What’s inside USAID’s latest localization report?

2024 was a record year for USAID’s localization efforts: The agency steered 11.2% of its eligible funding toward local organizations, up from 9.6% one year prior. In cash terms, spending increased to $1.9 billion, from $1.5 billion in 2023, according to a report released by USAID this week. USAID is still falling short of its ambitious target to get 25% of eligible funding to local organizations by 2025. It’s also some way away from another target — that by 2030, half the agency’s programs would be locally led. USAID has adjusted and readjusted the way it measures this target, but this year, it found that 35% of its programs were led by the communities they serve. Despite the shortfall, the latest upticks represent a tangible move forward for many tracking USAID’s localization efforts. “Over the last three years, they have doubled the amount of funding going directly to local [nongovernmental organizations],” said Justin Fugle, the head of policy at Plan International. “They went from basically 1 billion dollars to basically 2 billion dollars, and that’s the kind of progress you’d like to see.” “I think you’re seeing the results of all the changes USAID has been making over the course of several years — on the policy side, on the procurement side, doing outreach in different languages,” Fugle told Devex. “It looks like it’s all adding up, and that it’s being built on something real.” That includes the creation of WorkwithUSAID.gov, a platform that provides new partners with information on how to work with the agency; the increase of indirect cost recovery rates for new USAID partners, which makes working with the agency more cost-effective; and the expansion of a new translation program, which converts documents into nine different languages during the grantmaking process. As a result, USAID reached nearly 2,300 local and regional partners last year alone, making the agency’s local partner count jump by 48% since 2021. “[The local funding figure] is like a lagging indicator,” Samantha Power told Devex in one of her last interviews as USAID administrator. “The rule changes [USAID has made] lowering the barriers to entry for local partners should pay dividends for generations.” (Almost) halfway there Last year, 1.9 billion USAID dollars went toward local and regional organizations — double the dollar value for 2021. When funding to governments and regional partners are added to that count, the tally goes up to $2.1 billion, representing 12.1% of USAID’s eligible funding. While the agency headlines its latest report with the latter figure, Devex has chosen to focus on the former, as USAID’s past banner figures — such as 2023’s 9.6% — have excluded government-to-government cash. A deeper dive into the data shows that some regions fared better than others. In Africa, USAID achieved its 25% funding target: Regional and local groups took home nearly one-third of USAID’s eligible funding on the continent in 2024, accounting for nearly $1.2 billion alone. That success has long been ascribed to the President’s Emergency Plan for AIDS Relief, or PEPFAR, which has had its own localization mandate since 2018. For years, the U.S. government has been pushing PEPFAR funders to direct 70% of its cash toward local groups — and by 2023, they had reached nearly 60%. In large part, that’s why USAID’s health sector far surpassed any other thematic priorities, with the percentage of local funding toward health around 12.5 times larger than that of humanitarian assistance. There was also a disparity depending on where USAID money was flowing from. The vast majority of local funding comes through USAID missions, even though missions only obligated 55% of the agency’s funding deemed eligible for localization. Washington-based bureaus obligated the other 45%, yet directed less than 5% of that funding toward local and regional groups. “There’s no way you can get to 25% if the Washington bureaus are that low,” said Fugle. It’s nothing new for the agency, as for years, spending has been dominated by USAID’s D.C.-based bureaus. In 2023, missions obligated $8.2 billion while Washington obligated $29.9 billion — a figure three-and-a-half times larger than the former, according to the most recent report from USAID’s bureau of acquisition and assistance. Locally-led leadership Missions also outpaced Washington when it came to the agency’s second target: Ensuring that half of USAID’s programs are locally led by 2030. Last year, 40% of mission-based programs were found to be locally led — a figure that dropped to 30% when it came to those channeled through bureaus based in Washington, D.C. Even so, both figures represented positive progress for Gunjan Veda, the global secretary for the Movement for Community-led Development. “Showing a commitment toward that side of the promise has been the exciting thing for us,” Veda told Devex. “The very fact that so much work has gone into this, and there is an indicator that is attempting to capture some of the changes that need to be made, is definitely a step in the right direction.” Last year, USAID introduced a new metric to better assess whether programs were locally led. It came after the agency realized its first pilot metric had placed the bar too low, counting a program as locally led if they had two of 14 established “good practices” at any point in an initiative’s lifespan. 2024 brought a change in that metric, requiring at least one “good practice” to appear in all three phases of a program — including the activity design, implementation, and monitoring, evaluation and learning — to truly count as locally led. “Sam Power’s [initial commitment] was that 50% of the programming will put communities in the driver’s seat in design, implementation or evaluation of programs, and the ‘or’ was something we always thought was problematic,” said Veda. “It should have been an ‘and.’ And now, the new indicator is an ‘and.’” The agency’s listed good practices include co-creation during the activity design, making local subawards and subcontracts, and conducting evaluations with local experts, among other approaches to bring communities into the fold. Missions utilized almost all best practices at a higher rate than Washington, with the exception of two specific approaches: Providing direct monetary transfers to individuals, households, and microenterprises; and adapting programming based on participant feedback. Following through For Veda, the numbers within the progress report are important. But perhaps even more important is the fact that USAID publishes such reports at all — continuing a track record that’s rare for any bilateral donors outside the United States. “There’s been all this excitement about locally led development. It’s the latest buzz in town. We’ve seen all the commitments, the donor statements, and it’s the theme of every conference,” she added. “And yet, we really haven’t seen any evidence of action. USAID is the only funder that has actually consistently printed their progress reports.” Late last year, Publish What You Fund, or PWYF — an organization that advocates for transparency within the aid sector — looked at the aid agencies of Australia, Canada, the Netherlands, the United Kingdom, and the United States, assessing the publicly available information for each. PWYF found that despite all five of those donors committing to localization, USAID was the only donor to publish the funding targets, methodology, progress reports, and data to back their endorsements up. Even so, USAID’s localization calculations have long been questioned by both PWYF and others watching the charts. USAID’s count includes only funding they deem eligible for localization — a denominator that excludes around half its funding, including money going toward the United Nations. The agency also defines local entities as those headquartered in a target country, a calculation that doesn’t necessarily exclude those some would argue are not truly local — say, Right to Care Zambia or Population Services Kenya, the latter of which spun off of Population Services International more than 10 years ago, and today operates independently of PSI. In 2023, PWYF analyzed USAID’s localization figures with a wider pot of eligible funding and a narrower definition of local, ultimately finding that the agency’s true localization figure may be just over half what was reported. “As we’ve continued to see with localization and USAID, as some obstacles have been removed, another has been revealed behind it,” Fugle told Devex.