What the funding data reveals about local organizations, civil society, and the structural work the sector still needs to do
Locally led development has become the organizing principle of modern international development. It is written into donor strategies, embedded in funding frameworks, endorsed at the highest levels of bilateral and multilateral institutions, and repeated in the opening remarks of virtually every major development convening. It represents, at least in principle, a genuine and overdue reckoning with decades of practice that placed external actors at the center of decisions most directly affecting people and communities who had very little say in shaping them.
The principle is sound. The implementation is where the conversation becomes more demanding and more honest.
What Locally Led Development Actually Means for Local Organizations
Locally led development is a reorientation of authority. A deliberate shift in who sets the agenda, defines success, and holds decision-making power in the development process.
At its core, it recognizes what research and lived experience have consistently pointed toward: the people and organizations closest to a challenge are almost always best positioned to understand it, define a response to it, and sustain the work of addressing it over time. Community-based organizations, grassroots groups, and local civil society organizations carry a contextual intelligence that external expertise, however well-resourced, cannot replicate.
Decades of development organized around external priorities, delivered through external systems, and evaluated against external measures of success have produced outcomes more modest than the investment would suggest. The shift toward local leadership is, at its foundation, a shift in philosophy about who knows best and who should be trusted to act on that knowledge.
That shift has profound implications for how development is funded, how it is designed, and how the relationship between funders and grantees is structured. These are implications the sector has been slower to act on than its public declarations would suggest.
The Localization Data: What the Numbers Say About Direct Funding for Local Organizations
Despite more than a decade of declared commitment to locally led development, the financial flows that define the sector have moved slowly.
The vast majority of international development funding continues to travel through international NGOs, for-profit implementers, and universities based primarily in donor countries. USAID’s own localization tracking indicates that roughly 90 percent of its funding still reaches communities through international intermediaries.¹ Recent analysis across five major bilateral donors found that an average of just 5.5 percent of project funding was going directly to local organizations.² Global philanthropy tells a similar story: only about 13 percent of international grant dollars between 2011 and 2019 were directed to organizations actually based in the countries receiving support.³
These figures are from the period during which the sector was actively and publicly declaring its commitment to localization, not before.
Many funders who speak about local leadership mean it, at some level. The intent is there. The gap, however, is structural.
It lives in procurement systems designed for large international organizations that small local NGOs, community-based organizations, and grassroots groups cannot navigate without becoming something other than what they are. It is situated in compliance requirements that were not designed with smaller organizations in mind; funding cycles are too short for the kind of patient, adaptive work that genuine local ownership requires.
Declaring a commitment to local leadership without restructuring the systems that govern the relationship between funder and grantee is, to put it plainly, just another speech without substance.
Funder-Grantee Trust as a Strategic Variable in International Development
Trust, in development partnerships, is a structural variable. One that most directly determines whether locally led development exists in practice or only in policy.
When a funder genuinely trusts a local organization’s knowledge of context, it designs flexible funding that allows the organization to adapt as circumstances change, rather than requiring permission every time the situation on the ground evolves in a direction the original proposal did not anticipate.
When a funder trusts a local organization’s financial management, it invests in strengthening those systems rather than bypassing them with parallel reporting mechanisms that serve the funder’s accountability needs while quietly undermining the organization’s own capacity to manage itself.
When a funder trusts a local organization’s leadership, it engages that leadership as a partner in designing the work rather than a service provider executing someone else’s strategy.
These choices about funding flexibility, about accountability architecture, about who holds decision-making authority are where funder-grantee trust either exists in practice or does not.
The language in the funding agreement is hardly where the truth lives. The truth is in the modalities, in what the compliance requirements actually demand, and in who is invited to the table before the agenda is set.
Trust-based philanthropy, as a framework, has gained significant traction in the international grantmaking space precisely because so many grantees recognized that the language of partnership was being used to describe relationships that were, in practice, deeply transactional.
The shift toward trust-based approaches; multiyear unrestricted funding, streamlined reporting, genuine power-sharing in program design, is a structural response to a structural problem.
The Case for Community-Based Organizations and Local Ownership
The most compelling case for locally led development is operational.
When large-scale instability and displacement forced international NGOs to evacuate parts of eastern Congo in 2024, locally rooted civil society organizations continued operating. Community-based organizations built on local leadership, local staff, and deep community relationships adapted in real time and continued delivering essential services at the height of the crisis, precisely because their operational continuity was not contingent on external conditions.
Their connection to the communities they served was the organization’s infrastructure, something no international implementer, however experienced, could replicate at that moment.
This is what local ownership makes possible.
Organizations embedded in their communities, whether small local NGOs, grassroots groups, or larger civil society institutions, carry a resilience and contextual intelligence that proximity produces and distance cannot substitute for.
The development sector has known this for a long time. The funding structures have been slower to follow the evidence.
What Genuine Development Partnership and Grantmaking Reform Require
Genuine funder-grantee trust, the kind that actually produces locally led development rather than just naming it, requires funders to make choices that are uncomfortable by the standards of conventional grantmaking.
It requires flexibility as a design principle.
Local organizations, civil society groups, and community-based organizations operating in dynamic, resource-constrained environments need the ability to respond to what they find, not just to execute what was agreed in a proposal written months before implementation began.
It requires long-term commitment.
Research identifies targeted capacity support and long-term partnership as the factors most responsible for the outsized impact of the most effective organizations. Short-term, project-bounded funding undermines exactly the organizational stability that local leadership requires.
It requires honesty about power.
The funder-grantee relationship is inherently unequal in a financial sense. Pretending otherwise, or managing the relationship as though the power differential does not exist, does not make it disappear. It simply makes it harder to address.
Funders willing to name the dynamic explicitly and to build structures that genuinely redistribute decision-making authority to local organizations and civil society groups are the ones producing the partnerships that locally led development actually requires.
The sector is navigating a funding environment more constrained and more politically contested than at any point in recent memory. The organizations with the embedded knowledge, community relationships, and operational resilience to deliver in that environment are the locally rooted ones: the grassroots organizations, community-based institutions, and local civil society groups that have always been closest to the work.
Building genuine partnership with them, rather than transactional relationships dressed in partnership language, is not simply the equitable position. It is the strategically sound one.
At Iwà Consulting, we work with leaders, funders, and institutions navigating the strategic and communication dimensions of development partnership. The conversation starts here.
Sources
¹ Oxfam America. Funding the Localization Agenda: Measuring Progress of United States Development and Humanitarian Assistance to Local Organizations. 2023. Oxfam America. See also: USAID. Localization Progress Report FY2024.
² Publish What You Fund. Metrics Matter III. 2025. Publish What You Fund.
³ Council on Foundations. The State of Global Giving by U.S. Foundations: 2022 Edition. 2022. Council on Foundations.
