How localization will change INGOs

International NGOs will have to change how they operate in response to localization, including potentially shrinking and moving from the role of prime contractor to service provider, according to the chief executives of some of the best known organizations in the United States. In a conversation with Devex, the CEOs of FHI 360, Catholic Relief Services, and Save the Children US said they were comfortable with seeing their balance sheets shrink as more power and more funding flowed to local organizations, and that they wanted to stop using revenue as a metric for success. Janti Soeripto of Save the Children US said revenue currently made up the first slide of many board presentations in the sector. “We have to wean ourselves off this vanity measure,” she said. But making this transition is unlikely to be an easy one for NGOs — as Tessie San Martin from FHI 360 admitted. “What do we think [localization] is going to do to our income statements?” she said. “I honestly think they're going to be lower. And if we’re talking about the impact we can have by working differently, that’s okay. I've had that conversation with the board. But we are all used to — certainly in my organization — thinking about top line growth as a measure of health and impact. That's not the case, but, boy, that's a big culture shift in the organization, from the board on down.” Sean Callahan of CRS said he had had a similar conversation. “If we can assist local partners, I have to tell my board it means that our budget is going to go down a little bit,” he said. “We're not going to get the resources directly, but actually we're reaching more people. And that's success for us. I think, as international organizations, we have to understand what success really is.” “If we no longer come in and be this big prime implementer, what does that mean for the skill set of the organization?” --— Tessie San Martin, CEO, FHI 360 A growing debate The debate around the future role of the INGO has accelerated recently, especially after the U.S. Agency for International Development set ambitious localization targets and travel restrictions during pandemic-related lockdowns proved that much more work could be done locally. “COVID changed everything because it demonstrated that the world did not end because some expert from Washington couldn't get on a plane and impart their wisdom in some other country,” San Martin said. “The wheels didn't fall off this entire system. We figured out that we could deliver differently. Our donors have figured it out. So my view is there's no going back.” Right now, what that transition will look like is not crystal clear. INGOs are still wrestling with their new place in the world order, and how they can make themselves most useful. Soeripto said INGOs had recognized the need to change, but were “consciously incompetent” about how to make it happen. “I think what is good is that we at least recognize our incompetence, or those gaps, which then makes us more focused on how to resolve those,” she said. What is the new purpose of the INGO? San Martin said her organization, and others like it, were talking right now about what their new role should be. She said there were already many situations where FHI 360 had been a prime contractor, running a contract on behalf of USAID or another big donor, but was now a subcontractor, providing support to a local prime. “The result is that several hundred people are now working for someone else,” she said. “So if we no longer come in and be this big prime implementer, what does that mean for the skill set of the organization?” It was a theme San Martin picked up several times in the conversation. “Do we want to be in the market of providing support and compliance services, and procurement advice?” she said later. “We do it, but I don't know that we're the best place to do it. So you have to be thinking about that. What are your core competencies? What are you going to hang on to? It'll be fascinating to see what happens to our industry in the next 20 years.” Nonetheless, there appeared to be plenty of confidence that INGOs still had a role to play. This might include fundraising, advocacy, compliance, and coordination. Callahan talked about the role of the INGO as arbitrator and facilitator. He talked about how there remained a role for organizations that brought innovative technologies, global supply chains, and back office support. He said the funding environment required local organizations to face a daunting package of compliance and audit procedures, and that INGOs would have to continue providing the necessary support to protect them. When it came to funding, there was a sense that change involved both advocacy to get donors to change their behaviors, and systems change internally to get INGOs to change theirs. But again, there was a feeling that INGOs, with their well known brands and existing relationships, needed to be involved to help keep the wheels turning. Soeripto said it was necessary to have knowledge management and global awareness, in order to make a compelling case to the public and legislators. She also talked about the humanitarian impact of the INGO. “I don't think the general public is necessarily too bothered about whether it's Save the Children delivering something, or whether it's a local partner as long as kids are fed and survive,” she said. “So I think we have to also get out of our little bubble and think it's all about us. “But at the same time, it's important to continue to mobilize resources, so that people give to our missions instead of a new building for their alma mater. Last week when I was in Tigray, and subsequently in Turkey, I was struck by our ability to bring in national colleagues who were working all over the world — all of that talent and energy and knowledge of the local situation, but bringing all that global skill set too. So while I expect us to reduce in staffing levels and direct implementation, I think we still have value.”