In 2024, we are witnessing a pivotal transformation as major grant-distributing organizations, including entities like USAID, are increasingly directing their funds toward local partners rather than international NGOs. USAID is planning to shift at least 25% of its annual grant funding to local partners by the end of FY2025.[i] This trend reflects a growing belief in the value and effectiveness of empowering local communities and organizations to drive change from within.
In this article, we delve into the implications of this shift for large nonprofits and how it is reshaping their roles and strategies in the international development landscape. We’ll discuss the importance of fostering strong local partnerships, understanding community needs, and building capacities at the grassroots level. This trend not only challenges large organizations to rethink their operational models but also presents an opportunity to collaborate more closely with local entities, ensuring that interventions are culturally relevant, sustainable, and aligned with local priorities.
In the United States, a similar trend is taking shape as grantors increasingly show a preference for working with smaller, local partners over larger, more distant organizations. This shift is driven by the recognition that local partners often possess a deeper understanding of the community’s unique needs, challenges, and cultural nuances, enabling them to implement more effective and sustainable solutions. By directing funds towards these local entities, grantors are not only ensuring that resources are used more efficiently but also fostering a sense of ownership and empowerment within the communities, leading to more impactful and long-lasting change. This trend underscores the growing importance of community-driven approaches and the need for larger organizations to adapt by forming meaningful collaborations and supporting local capacities.
How Do Nonprofit Organizations Navigate Localization Issues?
As funding increasingly shifts towards local entities, nonprofit organizations must adapt their strategies to remain relevant and impactful. This involves embracing the localization of funding, recognizing the value of local knowledge and community-driven approaches, and adjusting operational models accordingly.
Strengthening Local Partnerships and Capacity Building
Nonprofits should focus on forming and nurturing strong partnerships with local organizations. These relationships are crucial for understanding community needs and developing culturally appropriate solutions. By investing in capacity building, nonprofits can empower local partners, equipping them with the skills, knowledge, and resources necessary to lead and sustain initiatives. Supporting local partners not only enhances program effectiveness but also aligns with the preferences of funders who are increasingly looking to fund organizations with strong local ties.
Adapting Program Design and Implementation
Nonprofits must be willing to adapt their program design and implementation strategies to suit local contexts. This may involve decentralizing decision-making processes, involving community members in program planning, and being flexible and responsive to feedback and changing local needs. Programs that are designed and implemented with local insights are more likely to be accepted, effective, and sustainable.
Leveraging Local Expertise
Nonprofits should recognize and leverage the expertise of local staff and partners. These individuals bring invaluable insights into the community’s social, cultural, and political dynamics. Involving local experts in program development, leadership roles, and decision-making ensures that interventions are relevant and resonate with the community’s values and priorities.
Transparent Communication with Funders
Clear and transparent communication with funders about the importance and impact of local partnerships is essential. Nonprofits should articulate how working with local entities aligns with the funder’s goals, leads to more effective use of resources, and contributes to sustainable development. Sharing success stories, challenges, and learnings from local partnerships can further demonstrate the value of localization to funders.
Monitoring, Evaluation, and Learning
Implementing robust monitoring and evaluation systems is crucial to assess the effectiveness of localized programs and partnerships. Nonprofits should use data and feedback to improve program design and implementation continuously. Additionally, documenting and sharing lessons learned from local collaborations can provide valuable insights for the organization, the community, and the broader sector.
Dealing with the trend towards localized funding requires nonprofits to embrace local partnerships, adapt their program strategies, leverage local expertise, communicate transparently with funders, and commit to continuous learning and improvement. By doing so, organizations can ensure that their initiatives are locally driven, contextually relevant, and aligned with the evolving preferences of donors and the communities they serve.
