House committee passes bill to make local funding easier for USAID

Localization just got a bump in the U.S. Congress, with new legislation attempting to bring more government dollars to local organizations across the world. The Locally Led Development and Humanitarian Response Act was passed by the House Foreign Affairs Committee on March 20, just one day after it was introduced with support from both political parties. Though the bill still needs to clear the U.S. Senate, most seem hopeful it will do so — ultimately making it much easier for the U.S. Agency for International Development to push its localization targets forward. “It’s long overdue to rethink traditional ways of delivering development and humanitarian assistance – and instead look for ways to empower local communities so they can determine their own future,” said U.S. Rep. Sara Jacobs, a Democrat from California and one of the members of Congress who introduced the legislation, in a statement. “[This bill] would support USAID’s efforts to ensure that we’re following the lead of local communities, who know the challenges they’re facing and how to solve them better than we do.” The bill comes three years after USAID announced its localization targets, pledging that 25% of the agency’s eligible funds would be directed toward local entities by 2025, and half of all USAID programs would be locally led by 2030. If accomplished, those ambitions would create a seismic shift for the agency that funnels just $1.6 billion, or 10%, out of its total eligible pot — more than $36 billion — to local organizations, according to the most recent figures released by USAID. Despite USAID’s lofty goals, the agency has struggled to actually move the needle on its targets, in large part because of the way the multibillion-dollar entity operates. USAID traditionally grants massive, complex awards, and getting through the proposal process itself is something many organizations — especially smaller, local entities — are simply not set up to do. This bill would ease some of those challenges, advocates say, authorizing USAID to accept grant applications in non-English languages, provide local entities with time extensions to meet complex reporting requirements, and boost the de-minimis indirect cost rate — an overhead rate for those without a pre-written agreement with the U.S. government — from 10 to 15%, among other changes. “The Locally Led Development and Humanitarian Response Act will push a larger share of funding directly to local leaders, reduce burdens on local partners, and create incentives for USAID to strengthen projects led by local communities,” said Sen. Chris Coons, a Democrat from Delaware, who introduced the bill alongside Jacobs and Sen. Joni Ernst, a Republican from Iowa. On USAID’s side, a spokesperson said they welcomed the support to help the agency advance its localization efforts, along with the opportunity to work with Congress to do so. Many of these additions are not necessarily new. In recent months, the White House has pushed for similar changes in grantmaking across all its federal agencies, including elements like increased language flexibility and a boost to the de-minimis rate. For Walter Kerr, the executive director of the lobbying group Unlock Aid, having these efforts come from both the executive branch and Congress signals a widespread buy-in for change — a sentiment that was supported by a spokesperson at Jacobs’ office. “There is a growing bipartisan sense that our current model of fly-in, fly-out contractors is not working,” Kerr told Devex. “I’m very optimistic that this legislation and the principles that underlie it will become law before the end of this year.” If the bill passes in both chambers, it would also help cement localization within USAID regardless of who is in charge of the agency in the years to come, explained Dave Cronin, a senior policy and legislative specialist at Catholic Relief Services. “This bill shows that Congress is taking ownership of this issue today, and hopefully ownership of this issue for years to come,” Cronin told Devex. “I think it’s a really good sign that in a time as polarized as we’re in, we can find something in the foreign affairs space that both Democrats and Republicans can agree on.”