It’s a classic tale of the trajectory of a nongovernmental organization (NGO): a well-meaning organization grows rapidly, crafts a beautiful strategy, and has all the right subject-matter expertise in place, only to realize late in the game that it neglected to build the systems and processes necessary to support its mission and vision.

Today, a similar phenomenon is evident in the philanthropic and international development sectors as they too evolve and mature.

In recent years, these sectors have begun to sharpen their politics to tackle problematic power dynamics within civil society and philanthropy itself. ‘Trust-based philanthropy,’ ‘localization,’ and ‘big bets’ dominate the conversation. But, just like the NGO that overlooks the importance of systems and processes, we are not talking enough about the way we operationalize grant funding and foreign aid. Lack of infrastructure hinders the ability to reach a goal. If we do not operationalize funding in a way that aligns with our politics, we will fail in our mission to shift power.

Shifting power means that grantee organizations drive the agenda through donor-grantee relationships based on trust, support, and solidarity. But that should also translate to thriving ecosystems and stronger movements, organizations that are not suffocated by administrative burdens, and activists who can focus on the important work at hand and not be forced to constantly chase the funding. Right now, even as ideals like shifting power and localization dominate the debate in our sector, too many funding opportunities are concentrating rather than decentralizing power, are opaque, or come with administrative hurdles or other demands that are out of reach of the organizations whose voices are needed most.

Localizing without a local lens

There is perhaps no better example than ‘localization’: efforts to move more funding directly to local groups. This is an important component of shifting power from international organizations to local ones. The international development sector in particular has embraced it in recent years. USAID, through its massive reach, has made localization one of its top priorities and hallmark of foreign policy aid under President Joe Biden’s administration. USAID Administrator Samantha Power has set out to ensure that 25 per cent of the agency’s foreign assistance go directly to local partners by 2025. Others are following suit: at the December 2022 Effective Development Cooperation Summit, fourteen donor governments announced a commitment to localizing development funding. 

This is a noteworthy step, and one that should be applauded. But to be effective, the mechanics of localization must be considered with care and intention. Without an overhaul of how these major government provide funding to local groups, it is unlikely to enable local organizations and movements to flourish.

First, the stringent requirements and administrative burdens associated with applying for, managing, and reporting on funding are too much for many local organizations to absorb. Often, those that are closest to stakeholders and the issues are least able to manage these complex grants. This alone will deter many highly capable and creative local leaders and organizations from pursuing funding. Too often, the remedy to this problem seems to focus on improving the capacity of organizations to manage complex and burdensome grants. In other words, applicants must change, not the donor agencies, which seems to run counter to the spirit of shifting power.

Second, project-based funding remains far too prevalent. If local organizations have to shift their priorities and strategies to align with funding opportunities, they are not driving their own agendas – and, therefore, are not holding the power.

Finally, the hoops that still must be jumped through will ultimately privilege a few, well-positioned groups, which will receive the lion’s share of localized funding. Large infusions of funding that only a few local organizations have the capacity to absorb will have a destabilizing impact on the wider civil society ecosystem, introducing tension into movements, and concentrating rather than decentralizing power.

Betting big on the few over the many

While aid agencies localize, more and more large foundations are focused on big bets-style grantmaking: identifying a problem and making huge grants to organizations who propose a solution. There seems to be a continuous stream of press releases announcing the next ‘big bet.’ But despite the tendency to celebrate this news, huge amounts of money are going to a very small number of organizations. It’s hard not to wonder how many organizations have been rejected. After all, big bets produce a few big winners – and many, many losers. 

This style of grantmaking doesn’t just have a negative impact on the wider ecosystem, it is also a questionable approach to shifting power. Big bets create mega-institutions that operate in a constellation of smaller civil society groups, inevitably leading to new and disorienting power dynamics in local activist politics and civil society networks.

Without continuity, groups that receive such large infusions can face a crisis: the looming cliff when the grant ends. This is doubly risky when it comes to big bets. On one hand, not only do they produce just a few strong leaders within a movement, but these leaders themselves are not sustainable. On the other hand, when renewed funding is a possibility, these overextended grantees are under great pressure to remain aligned with the funders’ interests and strategy, perhaps at the expense of locally determined alternatives. Either way, problematic power dynamics persist – or even deepen. 

Moreover, big bets are often awarded through non-transparent processes. This further strips an organization of the agency to determine whether or not available funding represents a good opportunity for them. It also has the potential to interfere with both programmatic and fundraising priorities, as organizations begin to chase the hope that they will be the next big winner without clear guidelines on how to do so.

A better way forward

To foster ambitious change – and truly shift power while doing so – funders must focus not on organizations but on systems. As donors localize and place big bets, they should ask themselves if their funding will help sustain the ecosystem, if it will generate conflict between organizations, if it will help democratize funding, or if, perversely, it will serve to concentrate power or leave grantees overly dependent and ‘donor driven.’ Perhaps funders could begin to think about how widely they are able to spread their funding and how doing so can support positive inter-organizational dynamics, rather than how large they can make a singular grant.

Making it easy for grantees to manage the funds and understand commitments is likewise essential. Groups must have the means to decide whether or not to accept a grant. Transparent, streamlined processes of disbursement, reporting, and evaluation is a vital way to make sure not only that the funds make it into the hands of those who can use it most effectively, but also that accepting the grant does not create undue burdens especially for smaller community-based organizations. 

To achieve this, donors should invest in their own ability to better meet the needs of applicants and grantees. Increased staffing to build strong relationships with local groups and a solid understanding of the context would increase trust, enable less burdensome forms of due diligence, and allow for ongoing conversation and feedback loops. Stronger relationships and higher levels of trust would facilitate more unrestricted funding, ensuring that grantees are able to drive their own agendas and have the ability to respond to emerging threats and opportunities.

Truly shifting power by aligning the operations and politics of grant funding and foreign aid is not only the right thing to do, it’s also a more effective way to achieve donors’ ends. As with any complex problem, it is impossible to guarantee that there is one best solution to any given problem in any given space. Donors can hedge their bets by supporting not one but many of the different actors who can contribute to the solution. No one organization is able to tackle a problem from all angles; several groups, using a range of complementary strategies to achieve the same objective, have a greater chance at success. By funding different approaches, experts, and organizations – all with different affinities and stakeholders – donors are more likely to succeed as well.

The result of this strategy in action would be a community galvanized, with more resources spread across its civil society sector to raise important issues, advocate for effective responses, and provide essential services. It would also be an economically stronger community, helping to achieve the aims of USAID and other development agencies. A sustained ecosystem approach to funding would create good jobs in lower-income nations, while pumping money from overseas into the local economy. It would add diversity to local industry, creating jobs in new sectors that encourage and provide support for the development of new skills.

In short, the importance of ecosystems – civil society sectors and movements – must not be overlooked in efforts to shift power. The best way to use money to achieve social change is to put grantees, their knowledge, and their strategic vision at the heart of things. Instead of identifying one grantee, support many; instead of imposing tricky power dynamics on the local level, support and strength whole sectors.

Many funders are already doing this – notably human rights and feminist funds such as the Global Fund for Women and the Fund for Global Human Rights (where one of us works). These smaller grantmakers are a lifeline to local activists, reaching grantees that others cannot, and doing so with an understanding of the challenges that grantees face. Large foundations making big bets and government agencies seeking to localize their funding would do well to follow their example. If we all put a big bet on this ecosystem approach, we are confident that positive change would follow. 

Clare Gibson Nangle is director of strategic partnerships at the Fund for Global Human Rights. And Devon Kearney has worked with human rights and social justice nonprofits around the world for more than 20 years.