) is managed by a governing body, the majority of whom are citizens or lawful permanent residents of the country receiving assistance from the USG.”

U.S. budget appropriations legislation. In the Consolidated Appropriations Act of 2012 and the Consolidated Appropriations Act of 2014, Congress included a “Local Competition Authority,” allowing the agency to limit competition to local entities “when doing so will result in cost savings, develop local capacity, or enable USAID to initiate an activity in appreciably less time than if competition were not limited.”

The earlier version said a local entity must be either majority owned or managed by citizens or permanent residents of the country receiving assistance, but the 2014 bill required both of these criteria.

Inter-Agency Standing Committee. As part of the “Grand Bargain” — an agreement between some of the largest donors and humanitarian organizations at the 2016 World Humanitarian Summit — the Inter-Agency Standing Committee developed a definition of “local actors”: “Organizations engaged in relief that are headquartered and operating in their own aid recipient country and which are not affiliated to an international NGO.”

It further notes that “A local actor is not considered to be affiliated merely because it is part of a network, confederation or alliance wherein it maintains independent fundraising and governance systems.”

NEAR. The Network for Empowered Aid Response is a group of local and national civil society organizations from the global south focused on “genuine local participation” in development and disaster management.

The “NEAR Definition of Global South Local Organization” applies to community-based organizations, NGOs, civil society organizations, and southern regional or cross-border organizations that are: “Present in locations before, during, and after a crisis”; “Accountable to local laws”; “Accountable to communities where they are based”; and “not internationally affiliated in terms of branding, governance, or financing (that results from that affiliation).”