The Shifting Landscape of Development Assistance & Funding – Some Recommended Writings on the Subject

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One of the central tensions in international development assistance is the affect that outside organizations have on co-opting priorities and the direction of action at the local level. In their 2002 article titled Operationalising bottom-up learning in international NGOs: barriers and alternatives (Volume 12, Numbers 3 & 4) Power, Maury, and Maury give one of the best description of this tensions and while now over a decade old, is still very much true. The authors summarize the problem in this way:

“[M]ost INGO interactions with community groups can be defined by a single input: money. While there are often attempts to build a more holistic partnership, once funds are introduced the relationship becomes one of power held by the INGO with the community often forced to respond ‘appropriately’ to INGO’s real or perceived wishes in order to secure the elusive funds. Some INGOs have sought to mitigate this effect by working through local community organisations or local NGOs. However, the unequal power relationship generally is transferred to this relationship as well. Ashman (2000) observes that formal agreements as written by INGOs (a) almost always ensure upward (rather than mutual) accountability; (b) are bounded by timelines too short for effective development (usually three years); and (c) suffer from a lack of mutual agreement on the terms for ending funding (tending to be INGO driven).”

Powers, Maury & Maury go so far as to recommend that because of this problem INGO’s should “cease being operational in the field” arguing that:

“Because such intensive, hands-on activities often demand a deep sensitivity and familiarity with local needs and conditions, we believe it may be most effective if INGOs go beyond decentralising their operations and cease being operational in the field. This can be done by forging ties with autonomous local NGOs which have a proven commitment and track record in handing over controls in the development process to the communities where they are working. To the degree that terms for partnership can be negotiated equitably, the imperative for standardised and impersonal mass reproduction of one strategy, which ironically is often only magnified (rather than adapted) in the process of decentralisation, can be significantly curtailed.”

These concerns are echoed in a more recent 2015 article by Nicola Banks, David Hulm and Michael Edwards, all of who are leaders in the study of organizational development and civil society.

NGOs, States, and Donors Revisited: Still Too Close for Comfort? by NICOLA BANKS, DAVID HULME and MICHAEL EDWARDS. World Development Vol. 66, pp. 707–718, 2015

Summary — Serious questions remain about the ability of NGOs to meet long-term transformative goals in their work for development and social justice. We investigate how, given their weak roots in civil society and the rising tide of technocracy that has swept through the world of foreign aid, most NGOs remain poorly placed to influence the real drivers of social change. However we also argue that NGOs can take advantage of their traditional strengths to build bridges between grassroots organizations and local and national-level structures and processes, applying their knowledge of local contexts to strengthen their roles in empowerment and social transformation.

At its core, Banks, Hulme and Edwards argue that the shift called for by critics such as themselves (in a 1996 article) as well as others, such as Powers, Maury & Maury, hasn’t happened quick enough and as a result, is seriously compromising effectiveness of aid.

Despite the inability of INGO’s to transform their practice, to let go of the reigns and truly empower grassroots organizations, a quite revolution has taken place in development financing brought about by the proliferation of the internet, cell phones, and digital media. This revolution is direct-giving – the ability of individuals to make financial contributions directly to local grassroots and civil society organizations and bypassing the usual INGO intermediaries. The following 2014 article by the Organization for Economic Cooperation and Development (OECD) describes the transformation taking place and similar to the previous articles, calls for “new business models” to ensure that these trends financing benefit the peoples with the most need.

“The Changing Role of NGOs and Civil Society in Financing Sustainable Development” by Sarah Hénon, Judith Randel and Chloe Stirk, Development Initiatives DEVELOPMENT CO-OPERATION REPORT 2014 © OECD

Summary — The role of non-governmental organisations (NGOs) and civil society in financing sustainable development is important, but it is changing. While domestic resource mobilisation and international commercial flows are growing very rapidly, they are not equally available to all. NGO finance, capacity and expertise are critical for populations at risk of being left behind. This chapter outlines the scale and trends in resources raised and mobilised by NGOs and civil society, and identifies a rise in direct giving by the public. It finds that the classifications of countries into “developed” and “developing”, and models based on raising money in the “North” and spending it in the “South” do not fit well with the distribution of poverty across and within countries. New business models are needed. To achieve the post-2015 global goals, civil society finance and expertise are needed, along with new cross-border partnerships between organisations working on similar issues, supported by increased transparency and civil society space.

The central actor in the Village Earth approach is a particular type of intermediate organization that focuses on supporting grassroots initiatives from the bottom-up called a Grassroots Support Organization (GSO). Rather than being dictated by the priorities, time-lines and methods of donors, GSO’s form a long-term alliances with a particular region and are committed to its long-term empowerment. In a 2008 article in the Journal of Community Practice, GSO’s were described this way:

“A subset of NGOs has decided to move beyond social service provision and invest in initiatives that build the human and financial resources of impoverished communities. Focusing on diverse issues—from health and the environment to political mobilization and microenterprises—these NGOs share a common approach to the communities with which they work: They foster the long-term empowerment of impoverished populations by assisting them in decision making and the mobilization of resources and political power. This core approach is what defines these development NGOs as grassroots support organizations.”

In the Village Earth Approach one GSO can support several grassroots community-driven initiatives and organizations across an entire region.  In this way, we support the development of two levels of social organization, regional AND at the grassroots community level. GSO’s provide temporary organizational support, fiscal sponsorship, funding, networking, advocacy, and training to these grassroots organizations so they can access the resources they need to develop and refine their strategies, giving them the time to develop organically rather than being rushed simply to meet the demands of donors. Where one GSO can serve as a support hub for numerous formal and informal grassroots organizations, Village Earth serves as an international hub for a multiple GSO’s around the world, providing access to international donors through our fiscal sponsorship based in the United States and Europe, organizational support, training, networking, and advocacy support services. 

In the traditional aid system funding flows from top-to-bottom. Often mirroring that flow is decision-making and power. According to Powers (2002) “While there are often attempts to build a more holistic partnership, once funds are introduced the relationship becomes one of power held by the INGO with the community often forced to respond ‘appropriately’ to INGO’s real or perceived wishes in order to secure the elusive funds”. A common dilemma that occurs with the traditional funding model is the competition that is created between the NGO and communities over funds. For example with a well project, since the Community oftentimes doesn’t know how much is budgeted for the project, they will seek to get the best well they can get. The NGO, on the other hand seeks to economize and get just the quality of well that will do the job since any funds remaining can either be used to purchase more wells or be used to cover other aspects of the project, like salaries for its personnel. The Village Earth decentralized funding model eliminates the built-in competition between outside organizations! Here’s how it works. Rather than funding and decision-making flowing from the top-down, In the Village Earth decentralized model, each level of organization is ultimately responsible for it’s own survival and for generating its own funding, but with support and training from the level above it. In exchange for these services, the level above retains a small percentage of any funding generated through the partnership. All levels are also provided support and training to develop income generating programs, eventually eliminating the need for outside funding. For example, the GSO can work with grassroots to create income generating services to meet locally determined needs, such as micro-finance services, training, organizing farmers’ or artisans’ markets, supporting a marketing cooperative, computer and telecommunications, etc.

This is a radical departure from the traditional system. Instead of grassroots organizations being dependent on the NGO, the NGO is now dependent on the grassroots and Village Earth is dependent on the GSO’s, creating a monetary incentive for providing relevant and timely support services that benefit the grassroots. It also creates an incentive for grassroots organizations to increase their capacity and become formalized so they can retain the overhead paid to the GSO and for the GSO to longer need the support from Village Earth.

Topics discussed in this article are also discussed in the following courses in our online certificate program: Approaches to Community Development & Development and the Politics of Empowerment.

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