Donor targets for directing funding to local organisations are not new. The Grand Bargain signatories have their targets for global humanitarian funding. On the development side, USAID’s recent “25%” announcement is just the latest in a string of commitments from the world’s largest aid agency.

To measure performance against these targets, however, we need two things; firstly, we need data, which we now have thanks to the frequency and quality of aid agencies publishing. Secondly, we need a definition of “local” which, understandably, has been more challenging. Previous work trying to track funding to local organisations has centred on specifically defining what “local” means and trying to trace funding all the way down the delivery chain. Both of these have often made it difficult to provide an accurate percentage of funding going to local organisations. In this blog, we share an approach that we recently tested, and which is bearing some early fruit.

Now let us be clear from the outset – neither Publish What You Fund, nor indeed any global entity, is well placed to define either transparency or localisation as it relates to individual countries and communities. We recognise that efforts to “shift the power” and increase “localisation” speak to many more issues (such as agency, power, co-creation, etc.) than we are addressing here by tracking funding. To that extent, we recognise that our recent work only addresses issues relating to resources. Even then, it has a limited scope focussing purely on flows and quantities of aid rather than quality of funding and other aspects like overheads, grants vs contracts, and flexibility. Bearing all this in mind, we believe we are well placed to understand, interpret and present existing data in a way that enables stakeholders to undertake analysis and track funding based on their own definitions of “local”.

Enabling stakeholders to use their own definition of local

The search for an agreed definition of local has been difficult and has led to some delay in analysing current development finance flows. Rather than providing a single definition, we have sought to annotate existing data sets with the characteristics frequently referenced by both northern and southern definitions of local. Importantly, our methodology accommodates the many nuanced definitions of local proposed by funding agencies[i] as well as those valued by localisation stakeholders. For our pilot research, we used the following characteristics for each of the donor’s primary recipients:

1. Entity’s principle place of business/location of headquarters (donor country, recipient country, third country)
2. Type of entity (private, academia, UN agency, NGO, Public Sector, multilateral, global program)
3. Organisation’s focus (sub-national, national, regional, international)
4. Is the organisation a Community Based Organisation (CBO)? i.e. does it only work sub-nationally within the area local to the organisation’s HQ? (yes/no)
5. Is the organisation legally organised under national laws in the recipient country? (yes/no)
6. Is the organisation a subsidiary/brand of an international organisation? (yes/no)
7. Is the organisation a subsidiary/brand of a regional organisation? (yes/no)
8. How long has the organisation been operating in the country? (no. of years)
9. Is the organisation beneficially owned (the owners) by individuals who are citizens of the country which is the organisation’s principle place of business? (yes/no)
10. Is the organisation majority run (the executive) by individuals who are citizens of the country which is the organisation’s principle place of business (or else run by and for a specific target group e.g. refugee organisations)? (yes/no)
11. Is the organisation governed (the Board) by individuals who are citizens of the country which is the organisation’s principle place of business? (yes/no)
12. Does the organisation have a bank account in the recipient country? (yes/no)

While applying characteristics to each organisation, in most cases, information to support decisions was found using a combination of receiver organisation’s websites, International Aid Transparency Initiative’s (IATI’s) d-portal, and secondary research. Where information could not be found best guesses and deductions are used to determine characteristics, noting that the findings of this work should be considered indicative rather than factually correct.

How much of USAID’s funding to Zambia is “local”?

Following six months of exploratory analysis, we have demonstrated that it is possible to use donor’s current data sets to analyse funding flows between the world’s major aid funders and their primary recipients, and to determine to what extent those recipients are local. In a pilot piece of research, we tracked USAID funding to Zambia in 2019 using their data published to the IATI open data standard. The purpose of this exercise was to present a dataset illustrating the extent to which USAID funds in Zambia were disbursed to various types of organisations. Our analysis represents US$228,378,811 of disbursements. One limitation of the data is we can only track funding to the primary recipients so cannot further trace funding which trickles down to sub-contractors. However, based on primary recipient data we found that using the most restrictive definition of “local”, USAID provided only 3% of funding to such organisations during 2019. Using the most expansive definition of local (for example, including local offices of global organisations), we found that USAID provided 10% of funding to such organisations. To see our full analysis, please click here.

Table 1: Comparing disbursements to different types of Zambia-based organisation

From our analysis, we were able to manipulate the results by toggling the various characteristics (see table 1). This is how we were able to come up with a range of funding going to local organisations (3-10%) depending on whether we used the most restrictive or expansive set of characteristics.

The potential to scale up our research

Our conclusion from all of this work is that it is feasible to analyse, annotate and present existing data, for a select number of donors, in a number of high aid recipient countries, to illustrate the extent to which disbursements are made to different types of organisations. With funding, this research could be scaled up to cover all G7 donors, providing an independent annual comparison which can be used by aid agencies and advocates alike to overcome definitional complexities and drive faster, better funding of local organisations.

Note

This work, and the pilot research on which it is based, was undertaken by the Publish What You Fund team. Specifically, Farzana Ahmed, Henry Lewis, and Gary Forster developed the concept and analysed the pilot data set. We thank a number of stakeholders including USAID and CRS for their feedback as we developed this concept.

[i] Note that these criteria are derived from a broad cross section of current definitions including those from the Inter-agency Standing Committee (IASC), PEPFAR, USAID and the Network for Empowered Aid Response (NEAR).

Further reading

Read more about how this work evolved into our localization project

Download our Metrics Matter report, which analysed USAID funding to local organisations in ten countries