International aid supports emergency relief, public health, climate change and other outcomes in order to bring a level of parity across international borders. Localising aid is the next step in the process, ensuring that local communities have more agency and make the most of funding from international sources. For a local organisation, properly understanding the nature of this aid is key to better long-term working practices. In this article, we discuss the different types of localised aid, how it helps organisations in local communities and some of the key tips for making the most of your organisation’s position.
What is aid localisation?
Aid localisation is the process of applying aid to specific locales and has been identified as the number one challenge facing CEOs of international nonprofits. USAID Administrator, Samantha Power, has challenged the audiences at SID-US and most recently at the InterAction Forum to focus on “progress not programs” and a big part of that is getting localisation right. We have done extensive work supporting the nonprofit community grappling with the pragmatic aspects of aid localisation, including developing resilient governance structures.
Separate from standard aid, localised aid targets selected regions and even towns rather than covering an entire country.
What types of localised aid are there?
Depending on your location and the nature of your organisation, there is a range of different types of aid available. Funding sources around the globe are giving more agency to local organisations to fundraise and play a more active role in the development efforts within their countries. The international community still has a role in sharing best practice and collaborating with local organisations to make maximum impact. Read on to find out more about the key types of localised aid and the eligibility criteria for each:
USAID’s PEPFAR program directs 70% of its funding to host country governments and organisations, ensuring the majority of its budget goes to supporting the local community. The criteria for classification as a local entity for PEPFAR are:
- Board composition: At least 51% of the board are citizens or permanent residents of the country.
- Organisation: The company is incorporated under the country’s laws, and/or has its primary place of business there.
- Staffing: At least 75% of the organisation’s staff are citizens or permanent residents of the country.
USAID has a commitment that 30% of its funding goes to local entities, less than PEPFAR’s commitment but still enshrined in the organisation’s rules. Local entity criteria for USAID are as follows:
- Organisation: The company is organised under the laws of the country the localisation refers to.
- Location: The principal place of business is the country in receipt of the localised aid.
- People: The governing body and ownership structure of the organisation are both majority comprised of citizens or permanent residents of the country.
The Centre for Disease Control and Prevention, or CDC, has no defined minimum regarding aid localisation, however, localised aid is still in use. Localisation criteria for the CDC are as follows:
- Board: At least 51% of the board’s members are citizens or permanent residents of the country.
- Location: The organisation’s incorporation and/or primary place of business are in the country in question.
- Staffing: At least 75% of staff are citizens or permanent residents of the country the localisation applies to.
In the case of confusion, PEPFAR and the CDC have the same requirements.
The Bill and Melinda Gates Foundation has no set limit on localisation, however, preference is given to local groups and individuals. There are no set criteria for localisation, however, the organisation prefers bids and letters of intent from companies with ties to the local community, and companies putting the community at the heart of their ethos.
Benefits of localisation to INGOs
Where globalisation is clearly beneficial for an INGO looking across borders and seeking significant expansion, the positives of localisation are less plain to see. However, there are key positives for global organisations looking to make a real impact to local people. These include:
- Growing a deeper integration with local people
- Drawing local cultures into your organisational structures
- Expanding your team’s horizons and using international money to solve national problems.
If you’re looking for support with international expansion or need more information on localised aid, get in touch with the Seamless team today. We are experts in global governance, expansion and support organisations from around the world in maximizing impact and establishing resilient structures.