A few weeks ago, I stumbled onto a post on Chris Blattman’s website provocatively titled “Is this the most effective development program in history?” In it, he shares the story of how, in 2011, the Nigerian government handed out 60 million USD to 1,200 Nigerians—about 50,000 USD each—to help them create, run and/or scale a business. According to that post, “Three years later there are hundreds more new companies, generating tons of profit, and employing about 7,000 new people.” Not bad for a reasonably modest amount of money.
Currently, only about 1% of humanitarian aid goes directly to local actors in the global south. Tweet This Quote
Although I see this as more of an investment program rather than a development initiative, I come to similar conclusions as Chris. What if we channeled more funds to the middle and the bottom, and let local market forces and entrepreneurialism take over?
More recently, I read another post that posed a similar question, this time on the Guardian Global Development Professionals Network. In “Five reasons funding should go directly to local NGOs,” Jennifer Lentfer—creator of how-matters.org and director of communications at International Development Exchange—argues that we should channel more funding directly to local innovators, NGOs and social entrepreneurs on the ground in developing countries. To put things in context, only about 1% of humanitarian aid goes directly to local actors in the global south at the moment. The rest goes through what Dhananjayan Sriskandarajah calls “fundermediaries”—larger global development players who then “trickle” it down (or so the theory goes).
Local organizations are part of the social fabric of the communities they serve and more vested in developing solutions. Tweet This Quote
Lentfer’s call for more local funding is based on five key arguments:
- While outsiders struggle with concepts such as “community participation” and “local empowerment,” there are often “dedicated and embedded local partners who are working hard to understand and address their own problems” who do get it.
- Local organizations are part of the social fabric of the local communities they serve. Thus, they are often more vested in developing meaningful, sustainable, and long-lasting solutions.
- The larger the (outside) institutions, the more funds they need to divert to their own internal operational budgets to sustain their staff and pay for offices, among other costs.
- Most local institutions—free from the burden of annual reports, log frames and three-year funding models—have greater staying power than outside, larger institutions that come and go based on a range of external factors.
- There is proof, albeit in low quantities (because of the lack of direct funding at this level) that “grassroots grantees get results.”
Local institutions have greater staying power than outside, larger institutions that come and go. Tweet This Quote
In a separate post, Dhananjayan Sriskandarajah shares five excuses donors give for not funding local NGOs directly. Among these are that local NGOs don’t have the expertise or capacity to fill in all the forms; it is too expensive to administer the smaller grant amounts suitable for smaller organizations; that funds need to be channelled through “trusted partners” to manage risk; money laundering and anti-terror rules make it hard to give to “non-trusted partners”; and there’s pressure for funds to be put through organizations in their home country (organizations more often than not also in the global north).
I’ve been arguing for more direct support for local innovators, social actors and NGOs for well over a decade, so each of these posts resonated strongly. It has also been a central part of my argument that we build tools that local organizations can take and use on their own terms.
We must build tools that local organizations can take and use on their own terms. Tweet This Quote
Of course, not all international NGOs are the same, and not all grassroots are the same, either. But if there’s evidence that in certain circumstances local players have a better chance of achieving a desired impact, often for less money, then it’s right and proper we investigate further.
So, I propose a new “Development Challenge,” modeled on the same types of competition where investors start with the same amount of money and aim to turn it into as much as they can within a fixed period of time. It would need to be a fairly long-term experiment, and it could go something along the lines of:
- Identify half-a-dozen international “fundermentaries” (organizations based outside of the local community they aspire to help).
- Identify half-a-dozen grassroots NGOs (organizations working “from within”).
- Determine a modest starting budget—the same amount for each organization.
- Allow them to dictate where and how they spend the money (via a short proposal).
- Using an independent evaluator, take some baseline data based on the proposals.
- Disburse the funds.
- Come back in a predetermined amount of time (at least three years).
- Using an independent evaluator, carry out some monitoring and evaluation to assess results.
In many circumstances, local players have a better chance of achieving a desired impact, often for less money. Tweet This Quote
Which projects are still running? What impact have they had? What changes have they helped facilitate? How sustainable are they? What changes have there been in the community? How did the approaches of the local organizations differ from the others? What conclusions can we draw from all of this?
We wouldn’t have much to lose by trying out an experiment like this, but we would have a whole lot to gain. Of course, if it was shown that grassroots designed and managed projects performed better, the international development community would have some awkward and difficult questions to answer.
And if the international community does better? Well, then it’s just business as usual.