A bigger piece of the pie

Illustration: Jonathan Williams

A bigger piece of the pie

Donors pledge to increase direct funding of local and national organizations.

The move to increase direct funding to local humanitarian organizations comes in the wake of growing international attention to the funding imbalance between international and local actors, in spite of the advantages local organizations have in delivering aid in affected communities.

The IFRC’s World Disasters Report 2015, for example, concluded that the current donor regime favours international actors like United Nations (UN) agencies and international non-governmental organizations (NGOs), while leaving national governments and local NGOs with a far smaller piece of the pie.

How much smaller is not entirely clear. The best available estimate of funds channelled directly to local and national humanitarian responders last year was 0.2 per cent, though it is generally agreed that this doesn’t reflect the full picture. Even Development Initiatives, the United Kingdom-based think tank that came up with the figure, says the true percentage of funding these responders actually receive is likely much higher. “It is simply our best estimate of what local and national NGOs receive directly given currently available data,” says Sophia Swithern, head of research and analysis at Development Initiatives.

She explains that the figure, which rises to 0.5 per cent for 2016, only reflects funds reported through the UN’s Financial Tracking Service, to which not all donors and organizations fully report. And it only captures what is given directly, not what comes to local and national organizations indirectly via other partners. “There is a real need for better traceability so that we can see the full picture of what these local NGOs ultimately receive and the length of the transaction chains via which they receive it,” she says.

Some donors nonetheless make their own estimates of how much humanitarian aid they give to local and national organizations. In Sweden, Sida’s own ‘conservative’ figure is 12 per cent, while one evaluation estimates that 6 per cent of Norway’s humanitarian assistance to Syria was implemented by local NGOs. The UK’s Department for International Development agrees that more funds should ultimately go to local and national first responders and it supports the 25 per cent target, but it has no estimate about how much currently goes to local organizations. Neither does Denmark.

Cutting out the middleman?
The reasons for the funding imbalance are many. Strict reporting standards meant to provide basic accountability to taxpayers in donor countries and to prevent corruption or funding of organizations considered as ‘terrorist’, are almost impossible for local organizations with weaker administrative capacity to meet. As a result, donors use international agencies as middlemen, who take a percentage of the aid for administrative costs.

Critics argue this makes aid more expensive and less efficient. But what are the challenges of sending money more directly to local organizations? For donors, doing so would probably entail more agreements with smaller organizations. Some donors in recent years, however, have deliberately sought to shrink the number of recipients in their portfolios mainly to reduce the administrative burden and the fragmentation of aid. The Norwegian Foreign Ministry, for example, has an explicit goal of decreasing the number of agreements with partners from 5,500 to 4,000 over the coming year.

Sida’s Peter Lundberg, meanwhile, says it is out of the question for Sida to channel funds directly to local first responders. Sida funds that go to Red Cross Red Crescent National Societies, for example, are dispersed via the IFRC or the Swedish Red Cross. Other local organizations are funded via the Country-Based Pool Funds run by the UN’s Office for the Coordination of Humanitarian Affairs (OCHA). “There is only one layer between us and the local NGO,” he says, referring to the OCHA funds. In the Pakistan fund, he says, 60–70 per cent of the money goes to local organizations.

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The United Kingdom, meanwhile, is one of three donors supporting the NGO-run START Network that directs almost half of its resources to local and national responders. It also launched a Disasters Emergency Preparedness Programme last year with US$ 53 million in funding to improve the capacity of local and national NGOs. Rather than transfer funds directly, the UK wants to reach the 25 per cent goal by supporting efforts of international NGOs and the UN to pass on more funds to national and local partners.

Likewise, Denmark recognizes the advantages of local organizations and is committed to the overall aim of increasing support for local and national responders. Continued from page 13 But the Danish aid administration lacks the capacity to implement the level of monitoring that direct funding to local groups would demand, says Stephan Schønemann at the Danish Foreign Ministry.

Notwithstanding donors’ limitations, some say the continued heavy reliance on international organizations is simply not tenable. An evaluation of Denmark’s humanitarian aid by the UK-based aid monitoring organization ITAD questions why so much of Denmark’s aid is channelled through UN agencies. These agencies “do not implement directly, are often slower than NGOs at delivering humanitarian assistance and their implementing partners face extremely high transaction costs”, ITAD writes.

Instead, international organizations should serve more as enablers of other people’s work and not fly in with expensive materials and high salaries every time a crisis strikes, says Christina Bennett, a researcher at the Overseas Development Institute, a UK-based policy research organization.

Bennett is the author of a recent report, Time to let go: remaking humanitarian action for the modern era. It calls for the UN and large international NGOs to let go of power and control, and enable national and local aid organizations to lead crisis response. One of the challenges is to raise funds for strengthening the capacity of local organizations.

This is exactly the logic behind the IFRC’s recently launched US$ 50 million National Society Investment Fund, which will raise money specifically for the organizational capacity of National Societies to meet the monitoring and reporting needs of donors and also seek new sources of funds in the local and national arena.

Getting money direct to the scene

When an earthquake measuring 7.8 on the Richter scale struck, central coastline of Ecuador in April, Ecuadorian Red Cross emergency responders were among the first on the scene, searching for survivors, offering first-aid, food, blankets and whatever comfort they could.

With time of the essence, the National Society wasted no time raising the call for support. As an international emergency appeal was launched by the IFRC, the Ecuadorian Red Cross also turned to an online tool that offers a way for people to donate money directly to local relief organizations.

This online fundraising platform also allows local organizations to reach out globally for support through their websites and social media. By mid-July, the effort had raised more than US$660,000 mainly due to donations triggered via social media, especially Twitter, as the Ecuadorian diaspora tweeted and re-tweeted the appeal.

As the humanitarian sector debates ways to bring greater support directly to locally based organizations, this online platform offers an interesting option, particularly in the case of smaller disasters, which don’t gain widespread, international media coverage. When Tropical Storm Erika hit the island of Dominica in the western Caribbean in August 2015, floods and landslides claimed 11 lives and left more than 570 people without homes.

The crisis wasn’t big enough to make international headlines but the need for shelter, health services, water, sanitation and hygiene-promotion was significant. The IFRC launched an emergency appeal and released US$171,000 from its Disaster Relief Emergency Fund but the National Society also turned to this online fundraising platform.

After one week, the Dominica Red Cross Society collected roughly US$11,000 and after one month, US$ 51,000 had been raised. The platform takes a 5 per cent fee for administrative expenses, but for the Dominica Red Cross Society, this is a small price given that they would not have otherwise received any of these donations.

The IFRC has worked with the Swiss Red Cross and the online fundraising platform to boost online fundraising with and by National Societies. Today, 161 National Red Cross and Red Crescent Societies use the system, which accepts donations in more than 80 currencies, via 20 payment methods and operates in 12 languages.

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