Money Matters: Boom and bust for the largest INGOs

Last month, two major international agencies — Save the Children International and the International Rescue Committee — announced they were cutting hundreds of their staff. They are two of the biggest players in the international development game, but they are far from alone. Across the sector, organizations are struggling to raise money, keep their staff, and continue their programming. So, what’s going on?

Also in this edition: USAID’s plan to get more cash to local humanitarian groups, a matchmaking plan for world hunger, and how grants are superseding impact investments.

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Boom and bust

For years, humanitarian need has been rising — and until last year, humanitarian spending had kept up with the demand. Organizations expanded to deliver — but in 2023, the total humanitarian funding tracked by the U.N. Office for the Coordination of Humanitarian Affairs plunged by 17%, largely due to reductions by the world’s largest donor: the United States. As a result, organizations have contracted, too.

“In periods of growth, people take their eye off the ball when it comes to cost recovery models,” says Tim Boyes-Watson, who runs Fair Funding Solutions, a consultancy in the U.K. that supports NGOs to make funding sustainable and locally led. “They may get less cost-conscious because they will have more money for overheads, because these are fixed costs whereas program costs are variable.”

But there is widespread dissatisfaction among staff at the two agencies, who question the approach of leadership. Could IRC and Save the Children have taken a different approach?

Read: Major INGOs are cutting jobs. What’s gone wrong? (Pro)

Related: What is the future of the INGO? (Pro)

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Funding activity

We publish tenders, grants, and other funding announcements on our Funding Platform. Here are some of the ones which have been viewed the most in the past 10 days.

USAID has launched a $49 million initiative to increase incomes and improve nutrition in Kenya over the next five years through enhanced food production and distribution.

Belgian development agency Enabel is seeking technical support to strengthen agricultural and rural governance in the Democratic Republic of Congo.

The United Nations has allocated $4 million to support flood relief efforts in Bangladesh.

The African Development Bank is seeking a firm to develop and implement a sustainable public procurement strategy as part of a project to improve digital financial inclusion and competitiveness in Malawi.

The World Bank has approved a $40 million project to help Moldova prepare for and respond to natural disasters and climate-related shocks.

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‘A wider lens’

USAID has published its long-awaited policy on locally led humanitarian assistance. For years, the humanitarian sector has struggled to shift money and decision-making power to local groups, with USAID channeling less than 2% of its humanitarian dollars to such organizations last year. But with this new policy, some are hopeful things could change.

USAID’s latest localization policy comes in the form of five goals: increasing the amount and accessibility of USAID funding for local humanitarian organizations; strengthening the agency’s ability to build humanitarian partnerships; boosting capacity strengthening, sharing, and learning within those partnerships; advocating for local humanitarian leadership; and leveraging humanitarian diplomacy.

The policy feeds into USAID’s larger ambition of steering 25% of its funding toward local organization by 2025 — an ambition that, so far, is far from the finish line.

Read: USAID launches a policy to drive locally led humanitarian response (Pro)

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A ‘matchmaker’ for world hunger

Brazilian President Luiz Inácio Lula da Silva has come up with a plan: to end world hunger, align world resources. To do so, Lula has used Brazil’s presidency of the Group of 20 largest economies to build the Global Alliance Against Hunger and Poverty, a group, which ultimately, will aim to bring public and private financial resources together to serve as a “matchmaker for partnerships,” according to Renato Godinho, a special adviser to Brazil’s Ministry of Social Development and Fight Against Hunger.

Brazilian officials are lobbying countries to join the alliance ahead of the G20 summit, which will take place in Rio de Janeiro in mid November. They’re expecting more than 100 initial member nations, Devex contributor Jorge Valencia writes, all of whom will be able to submit public policies for consideration through the alliance’s “policy basket.”  

So far, Brazil’s idea has been welcomed by those at the very top of the food chain. World Food Programme Executive Director Cindy McCain called on governments to follow Brazil’s example to prioritize ending hunger, while the Gates Foundation commended the country for paving the way.

Read: Inside Brazil’s plan to cut world hunger by 2030

Servants of the super-rich

The new head of Oxfam has some bad news for the development sector: the Sustainable Development Goals were doomed from the start. The reasons for that, Amitabh Behar explains, is because the SDGs failed to address how the global economy is run.

“Governments are essentially becoming aides to the super rich, instead of it being the other way around,” Behar tells my colleague Rob Merrick, admitting he felt even more “doom and gloom” about the likely failure of the SDGs than most people.

Behar rejects the common argument asserted by the United Nations — that the SDGs were derailed by the pandemic, Russia’s war against Ukraine, and other unlikely events. Instead, he feels politicians hold the blame, stating world leaders are “protecting capital and the accumulation of capital” instead of focusing on their own people.

Despite that, Behar did have some hope. At the G20 summit in Brazil, many are looking toward the prospect of a global wealth tax on billionaires — a deal that could steer $250 billion a year toward poverty and climate change. And Behar is optimistic that this agenda could bring change.

Read: SDGs were doomed to fail from the start, new Oxfam chief warns (Pro)

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Are grants getting in the way?

Impact investing has often been defined as doing good while doing well — essentially, investing in companies, entrepreneurs, or startups that can achieve social good while also making money. For years, impact investing promised to transform development, but in a new opinion piece for Devex, University of Oslo researcher Elisabeth Fosseli Olsen argues grants are muddying the water.

Too often, she says, development organizations are handing out free money to early-stage organizations. The problem, she says, is that this forces organizations to show that they can help with the SDGs, rather than that they have an effective business model.

“Instead of stimulating private investment, these programs have failed to mobilize additional private capital for development,” she writes.

Opinion: Development funding is sidelining true impact investing

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