The Dutch development sector is (modestly) celebrating its 65th anniversary this year. Is it time to retire, or should we continue? And if so; in what way? With shrinking development budgets on one side of the spectrum and a globally rising middle class on the other, domestic resource mobilisation and claim-making are presented as the future of international development. But what exactly does this approach entail? What are the challenges and opportunities concerned with it? This first contribution of the Change the Game online debate formulates the main points of discussion for the coming weeks.
According to a study by OECD, the middle class and purchasing power will increase globally with 165% and 161% respectively, in the coming years. Remarkable is the fact that this growth will manifest itself mainly outside of Europe and North-America, and mainly in rising economies like China, India and Brazil. While the middle class in China is already catching up with the middle class in the United States in absolute terms, the Indian middle class is expected to exceed these numbers by 2020. At the same time, there has been a dramatic demographic shift in the global distribution of poverty in the last decade. Whereas previously the majority of the world’s poor lived in low income countries, more than two-thirds of the world’s poor today are situated in middle income countries.
These global changes also have far-reaching consequences for the future of international development. While the West is strongly reducing its development budget because of the financial crises, the economic growth in emerging economies offers a promising perspective for philanthropy. According to Jenny Hodgson, executive director of the Global Fund for Community Foundations (GFCF), it is about time the potential of domestic resource mobilisation is realised internationally. ‘Currently, a great number of development organisations still largely or completely depend on the West. However, Western funding is not inexhaustible and international organisations will not be there for ever. In order to make development sustainable, it is therefore important to look for alternative funds. This will make organisations and their programmes less vulnerable’.
Domestic resource mobilisation
Local fundraising involves more than just monetary donations. Also knowledge, networks, time and goods, donated both by individuals and corporates alike are part of the fundraising opportunities. On a larger scale, domestic resource mobilisation also entails a fairer distribution of wealth by the government and support through subsidies or an advantageous tax climate.
In recent years, the importance of domestic resource mobilisation for international development has been stressed by different parties. In the Netherlands, Cordaid and Mamma Cash published the report ´Lokale fondsenwerving. Samen doen´ (‘Domestic resource mobilisation. Doing it together’, Red.). Internationally, a great number of articles on the topic have been published and a number of conferences have been organised. Nevertheless, according to Hodgson, the movement is still in its infancy and only few organisations have fully adopted this new approach. Speaking of a paradigm shift in progress would be premature.
Besides the financial arguments as stated above, there are other important reasons to focus more on domestic resource mobilisation according to Hodgson. ‘The Western civil society organisations (cso’s) tend to work according to singular themes that are motivated by funding streams. Consequently, international development remains top-down and supply-driven and not reaching its full potential. By focussing on domestic resource mobilisation, the possibility of a more holistic view and long-term perspective presents itself, with the wellbeing of the entire community as an ultimate goal.
Domestic resource mobilisation also has an important political function. In many countries, the space for civil society is shrinking drastically. ‘The possibility to speak-up is diminishing on a daily basis’, a UN representative stated recently in one of the largest Dutch newspapers Trouw. Especially development- and human rights organisations have to pay the price of the tightening of policies and legislation for cso’s. In Ethiopia, for example, the anti-terrorism law enables the Ethiopian government to crush critical voices by threatening with long-term imprisonment and allowing a violent response to protests. In addition, in countries like Azerbaijan, Ecuador, Indonesia and Algeria recently laws have passed to limit the space for social organisations. And in countries like Kenia and Russia laws that prevent foreign funds from supporting local organisations have been proposed in parliament.
Domestic resource mobilisation can hence play an important role in increasing an organisations legitimacy, and thus also its political power, according to Hodgson. The capacity of a local organisation claim the services communities are entitled to with the government is also referred to as claim-making. ‘When an organisation is able to mobilise funds domestically, it shows the government the citizens support the cause and the organisation is not just a channel for a Western agenda’, she states. ‘When you raise your own funds locally, you do not just bring your own demands to the table when negotiating with the government; you represent the voice of the people. This makes you politically less vulnerable.
Despite the apparent added value of local organisation, Hodgson thinks there is still an important role to play for international organisations when it comes to lobby and advocacy. ‘Since international ngo’s are based abroad, they are not there long term, the staff changes, they don’t have to live by the consequences of the decisions that have been made. That might allow them to fund more difficult issues. may also mean they make decisions that in the long term turn out not to be as good as they thought they were. That might allow them to fund more difficult issues. However’, Hodgson warns, ‘This may also mean they make decisions that in the long term turn out not to be as good as they thought they were.’
Hogdson continues. ‘It would be good to start looking at the relative merits and strengths of these different kinds of institutional forms. The Community philanthropy sector has been far of the map. Now is the time to start saying; if you are a locally supported, local grant maker, this is what you’re good at, and this is what you want to be working towards. And as an INGO; this is your area. This is not only about thinking about where the potential is in partnership, but also thinking about international development as a long term project.’
Other than a complex political context, organisations also find it challenging to find local support from the community they are working in. In many countries the middle class is not yet convinced about the added value of ngo’s. ‘ For years, international development was an external process local people were kept away from’, Hodgson explains. Additionally, a great distrust emerged out of mismanagement and corruption scandals, like the arising of so-called briefcase ngo’s. which had making profit as a primary target, not instigating development.
In order to address local sources of funds, an investment in donor trust is essential. According to Hodgson, this means organisations will have to go through a cultural change. ‘Terms like ‘impact evaluation, financing proposals and other ‘donor-speak’ does not appeal to the local citizens’. Hodgson also points out to digital technology as an important means. ‘In Africa, mobile banking and donating through sms are huge. By adapting to these innovations, organisations can reach out to an enormous potential donor base’, says Hodgson.
But precisely these local cultures of giving present another challenge for organisations. In many cultures around the world an increase in one’s income means an increase in the responsibility to take care of the family. These social obligations lay a large claim on the disposable income, making the term ‘middle class’ almost an illusion. Institutionalised, community philanthropy for poverty eradication approach seems a thing of the future.
However, there are also positive signs that suggest a paradigm shift is albeit slowly, underway. According to the latest World Giving Index, a study done every year by the Charities Aid Foundation, philanthropy in middle- and low-income countries has been on the rise the past few years. In particular, the category ‘helping a stranger’ has seen a remarkable increase among the emerging economies.
What is the best way to stimulate this culture of giving and what type of organisation will take the lead? The past decade shows a clear trend of decentralisation in which international organisations establish regional offices in the countries where they operate. Organisations like Greenpeace, Amnesty International, Unicef, Save the Children and the Red Cross now have offices all around the world. According to Hodgson there is a danger situated in this trend; when these organisations enter the local market for local funding, are actually competing with the groups they are working with. This competition reinforces the asymmetrical power balance that exist between these partners.
As these international ngo’s are often more institutionalized than local ngo’s , the community organisations do not only have a disadvantage in raising funds, but also in recruiting the most capable staff members. ‘It is still more prestigious to work with an INGO than with a local one.’, Hodgson explains. ‘Additionally, salaries offered by international organisations are often several times higher than the ones offered by local ngo’s. Therefore, when the staff of an organisation is offered a chance to work for an international organisation, the choice is easily made. Serious consideration is needed to find out what it is we’re trying to do here. A local organisation that is raising money locally and is embedded should have more prestige. International ngo’s have an important role to play in helping to reframe those dynamics.
According to Hodgson, domestic resource mobilisation and claim-making is thus more than diversifying an organisations’ donor base. It requires a radically different approach to international development. ‘In the end, it is about devolving power. The willingness to give up power to local groups’, claims Hodgson. Does this reorientation mean we should completely stop our involvement? ‘No, absolutely not’, she says. ‘Especially at this point it is important to invest, both in the capacity to mobilise resources domestically and in the strength of the lobby and advocacy skills of local partners.’
The new policy by Dutch minister Ploumen from Foreign Trade and International Development, which is fully focussed on lobby and advocacy, seems tailor-made for this reorientation of the development sector. In a report by the Dutch Ministry of Foreign Affairs, which has been released recently, domestic resource mobilisation is being referred to as one of the ‘Key messages for civil society development’. Additionally, in a video message for the Global Partnership for Effective Development Co-operation Steering Committee, Ploumen explicitly mentions the importance of domestic resource mobilisation in achieving the post-2015 sustainable development goals.
However, in practice things are rather more complicated. Since only initiatives in low- or middle income countries can apply for subsidies from the strategic partnerships in the Netherlands, the potential of domestic resource mobilisation and claim-making is not being fulfilled, argues Fabio Poelhekke, senior project officer at the Wild Geese Foundation. Because of these geographical limitations, initiatives that serve as a role model to organisations in other countries and who strongly contribute to the quality and the power of international networks, will lose out.
Time will tell how this strategic reorientation will turn out and if the investment of the Dutch government and other donors can really make a difference. Because what will happen when this stream of subsidies ends? And also international support for international development decreases? What’s Next?
This August, Vice Versa and the Wild Geese Foundation, organise an online debate about domestic resource mobilisation and claim-making. On September 5 a concluding live event about this theme will take place in the Humanity House in The Hague.
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