Dispute over 'Grand Bargain' localization commitments boils over

A network of NGOs from the “global south” has accused international aid agencies, NGOs and donors of attempting to renege on their commitment to deliver a quarter of all emergency funding through local and national actors by 2020, as a dispute over the terms of last year’s “Grand Bargain” reaches a head.

The criticism came in an open letter from the Network for Empowered Aid Response, a group of local NGOs based across Africa, the Middle East and Asia, that advocate for a locally driven aid system.

It was addressed to the co-conveners of the localization workstream within the Grand Bargain — a landmark package of reforms to emergency aid delivery and financing agreed at the World Humanitarian Summit in Istanbul last May. One of its most significant pledges was to channel at least 25 percent of humanitarian aid through local and national actors by 2020.

The letter was published on the same day the agreement’s 52 signatories gathered in Geneva to discuss progress so far at the first Grand Bargain annual meeting on June 20.

The dispute hinges on the wording of the agreement, which commits to paying at least a quarter of all humanitarian aid funding “as directly as possible” to “local and national responders.”

NEAR says this was always intended to mean that funding should go directly from the donor to the local actor, without passing through an intermediary international NGO or United Nations agency. Any definition that includes an intermediary is against the spirit of the agreement, they say.

But others argue that it is incredibly difficult for donors to give directly — a reality accounted for in the phrasing “as directly as possible.”

The localization agenda

The Grand Bargain’s localization commitment came in response to years of pressure from local and national humanitarian actors and advocates who argue that in-country responders are better placed to design and implement effective programs than their international counterparts.  

Many also question the fairness and efficiency of current funding models, which often involve donors making grants to U.N. agencies and international NGOs who then subcontract to local organizations while also drawing on funding for themselves, according to Anne Ikiara, NEAR’s executive director.

Reflecting these concerns, the 2015 Charter4Change agreement saw 29 international NGOs agree to increase direct funding to southern-based organizations by 20 percent. The localization issue was high on the agenda a year later at the World Humanitarian Summit, leading to the landmark 25 percent target included in the Grand Bargain.

The Grand Bargain also includes other localization commitments, including more flexible and reliable funding to in-country partners with lower bureaucracy requirements, more equitable partnerships between international and national NGOs, and more resources for strengthening local capacity.

Reaching the 25 percent commitment is proving difficult for donors and international actors, however — so much so that the proportion of humanitarian assistance going directly to local and national NGOs decreased from 0.4 percent in 2015 to just 0.3 percent in 2016, according to the new Global Humanitarian Assistance report. When including national governments and the private sector, the figure rises to 2 percent.

Officials say they are as yet unable to track all the money reaching local actors, so the total figure is likely to be higher — but the report is clear that global targets are still a long way off.

“There is a huge gap between where we are now and the 25 percent commitment; we have a very steep hill to climb,” said Anne Street, head of humanitarian policy at the Catholic Agency for Overseas Development and a leading voice within the Charter4Change alliance.  

Deciphering the words

Since the Grand Bargain was launched last year, much time and energy has been put into defining the commitments, and working out how to implement them.

The localization workstream — led by the International Federation of Red Cross and Red Crescent Societies and the Swiss Agency for Development and Cooperation — included a subgroup tasked with identifying definitions of terms such as “local actor,” “direct funding” and “as directly as possible,” in order to measure progress against the 25 percent target.

The group included members of NEAR, as well as donors and independent experts. After surveying more than 450 people and nine months of deliberations, the working group came up with a final set of definitions in April.

According to NEAR’s Ikiara, these definitions stated that only money passed directly from a donor to a local or national actor can be defined as “direct,” and that only money channeled through a pooled fund directly accessed by national and local actors could be classified as being passed “as directly as possible.”

However, Ikiara claims that these definitions were later changed to allow for one intermediary to be introduced into the chain. She and her fellow NGOs only learned of the alterations in an email from the Grand Bargain secretariat on June 13, which Devex has seen.

This is not what in-country partners had understood “as directly as possible” to mean, and it goes against the whole premise of the Grand Bargain, according to Manu Gupta, director of SEEDS India, and a member of NEAR’s leadership council.

“It’s not just about having one intermediary or two — it’s about having one or [none] and trying to draw a compromise by saying ‘one is OK’ is not the way it should be,” he said.

Ikiara agreed, saying “it disregards our views, and will only maintain the status quo. Why did they agree to the Grand Bargain if [they] want to continue doing the same thing?”

Jemilah Mahmood of the IFRC, one of the localization workstream’s two co-conveners to whom the letter is addressed, told Devex they are working on a response to the claims.

A ‘get out clause’ — but a necessary one

CAFOD’s Street — who acted as the subgroup’s co-chair — confirmed the additional intermediary clause was added without consultation with the subgroup, explaining that the IFRC and Swiss localization conveners “came up with this compromise, which adds in the one transaction layer,” she said.

She also said the text is not set in stone, and was added in order to facilitate baseline data collection to determine how much money flows directly and how much flows through one intermediary, and could potentially only last a few years.

Street referred to the phrase “as directly as possible” as “the great get-out clause” within the Grand Bargain — but said it was necessary since it is difficult for donors to give directly.

“Donors like [the United Kingdom’s Department for International Development] would like to give directly but they’ve got newspapers breathing down their neck and calls for cuts in administrative capacity, so they’d rather write one big check to a large U.N. agency or an international NGO than write 100 small checks,” she explained. “It’s a balancing act between the ideal and the possible.”

This view was supported by Jeremy Konyndyk, who was director of USAID’s Office of U.S. Foreign Disaster Assistance during the Grand Bargain discussions.

“Donors have been very clear for years that they don’t have the bandwidth to start giving money out at scale in sub-$1 million chunks,” he said, adding that “you can’t have a $26 billion aid system without a few middle management layers. It’s not practical, and that was never the intent.”

Grand Bargain: Spirit versus letter

Christina Bennett, head of humanitarian policy at the Overseas Development Institute, a U.K.-based think tank, said the difficulties were linked to a “disconnect” between “the letter and the spirit of the Grand Bargain.” Despite their best intentions, the signatories are having a tough time implementing the commitments, she said.

“It was easy for organizations to sign up to the Grand Bargain because it says all the things we aspire to, but in practice it’s been really hard to implement,” she said.

But there is also resistance to change among actors, according to Bennett. As a result, some groups are attempting to “retrofit” their existing activities in order to comply with the localization commitments, but without fundamentally changing the way they work, she said. This is against the “spirit” of the agreement, which was created to reform an antiquated humanitarian system that is “no longer fit for purpose.”

“Tinkering and redefining things to fit existing processes is not what the Grand Bargain had in mind,” she said. A fundamental shift in the way the humanitarian system operates is needed, she said, adding that “NEAR is right to push because otherwise it’s not going to happen.”

Street has similar concerns. “I worry a bit about U.N. agencies and some international NGOs positioning themselves to say they’re doing localization rather than actually doing it,” she said.

NEAR’s director suggested this was in part due to international NGOs’ fears about their place in a changing sector.

For example, another commitment under the Grand Bargain is to increase the proportion of aid given directly to beneficiaries in the form of cash or vouchers. According to the Global Public Policy Institute’s Grand Bargain evaluation report released earlier this month, aid agencies and NGOs have expressed concerns that donors are seeking to use just one contractor to deliver this cash-based aid.

“Between cash-based programming and localization, what is left for the international NGOs and agencies to do?” Ikiara said.

However, Street said such behavior on the part of aid organizations would ultimately work against them.

“Those who don’t adapt will be seen as the dinosaurs of the past and will be bypassed by the donors,” she said, calling on donors to “incentivise their partners” to embrace localization.

The system needs a variety of actors with different strengths

Konyndyk, now at the Center for Global Development, criticized NEAR for its use of “oppositional rhetoric,” which makes it “harder to make progress” on reform. The sector needs both international and local organizations for their different value adds, he said.

“It’s very hard to retain both deep local knowledge and the large scale administrative capacity needed to manage an international organization,” he said.

Mahmood, under secretary general for partnerships at the IFRC and co-convener of the localization workstream, agreed that international organizations have a crucial role to play in the sector and said it was “arrogant” for local and national actors to say they are ready to receive a quarter of the $26 billion humanitarian budget.

Speaking on a localization panel held during the recent U.N. Economic and Social Council meetings, she said: “It would be arrogant for local organizations to feel they are ready to take everything on, and I say that [as having been] part of one myself.”

Gupta disagreed. NEAR is not trying to be oppositional, he said, but wants to reorient the Grand Bargain back to its original purpose of strengthening local action.

“The intention of the Grand Bargain was to capture the spirit of what is local. It’s not just about ‘global north’ versus ‘south;’ it’s about more about local leadership,” he said.

Despite the controversy, there is clear momentum for the localization agenda among the Grand Bargain signatories, according to both Street and Mahmood.

“Change isn’t impossible, but it’s going to be hard,” said Bennett. “It will take a long time and will require a change in mindset and a different way of doing business.”

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