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Localization

Metrics Matter Series

In November 2021, United States Agency for International Development (USAID) Administrator Samantha Power set out her vision to make aid more accessible, equitable, and responsive. A key part of this vision is the commitment to the localization agenda: by 2025, 25% of USAID’s funding will go directly to local partners.

Publish What You Fund has undertaken detailed research into USAID’s local partner funding goal to establish an independent, credible, and replicable measurement approach to track funding for local partners. Through our Metrics Matter series, we have evaluated USAID’s progress in directly funding local organizations and assessed the suitability of USAID’s measurement approach to achieve its stated goals. Ultimately, the definition and the approach used by USAID to track direct funding need to support its overall vision, including its goal to diversify its in-country partner base and to lift-up under-represented voices.

Metrics Matter II, published in June 2024, builds on the methodology established in our 2023 Metrics Matter I report. We have examined USAID funding in 10 sample countries (Bangladesh, Ethiopia, Guatemala, Haiti, Jordan, Kenya, Liberia, Moldova, Nepal, and Zambia) and compared our own measurement approach with the approach adopted by USAID to determine the difference in funding amounts currently directed to local partners and the amounts that would be needed to reach the 25% target.

Download the Metrics Matter II report

Our findings

Our analysis provides two main takeaways:

  1. USAID is a long way from meeting its 25% goal of directly funding local organizations.
  2. How USAID defines and measures its 25% goal is working against its own progress. It is allowing perverse incentives – such as affiliates of international organizations to be counted as local – and leaving significant funding opportunities – such as projectized funding that currently goes to UN agencies and multilaterals – untapped for local partners.

The outcome of our analysis illustrates how differences in measurement approaches change the funding amounts USAID will need to provide local organizations to reach the 25% target.

By analyzing funding in the ten sample countries in US FY 2023 and applying both measurement approaches we found for our 10 countries:

  • USAID’s approach nearly doubles the percentage counted as going directly to local organizations – 10.3% compared to 5.2% using our approach. Both approaches show a drop in the proportion of funding directed to local partners compared to US FY 2022.
  • USAID’s denominator (the 25% of what) reduces the envelope of funding considered for the 25% target from $4.2bn to $2.4bn when compared to a denominator which provides more opportunities for local organizations.
  • Under USAID’s approach, an estimated $247m went directly to local partners. To reach 25%, USAID would have needed to channel an additional $355m to local organizations in our 10 countries.
  • Using Publish What You Fund’s approach, an estimated $221m went to local partners. To reach 25%, USAID would have needed to fund an additional $840m directly to local organizations in our 10 countries.

proportions of funding from 2019-2023. The chart shows two lines comparing the percentage of USAID funding directed to local organizations in 10 countries using two different approaches – the Publish What You Fund approach and the USAID approach – across five US fiscal years from 2019 to 2023. Using the Publish What You Fund approach, it shows that there has been a drop in the percentage of USAID funding directed to local organizations over the 5-year period. It shows in 2019 that 7.6% of funds went directly to local organizations, in 2020 it was also 7.6%, in 2021 it dropped to 5.6%, rising slightly in 2022 to 6.1%, and then dropping again in 2023 to 5.2%. Using the USAID approach, it shows that the figures are higher than the Publish What You Fund approach but there has also been a drop in the percentage of USAID funding directed to local organizations over the 5-year period. It shows in 2019 that 12.3% of funds went directly to local organizations, in 2020 it dropped slightly to 12.0%, in 2021 it dropped again to 9.1%, rising in 2022 to 10.6%, and then dropping slightly again in 2023 to 10.3%.

Our recommendations

We acknowledge and congratulate USAID’s bold step to set a target for localization, to develop a measurement method, to monitor progress, and to provide access to the underlying data for US FY 2022 to allow that progress to be independently verified.

We recommend that USAID takes the following action to improve its data and move us closer to credible, transparent reporting that will not create perverse incentives.

1. USAID’s definition of local needs to be tighter:

  • USAID should reassess its measurement approach to ensure that its direct funding to local organizations is in line with both its vision and with incentives. This includes removing local affiliates of international organizations, and tightening the definition to be more in line with the IASC.

2. USAID’s denominator should include more funding opportunities:

  • As a priority, USAID should examine financial flows currently excluded from its denominator, which represent significant opportunities for direct funding, including developing a strategy for how to open UN projectized funding to local organizations.

3. USAID should improve its data:

  • USAID’s reporting on funds to local actors should include both disbursements and obligations.
  • To the extent undertaken in its progress reports, USAID should provide a methodology and explanation for its manual check of the data. This should improve data quality and allow stakeholders to understand when organizations which meet USAID’s definition have been reclassified as local/non-local and why.
  • USAID should publish the individual direct funding targets for USAID’s missions, to help local actors understand the goals and opportunities within their countries.
  • USAID should ensure as many entities as possible are identified in the data set by providing names for all entries and eliminating the practice of using “miscellaneous foreign awardees”, “recipient not reported” or “undisclosed.” An explanation should be provided for any entity whose name is not published. In the US FY 2022 Report, more than $100m was categorized in this manner.

Our approach

We used publicly available International Aid Transparency Initiative (IATI) data to analyse USAID disbursements in US FY 2023 in 10 countries. We also compared this to spending data spanning five years, from US FY 2019 to FY 2023.

We used this data to assess how much funding is being directed to local organizations using the USAID measurement approach (its definition of local and its chosen denominator – the 25% of what). We compared this to the Publish What You Fund approach – using the Inter-Agency Standing Committee (IASC) definition of local and a broader denominator which includes all project funding flows to the relevant countries.

We feel the IASC definition best reflects USAID’s vision to diversify its partner base, it has been independently developed by the Grand Bargain community, and it has been adopted by USAID for Grand Bargain purposes.

Download our methodology paper for full details of our research approach and what is included in the numerator and denominator of the USAID and Publish What You Fund measurement approaches. You can also download our full dataset.

A note on comparability: for Metrics Matter I, we compared USAID’s definition of local with a variety of bespoke definitions which reflected the priorities of stakeholders at the time. For Metrics Matter II we have compared USAID’s definition of local with the IASC definition of local. The funding differences between the IASC definition and our previous definition are marginal.

Supporters

This research was supported by CARE, Catholic Relief Services, FHI 360, Global Communities, Modernizing Foreign Assistance Network (MFAN), Oxfam America, and Save the Children US.