How philanthropy can help catalyze the localization movement

Even as the aid sector makes commitments to localization — driving more resources toward organizations working in closest proximity to development challenges — progress has been slow. Most community-based organizations continue to be sidelined from funding, with less than 1% of official development assistance going directly to local organizations in the global south. The philanthropy sector represents a relatively small amount of international development funding compared to official development assistance. But philanthropic funders — from high net-worth individuals to large charitable foundations — are in a unique position to accelerate this shift toward localization. Experts at the recent Global Philanthropy Forum in San Francisco, California, discussed how they might collectively address some of the barriers that stand in the way of localizing aid. Decolonizing philanthropy Degan Ali, the executive director of Adeso, a Kenya-based international development and humanitarian organization with the stated mission of working to change the way aid is delivered, appears on the cover of a recent issue of Social Investor. She appreciated that the Chandler Foundation, the funder behind the social impact magazine, wanted to put “a global south hijabi” on the cover, she said. “One of philanthropy’s strategic advantages is that many foundations are set up to exist in perpetuity. … This allows philanthropists to invest for the long haul in areas such as the greater localization of funding.” --— Peter Laugharn, president and CEO, Conrad N. Hilton Foundation. But when the foundation asked whether Ali could go to a studio for photos, she declined. “I said no, I want to go to Somalia, and I want you to hire African photographers in my space,” Ali said on a panel called Rethinking Aid: Investing in Local Knowledge. The foundation agreed, in an interaction that she said serves as a small but powerful case study of what decolonizing philanthropy looks like in action. “Decolonization is not just about moving money, but it’s about really transforming some things that seem so simple and just basic, like taking pictures,” Ali said. In that issue, Ali outlines nine ways to “decolonize” philanthropy. She advises funders to skip onerous requests for proposals, support the kinds of infrastructure needed for localization to happen, and provide flexible funding. The $5 million grant MacKenzie Scott gifted Adeso, which the organization used to create an endowment, is an example of funding that is “significant and transformative,” which local organizations can use to build stability and financial independence, she noted. When funders take these steps, they can enable civil society organizations to stop serving as subcontractors to international NGOs, and return to their mandates advocating for communities, tackling societal challenges, and holding governments accountable, Ali said at the event. Reassessing risk At the philanthropy forum, Ali’s nine points were displayed on a screen for participants in a working group on supporting local collective action, which featured Don Steinberg, who is leading the U.S. Agency for International Development Administrator’s localization efforts as an expert adviser to USAID Administrator Samantha Power. Although the scale of philanthropic investing pales in comparison to bilateral donors such as USAID, philanthropy can be more agile in responding quickly and strategically to emerging needs, said Peter Laugharn, president and CEO of the Conrad N. Hilton Foundation. “One of philanthropy’s strategic advantages is that many foundations are set up to exist in perpetuity,” he explained in an email to Devex afterward. “This allows philanthropists to invest for the long haul in areas such as the greater localization of funding that require sustained commitment to produce meaningful change.” The Hilton Foundation, which is trying to localize its giving, is sharing its learnings with other funders, and asking them to join the localization agenda. “I think we should all take a step back and reassess our perceptions of ‘risk,’” Laugharn said. “We risk far more by not moving more funding to local organizations, which can increase the impact of our investments than we assume by doing so — and there are many practical ways to mitigate this risk.” Perceived risk is a major barrier to faster progress toward localization. But why should funders see working with local partners as riskier than working with large international NGOs based thousands of miles away? Participants in the working group discussed how this perception of local partners as “risky” may be rooted in racism. Funders seeking to localize their funding could grant money directly to community-based organizations, or work with local intermediaries to issue grants, said Courtenay Cabot Venton, founder and CEO of The Share Trust, which supports women's self-help groups globally. “It’s highly inefficient, and still a colonialist mindset, to say in the West we determine which organizations get our grants,” she said. Shifting 25% of official development assistance — which is what USAID has committed to directing to local partners — from international to local intermediaries would deliver programming that is 32% more cost-efficient, according to a new study from The Share Trust, which breaks down the cost savings that would otherwise go to inflated international overhead and salary costs. “The key is those local intermediaries have to be democratically run and governed,” said Cabot Venton, who also started the Local Coalition Accelerator, an initiative to support local and national organizations to access the bilateral and multilateral financing that is channeled through the United Nations or international NGOs. “Otherwise, you shift capital to elites in Nairobi versus New York, which is better, but only marginally better.” Changing the status quo Ali noted that there are still some valid reasons why funders cannot support community-based organizations in the global south. For example, some are concerned that as their strategies change, and with it their grant-making, local groups will not be able to absorb those shocks. But as the philanthropic sector sees more mechanisms to direct their dollars toward local groups, funders are losing those excuses. “Sustaining the status quo hasn’t gotten us the impact we wanted,” Ali said. “Let’s try another way. Let’s move the money proximately. And then we can say was it worth the risk.” Adeso is developing several tools to tackle the barriers funders have in driving their dollars toward local groups. For example, it’s launching CORE, a social enterprise that will provide local organizations with support for back-end functions to meet donor requirements, including procurement, finance, and human resources. This addresses the challenges that large donors such as USAID face in finding locally based groups that can absorb the kinds of big dollars they need to spend. The hope is that organizations can go from being assessed as high risk to low risk within a year in order to absorb funding from larger donors. “We’re finally seeing the resources coming in to build this infrastructure,” Ali told Devex. Now, with these mechanisms in place, the key is to hold funders accountable for their rhetoric, she said. “If you build infrastructure and they don’t come, then you know whether they were serious or not,” she said. Update, Nov. 18, 2022: This article has been updated to reflect correct attribution to a statement by Peter Laugharn.