Practical Guidelines for Supporting Locally Led Development

6. Action area: Quality financing to local actors

Abstract

Quality funding is a critical enabler of locally led development, implying access to long-term, flexible and predictable finance. This action area identifies practical entry points for delivering such funding, addressing both technical and strategic dimensions. This chapter also offers tools and guidance on providing funding through existing local systems, scaling up core funding and transitioning financial agency to local actors.

What is the issue?

Despite growing recognition of the importance of quality funding for locally led development (LLD), many local actors continue to face limited access to long-term, flexible and predictable finance. Most ODA remains channelled through international intermediaries or partner country governments, while direct funding to non-state local actors, including community-based, women’s rights and grassroots organisations, remains marginal. Engagement with civil society overall has plateaued over the past decade, and only a small fraction of CSO funding reaches organisations based in partner countries (OECD, 2026[1]).1 Similar patterns are observed for women’s rights organisations2 and in humanitarian assistance, where direct funding to local actors remains minimal (ALNAP, 2025[2]). Refugee-led organisations are particularly underfunded, despite their frontline role in responding to displacement contexts (ODI, 2025[3]). At the same time, projected reductions in ODA and low levels of budget support3 risk further constraining the flexibility and predictability of financing available to local actors, including partner governments.

Funding patterns undermine local actors’ institutional sustainability and local leadership. Rigid, short-term and prescriptive budgets limit local actors’ ability to adapt, plan over longer horizons, recover core costs or invest in staff and organisational systems. Fragmented funding cycles further inhibit collaboration and institutional growth, weakening staff retention and reducing the ability of local organisations to operate as autonomous and self-reliant partners (OECD, 2023[4]). Development partner-driven project frameworks, short funding cycles and high compliance requirements absorb scarce administrative capacity and often disadvantage smaller organisations with strong community roots. Closing the gap between commitments and practice therefore requires a candid assessment of the structural factors that continue to constrain progress.

Policy commitments alone are insufficient if development partners’ institutional funding rules and regulations remain rigid. Many Development Assistance Committee (DAC) members continue to operate under legal, procurement, risk, financial management or human resource frameworks that limit direct funding to local actors, restrict local procurement (see Box 6.1) or constrain locally employed staff from assuming leadership roles. When these compliance requirements are passed down unchanged to intermediaries, while they are simultaneously expected to advance LLD objectives, misaligned incentives can emerge that ultimately undermine locally led practice.

Box 6.1. Open and fair competition in aid-funded procurement for development effectiveness and locally led development

Tied aid restricts recipients’ ability to procure goods and services freely and limits opportunities for local suppliers, undermining both development effectiveness (untying ODA reduces transaction costs by as much as 15-30%) and local economic participation. Most DAC members have formally untied a large share of their ODA in line with the DAC Recommendation on Untying Official Development Assistance [OECD/LEGAL/5015]. However, informal barriers may persist in practice. Procurement specifications, language requirements and tendering practices may, in some cases, favour provider-country firms, potentially leading to re-tying aid and constraining access for local actors. As development assistance is increasingly framed around strategic and political objectives, there is a risk that such practices become more prevalent, weakening local ownership, distorting markets and reducing the long-term developmental impact of ODA.

The revised DAC Recommendation on Untying Official Development Assistance, adopted in January 2026, recommends i) reinforcing the responsibility of partner countries for procurement, with appropriate safeguards for effectiveness, accountability, probity and transparency, and ii) promoting local and regional procurement in partner countries and territories.

Where to start

• Work with partner country and territory governments and non-state organisations to identify procurement needs and strengthen local and regional procurement practices.

• Draw on peer learning to identify and share good practices that support locally led development (LLD) through procurement, while ensuring efficiency and compliance with international trade obligations.

• Use and strengthen partner countries’ systems: Where appropriate, channel ODA through partner countries’ public financial management systems, including budget execution, financial reporting, auditing and procurement, for funds disbursed to the public sector, such that the countries’ own procedures are applied rather than separate development partner systems. Complement this with technical assistance to improve system integrity and help countries meet internationally recognised procurement standards.

• Enable local private sector engagement and capacity: Invest in strengthening the capabilities of local enterprises to compete for aid-funded contracts by supporting access to certification, finance and consortium-building. This expands the pool of qualified suppliers, promotes untied aid and reduces reliance on external implementers.

• Facilitate inclusive procurement practices: Increase opportunities for local participation by unbundling large contracts, publishing tenders in local languages and advertising bids widely, and promoting local subcontracts and joint ventures. These measures help level the playing field and maximise competition.

• Enhance transparency and accountability: Monitor and publish disaggregated data on contract awards to enable oversight by partner governments, civil society and the media and to identify potential informal tying practices that undermine the spirit of untied aid. In doing so, approaches should be proportionate and respect partner country ownership and contractual arrangements, including relationships between executing agencies and prime contractors, while avoiding undue reporting burdens on implementing partners.

Additional resources

• The OECD’s statistics on untying aid offer a practical starting point to collectively track progress on untying aid, covering both formal (de jure) and informal (de facto) untying (OECD, n.d.[5]).

• In order to promote local participation in ODA procurement, Australia’s PERFORMS platform tracks procurement outcomes across the ODA supply chain, including the share of engagement of local workers and subcontractors (OECD, 2025[6]).

• The report funded by the Joint SDG Fund on The Localization of Aid-Funded Procurement offers guidance for development partners on promoting locally led procurement, including good practices for entrusting partner country organisations with responsibility for procurement (OECD, 2024[7]).

Note: “Tied aid” refers to ODA that must be used to procure goods or services from the provider country or a limited group of countries. Progress on formal untying has been substantial: the share of ODA covered by the DAC Recommendation that is reported as untied increased from around 51% in 2000 to 87% in 2024, while the share of all bilateral ODA reported as untied rose from about 34% to 79% over the same period. Based on 2024 data, 24 of 33 DAC members had untied more than 90% of ODA covered by the DAC Recommendation, with 15 fully untying their aid. However, evidence suggests that a share of formally untied aid may de facto be tied. In 2022-2023, 47% of contracts (in terms of value) reported as untied were awarded to suppliers in the provider’s own country, compared with 40% awarded to suppliers in developing countries. However, this aggregate picture conceals important variations across development partners (from 0% to 99% of contracts awarded to development partner companies). Upon approval of the revised Recommendation, the DAC tasked the OECD to develop good practices for supporting LLD through procurement.

Sources: Center for Global Development (2025[8]), The EU’s Ambition to Tie Its Development Aid Will Undermine Economic Development, https://www.cgdev.org/blog/eus-ambition-tie-its-development-aid-will-undermine-economic-development#:~:text=Even%20though%20OECD%20guidelines%20advise,%2C%20Denmark%2C%20and%20the%20Netherlands; Eurodad (2021[9]), Strings still attached: Unmet commitments on tied aid, https://www.eurodad.org/unmet_commitments_tied_aid; Eurodad (2022[10]), This year's 2022 Effective Development Co-operation Summit could be a game-changer for untying aid, https://www.eurodad.org/this_year_s_summit_could_be_a_game_changer_for_untying_aid; Eurodad (2024[11]), Exposing Tied Aid: Preventing donor countries from getting rich on their own aid, https://www.eurodad.org/exposing_tied_aid_2024; OECD (2021[12]), Untying ODA: Development Co-Operation Fundamentals, https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/03/development-co-operation-tips-tools-insights-practices_d307b396/untying-oda_4062820b/251efd69-en.pdf; OECD (2025[13]), Untied aid, https://www.oecd.org/en/topics/sub-issues/oda-standards/untied-aid.html; OECD (2025[14]), Implementing the OECD Recommendation on Public Procurement in OECD and Partner Countries: 2020-2024 Report, https://doi.org/10.1787/02a46a58-en; OECD (2001/2026[15]), DAC Recommendation on Untying Official Development Assistance, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-5015.

Where to start

Quality funding for LLD means providing long-term, predictable and flexible support that goes beyond short-term projects. Such funding gives local actors the space to plan strategically, phase implementation, sequence capacity support, retain staff, adapt to changing contexts and pursue transformational outcomes rather than transactional activities (OECD, 2024[16]; OECD, 2023[17]).

• Canada's International Development Research Centre (IDRC) has designed its partner selection, due diligence, approval and evaluation frameworks around local leadership as the default, with explicit justification required when funds are channelled through non-local actors. In 2024, IDRC allocated about 65% of its total funding directly to local entities.

In practice, this includes flexible financial requirements and budgeting timelines, dedicated overhead lines for local partners, such as i) allowing a set percentage of direct costs, management fees or passing on a defined share of management support costs, and ii) ensuring that non-local intermediaries earmark resources for local partner organisations’ core functions. Development partners can also improve quality by shifting from short-term project calls to multi-year country or regional funding windows, using multi-year memoranda of understanding or partnership frameworks and allowing costs to be adjusted across years without lengthy and costly renegotiations. Incorporating such adjustment clauses and extended inception phases supports meaningful dialogue and enables local actors to modify allocations as needs evolve.

• Canada’s International Humanitarian Assistance Funding Guidelines for NGOs outlines that GAC partner and local partner overhead cannot exceed a combined 7.5% of Total Direct Project Costs. Through these guidelines, partners are encouraged to allocate an appropriate portion of this amount to local and national actors.

• In 2022, the International Rescue Committee (IRC), together with the European Commission, co-launched the Grand Bargain Quality Funding Caucus (IASC, 2022[18]) to advance more predictable and flexible humanitarian financing. Participating stakeholders committed to promoting multi-year funding as a preferred modality, incorporating greater flexibility to adapt to evolving needs, and ensuring that funding is channelled as close to frontline responders as possible, including through key intermediaries such as United Nations agencies. 

• Peace Direct’s Funding Freedom: Models, Stories and Strategies for Making Flexible Funding Work (Peace Direct, forthcoming[19]) outlines considerations to make when providing direct, flexible funding to individuals, organisations, communities and networks. The report lays out different subcategories of direct funding models, including community-led funds, community-based philanthropic funding and crowdfunding.

This also means expanding or strengthening flexible, multi-year direct or core support to civil society. Incremental steps, such as bundling core support within projects for setting minimum percentages for core funding, can serve as entry points. Core support reduces restrictive earmarking and allows local civil society organisations (CSOs) to plan over longer horizons, adapt programming, invest in institutional resilience and retain staff as contexts evolve (OECD, 2024[16]; IASC, 2022[20]; OECD, 2023[17]). When structured around mutual interests, shared accountability and clear expectations, core funding enables local actors to strengthen their institutions and respond flexibly to emerging priorities. Making this work in practice, however, requires deliberate attention to governance, trust-building and risk-sharing, with mutual accountability applied on both sides: local actors reporting on progress and development partners being transparent about their commitments, constraints and decision making.

• Several DAC members have embedded policies and programmes supporting flexible, multi-year funding to civil society organisations, including Australia’s Strategic Partnership Arrangement with BRAC (Australia DFAT, 2018[21]), Canada’s Policy for Civil Society Partnerships for International Assistance (Global Affairs Canada, 2023[22]), Ireland’s Civil Society Partnership (OECD, 2023[23]), the Netherlands’ Grant Instrument: Power of Voices Partnerships (Government of the Netherlands, 2022[24]), New Zealand’s Partnering for Impact programme (OECD, 2023[25]),the funding to CSOs policy of the Norwegian Agency for Development Cooperation (Norad) (Norad, 2025[26]) and the 2025-2029 CSO Strategy of the Swedish International Development Cooperation Agency (Sida) (Sida, 2024[27]).

• In 2024, the Norwegian Refugee Council and Development Initiatives published a catalogue of quality funding practices and examples from the humanitarian space (Development Initiatives, 2024[28]).

• Shifting the Power  is a 10‑year partnership between Comic Relief (CR), the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO), and Anchor Partners in Ghana, Malawi, and Zambia. The programme is designed to challenge traditional donor‑driven models by deliberately shifting power to local CSOs. CSOs are empowered to define their own focus areas in line with the principles of the #ShiftThePower movement. For example, in Ghana, partners have prioritised access to public services, while in Zambia, the focus has expanded to climate justice and environmental degradation. Core programme activities are delivered through the following three funding streams and a comprehensive package of organisational strengthening:

  • Catalyst Fund: Provides accessible grants to small grassroots organisations, particularly those new to FCDO/CR funding, enabling them to invest in their own organisational strengthening and create positive community change.

  • Civil Society Strengthening Fund: Offers a mix of core funding and supports CSOs with organisational resilience and sustainability, helping them overcome barriers to long term effectiveness.

  • Community Resource Match Fund: Supports CSOs to diversify income through innovative local resource mobilisation, with community generated income matched by the fund to incentivise sustainability and financial independence.

▲Pitfall to avoid:

• Avoid relying solely on short-term, project-based funding. It can undermine long-term sustainability, weaken staff retention and capacity, and limit the ability of local actors to operate as independent, self-reliant partners. Fragmented funding cycles also inhibit collaboration and institutional growth, making it harder for local organisations to lead effectively (OECD, 2023[4]).

Budget support to national governments, alongside decentralised support and arrangements with subnational governments, may be considered where fiduciary and political conditions permit, given their role in linking to broader local actor ecosystems.4 Instead of funding fragmented, short-term projects, development partners can use programmatic or sector budget support as a system-level funding approach. This approach enables improved alignment with national and local priorities by channelling resources through existing systems and institutions.

• Since 2020, Australia has scaled up the general budget support given to Pacific Small Island Developing States. This budget support recognised mutual interests and helped manage crises, strengthen partnerships and protect structurally excluded groups (OECD, 2025[29]).

• Iceland adopted a district-based approach to directly fund Ugandan district governments, combining budget support with oversight units, steering committees, audits and training. The approach contributed to Kalangala District becoming one of Uganda’s top performers in education (OECD, 2023[30]; Government of Iceland, n.d.[31]).

• The European Commission report on budget support highlights a variety of cross-sectoral and country-specific results that have been achieved when using a sector budget support modality, including improving local government capacity in addressing climate change, peace agreements, and trust-building between communities and government (European Commission, 2021[32]).

In addition, funding approaches can be tailored to different contexts, types and needs of local organisations. Contextual and political economy analysis, drawing on the knowledge of local staff in country offices where possible, can help identify appropriate partners and funding modalities. In some settings, such as contexts of conflict, deep political division or political repression, direct funding to local civil society organisations may politicise service provision, expose organisations to heightened risks or undermine their perceived legitimacy (OECD, 2023[17]). In contexts of shrinking civic space, financing local actors without adequate protection measures may further increase exposure to risks, underscoring the importance of integrating security, legal support and context-appropriate visibility and reporting arrangements into funding approaches (see Chapter 5). In other cases, local organisations may choose not to receive development partner funding directly, given the opportunity costs of investing in development partners’ management and compliance systems. Supporting informed choice, rather than assuming direct funding is always desirable, allows local actors to engage in roles that best align with their priorities, capacities and comparative advantages.

• Global Affairs Canada’s Women's Voice and Leadership Program offers long-term, flexible, core and unrestricted funding to women‘s rights organisations, lesbian, bisexual, trans, intersex and queer (LBTIQ+) people’s groups and feminist networks (OECD, 2025[33]). The programme also offers fast and responsive funding, allowing organisations to adapt to unforeseen opportunities, challenges or urgent events, including time-sensitive advocacy needs.

Transitions to shift leadership and financial control to local actors can be planned gradually and responsibly, using established country systems where available. This involves assessing absorption capacity and potential constraints across country contexts and national versus subnational partners. The capacity to absorb funding is not fixed and can be improved through targeted policies and intentional capacity-strengthening of existing systems (UK Government, 2018[34]). Development partners can explore scalable approaches, including phased funding or performance-based scaling, to avoid automatically excluding actors with limited capacity.

• The Swiss Agency for Development and Co-operation requires a share of funding to be provided directly to civil society actors in Somalia but first assesses partner risk and capacity using its Risk Governance and Adaptive Programming Framework. It also supports improvements in absorption capacity before disbursement (ODI, 2024[35]).

• Funded by Australia, Germany and the United Kingdom, SPACE Framework for Shifting Bilateral Programmes to Local Actors provides practical guidance for planning responsible transitions, analysing actor roles, and managing costs and risks when shifting bilateral programmes to locally led funding models (SPACE, 2021[36]).

• Funded by Denmark, the European Union and the United Kingdom, the STAR Ghana programme is an example of transitioning from a multi-donor funded programme to an independent Ghanaian-led national entity (Christian Aid, n.d.[37]).

It is important to consider how to make flexible, multi-year core support accessible to marginalised or disenfranchised groups, where appropriate. To address structural inequalities faced by marginalised groups, development partners can establish dedicated funding streams tailored to their needs. These streams can prioritise harder-to-reach communities and include targeted outreach, communication and application support to ensure equitable access to funding opportunities. Proposal requirements can be designed to prevent exclusion, including by avoiding overly prescriptive criteria that may disadvantage disenfranchised groups.5

Adopting intersectional approaches can address overlapping forms of exclusion. In some contexts, direct support to public institutions may also be appropriate if it contributes to reaching marginalised groups. Applying feminist and equity principles can increase funding flows reaching women, youth, people with disabilities and other representative groups and movements to address organisational under-resourcing and to ensure flexibility and local agency in framing needs and priorities. The most impactful mechanisms are those tailored to marginalised groups by design, where women and marginalised groups themselves set priorities and make key decisions. Women's funds represent a unique funding model in development co-operation, channelling resources to local feminist organisations through intermediaries at the global, regional, national and thematic levels (OECD, 2024[16]).

• Examples include Mama Cash, Prospera, the Global Fund for Women, and the Equality Fund, which enable development partners to reach grassroots movements that would otherwise lack access to traditional funding channels (OECD, 2024[16]). Notably, the Equality Fund represents an example of a feminist fund that is tailored to marginalised groups by design. With support support from governments (Canada, United Kingdom, Germany), philanthropic actors, and private donors, this fund takes a gender-lens investing approach to create a sustainable funding stream for flexible grants to reach grassroots feminist movements (Equality Fund, n.d.[38]), (Global Affairs Canada, 2024[39]).

• The Local Government Initiative on Climate Change (LoGIC) is a multi-development partner initiative including the European Union and Sweden that focusses on the intersection of financial inclusion for women’s groups exposed to climate change (LoGIC, n.d.[40]). Development partners provided start-up capital to help scale up their climate-adaptive livelihood business development portfolios.

• Oxfam has established the Women’s Rights Fund and the Women’s Humanitarian Leadership Fund (Oxfam International and Action Aid, 2025[41]) in Ukraine to channel flexible, multi-year support to grassroots women’s rights organisations that are often excluded from traditional funding mechanisms. Delivered through in-country teams, these funds enable outreach to less visible organisations and provide tailored, long-term capacity support, allowing recipients to set their own priorities and adapt to rapidly changing contexts.

Development partners can consider working more directly through locally led intermediaries, networks or funds, which are often integrated with existing local networks and systems. Working through such local intermediaries, including informal mutual aid groups,6 can be both more cost-efficient and enhance programme sustainability by operating within, rather than bypassing, established local leadership and decision making structures.

• The Network for Empowered Aid Response (NEAR) piloted the Bulsho Fund in Somalia as a locally led, community-driven financing mechanism (NEAR, 2025[42]). Unlike traditional pooled funds, Bulsho is governed by Somali leaders and channels resources directly to locally defined priorities through youth-led sourcing and community consensus processes. Its early development was supported through seed financing from Save the Children Denmark, Comic Relief and the Global Fund for Community Foundations.

• NEAR’s Change Fund is a locally led, humanitarian response mechanism that provides flexible grants to frontline local non-governmental organisations across 44 countries (NEAR, 2026[43]). Structured around three dedicated windows (Emergency Response, Displacement, and Bridge Funding), it delivers rapid, context-specific and largely unrestricted support to grassroots actors. By positioning NEAR as a single local intermediary, the Fund channels resources directly to community-based organisations while managing co-ordination and compliance centrally.

• The Movement for Community-led Development (MCLD) is piloting a model in which a member-led local network acts as the intermediary, managing co-ordination, compliance and learning, while members implement activities based on their expertise. Because decisions are member-led and compliance is handled centrally, funding is tailored to members’ capacities without adding administrative burdens while still meeting funder requirements and enabling a trust-based approach.

• Nominated for the 2024 and 2025 Nobel Peace Prize, Sudan's volunteer-led mutual aid groups, including the Emergency Response Rooms (Chatham House, 2024[44]) and Survivor and Community Led Response Models (Corbett, Carstensen and Di Vicenz, 2021[45]), demonstrate how locally rooted networks can sustain humanitarian efforts over the long term, particularly in contexts where international actors face limited access and reach.

▲Pitfalls to avoid:

• Avoid treating local intermediaries as mere conduits for funding by development partners. Recognise and support their role as agents and partners of change, while taking care that funding relationships do not shift accountability away from communities or reorient local organisations primarily towards alignment with development partners’ priorities rather than community needs.

• Avoid requiring informal, community-based mutual aid groups to formalise into registered non-governmental organisations (NGOs) to access support.

Increasing allocations to country-based pooled funds (CBPF),7 with clear targets for local and national actors, helps ensure that more resources reach organisations closest to affected communities. In 2024, the Country-Based and Regional Humanitarian Pooled Funds managed by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) allocated USD 425 million to local and national actors, representing 46% of total disbursements (OCHA, 2025[46]). In politically sensitive or constrained environments, channelling funds through CBPF mechanisms can reduce the visibility and political exposure of local actors while still supporting them (OECD, 2023_[47]). CBPFs also serve as a model for transparent allocation, as they maintain public data hubs that track allocation flows. At the same time, some stakeholders consider that growing reliance on a single pooled funding modality may reinforce centralisation of decision-making and influence, pointing to the need for a more balanced approach across pooled funding instruments and delivery models to avoid over-reliance on a single channel.

• Developed by the United Kingdom, Switzerland and Denmark in collaboration with other DAC members, agencies, funds, and organisations, the Guidance Note for Donors on Promoting Inclusive and Locally-led Action through Humanitarian Pooled Funds outlines nine inter-related principles to guide development partners in their engagement with pooled funds as funding partners, and, as appropriate, as board members (ICVA, 2024[47]).

• OCHA’s Afghanistan Humanitarian Fund (AHF), established in 2014, introduced preliminary self-screening, structured due diligence and internal capacity assessments across governance, financial management and safeguarding (including preventing sexual exploitation, abuse and harassment). Partners are assigned risk ratings (low, medium, high) that determine proportionate oversight requirements, with ongoing performance-based reassessment. This risk-based, tiered approach allows AHF to channel funding to local NGOs while safeguarding compliance and accountability (OCHA, 2024[48]).

Additional resources

• The OECD’s analysis on the role of flexible financing in philanthropy outlines the barriers and current research on the limitations philanthropic funders face in providing flexible direct (or core) funding (OECD, 2024[49]).

• The OECD DAC Blended Finance Guidance (OECD, 2025[50]) outlines how to support local development priorities and capacities in ways that are aligned with, and where possible strengthen, local financial markets.

• The Global Partnership for Effective Development Co-operation (GPEDC) monitoring exercise provides evidence on whether development co-operation funding for the public sector uses country public financial management systems, which reinforces country ownership, alignment with national priorities and institutional capacity (see Annex A).

• Charter for Change’s Intermediary Agencies & Locally Led Humanitarian Action paper includes best practices of partnering with local intermediaries (Charter for Change, 2025[51]).

• DanChurchAid’s report on Financing for Locally Led Action introduces a shared diagnostic framework, along with illustrative examples of live or recent financing instruments, designed to help funders, intermediaries, and local and national organisations align their roles and resources to advance financing for locally led approaches.

• Development Initiative’s Development Partner Approaches to Overheads for Local and National Partners summarises opportunities and barriers to change development partners’ provision of overheads and indirect costs (Development Initiatives, 2023[52]).

• The Grand Bargain Localisation Workstream’s Localisation Guidance Note outlines good practices for inclusive financial planning, including humanitarian financing (IASC, 2020[53]).

• The Country-level Financing Solutions for Local Actors report by the International Federation of Red Cross and Red Crescent Societies (IFRC) highlights humanitarian financing solutions used by local actors and enablers for direct funding, pooled funding solutions, and domestic resource mobilisation (International Federation of Red Cross, 2019[54]).

• ICVA’s interactive directory of humanitarian pooled funds maps pooled funds, including locally-led pooled funds.

• The International Institute for Environment and Development (IIED) published The Climate Finance Guide for Locally Led Adaptation, which highlights different models for partnerships for blended finance (IIED, 2022[55]).

• The Share Trust and the Active Learning Network for Accountability and Performance in humanitarian action (ALNAP) developed a toolkit on Intermediary Models to Advance Locally Led Humanitarian Action provides a useful overview of the range of local intermediary funding models (ALNAP, 2025[56]).

• The Share Trust and Warande Advisory Centre’s study of local intermediaries provides an overview of the main characteristics, trends, types of grants, size and capacity, function, and geographical distribution of local intermediaries (The Share Trust and Warrande Advisory Centre, 2025[57]).

References

[2] ALNAP (2025), Global Humanitarian Assistance Report, ODI Publishing, https://alnap.org/help-library/resources/global-humanitarian-assistance-gha-report-2025-e-report/.

[56] ALNAP (2025), Intermediary models to advance locally led humanitarian action, https://alnap.org/help-library/resources/intermediary-models-to-advance-locally-led-humanitarian-action/.

[21] Australia DFAT (2018), Strategic Partnership Arrangement (SPA) Phase II, https://www.dfat.gov.au/sites/default/files/bangladesh-spa-phase-2-brac-dfic-mtr-report.pdf.

[8] Center for Global Development (2025), The EU’s Ambition to Tie Its Development Aid Will Undermine Economic Development, https://www.cgdev.org/blog/eus-ambition-tie-its-development-aid-will-undermine-economic-development#:~:text=Even%20though%20OECD%20guidelines%20advise,%2C%20Denmark%2C%20and%20the%20Netherlands.

[51] Charter for Change (2025), Intermediary Agencies & Locally Led Humanitarian Action, https://charter4change.org/wp-content/uploads/2025/10/charter-for-change-practice-paper-2025-intermediary-role_final.pdf.

[44] Chatham House (2024), Local aid groups are keeping Sudan alive, https://www.chathamhouse.org/publications/the-world-today/2024-12/local-aid-groups-are-keeping-sudan-alive (accessed on 15 January 2026).

[37] Christian Aid (n.d.), STAR Ghana, https://www.christianaid.org.uk/our-work/programmes/star-ghana-foundation (accessed on 14 January 2026).

[45] Corbett, N. Carstensen and S. Di Vicenz (2021), Survivor- and community-led crisis response: Practical experience and learning, ODI, London, https://odihpn.org/wp-content/uploads/2021/05/HPN_SCLR-Network-Paper_WEB.pdf.

[28] Development Initiatives (2024), Falling short? Humanitarian funding and reform, https://devinit.org/resources/falling-short-humanitarian-funding-reform/.

[52] Development Initiatives (2023), Donor approaches to overheads for local and national partners, https://devinit.org/resources/donor-approaches-overheads-local-national-partners/.

[38] Equality Fund (n.d.), Equality Fund - How We Work, https://equalityfund.ca/page/how-we-work#grantmaking (accessed on 30 March 2026).

[11] Eurodad (2024), “Exposing Tied Aid: Preventing donor countries from getting rich on their own aid”, https://www.eurodad.org/exposing_tied_aid_2024.

[10] Eurodad (2022), “This year’s 2022 Effective Development Co-operation Summit could be a game-changer for untying aid”, https://www.eurodad.org/this_year_s_summit_could_be_a_game_changer_for_untying_aid.

[9] Eurodad (2021), “Strings still attached: Unmet commitments on tied aid”, https://www.eurodad.org/unmet_commitments_tied_aid.

[32] European Commission (2021), Budget Support: Trends and Results, https://south.euneighbours.eu/wp-content/uploads/2022/07/budget_support_-_trends_and_results_2021-1.pdf.

[39] Global Affairs Canada (2024), Formative evaluation of the Partnership for Gender Equality, https://www.international.gc.ca/transparency-transparence/audit-evaluation-verification/2024/pge-report-rapport.aspx?lang=eng.

[22] Global Affairs Canada (2023), Canada’s Policy for Civil Society Partnerships for International Assistance – A Feminist Approach, https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/civil_policy-politique_civile.aspx?lang=eng.

[31] Government of Iceland (n.d.), Development Cooperation between Iceland and Uganda, https://www.government.is/topics/foreign-affairs/international-development-cooperation/bilateral-cooperation/uganda/.

[24] Government of the Netherlands (2022), Policy Framework for Strengthening Civil Society: Power of Voices Partnerships, Ministry of Foreign Affairs, https://www.government.nl/binaries/government/documenten/policy-notes/2019/11/28/policy-framework-strengthening-civil-society/Grant+instrument+PoV+FINAL.pdf.

[20] IASC (2022), IASC Guidance on the Provision of Overheads to Local and National Partners, https://alnap.cdn.ngo/media/documents/IASC_Guidance_on_the_Provision_of_Overheads_to_Local_and_National_Partners_0.pdf.

[18] IASC (2022), Grand Bargain Caucus on Quality Funding: Outcome Document, https://interagencystandingcommittee.org/sites/default/files/migrated/2022-07/Grand%20Bargain%20Caucus%20on%20Quality%20Funding%20-%20Outcome%20Document%20-%20final%20-%2011Jul22.pdf.

[53] IASC (2020), Grand Bargain Localisation Workstream: Localisation Guidance Notes, https://gblocalisation.ifrc.org/wp-content/uploads/2021/02/Section-5.pdf.

[47] ICVA (2024), Guidance note for donors on promoting inclusive and locally-led action through humanitarian pooled funds, https://interagencystandingcommittee.org/grand-bargain-official-website/guidance-note-donors-promoting-inclusive-and-locally-led-action-through-humanitarian-pooled-funds.

[55] IIED (2022), The good climate finance guide for investing in locally led adaptation, https://www.iied.org/21231iied.

[54] International Federation of Red Cross (2019), Country-level Financing Solutions for Local Actors Report, https://gblocalisation.ifrc.org/wp-content/uploads/2019/12/Humanitarian-Financing-for-Local-Actors-IFRC-Research-Report-Final.pdf.

[40] LoGIC (n.d.), Unleashing new opportunities for climate vulnerable women through financial inclusion, https://www.logicbd.org/success-story/unleashing-new-opportunities-for-climate-vulnerable-women-through-financial-inclusion/ (accessed on 15 January 2026).

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[1] OECD (2026), Official development assistance to civil society organisations, https://www.oecd.org/en/data/dashboards/official-development-assistance-to-civil-society-organisations.html (accessed on 13 January 2026).

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[50] OECD (2025), OECD DAC Blended Finance Guidance 2025, Best Practices in Development Co-operation, OECD Publishing, Paris, https://doi.org/10.1787/e4a13d2c-en.

[29] OECD (2025), Partner-led development: Australia’s use of budget support in the Pacific, https://www.oecd.org/en/publications/development-co-operation-tips-tools-insights-practices_be69e0cf-en/partner-led-development-australia-s-use-of-budget-support-in-the-pacific_944e3c01-en.html.

[6] OECD (2025), Tracking local content in Australia’s development contracts: PERFORMS, https://www.oecd.org/en/publications/development-co-operation-tips-tools-insights-practices_be69e0cf-en/tracking-local-content-in-australia-s-development-contracts-performs_27a20871-en.html.

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Notes

← 1.  In 2023, total ODA to and through CSOs reached USD 27.6 billion (constant 2023 prices). The vast majority of this, USD 24.7 billion (89%), was channelled through CSOs, while USD 2.9 billion (11%) went directly to CSOs as core contributions and programmatic support. Over the past decade, ODA engagement with civil society has remained relatively stable. Between 2014 and 2023, total flows to and through CSOs hovered between USD 20 billion and USD 27 billion annually, representing approximately 11-13% of total bilateral ODA. Notably, developing country-based CSOs received only USD 2.7 billion in 2023, representing a small fraction of total CSO-directed aid.

← 2.  ODA to support the effectiveness and sustainability of women’s rights organisations and movements averaged USD 499 million per year in 2022‑2023, representing less than 1% of bilateral allocable ODA with gender equality objectives (OECD, 2026[58]).

← 3.  ODA channelled by DAC members via budget support has been decreasing over the last decade in most contexts. The share of bilateral ODA provided as general budget support decreased from 1.7% in 2011 to 1.0% in 2022. In contrast, sector budget support increased from 1.5% to 1.9% over the same period, mainly to accelerate disbursement rates and meet urgent needs in reaction to the COVID-19 pandemic (OECD, 2025[59]).

← 4.  Similar contextual and proportional risk considerations apply to core or flexible support to civil society and other local actors.

← 5.  This perspective was also reflected in consultations conducted by the Movement for Community-led Development (MCLD) and Peace Direct with civil society organisations (CSOs) across Africa, Asia and the Pacific, Europe, Latin America, and North America. Overly strict proposal requirements can inadvertently exclude organisations working on topics impacting marginalised groups. For example, organisations working on women’s rights, albeit not exclusively or not 100% women-led, may sometimes be excluded from applying for funding to promote women’s rights.

← 6.  Mutual aid groups are often small, voluntary, community-driven collectives that operate through trust, solidarity and informal networks.

← 7.  UN-managed country-based pooled funds allocated 35% of funds directly to local and national actors in 2024. Including sub-grants, total funding to local actors reached 45%, the highest share on record (ALNAP, 2025[2]).