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Renewing the Grand Bargain, Part 2: Old goals, a new path

‘Revolution? I wouldn’t dream of using the word revolution.’

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In Part 1, we went back five years to look at the origins of the Grand Bargain between donors and major aid organisations, and the circumstances that drove such a major rethink in the way humanitarian aid was financed. We also looked at areas of progress since its launch.

Here, in Part 2, we explore the obstacles to progress in the three areas the Grand Bargain 2.0 envisages as having the most potential for system-wide transformation: localisation, more agile funding, and greater involvement of affected communities. These, and other sticking points, will be hammered out at the next annual meeting of the over 60 signatories, from 15-17 June. 

Committing to locally led aid

Reza Chowdhury is executive director of COAST Foundation, an organisation that supports communities living along the flood-prone coast of Bangladesh. On reading the Grand Bargain for the first time, he felt a sense of excitement and empowerment about the proposed reforms for the humanitarian sector. For years, he and his colleagues – both national and international – had been pushing for many of the changes he found in the new agenda, introduced in 2016. Finally, he felt he had a powerful advocacy tool. “I can tell UN organisations, ‘look you have signed this Grand Bargain – now you have to implement this,’” he recalled.

But the very set-up of the bargain exposed how entrenched the exclusive nature of the system really was. It was a bargain between the international players only. Despite the extent to which internationals relied on local responders to deliver frontline assistance, they were excluded from the bargaining room, not given a seat on the Facilitation Group – the representatives of the signatories who maintain an overview of the bargain’s processes. Most troubling of all: They had been left out of the one workstream most important for their future. The Grand Bargain embraced the ‘localisation agenda’ – changing partnership and funding arrangements to be more favourable to national players like Chowdhury’s – but it did so without actually ensuring that such organisations were present in the discussions.

  • At a glance: Localisation’s enduring challenge

  • From the start, the very set-up of the bargain exposed how entrenched the exclusive nature of the system really was: It was a deal between the international players only.
  • While a handful of smaller agencies and donor nations have revised their partnership policies and practices to be more favourable to local organisations, direct funding flows to them remain a small fraction – 4.7 percent by the end of 2020
  • Local organisations still get the short end of the stick when it comes to overhead costs, as many of their contractual agreements are for short-term projects that don’t cover the basics (electricity bills, rent, bookkeeping) they need for organisational development, to operate between crises, or to pursue their own agendas. 
  • Shifts over the past five years do indicate some progress, but these have largely been at the initiative of the local organisations themselves and involve only a core set of smaller international agencies and donors. 
  • Localisation is one of the two main priorities that the new bargain hopes to tackle. The Grand Bargain 2.0’s new set-up will also strengthen local actor engagement by giving them a seat at the Facilitation Group which oversees progress. 

“It was a backroom negotiation that aimed to help local organisations, but it wasn’t an equal negotiation with them,” explained David Fisher, manager of the policy and diplomacy unit at the International Federation of the Red Cross, and technical co-convener of the localisation workstream. Today, 18 local organisations are invited to be part of this workstream, but the initial exclusivity has dogged the process since its outset. 

Being sidelined from international policy and decision-making forums was nothing new to national responders. In fact, it was so common that a network of local responders adopted the slogan used by disability activists, “nothing about us without us”. Exclusion was just one grievance in a long list of ways that they – often the first and most connected responders to any crisis in their community – felt marginalised by the formal humanitarian system they were pushing to change.

Another problem was the way funding flowed through the system. Government donors (and importantly their taxpayers) were generally ready to help those in the midst of humanitarian crisis. International organisations – the UN and NGOs – jointly put together a plan to respond, with a corresponding price tag. Donors then disbursed funds to “trusted” intermediaries who could manage that money all the way down the chain – until it became a shelter for a family in Bangladesh, a latrine for a community in Central African Republic, or school supplies for children in Yemen.

But by the time of the Grand Bargain’s launch, only a small fraction of funding in the aid system ever went directly from a donor to a local organisation – even though most often it was these local groups that were distributing those shelters or building those latrines.

Donor nations and international aid organisations understood this implicit imbalance and how unfair the arrangement was, but the reasons why it worked this way were deeply entrenched. Breaking down these barriers would prove more complicated than perhaps anyone initially bargained for.

One of the localisation workstream’s most notable initiatives was tacking a numerical target to the agenda. It aimed to raise the share of funding that went “as directly as possible” to local organisations to 25 percent by the year 2020. Those who had been pushing for this outcome for years were euphoric. Others were sceptical.

“Did anyone actually read what they’re signing up to?” asked Nils Carstensen, co-manager of localisation initiative Local2Global, recalling his reaction on reading that commitment. Before the Grand Bargain was launched, he and other colleagues at Charter for Change, an initiative to foster locally led response, had been pushing for the same outcome and had coined the slogan “20% by 2020” – the percentage of funding that internationals would give directly to local actors by that year. “They hadn’t just taken our 20 percent, they threw 5 percent on top. It was super! But have any of you done your homework?” he wondered. “We had done some of those calculations. To think we could make that change to 25 percent in five years… that’s where I got the sense that no one had done even the slightest back of envelope calculation.”

“Are major donors going to be ready to sit with each community-level actor to negotiate terms? Probably not.”

The problem with pegging a target to a quantifiable outcome, rather than a vague attempt to do better, is that progress – or lack of it – is more evident. Five years after the launch of the Grand Bargain, the numbers on direct local funding are sobering. By the end of 2020, according to analysis by the Overseas Development Institute (ODI), 13 out of 53 grant-giving signatories allocated 25 percent or more of their humanitarian funds to local responders as directly as possible (this is a jump from the previous year when it was 10). Although recent analysis shows variation in how funding flows are calculated, making it difficult to provide an exact measure, the latest ODI figures reveal that only 4.7 percent of overall global humanitarian funding was allocated to local and national responders in 2020.

And there were numerous reasons why.

“We can’t have 20,000 different contracts with local NGOs,” explained an official from a major donor who asked to remain anonymous to comment freely. Managing hundreds of small contracts would be impossible for a donor. There were other pressures too. “National auditors breathe down our necks,” the donor continued, justifying the tight oversight and regulation that a local organisation might not be able to handle. “Are major donors going to be ready to sit with each community-level actor to negotiate terms? Probably not,” said IFRC’s Fisher. “This is why there needs to be an expectation that intermediaries are not just there to subcontract [to local organisations], but to support [their] leadership and delivery.”

For some donors, like the EU, the excuses were more clear-cut: Legislation forbade them from investing in any organisation that wasn’t European. What this meant was that government donors were pushing the administrative burden and financial risk onto intermediaries like the UN agencies and international NGOs. 

And even when slices of funding did reach local organisations, there were additional inequities. Contractual arrangements were generally for short-term projects. This meant that local organisations never received money for the overheads (electricity bills, rent, bookkeeping) they needed for basic organisational development, to operate between crises, or to pursue their own agendas. It kept them in a constant state of scrambling and being beholden to their international counterparts. In a Catch-22, it also kept them from building the capacity to manage large grants, or to endure the arduous audits and other procedures that would make them competitive with international NGOs. 

Organisations needed to tell their donors that their constituents’ tax dollars went to solving world hunger, not buying paper and pens. But without paper and pens, how could they be expected to solve world hunger? 

“It’s a contractee-contractor relationship for short-term projects, which makes it really hard for us,” Nanette Antequisa of the most recent Grand Bargain signatory – ECOWEB, in the Philippines – said of some of her arrangements with international partners. Other partnership agreements, she noted, are more equitable. Indeed, ODI’s analysis points to an expanding set of agencies and donors who value and invest in quality partnerships. But overheads are still largely excluded from standard programming agreements with local actors. 

Although many international organisations were sympathetic to their national counterparts, their own incentive structures complicated things. Those agencies, and crucially the leaders of those agencies, were judged based on their fundraising abilities; their success was tied to the organisation's fiduciary health, even more so in a climate of steep competition over scarce resources. Splitting overhead costs with national partners, even if it was the right thing to do, would mean less money for the international organisation, and it ran counter to their fundraising goals. “You can hear the finance departments scream already, ‘we can’t do with less overhead!’” said Carstensen.

When those international organisations went back to their donors to request additional money to cover overheads of their national partners, the donors had a ready-made answer: “We can’t tell our constituencies, our national treasuries, that more money went for overheads,” Carstensen continued. (As outlined in part 1 of this article, some donors are changing this practice). Organisations needed to tell their donors that their constituents’ tax dollars went to solving world hunger, not buying paper and pens. But without paper and pens, how could they be expected to solve world hunger? 

Making funding more agile

The way funding flowed through the system didn’t just need to change for local organisations. For years, internationals had been clamouring for change themselves. When they saw the chance to access more quality funding – longer-term (and therefore predictable), flexible and unearmarked funds – through the Grand Bargain commitments, they came running.

Humanitarian assistance today is no longer just lifesaving immediate relief; most crises last eight years or more. Funding, the international organisations argued, needed to reflect that reality so that they could plan for these longer-term horizons. They also needed to be able to quickly adapt to changing needs as they arose on the ground – a cholera outbreak on top of a conflict, a storm on top of an earthquake – and redirect funding as needed. Without this flexibility, international agencies often found themselves either out of touch with what communities needed, or being held to an approach that may no longer be relevant.

As funding became tighter, competition between sectors grew fiercer, with each of them claiming to be the priority need: food needs more important than health needs more important than education needs.

To unleash this funding, donors needed something in return. Agencies had to be more transparent about where funding went, and provide a more accurate picture of the humanitarian problems that needed addressing. Over the years, donors had lost faith in the credibility of the assessments used to determine the cost of response. Many recognised the awkward bias in the current method – having the same set of actors assess needs, ask for funds, spend those funds, and then evaluate what they did with the funds. The incentives were all wrong.

  • At a glance: More flexible, longer-term funding

  • Accessing longer-term (and thus more predictable), flexible, and unearmarked funds was a major carrot for many NGOs signing up to the bargain. It continues to be a cornerstone of the next agreement.
  • To unleash more flexible funding, donors needed something in return. They asked agencies to be more transparent about where funding went, and to provide a more accurate picture of the humanitarian problems that needed addressing. 
  • Agencies have to some extent lived up to their end of the bargain by launching a new way to jointly assess needs, giving a more honest picture about the priorities. 
  • A simpler, uniform template was also proposed to free up some of the resources that went into donor reporting. But this hasn’t been universally adopted. 
  • While some smaller donors have released more flexible funding, the commitment remains largely unmet. 

And as funding became tighter, competition between sectors grew fiercer, with each of them claiming to be the priority need: food needs more important than health needs more important than education needs. The truth was: People in crisis needed a combination of all of these things – some more severely than others. But without a coordinated way of measuring needs and assessing their severity, the figures were unreliable and donors saw right through them.

“We know that quite often the data is retro-engineered to fit their [the aid agency’s] financial goal,” explained the official from a major donor institution who wished to remain anonymous. “Some tell me it’s done to keep the budget down to what they know donors will fund. Others inflate it as much as possible because they know they will only get a fraction.”

But agencies have to an extent lived up to their end of the bargain in this regard. Last year, the UN launched a new way to assess needs and severity across sectors, giving a more holistic picture about not only the priorities but also the price tag. The methodology is currently under review, but in the meantime a more accurate picture has emerged of priority needs and where funds should be directed.

And some donors – mainly smaller ones like Denmark, the Netherlands, and Ireland – have also lived up to their end too, releasing more flexible funding. But, overall, ODI analysis reveals that while the volume of flexible funding has increased since the start of the Grand Bargain, its proportion of total funding has not. And because funding is channelled first to UN agencies, it tends to get stuck there, with international and local NGOs not seeing those benefits. “That was a big conundrum,” said Kate Phillips-Barrasso, director of humanitarian policy for US NGO consortium InterAction, and a former member of the Grand Bargain’s Facilitation Group. “The dividends of the commitments need to flow all the way down the chain to frontline actors.”

As agencies have, to an extent, lived up to their end of the bargain – finding a better way to measure needs – part of the deal was that they’d get something more in return: some lenience over how they reported to donors on meeting them. But there was only so much leeway donors could provide. “We work in a heavily controlled environment, and we don’t want the public to lose trust in the work of humanitarians. We need to have scrutiny,” said the anonymous donor. And that came down to how organisations reported on that money, requiring arduous and time-consuming reports for each donor.

As part of the Grand Bargain, a simpler, uniform template was proposed to free up some of the resources that went into reporting. It would also remove one administrative barrier for local organisations in receiving that funding. Agencies piloted the template under the rubric “less paper, more aid” and showed the savings that could be made. 

“It was really basic and would have been super-helpful,” said Lindsay Hamsik, senior manager of humanitarian policy at InterAction, and also a former member of the Facilitation Group. “NGOs asked the donors, ‘please help us roll this out’.” Although some grant-giving UN organisations have taken it up, many donors balked, and the template still isn’t widely implemented. “Thought leadership, time, and energy went into coming up with something they could adopt. That’s disheartening,” she lamented. Now that the technicalities have been ironed out and the potential savings proven, many are hopeful the Grand Bargain 2.0 can push through this impasse.

Beyond the suggestion box

One of the most fundamental imbalances in the aid system has always been its “take it or leave it” set-up for people affected by crisis. They generally have no say over the goods or services they receive, nor a way to provide feedback on what or how it is delivered to them. Grand Bargain commitments around the “participation revolution”, ideas that had been circulating in the system for decades, set out to change that.

“It looks more like ‘pretend to’ participation to get around the commitments, and get on with what you wanted to do in the first place.”

Despite near-universal support for this idea in theory, as well as recent evidence of the benefits of having affected people in the driver’s seat, most players say very little of this reform has come to pass in practice. Aid largely remains a supply-driven enterprise. 

“Revolution? I wouldn’t dream of using the word revolution,” noted Carstensen on the lack of progress to date. “It looks more like ‘pretend to’ participation to get around the commitments, and get on with what you wanted to do in the first place.”

  • At a glance: The participation revolution

  • Accountability still skews heavily towards donors, with the end-users of humanitarian assistance given little say over the goods or services they receive. 
  • Technical tweaks have been made – agencies setting up a suggestion box here, a hotline there – but it’s far from revolutionary. 
  • Although there’s growing interest – not to mention additional proof of the benefits of having affected people in the driver’s seat – the ideas remain fringe, with continued resistance to allowing these voices to meaningfully impact decision-making. 

True participation required multiple shifts. Agencies needed to reorient their delivery, not only by soliciting feedback from people on the receiving end of assistance, but then by actually using that feedback to modify their programmes based on what people were telling them. Donors also needed to allow agencies the flexibility to change course based on what they were hearing from communities, so they could help people grow their own food instead of distributing blankets if that is what people preferred – despite blankets being written into a programme agreement.

Local leaders like Antequisa in the Philippines are frustrated. Her organisation regularly consults community members and recalls approaching an international partner with their plans and ideas – more appropriate and useful ways to assist. The international partner refused, citing programme and procurement restrictions. “Are those policies set in stone?” she wonders. “Could they be changed if the community wants a different response?”

The problem wasn’t necessarily collecting the feedback, it was about using it to influence decision-making. With competing demands on their time and resources, many agencies tended to prioritise other activities though, leaving participation as fringe and niche. As with other areas of the Grand Bargain, progress is often contingent on donor incentives; some have required evidence of community participation as part of a grant agreement with agencies. But agencies are often under pressure to respond quickly (thus without time to engage affected people), and are on a rapid planning treadmill, limiting time for reflection on progress or results, especially from the perspective of affected communities. 

The participation issue could be one of the most difficult problems the signatories face next week when they meet to hammer out the specifics of the new Grand Bargain. Surveys by Ground Truth Solutions, an organisation that collects feedback from affected people to help inform and influence aid responses, consistently show just how out of touch the aid system is: Most people do not feel aid meets their most important needs, nor enables them to be self-reliant. 

“There’s a tendency to limit the idea of participation to basic mechanisms sitting at the bottom of the totem pole,” explained Nick van Praag, founder and director of Ground Truth Solutions. “These won’t make the revolution happen. They’re minimums when it comes to the ability to spark real change.”

What’s next for the Grand Bargain?

Five years on, the $1 billion in savings the Grand Bargain was supposed to deliver seems laughable. Protracted conflicts, climate change, and a global pandemic conspired to see at least a $10 billion jump in global humanitarian needs recorded in 2020. At the same time, humanitarian funding is under pressure – some already has been cut – as donor countries face up to the domestic impacts of the pandemic.

As the West reckons with systemic racism, the aid sector itself is grappling with how to undo the lingering colonial legacies built into the way it does business, and the inherent power imbalances hardwired into the system – things the localisation agenda and participation revolution attempted to address and which seem more pressing today than ever.

The overall objective of the Grand Bargain 2.0 remains largely the same: enhanced efficiency, effectiveness, and greater accountability of the system. With the challenges of implementing the 51 commitments over the past five years well-understood, the Facilitation Group has drilled down on quality funding and localisation (including the participation of affected people) as the priority areas to achieve this impact. They have also proposed a new set-up, one that would elevate the technical workstreams into a more political arena, while also strengthening local actor engagement.

While there’s concern over some of the original commitments disappearing (the proposed 2.0 framework eliminates the 25 percent funding goal for local actors, for example), others see that simplifying it into priority areas may tighten the agenda. It may also improve accountability – with so many commitments, agencies and donors tended to cherry pick the issues they wanted to focus on, and ignore the others.

The quid pro quo has been a distraction from the collective mission.

The proposed reconfiguration of the bargain may also change that. Political caucuses, or “coalitions of the willing” as they’re being called – consisting of high-level, self-appointed “champions” – are expected to work together behind closed doors to drive through some of the toughest barriers to change. This is important, because translating the commitments into practice ended up being a “technocratic worker bee exercise”, as Phillips-Barrasso called it, rather than a process driven by the political actors who hold the levers to change.

Just as important, the new proposal shifts the centre of gravity from “Geneva to the front line” through country and regional consultation as well as through what are being called National Reference Groups, which would apply the commitments on the ground. For a local leader, like Sema Genel Karaosmanoğlu, director of Support to Life in Turkey and chair of the NEAR Network – a movement of local and national civil society organisations – this could be a welcome change. “Unless we start moving things at country level, it’s only talk,” she said. The draft new Grand Bargain proposal, obtained by The New Humanitarian, goes further, adding a local representative to be part of the top-level Facilitation Group, and encouraging local consortia to become signatories.

Although many are encouraged about more local voices making their way into the negotiating room, they still see these fixes as window dressing in tackling the underlying power imbalances. No matter the number of local actors sitting on the Facilitation Group, changes won’t happen until the most powerful do. 

The quid pro quo arrangement at the very heart of the Grand Bargain remains the biggest challenge. The original proposition was prescient five years ago when it said, “implementation will involve significant challenges and sometimes the sacrifice of individual interests for the greater common good.” Those sacrifices will have to be borne by the most powerful. Despite the international NGOs and some UN agencies living up to many ends of their bargain – being more transparent in how money is spent, coming together to jointly assess needs, piloting and demonstrating how reporting could be done more efficiently -- there’s a sense that donors haven’t met them halfway. “No one is going to outright say no,” explained Luca Peciarolo – senior adviser on humanitarian financing at the Norwegian Refugee Council and another of the organisation’s Grand Bargain focal points – referring to how donors stall the process. “But they give you 1,000 different excuses as to why they can’t do it,” he explained. At the end of the day, the donors have more clout: They sign the cheques.

The problem is that whereas NGOs – in particular local ones – have so much to gain from the bargain commitments, the value for donors and those UN agencies with enough resources of their own or dominant “market share” isn’t always obvious. What’s in it for them to reorient their whole approach – to take on more risk, to fund local actors, to loosen their reporting requirements? In other words, where’s their quo?

In some ways, the quid pro quo has been a distraction from the collective mission. Signatories spent five years negotiating amongst themselves, hammering out what each give and take would be – a bit less paperwork here, a bit more transparency there – but along the way, they lost sight of why they came together in the first place: to unlock resources to go to people affected by crisis. Carstensen offered a useful reminder: “It’s in the best interest of everyone, not least those who will live with the consequence of climate change and conflict. It’s a pact we have with ourselves and humanity.”

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