American foundations should feel pride about one of the key headlines from an event at the U.N. General Assembly last month: a new report on global giving found their giving has skyrocketed in recent years, reaching $8 billion in 2019, nearly four times the roughly $2.2 billion awarded in 2002.

But another number from the same report should have us all aiming to do better: of that $8 billion, 61 per cent went to organizations headquartered in the United States, not in the countries that U.S. funders are trying to help. In fact, the report found that only 12.6 per cent of international giving was localized from 2016-2019, barely up from 11.7 per cent from 2011-2015.

To be clear, philanthropy is doing better on this score than governmental funders, who sent just 2 per cent of their global funding directly to local actors in 2020, according to a report commissioned by the Humanitarian Policy Group. But as Degan Ali, executive director of the Kenya-based humanitarian organization Adeso, put it during our joint event during the General Assembly, ‘Philanthropy is a critical part of the solution’ because of its flexibility, which governmental funders don’t have. ‘You need to be role models to demonstrate solutions.’

Localization allows foundations the chance to walk the talk, tangibly committing their grant dollars to advance diversity, equity, and inclusion in real time.

In this case, the call for change is in line with best practices. We already know localized, flexible giving is often not only more effective and sustainable but also helps equalize relationships and power dynamics between funders and their partners. Shifting power back into communities – and trusting the people most affected to lead according to local knowledge and priorities – increases trust in philanthropy as a whole and gives the entire sector the ongoing opportunity to prove that it has earned it.

Of course, part of that greater trust stems from improved results. Foundations that fund local organizations have a more direct line of communication with the communities with which they partner. And because those doing the work on the ground are usually better equipped to make crucial decisions about how to do it, localization strengthens their ability to study, compare, and refine their methods and strategies to optimize impact.

Localization is not just about channelling more international resources to local organizations. By investing in local philanthropic support ecosystems, funders can also ‘grow the pie’ of local giving in the global south to make their giving more effective. There are tools and approaches that can be used to do that, increasing partners’ resilience and building sustainability. One example is WINGS’ project work in East and West Africa, funded by the Conrad N. Hilton Foundation. There, local stakeholders in the sector are mapping their philanthropic ecosystems to build roadmaps for defining a collective vision of self-owned and sustainable regional philanthropy development.

Localization also, frankly, allows foundations the chance to walk the talk, tangibly committing their grant dollars to advance diversity, equity, and inclusion in real time. It shifts greater resources back to marginalized communities and away from the geographic origins of colonial exploitation, establishing a new, truer partnership between grantmaker and grantee.

Localization and its many benefits are not new ideas in the charitable sector. In 2016, governments from around the world agreed to the ‘Grand Bargain,’ a proposal to commit 25 per cent of international humanitarian funding to local and national responders; after a slow start, the goal now is to reach that threshold by 2030.

We approach this issue with great humility, as we know well the benefits of directing aid through U.S.-based intermediaries that then reroute the aid to local partners. Intermediaries do terrific work, and they remain vital partners in this space. Leveraging their established relationships to help funders act quickly and meaningfully, particularly when a community faces acute, immediate crises.

Still, grantmakers too often use intermediaries when there are strong local alternatives, hoping to avoid internal and external hurdles that are worth the effort to clear. Some foundation boards or bylaws only permit giving to U.S.-based organizations, usually out of concern about fiduciary and legal risks. But bylaws can be amended, and risk exposure in international giving exists just as it does with domestic giving and it can be mitigated through equivalency determinations and other processes (and, critically, the Internal Revenue Service will not hold foundations liable if all requisite due diligence was conducted).

Other foundations may be concerned about their staff’s capacity to learn about and engage in international law, including sanctions, or they may not know where to start. But that’s where existing resources can help, including NGOsource or the Council’s Country Notes. 

Shifting the mindset across a foundation also means listening to and taking guidance from the voices and perspectives of people at the local level when setting priorities and making programmatic decisions.

When it’s worth it, when the greater good demands it, we all can change. Foundations are no different. The sector showed, in its response to the global Covid-19 crisis, that it can even make rapid, sector-wide changes when they’re needed. Localization is worth the work it will take. The sector is well-positioned to step up its commitment to international giving that prioritizes local expertise, connections, and impact – it should aim for at least the 25 per cent outlined in the Grand Bargain.

We invite funders and other leaders in philanthropy to join us on this journey to bring more resources closer to the communities we support, strengthen their connections with local partners, and advance the greater good with impact, mutual respect, and humility.  

Kathleen Enright is president and CEO of the Council on Foundations. Peter Laugharn is president and CEO of the Conrad N. Hilton Foundation. Benjamin Bellegy is the Executive Director of WINGS.