Too Southern to be Funded: the Funding Bias against the Global South

What's the problem?

Funding ring-fenced for CSOs from the donor country (tied aid) is not regarded as tied if its purpose is to provide core funding as opposed to funding for procurement-related activities. This is despite long-standing calls for a more equitable and decolonised development sector, and despite the Organization for Economic Co- operation and Development (OECD) recommending that Official Development Assistance (ODA) be untied to the greatest extent possible. 

Regardless of whether this funding can be officially designated as tied, more than 90% of all Development Assistance Committee (DAC) member countries’ civil society support goes to DAC member domestic CSOs and other Global North CSOs. Meanwhile, less than 10% is for CSOs in the Global South (referred to by the DAC as ‘partner countries’). Some DAC member governments require that CSOs from their own countries partner with Global South CSOs and transfer resources to them, but there is no consistent way of quantifying the exact amounts. This clearly demonstrates high levels of geographic restriction. We advocate for changes that would enable Global South CSOs (and other organisations) to directly access all forms of DAC donor funding. Tied aid, whether formal or informal, is both ineffective and harmful.

What does the research focus on?

The purpose of this research is to identify which DAC donors have policies that restrict funding to organisations from their own countries. The bulk of the research consisted of a desk review of both public sources and documentation provided directly by DAC donors on their CSO funding policies. DAC donors included in the report are: United States, Germany, United Kingdom, Sweden, Netherlands, Canada, Norway, Switzerland, Belgium, Finland, Ireland, and Iceland.

Key overall findings

Most DAC donors have dedicated civil society strategies in place, and a few have specific policies focused on funding CSOs from their own country. Virtually all DAC donors that we reviewed have dedicated funding streams for their own CSOs in one shape or form, both for core support and for programme or project funding. As shown in the chart overleaf, most DAC donors included in this study provide less than 10% of bilateral ODA funding for civil society to Global South CSOs, i.e., a negligible amount.

Questions for reflection and discussion

1. How can the definition of tied aid be revised to close existing loopholes that permit core funding to Global North CSOs to be classified as untied? How can this be done in a way that prioritises equity and increases core funding to Global South organisations, rather than further ‘privatising aid’ (i.e., increasing the amount of aid resources channelled through procurement)? 
2. How can a clear definition of what constitutes a ‘local’ organisation in the Global South be crafted to ensure that new funding commitments do not unintentionally lead to funding going to Global North CSOs with locally registered offices in Global South countries?
3. In what ways can DAC donors swiftly increase direct funding to Global South CSOs, without allowing the fact that some Southern CSOs receive funding through Northern intermediaries to delay this process?
4. How can due diligence and compliance processes be adapted to ensure they do not intentionally or unintentionally exclude Global South CSOs from accessing core funding and other types of direct support?
5. What processes could be used to establish a baseline, criteria and metrics that can be used by all OECD DAC members to track disaggregated aid flows to individual Global South CSOs on a consistent basis?
6. How can DAC donors and other Northern actors re-evaluate negative assumptions related to trust and accountability that are often used as reasons not to provide direct funding to Global South CSOs?