Intermediaries and the Challenge of Localization
CAF America’s approach to grantmaking solves many of the struggles intermediaries face when localizing humanitarian funding
April 25, 2023
This is the second part in our series on localization and grantmaking intermediaries. To learn more about the localization agenda and its origins, please read the first post in this series, “CAF America Champions the Localization Agenda.”
Within the philanthropic sector, the word “intermediary” can mean several different things; and better definition of what intermediaries can be and how they operate is important to understanding why donors might partner with a particular organization. CAF America is a platform for US donors and funders to support charities and charitable projects all over the world. We call ourselves an “international grantmaking intermediary,” and our model is uniquely designed to empower locally-owned and operated charities by giving them easy access to grants funded by US donors.
What may confuse some people is that the types of humanitarian organizations that fill an intermediary role may vary. CAF America is an intermediary—but so are groups like Oxfam, the Red Cross Societies, and Save the Children. We differentiate ourselves from charities like these (let’s call them INGOS) because we believe we have a more direct way of getting funds to those who need them most. While all of us do good work and deserve support, at CAF America we also believe that our approach is much more appropriate for delivering the types of localized humanitarian assistance that is being called for by those INGOs themselves.
Since 2016, many large INGOs, multilateral institutions, and policymakers have signed onto the Grand Bargain, a broad framework of initiatives seeking to improve the delivery of humanitarian aid. One of the pillars of the Grand Bargain is a call to localize charitable funding. In the eyes of these signatories, localization means that “local/national humanitarian actors (LNAs) lead, participate in and are adequately funded for humanitarian response.”1 This priority emerged as a response to barriers that funders (often in the Global North) and communities (mostly in the Global South) have faced in delivering impactful and effective funding for aid and development. Many of these barriers stem from top-down power imbalances that have persisted within these groups since the widespread decolonization movement of the mid-20th century. In short, the Grand Bargain aimed to overcome these entrenched, persistent power imbalances by both increasing funding to LNAs and building more equitable partnerships with them, thereby recognizing their importance for reaching people in need.
Why do INGOs struggle with localization?
In 2016, the Grand Bargain signatories set a goal for LNAs to directly receive 25% of humanitarian funding. As of July 2022, that number sat at 5%, representing little to no progress after over six years of work.
What exactly is preventing INGOs from fully committing to localization? When a caucus was held in November 2022 on this topic, the group named the following issues:
- They believe that many LNAs lack the capacity to accept/absorb funding; in addition, the INGOs themselves have not invested in the capacity within their organizations that is necessary in order to manage a larger number of grantee relationships.
- They cite the burden of ensuring compliance with regulations, charity vetting, and risk management.
- They complain about complex regulatory environments that make working with local organizations more burdensome and administratively difficult.
- Members stated that LNAs were not always the best option for the most effective humanitarian responses.
While INGO intermediaries agree in principle that localization is important, in real terms, they have struggled to provide organizations on the ground with the greater access to resources and control that is called for in the localization agenda.
How CAF America enables localized grantmaking
CAF America’s core operating model addresses all of the issues INGOs raised as barriers to delivering more localized funding:
- Capacity: Since we believe each local organization has the best sense of their own capacity and ability to deliver on projects and programs, we let them propose their own projects for our review and approval. This ensures that we are not demanding impacts or outcomes that strain charities’ staff and resources.
- Compliance: Our team has grown over time to meet the demand involved in vetting charities and managing risk, and now manages over 3,000 current, approved grantee relationships. By putting compliance at the forefront of our services as an intermediary, we can comfortably fund even the smallest locally-led grantees.
- Complex Regulatory Environment: Over the 30+ years we have been in operation, CAF America developed grantmaking protocols that ensure that we can navigate both US and grantee-country regulations with ease. And, we’re continuously improving our processes, interfaces, and team structures to make our grantees’ journeys with us as seamless as possible.
Donors looking to support local organizations around the world should explore some of the impactful projects we have funded in partnership with locally-owned organizations.
1 The Grand Bargain Caucus on Intermediaries, "Towards Co-Ownership: The Role of Intermediaries in Supporting Locally-Led Humanitarian Action."
About the authors:
Brooks Reed is CAF America's Vice President of Thought Leadership and Philanthropy, a role in which he oversees Business Development, Communications, and Content Development. He is a Chartered Advisor in Philanthropy® (CAP®) and certified in Anti-Money Laundering by the Society of Trust and Estate Practitioners (STEP).