Tracking funding flows to local organisations

Locally led development is in the spotlight. An increasing number of funders have pledged to increase the funding they provide to local organisations. The detail of how to measure this important metric, however, remains an open question.

We have therefore set out to develop a replicable methodology using available data that funders already publish, to determine the level of funding being directed to local organisations.

Pilot study

Following six months of exploratory analysis, we have proven that it is possible to use current International Aid Transparency Initiative (IATI) datasets 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 US Agency for International Development (USAID) funding to Zambia in 2019. We found that using the most restrictive definition of “local”, USAID provided only 3% of funding to such organisations. 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.

Our approach

Our new approach circumvents two of the major barriers which have undermined this kind of research in the past. First, our approach doesn’t rely on a single definition of “local” but rather incorporates all the individual characteristics included within the current available definitions. Second, by focusing on the primary, or first recipients of funds, the research is not restricted by the lack of data that makes it difficult to track funding down the aid delivery chain.

Key to this approach is the process of defining and then assigning specific organisational characteristics (such as principal place of business and/or years of operation) to the recipients of donor funds. This enables data users to manipulate data to present funding flows in line with their own interpretations of what it means for an organisation to be local.

Our USAID research programme

Following our pilot study, we have tested, shared, and refined our approach. The more we shared the approach with localisation stakeholders and experts, the more support and positive feedback we received. Recognising the importance of having an independent analysis of USAID spending, a group of US INGOs and development actors agreed to support a new piece of work which we launched in September 2022.

We are working to produce an analysis of US spending spanning the most recent three years for which we have full IATI data. We have selected ten countries that are recipients of USAID foreign assistance, based on regional diversity, a mixture of country-income classifications, countries that receive a reasonable proportion of total Official Development Assistance (ODA) from USAID, countries that have been prioritised for the push to greater localisation, and some that contain a mix of humanitarian and development funding.

Our selected countries are:

Sub-Saharan Africa        

Kenya

Ethiopia

Zambia

Liberia

South and Central Asia 

Bangladesh

Nepal

Western Hemisphere

Haiti

Guatemala                         

Europe and Eurasia  

Moldova

Middle East and North Africa

Jordan

Given the heterogeneity of USAID operations in different countries and regions it would not be possible to create a representative sample and we have therefore prioritised countries that include interesting features that will surface challenges in quantifying and measuring localisation targets. This will also provide good, independent baseline figures for the selected countries. More details about our selection process are given in this blog.

We will be publishing the findings from this study in early 2023. The report will include an analysis of the organisation types receiving funding and observations about the unique composition of implementing partners in each of the focus countries. It will also include recommendations for improvements in the underlying data and USAID’s reporting practices to improve future transparency and analysis.

Scaling up our research

This research could be scaled up to cover all G7 donors, providing an independent annual comparison to be used by aid agencies and advocates alike to drive faster, better funding of local organisations. Importantly, our methodology accommodates the many nuanced definitions of “local” proposed by funding agencies as well as those valued by localisation stakeholders. This concept note lays out more details of our approach which would, with additional funding, provide an independent baseline of funding flows for the major aid agencies.

We hope that our work will help drive an evidence-based path to greater locally led development.