Philanthropy and Funding Locally Led Organizations

In response to the pandemic and the inequities it has brought to the surface, a new set of giving practices has been on the rise amongst philanthropists: more partnerships, fewer regulations, faster disbursement of funds, and a more conscious look at power and other social justice issues. With a growing realization of philanthropy’s power to shape social change agendas—and an aim to make better use of philanthropic funds and better address structural causes of inequity—these practices rebalance power and place decision-making authority closer to the nexus of change. For the same reasons, and in parallel, there has been a new resolve to invest more in local communities and locally led organizations and processes.

In the field of international development, however, such initiatives are not so new. For more than a decade, the question of how to channel more assistance to recipient country entities has—albeit with some remaining questions about what constitutes locally led and how to actually fund them—become more or less standard. And while the obstacles for philanthropists are different, there is much to be learned from the efforts of other donors. For example, a 2021 report from the Overseas Development Institute reviewed bilateral and multilateral efforts to support localization and found challenges and obstacles that will be familiar to philanthropic donors: inherent power imbalances, lack of agency for local institutions, competing internal policies, perceptions of risk and lack of knowledge of local context. The same report offered up recommendations for philanthropy that will feel no less relevant: support locally led efforts that may be overlooked by other donors, model more progressive funding practices, and promote anti-racist and de-colonial practices.

While there are no roadmaps to power-sharing, there are fellow travelers on the same journey. The insights below sync up with the broad recommendations coming from the experience of donors in international development, and are meant to provide practical guidance on lifting up locally led organizations.

1. Design for the portfolio you desire (and make sure your systems reflect that design)

It seems straightforward: you will not get more locally led partners if you do not design and ask for locally led partners. However, actually doing so can be a real challenge for philanthropic actors. Finding, assessing, supporting, and evaluating local organizations requires purpose-built organizational structures. It also means undoing and unlearning practices that keep power in the hands of philanthropists, from investment decisions to how success is evaluated to the ways in which learning is promoted.

The design process begins with how philanthropists consider impact. A portfolio with more locally led organizations needs to be valued, specifically (though not exclusively), as an investment in the local NGO sector and the problems the sector is trying to address. Of course, seeking out ways to build ecosystems of local actors working on issues can mean pushing past the potentially more straightforward logic chain of solving medium-term problems with project-based investments. It can mean supporting networking and collaboration across local entities rather than competitive funding mechanisms. As a result, due diligence, risk assessments, proposal development processes, grant agreements, and accountability reporting all need to incorporate the extent to which locally led organization are lifted, strengthened, and connected. Doing so shifts thinking from the breakthroughs a single organization might make to a more holistic view of the breakthroughs the entire sector can make.

For foundations and individuals who are reluctant to develop a national presence in the places where they are funding activities, creating an effective constellation of local organizations is especially difficult. But whether through physical presence, partnership with others with greater knowledge of the context, or more experimental, participatory grantmaking strategies, communities and their locally led organizations must be meaningfully included in the design and decision-making of awards.

For example, the collaboratively-funded +1 Global Fund has enlisted trusted network partners on the ground to identify promising local actors, and rewards both the nominator and the successful local organization with financial compensation. Moreover, by replacing an application-based process with a nominations process, and by funding a cohort of recipients, they are able to replace a competitive experience with a collaborative one. This encourages sharing and mutual support across organizations that is critical to make sector-level breakthroughs and address complex social problems.

2. Establish and learn around principles for partnership and collaboration

Partnering with local entities needs to start with establishing why. For one thing, setting out principles that outline conditions of collaboration with others serves as an important guidepost for employees, partners, and peers. When these principles are explicit, it shapes everyday decisions about how to make investments, develop relationships, set up systems, and evaluate success. The character of the principles should be appropriate to the funder. They might take the shape of a declared commitment to building capabilities of funded partners, a statement of the intent to partner and support locally led organizations, or simply a set of beliefs that govern ways of collaborating.

Ultimately partnerships are human relationships, and entities need to expect missteps. By declaring principles of collaboration and partnership, funders underline the intent of their actions—even if slip-ups yield different results. Having a set of principles to return to when mistakes happen gives a common language for expressing what went wrong and an entry point for discussing how to fix it. Perceived infringement of principles of collaboration can render them practically useless, so a regular mechanism to reflect and learn is important. Intent to collaborate with genuine power-sharing is not sufficient without mechanisms to improve when funders fail to live up to those principles.

For example, Imaginable Futures publishes their approach to listening and engaging locally on their website, inviting their partners to engage with them in an explicit learning process, and publishing how that learning is changing their own practice as part of its annual report. Their commitment to build a collective understanding of needs, patterns, and possibilities with their partners has led to changes in what they fund and how they work with partners: after listening to their partners about how they could better support change, Imaginable Futures started funding systems change enabling investments, such as advocacy for affirmative action legislation in Brazil and locally led research capability in Sub-Saharan Africa. Their partner conversations have also shifted their internal processes, from a focus on traditional reporting metrics to asking their partners what they learned over the previous reporting period, as well as how they can best support growth from those learnings.

3. Re-conceptualize risk and invest in local evidence-building capacity

Over the last decade, the nonprofit sector has made leaps in understanding about the behavioral sciences, impact measurement, systems thinking, design thinking, and a host of other complex concepts that can be applied to social problems. But these evolving disciplines require training, knowledge, and the development of new skills before NGOs can absorb and apply them, which can make these new skills seem out of reach for smaller, locally led organizations. And while philanthropy has been at the vanguard of championing many of these evolving approaches—a tremendous asset to the sector—the effect has can also be to put philanthropic donors out of reach for locally led organizations. The status quo is self-perpetuating, whereby locally led organizations are reliant on INGOs to subcontract them for local buy-in and on-the-ground expertise, but too often these new skills are built up and developed mostly in INGOs, who are then even more effective at engaging philanthropic donors. Locally led organizations get left further behind.

At least in the short-term, many philanthropists should recalibrate what they see as evidence of impact (or be willing to fund the long-term development of new skills and capabilities to measure impact). Beyond the risk of investment failure, funders must calculate the risks of harm created by extractive approaches that use local actors for their local knowledge without sufficiently investing in their systems and capabilities. Similarly, the costs of investment need to account for what it will mean to build dynamic learning systems with locally led actors.

In my time as the Chief Impact Officer at the LEGO Foundation, we wrestled with just how best to fulfil our commitments both to local actors and to evidence-based solutions. We wanted to work with locally led organizations who had an important knowledge base and access to communities and policy makers, but the rigor of results and evidence we had hoped would help shape policies and lead to further program scale-up required bringing in new types of evidence-building expertise. Our approach was to try funding a mix of actors, encouraging what we thought would be equitable partnerships.

Even with the best of intentions, we witnessed first-hand how locally led organizations could become overwhelmed by the outside expertise being brought in to support stronger evidence building. With day-to-day implementation matters occupying the concerns of local leadership, it was as an easy trap for everyone involved in project-based grants to simply divide responsibilities: locally led organizations did implementation, international organizations did the research. Although this is one way to measure results, it failed to meaningfully build new capabilities in locally led actors. Ultimately, it shaped the LEGO Foundation’s own investment strategy to experiment with funding more Sub-Saharan African researchers.

Many well-meaning funders and INGOs have sought to solve this local partner capability-gap challenge by hiring specialized firms that “supplement” a locally led organization’s capabilities. However, the criticism for this kind of approach should not be ignored, arguing that it contributes to a colonial mindset where results and outcomes are primarily defined, measured, shared, and used by outsiders.

Commitment to locally led development means a commitment to this skill building and exploring different types of risk.

4. Invest in individualized plans

Once locally led organizations have been selected, philanthropists need to be willing to make investments in their organizational development. But they need to invest in the organizational development prioritized by the organization, not just by the funder. Moreover, for organizations to articulate their development needs, sometimes an upfront investment is needed to help nonprofits better understand their organizational health and future outlook. For philanthropists, this can be a big leap – moving from valuing an organization’s results to also valuing an organization’s capacity and awareness of its development areas and even its role in the ecosystem.

An exploration and assessment process agreed by all parties can be an in-road to identifying and prioritizing areas for development and investment. But while engaged funders may have a framework for starting an assessment, locally led partners need the space to understand the process, as well as have the agency to opt in or opt out of parts of the process (and to add new areas for discussion to the agenda). Alternatively, a funder can make unrestricted resources available for a local organization to use for organizational investments. Visionary leaders often already have a good sense of where they need to invest to support their long-term growth and development.

Organizational investments can be made individually by partner or as part of a cohort of organizations. For example, together with its local partners, the Oak Foundation recognized leadership transitions as a common challenge in Ethiopian organizations, and so they commissioned a report to study the challenge. In this case, the inquiry highlighted adjustments and areas for growth not only for the locally led organizations, but for funders of local civil society as well.

5. Consider all the assets you can bring to a partnership

Individualized plans require resources. Funders should be prepared not only to put forward financial investments in specific capabilities or discrete projects, but consider investments of unrestricted funding, strategic advising services, support to procure and install new systems, executive mentorship, and networking and learning with others.

For example, New Profit, a venture philanthropy organization in the United States takes a comprehensive view of systems support to its grantees. It not only funds a portfolio of organizations at once and creates opportunities for them to network, it also provides in-house monitoring and evaluation expertise, advocacy and fundraising opportunities, and strategic advising services by way of executive mentorship and specialized support. This comprehensive backing not only leverages New Profit’s financial resources, but also its intellectual capital, convening power, experience, and vast network.

All NGOs struggle to some degree with big decisions—for example, installation of enterprise-wide software, incorporating participants meaningfully into their decision-making, effective talent management strategies, business planning of new lines of work. Of course, availing money is helpful in tackling these challenges, but connections with experts and peers who have faced similar challenges, support to free up time for talented staff to lead processes, or direct coaching to senior managers can be just as valuable as outcome-based funding. And, to find out, a funder just needs to ask.

Read more stories by Sarah Bouchie.