Proposes new funding structure to break rich-country NGOs’ grip on resources

Somalian civil society advocate Degan Ali is proposing a new funding structure that addresses the inherent biases in the international humanitarian system where local NGOs do much of the work but receive almost none of the funding. 

Degan Ali, Executive Director of Adeso
Photo: Adeso

Ali, Executive Director of the Kenya-based NGO Adeso and an initiator of the NEAR network of Southern-based NGOs, is in Oslo to speak at Norad’s annual conference.

“Local NGOs on the ground risk their lives every day. We are doing the heavy lifting, 80 per cent of the work, but we’re only getting 0.2 per cent of the funds,” she says in an interview with Development Today.

Donors give many reasons for reserving their funding for international NGOs (INGOs), she says. They have limited administrative capacity to give out smaller grants and would prefer to give grants in the millions of dollars that large organisations can absorb. They also say they don’t know which local NGOs they can trust.

Ali says the bias in the system is also exacerbated by the INGOs themselves which argue that outsiders are in a better position to be objective and neutral in conflict situations.

“I am not saying that we should throw out the humanitarian principles. I am saying that it is very patronising and quite a racist assumption to say that because I am from Somalia, that somehow I cannot be objective and neutral,” she says.

A review of Nordic humanitarian NGO funding done by Development Today earlier this year revealed that while Sida allocates about half of its resources to non-Swedish actors, Norway reserves 96 per cent of these funds for Norwegian NGOs. (See DT 10/16)

The Foreign Ministry in Oslo said at the time that “Norway channels the lion’s share of its humanitarian funds for civil society through Norwegian organisations [because] the character of humanitarian aid requires quick responses and flexibility. Close cooperation, but also a clear division of roles, between the Norwegian authorities and Norwegian NGOs has been an important part of Norway’s humanitarian policy for many years.” 

Ali says the findings are consistent with her experience from the field.

“It doesn’t surprise me. I see the practice on the ground. I see that Norway doesn’t fund anyone but Norwegian NGOs. I don’t see them funding British NGOs, or American NGOs, or Swedish NGOs. Whereas we were actually able to break through and get funding from Sweden.”

The notorious funding imbalance in the international humanitarian system was a central theme of the World Humanitarian Summit in Istanbul this May. There, donors (including Norway and Sweden) and others agreed on a plan to reform the humanitarian system, the Grand Bargain, which included a 25 per cent target for funding local actors.

Ali says that within the current structure, the donors will never reach the 25 per cent.

She is proposing a new structure which, she says, will address the donors’ limitations and help to build up a cadre of Southern-based NGOs that will in a few years have the capacity to deal with Northern donors directly.

Instead of the current UN country pooled funds, which Ali says are too bureaucratic and inflexible to support smaller local actors, she is proposing country pooled funds that are tailored to individual countries’ needs. Adeso currently has ECHO funding to do research on the design of the pooled funding network, and they are looking at pilots around the world. They are planning a humanitarian pilot in Syria, Somalia or South Sudan and one in a more middle-income pilot like Kenya, Bangladesh or Nigeria.

The fiduciary agent for these funds could be an internationally-recognised actor like KPMG or PriceWaterhouseCoopers, Ali says, but the decision making and criteria setting would be done by local NGOs. The funds could provide small grants and capacity building support. By investing in these organisations, over five or ten years, they would be able to meet the due diligence requirements of outside donors and could “graduate” from the fund, making room for others.

Ali’s idea is that funding from donors like DfID, ECHO or Norad would make up only about 20 per cent of the resources for the country pooled funds. The rest would come from Southern national money, diaspora communities and the private sector.

(Read the full interview in the next issue of Development Today.)