Making more flexible funding available to well-managed local actors would make a huge difference to development effectiveness and would change lives on the ground.
That is according to the Stars Foundation’s development director David Crook, who shared his thoughts with Devex on the organization’s latest campaign, Fund the Front Line.
“Local organizations are relied upon to deliver both emergency humanitarian and global development efforts,” but they are “often marginalized from decisions concerning their futures and the futures of the communities they serve,” said Crook.
Through the campaign, supported by the Bill & Melinda Gates Foundation, Charities Aid Foundation and the Pears Foundation, Stars aims to stimulate the debate around enabling effective local organizations to take the lead in the fight against child mortality and poverty in developing countries.
“Once funding is secured … these organizations would be empowered to take the lead on deciding how to allocate the funds raised,” noted Crook.
With fundraising for the pilot phase of the campaign closing on October 28, the initiative hopes to secure donations to support the work of the six most recent recipients of its Stars Impact Awards, hailing from Nigeria, East Timor, Pakistan, the Philippines, Ethiopia and Lebanon.
Separate from the campaign itself, each year the foundation gives $100,000 of unrestricted funding to organizations in Africa, Middle East and Asia-Pacific in a number of different categories, together with a package of consultancy, PR support and media training. A new group of winners will be unveiled in early December.
Going directly to the front lines
Despite efforts from donors to “go local,” the fact is that most funds made available to development implementers end up going to big international organizations.
The Stars Foundation wants to change that and, according to Crook, “play a brokerage role between institutions and local [groups], trying to bring out into the open some complicated development messages about what happens to a dollar when it goes to an iNGO, as opposed to when it goes directly to the front line.”
In line with this vision, the campaign was conceived about a year ago when a small group of donors were brought together to talk with the Impact Awards winners, who said they needed donors to support them by sending money directly and without restrictions.
“It might seem prosaic, but when you sit in a London office, sending $100,000 is meaningful, but how you do that and how you unlock it for your partner makes a big difference,” noted Crook.
To explain how the awards recognize excellence in management rather than just allocating funds based on proposals, he cited the example of last year’s winner from Lebanon, who used more than a third of the funding to unlock United Nations support for a project to assist Syrian refugees.
“That was absolutely fine and within the parameters we set out for the relationship,” said Crook, adding that recipients are free to reposition, upscale, or use the money for things no other donor will pay for, like networking, legal fees, or making a building accessible for persons with disabilities.
Organizations on the front lines, he explained, “sometimes [have] to plug a gap.”
The aim of Fund the Front Line is “for more international donors to fund local actors directly and to consider how they fund in the future. So it’s a ‘double whammy,’ to localize aid and advocate for unrestricted funding,” noted Crook.
The foundation is able to pursue this non-traditional approach to development in giving direct funding to local groups, because it’s a private organization with all of its costs covered.
But can this put them on a collision course with iNGOs or traditional donors?
Crook doesn’t think so, instead highlighting the “growing consensus” from members of the public and institutional donors alike that there are more enabling ways for the donor audience to support local actors and therefore catalyze greater development progress. Indeed, he sees it as an opportunity to reconsider the role of iNGOs so that they don’t conflict what they do with what local partners do, instead using their comparative advantage for networking, fundraising or advocacy.
“In our experience, we see local organizations relied on for short- and long-term responsiveness and sustainability of development interventions on the ground and yet they seem marginalized and misrepresented in policy spaces. So part of the reason for campaign is to use the experience and use what we’ve learned in terms of the traction with the public and international donor audience,” he explained.
A donor-led approach, argued Crook, doesn’t allow for quick responses, decent salaries, appropriate technologies, as local NGOs regularly complain about, arguing that they can’t accomplish a particular goal due to lack of funding or the way the money is disbursed from overseas. This is why Stars wants to transition to a recipient-led scheme.
With the final push towards achieving the Millennium Development Goals and the post-2015 agenda discussions in full swing, it’s also the “right time” to talk about the new system and “assess whether or not it reflects the efficiencies and comparative advantages that it should if we’re going to achieve all we hope to achieve as an industry in the time that we’ve given ourselves.”
How it works
The Stars Foundation’s award criteria process was developed in partnership with consulting firm PriceWaterhouseCoopers back in 2006-07.
Although they are not currently working together on this campaign, Crook said that their input and subsequent analysis by the foundation itself, provided them and other donors with the assurances that they need to give unrestricted funding.
PWC, he explained, “worked with us in a hands on way for the first few years to refine [the] process,” and the foundation is now trying to simplify it further. For the 2014 awards, NGOs will be assessed on their organizational performance according to six main criteria, down from eight last year, making it easier for applicants.
The campaign also involved several smaller nonprofits, which Crook said helps the “brand equity” of these groups, and additional intellectual underpinning for the campaign was provided by the Overseas Development Institute and USAID on the risks of localizing aid. The research shows that those risks — except for a few very fragile conflict states — are no greater when you localize at government, business and NGO levels.
“We’re taking one piece of that, the local organization level. But this finding was particularly heartening, coming at a good time and giving some clout to what we aim to do as we were plotting this campaign,” noted Crook.
As for where the funding will come from, public fundraising will be relatively small, while among the six partners the Gates Foundation plans to pay close attention to what happens when they fund local groups on the ground.
“In some ways the mechanics of it are risky in terms of the NGOs absorbing money successfully, but it’s a principle, a value we want to work hard at to enable local actors, even if it means being a bit more flexible or changing our practices, or recognizing that there will be different barriers or risks along the way,” said Crook.
Join the Devex communityand gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.