Rethink needed on humanitarian funding for national NGOs

With humanitarian aid effectiveness high on the agenda of the 2016 World Humanitarian Summit,  there is much talk of how to reform humanitarian financing to make it more inclusive of national NGOs, but risk aversion will slow progress, say analysts.

Between 2009 and 2013 local and national NGOs received 1.6 percent of the humanitarian aid that international donors gave to NGOs, representing 0.2 percent of total humanitarian aid, according to research by Development Initiatives. The actual percentages might be different given that these figures represent only assistance reported to the UN Financial Tracking System. All agree, however, that the percentage is low, particularly when compared to the development sector, which turns to national NGOs far more prominently.

Guillaume Le Duc, director of development and communications at NGO Alima which partners with national NGOs, said this amounts to exclusion, noting that even strong, technically expert NGOs - such as BEFEN in Niger and Alerte Santé in Chad - cannot access the bulk of international funding directly. As a result, "it qualifies the capacity to manage and deliver services based on the citizenship of the organization and not on the quality of the staff or their track record," he said, adding: "Qualified staff who worked for MSF [Médecins Sans Frontières] in other countries and wanted to return home could find no work in their own country."

For Makimere Tamberi, president of Chadian health NGO Alerte Santé, which relies on funds through ALIMA as well as some small-scale foundation funding, said this exclusion reduces aid effectiveness. "Qualified national NGOs can intervene more quickly than international NGOs. We're already there [in the country]. We have the expertise. We can do it more cheaply. If money were given directly, it would speed up the response," he told IRIN.

Alerte Santé was running a nutrition programme in Southern Chad's camps for returnees and refugees from the Central African Republic and applied for international funding to extend it, but had to cut it short due to the lack of response.

In the first report done on national NGO humanitarian funding, Aid at the Sharp End, NGO CAFOD sharply criticized the current funding system when it comes to the approach to national NGOs: "International financing for national NGOs. is not fit for purpose. It is unpredictable, volatile, difficult to access, insufficient and is not sufficiently enabling to support the strengthening and capacity development. that is central to improving preparedness, response capacity and resilience to disasters."

Most national NGOs receive funding through international NGOs or sometimes UN agencies, according to analysts. But some direct international funding is available: notably country-based pooled funds which have been set up in several countries and deemed to work well, particularly in Somalia, Sudan and the Democratic Republic of Congo (DRC).

The proportion of pooled fund money going to national NGOs has increased gradually over recent years.

Perceived risks

The NGO Start Network, which aims to improve aid effectiveness by reforming emergency funding approaches, among other things, plans eventually to fund national NGOs directly. But currently "owing to risk aversion in donor governments" Start channels at least half of its funds to national NGOs through sub-agreements whereby international NGOs take the legal risk for implementation, said the network's coordinator, Sean Lowrie.

National NGOs can also approach national governments for humanitarian funding - the Chadian, Philippines and Ethiopian governments among others, have encouraged this approach over recent years, but national disaster management agencies themselves in many cases need more direct donor support or investment, say analysts.
Most large donors, meanwhile, refrain from directing funding national NGOs due to the perceived risks involved. European Union humanitarian aid body ECHO is legally bound only to fund NGOs that have signed a framework partnership agreement and thus have proven their operational and administrative capability, something which goes beyond the scope of most national NGOs.

The UK Department for International Development (DFID) funds mainly through partners and pooled funds, though national NGO funding is about to be reviewed, according to sources there, and partners and suppliers are having to increase their transparency when it comes to the visibility of local NGOs. DFID aims eventually to be able to trace official development assistance along the aid delivery chain, including through national NGOs, to show where the money is spent.

The US Agency for International Development (USAID), meanwhile, is making a concerted effort to channel more funds through government and local institutions through its initiative USAID Forward.

Risk tolerance guides donor approaches to national NGOs, said Lisa Doughten, head of the UN Central Emergency Response Fund (CERF). "Ultimately the donor needs to feel comfortable with the level of risk they're taking on through the chain. What is their tolerance level? If it shifts, additional direct funding might open up."

Managing risk

Pre-auditing national NGOs, which the DRC and Somalia country humanitarian funds attempted, is an effective way to manage risk and should be extended to other funders, said CAFOD's humanitarian adviser, Anne Street.

CAFOD also recommends that donors and UN agencies improve awareness of what funds are available to national NGOs; set up pooled funds specifically targeting national NGOs; undertake an assessment of national NGO capacity country by country; and adjust contracts to be more favourable to national NGOs.

Training national NGO staff so they are better aware of available funding and how to access it should be a priority in coming years, said Jessica Alexander in the Policy Analysis and Innovations Section of OCHA, noting that this capacity building should also apply to national disaster management authorities, which are increasingly taking the helm on response.

And stricter reporting requirements should be set up to track the impact of indirect funding to national NGOs, said Street. "Very few funding recipients are able, let alone required, to report even basic information about the funds they pass on to third-party implementers, so there is no way systematically assessing the timeliness, appropriateness or impact of funding."

CAFOD's report and its recommendations are gaining traction, said Street, who is helping to convene a series of global discussions to map reform priorities.

While all agree that some degree of change is needed in international financing to national NGOs, many assert the importance of various actors along the transaction chain when funding is indirect. OCHA's Alexander said: "People tend to overlook the capacity the international community can bring [to the funding cycle] - the middle man can be a broker of solutions - can provide accountability, stress humanitarian principles, transparency, among other vital roles."

The CERF's Doughten agrees, saying: "If each part of the chain is working well, it would add value." But Street is more sceptical, calling the pervasive long transaction chains "inefficient and expensive."

Sub-contracting humanitarian finances typically means that 7 percent of the contracted amount is taken up in administrative costs. But overheads should not be seen as waste, stressed Alima's Le Duc. "I could run a programme on 1 percent overheads but I couldn't guarantee the quality. Likewise some agencies may be at 25 percent overheads but maybe they're the most efficient," he told IRIN, noting: "On 7 percent you don't necessarily have the room to provide career development to further qualify staff - something that can make a project 50 times more efficient."

Assessing the comparative advantages of direct versus indirect funding requires more study. But one thing is clear for Le Duc: donors need to keep up with the changing times. "In a region like West and Central Africa new NGOs are setting up all the time - the same thing is happening in the political and media arenas. So the question is: can donors reconfigure a system where they take these actors into account? Because at some point they will have to."

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