Why do some countries mostly fund their own NGOs?

If you’re an NGO, and you get a grant from the Belgian government, it probably means you’re Belgian. Belgium, with a population of 11.7 million people and a gross national income of around $630 billion, is the 17th largest donor in the OECD Development Assistance Committee. In 2023, it gave $2.8 billion, according to figures from the Organisation for Economic Co-operation and Development. But the country has a strict set of criteria governing who can apply for that funding, which campaigners say precludes NGOs from the global south getting a look-in. Only accredited NGOs can apply for direct funding — a process which takes place every five years and is valid for 10 years. To get on the list, NGOs must comply with a strict set of criteria, outlined in a Royal Decree including having a demonstrable “assise sociétale,” or societal base, in Belgium. There are currently 88 accredited NGOs. Organizations from the global south can in theory receive funding if they partner with an accredited NGO. But right now, they receive just 1.8% of all civil society funding, according to figures compiled by the #ShiftThePower movement, a coalition of organizations pushing for locally led development. In April, #ShiftThePower published a report, “Too Southern to be Funded,” that examined the funding behaviors of a dozen mostly large donors from 2009 to 2021. It found that over 90% of official development aid to civil society organizations went to development groups in the global north. While the report identified Belgium as one of the worst offenders, it also found that many countries have similar policies. In some cases, there’s an explicit rule saying that only NGOs headquartered in a country can receive funds. In other cases, there are rules and regulations — like having to apply in the native language — which make it prohibitively difficult. ‘Tied aid’ by another name In previous generations, much aid was explicitly labeled as “tied,” where a country in the global south received resources but was expected in exchange to do business with organizations linked to the donor. The authors of “Too Southern to be Funded” say that this kind of tied aid is now rare, but a lot of aid is still effectively tied in practice. Most aid is given away by the 32 members of the Development Assistance Committee, which is made up mostly of North American and European states. Some of these countries have pots of money they will only give to their own NGOs, the report said. More often, aid is theoretically open for anyone to bid for, but in practice is surrounded by rules that hand local organizations an overwhelming advantage. Part of the problem is inertia. Countries want to change, but shifting existing systems and norms has proved hard. “U.K. foreign aid is legally untied,” said Ranil Dissanayake, a senior fellow in the Center for Global Development’s Sustainable Development Finance and Europe programs. “But if you look at who actually wins contracts, a very large part goes to U.K. institutions. They have an advantage in responding to calls for procurement; it’s not always overt discrimination. There are all sorts of rules and regulations and reporting requirements that have to be satisfied before you can sign a contract. These are more burdensome for smaller institutions and also for institutions that have less experience.” Does the system need to change? An open letter released at the same time as the report, and signed by over 200 organizations, said: “Despite rhetoric committing to support Southern leadership and civil society, a significant portion of aid remains unofficially ‘tied,’ disproportionately benefiting CSOs within DAC member countries, while marginalizing civil society in the South.” In theory, the door is open to this change. For the past two decades there has been a growing acceptance among donor countries that too much of their development aid goes to civil society organizations in their own countries, and too little to groups in low- and middle-income nations, thus discriminating against local organizations that may have the greatest understanding of, and capacity to reach, vulnerable populations. Already in 2001, a DAC recommendation called on all donor countries to untie their assistance, in order to “strengthen the ownership and responsibility of partner countries in the development process … [and] to promote aid effectiveness.” Numerous declarations since then have renewed that call. Yet while declarations have proliferated, actual change has been exceedingly slow. Supporters who want change in the aid rules say the fact that most funding is captured by organizations in the global north not only violates repeated pledges to shift more funding to groups in the developing world. It also perpetuates neocolonial power dynamics. But many global north-based NGOs see things differently — and question whether the current system needs to shift at all. “We are in favor of more direct aid to NGOs in the [global] south,” said Raphaël Maldague, director of Acodev, a federation representing 68 development NGOs from the Francophone and German-speaking parts of Belgium. “But it should not be to the disadvantage of NGOs in the [global] north.” Rather, he said, Belgium’s total ODA spending, which only amounts to 0.45% of GNI, should be increased closer to the 0.7% goal set decades ago by the United Nations. Additional funding could go directly to the NGOs in the global south, while maintaining or increasing support to those in Belgium. Moreover, reflecting a position of many global north-based NGOs, Maldague said that the current situation — in which Belgian NGOs receiving official development funding often subcontract with local partner organizations — is a positive arrangement. “The aid is already going in the right direction,” he said. The official donor development agencies, he said, “don’t have the capacity to monitor the NGOs in the South, so it’s not a bad thing that much of the aid goes through Belgian NGOs.” The Swedish question Moves to shift funding to global south NGOs can be fraught. In March, Sweden’s right-wing government announced that at the end of the year it will terminate its funding contracts with the 17 strategic partner organizations, or SPOs, all Swedish, through which most of the country’s NGO support is channeled. (The SPOs in turn partner with hundreds of NGOs in low- and middle-income countries to run projects.) Development organizations outside Sweden, including in the global south, will now be able to bid for Sweden’s funding grants. Swedish development groups decried the decision, saying it was hasty and poorly thought out, and that valuable long-term relationships they have built up with global south NGOs will be lost. Anna Tibblin, secretary general of We Effect, one of Sweden’s 17 SPOs, told Devex “we fear that it is the global south that will lose out — not least in the shorter term [as] Swedish CSOs are forced to rip up agreements with over 1600 organizations in the global south without being able to tell them if they will get a new one. That has real-life consequences to millions of people in need of support.” She added that if Sweden is “able to direct more funding towards a broad array of CSOs in the global south that would be fantastic. But we see a great risk that there will be other global and western actors that win the bids.” Yet many global south organizations applaud Sweden’s decision. Eshban Kwesiga, knowledge weaving and influencing manager at the Global Fund for Community Foundations, which promoted the open letter, said whatever the motivation of Sweden’s right-wing government, its decision “moves us [toward] ending the exclusion of Southern CSOs from international funding systems.” He rejected the concern voiced by some global north NGOs that development organizations in the global south tend to lack the “capacity” to manage large grants and comply with strict reporting requirements. Such warnings, he said, are “a loaded and coded term that speaks to problematic assumptions of trust, fraud, etc., all of which are cleverly used by the international aid system to maintain the status quo to exclude Southern CSOs.” For activists like Kwesiga, the fact that NGOs from the global north often partner with those from the south to run projects is not an adequate solution. This arrangement undercuts the autonomy of the developing country NGOs, the open letter said. “In continuing to maintain a system in which Southern CSOs [civil society organizations] must always look to Northern CSOs for funding,” it said, “the OECD has enabled a system akin to the ‘indirect rule’ found in the colonial histories of various countries.” CGD’s Dissanayake also questions the argument around capacity. “There are lots and lots of very effective implementing organizations in the developing countries, such as BRAC in Bangladesh, that have proven they can handle large sums of money without a whiff of scandal,” he said. “We don’t give money willy-nilly to development partners in the U.K. With good policy and vetting there’s no reason we can’t do the same thing in the developing countries.” One way to do that, said Howard Mollett, head of humanitarian policy at Britain’s Catholic Agency for Overseas Development, is to relax strict requirements and reporting rules established to make sure public funds are not squandered. “It’s about being proportionate and having a tiered approach,” for example, simpler requirements for smaller organizations. He added that donors and international aid groups should make support and strengthening of local NGOs part of their overall strategy. “In Gaza, aid should be delivered in a way that does not lead to poaching of staff for international organizations and supports the good work that local groups have been doing. Big donors should now be planning for how they can support local NGOs in any aid and recovery.” So where now? The two big questions are: Why countries continue to give aid disproportionately to their own NGOs, and whether they should continue to do so. On the one side, many argue that the current systems are effective — a small number of partners who understand both governments and local contexts are able to take money from one, and disburse it in the other. But others see it as problematic and in need of change. They say global south NGOs must be able to compete for funds directly, fairly, and freely, and see global north NGOs as being too focused on protecting their own place in the ecosystem. Amandine Sabourin, a policy officer with the European Centre for Development Policy Management, said some donors are seeking ways to make the direct funding of global south NGOs more feasible. This includes providing capacity building to NGOs in low- and middle-income countries, and promoting the establishment of consortiums where stronger global south NGOs would help oversee funding for smaller and weaker ones. "Localizing aid is the big challenge now — moving from the willingness to decolonize aid to how to structure it." Yet at this point, governments are moving slowly to do so. It remains unclear whether the lack of progress in shifting funding to global south NGOs is due more to difficulties in finding acceptable mechanisms, or a lack of enthusiasm to do so, or both.