Five decades of investment in international development and global health have produced critically important gains in quality of life and survival in low-income and emerging middle-income countries. Poverty in the world’s poorest countries has declined, and life expectancy has increased, with the most substantial gains shown in maternal and child survival.
These are largely founded on the substantial investments made by donor countries to strengthen health systems and the global supply chain. However, many of these systems are still inherently weak and vulnerable to disruption.
The 2020 coronavirus pandemic is one such disruption. It notably differs from its most recent predecessor, the Ebola epidemic, in that it has hit countries across the globe within weeks or months rather than being concentrated in a few geographically contiguous African countries.
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This has resulted in the prioritization of an inward-facing response by countries that would traditionally have supported response mobilization in low-income countries. The scale of the pandemic in countries such as the U.S. and U.K. does not negate the critical need for these countries to continue, or even increase, their foreign assistance. Simply put, the needs of LICs will only grow as they see their health systems battered by COVID-19 and global remittances to their populations plummet.
Beyond this, continued foreign assistance is needed to protect the decadeslong investment of donor-country taxpayers. And — perhaps most importantly — it will help LICs combat the spread of the novel coronavirus, thus protecting their global neighbors from a second or third wave of infection.
While the debate over appropriate levels of foreign assistance continues in the global north, the current pandemic has revealed inherent cracks and weaknesses in the operating structure of development aid. For the past few years, many global donors, including the U.S. Agency for International Development and the U.K.’s Department for International Development, have correctly and increasingly adopted a strategy of localization, prioritizing direct investment to national and community-based organizations in the global south.
However, these efforts were only just beginning to get traction when the pandemic arrived, and emerging southern development organizations, as well as their longer-established northern counterparts, have been hit hard by the scale of the health crisis. The shelter-at-home nature of the response has worked in direct opposition to their typical outreach approach, restricting their activities and undermining the domestic fundraising that is critical to building financial resilience.
Compounding the impact of the inevitable restrictions on movement and activity is the long-standing donor practice of failing to cover the true costs of development through limited indirect cost coverage. This has contributed to a “starvation cycle” that has left many organizations weak, with limited financial reserves and their main assets consisting of the capacity and commitment of staff rather than organizational systems, processes, and cultures.
We collectively have a window of opportunity available now that is not likely to last.
—In one not-unlikely scenario, organizations will be forced to turn to their cash reserves, cut activities, and lay off staff, leaving little behind to respond to growing social sector priorities and the eventual need to rebuild. Not only will staff in the global south be affected, but their loss of income will immediately impact extended families and social networks.
However, is the starvation-cycle scenario inevitable, or can we choose to build back better, solidifying our commitment to addressing the well-known and documented operational weaknesses in the development sector model to ensure even more impact post-pandemic?
The international development sector has been moving toward greater alignment for almost two decades. Embracing this opportunity to further the effectiveness of aid would be rational and most likely welcomed by actors from across the sector. A pandemic-inspired undertaking of this nature would be based on the spirit and strength of collective action and would need to include at least three major components:
1. A fully resourced move toward localization, including a capacity-strengthening pooled-funding mechanism and supporting resource hubs
This would advance local development capability and accountability. To this point, global funding mechanisms for development have been highly vertical in nature and recognized too late the importance of systems strengthening. Country-based pool funds have increased the funding share going to local actors by an average of two-thirds since 2015. The need for highly accessible, suitable support to emerging global-south organizations at the community and national levels must be recognized and acted upon if these partners are to successfully take the baton from their northern counterparts.
2. Strengthened international collaboration, structured in new ways and built on new assumptions
This would involve much more rapid knowledge exchange in all directions — south to north and south to south — and be supported through peer-to-peer networks of practitioners. Humentum’s upcoming “OpEx Africa Online” conference is an example of this approach being brought to life, as operations professionals from across Africa share learnings with each other and the world via a supported online platform and accompanying technology.
3. The true harmonization of donor requirements and the reduction of compliance burden
This would make funding accessible to local organizations, speed up the response, and save millions in wasted funds and person-hours. Now is the moment for nongovernmental-organization networks to work together in collective advocacy to challenge the confusing and arcane web of donor rules that, in effect, strangle the development sector and impede progress. Donor agencies can also seize the moment and move forward on two much-needed reforms.
The International Financial Reporting for Non Profit Organizations initiative was launched by Humentum in partnership with the Chartered Institute of Public Finance and Accountancy in July 2019 to develop the first international financial reporting guidance for nonprofits by 2025 and is already supported by the accounting community, funders, and regulators.
The Money Where it Counts initiative, launched in September 2019, has the potential to harmonize project financial reporting to donors and address the starvation cycle by providing a simple and justified approach to indirect costs, which can be accepted by all donors.
We collectively have a window of opportunity available now that is not likely to last. To do well, we need to be well. Translated into the concepts of organizational health and effective foreign assistance, this means using any opening we have to deliberately and thoughtfully improve the way we work and how we hold ourselves accountable.