Policy Paper

July 2012

A New Vision for the USAID-U.S. NGO Relationship:

Partnering for Effective Development
For more information, please contact: Sam Worthington President and CEO InterAction
sworthington@interaction.org

Preface: InterAction welcomes the opportunity for a series of roundtable meetings between its member CEOs and U.S. government representatives to discuss ways to strengthen the U.S. NGO-USAID relationship in the post-Busan aid effectiveness era. i This is the first in a set of white papers intended to explore the role of U.S. NGOs in key USAID Forward reforms. Subsequent papers will focus on local capacity building, procurement reform, and a strategic policy dialogue.

Mark Lotwis Senior Director, Public Policy InterAction mlotwis@interaction.org Filmona Hailemichael Policy and Advocacy Manager, Aid Reform & Effectiveness InterAction
fhailemichael@interaction.org

The Road from Busan and the Risks of the Status Quo
Since the 4 High Level Forum on Aid Effectiveness in Busan, South Korea, the world community has continued to adapt to a new era of development cooperation: an era guided by the 2005 Paris Principles but taken to a new level of inclusive, democratized development involving many new partners. Most U.S.-based international development NGOs not only support such shifts, they actively championed these reforms. For USAID, this new era offers the promise of more sustainable strategies for overcoming poverty, yet it must succeed in a climate of severe budget constraints and competing demands for scarce public resources. Continuing political support for official development assistance is tenuous.
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This paper was produced by InterActions CEO Task Force on Aid Reform and Effectiveness

There are serious risks. We have learned the hard way that there are no shortcuts to effective results. Development cannot happen without a capable government, it will not be sustainable without the job creation of the private sector, and it will not be inclusive without an engaged and empowered populace, particularly women, organized by civil society. A capable, dynamic local civil society sector is critical for accountability, inclusive country ownership, participatory governance and sustainability. It is also essential for reaching poor, vulnerable and underserved populations. How rapidly we move the frontiers in development to standard practice will depend on how well each of these entities works with the other, understands its different motivations, and actively supports each other's roles and core competences. Different development actors bring complementary capabilities and strengths. Only by mobilizing, leveraging, and coordinating all of these actors can we address complex development challenges.

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Toward a Shared New Vision of Development

In the Spirit of Paris and Busan, we feel it is crucial that USAID join us in creating a new partnership. Partnering with U.S. NGOs should be a key part of USAIDs strategy for promoting effective global development, yet it has not maximized the potential of this relationship in its reforms and vision for the future. To accelerate and broaden development impacts, the strategic relationship between U.S. NGOs and USAID must be strengthened.

The Critical Importance of NGOs for Effective Development

U.S. NGOs bring a range of important and unique assets to development practice which are relevant for todays rapidly evolving results-based, multi-stakeholder development ecosystem. NGOs have accumulated knowledge, experience and social capital that can contribute very significantly to reaching development goals both sectors share. These assets include: Established Partnerships with Local Populations U.S. NGOs have worked with local communities, civil society and private sector implementing partners for decades. Our commitment to working with local people extends to our staffing structure: in most countries, more than 90% of NGO staff are local nationals. This history and these long-standing relationships have created trust that is reflected in our extensive human and social capital networks. The close relationship between U.S. civil society and local civil society is one of the major assets that the United States brings to the development cooperation agenda. Global Reach American NGOs work in every developing country, including many where USAID has no presence. In others, U.S. NGOs dwarf the size of the USAID mission both in capacity and resources. In places like Somalia, remote camps in Darfur, insecure villages in Afghanistan, or distant communities in Indonesia, NGOs work in the spaces that lie beyond the reach of U.S. government staff. The ability of NGOs to sustain a presence where the USG does not or cannot provides an important means of matching U.S. resources to the accomplishment of worldwide development priorities. USAID, particularly its Bureau for Democracy, Conflict, and Humanitarian Assistance, does tap the reach of InterAction members, but this could be expanded beyond a traditional relief frame to a broader resilience and development approach. Support and Resources from the American People In 2009, InterAction members raised $8.3 ii billion from private sources of funding, to complement $3 billion in USG support. This is a powerful expression of commitment by American citizens, foundations, and corporations to development assistance and to the NGOs they entrust to implement this work. The billions of dollars of privately-funded NGO programs often operate separately from USG efforts, which mean both sides are missing opportunities to leverage these investments and enhance the impact of official iii U.S. assistance . Innovation & Best Practices As U.S. NGOs have professionalized, they have consistently focused on applying best practices and incubating innovations that address persistent development constraints. NGOs regularly produce research often in partnership with foundations such as Gates or Hewlett on issues ranging from aid effectiveness to more cost-effective technical approaches. NGOs also often enjoy the freedom to experiment, take chances, and innovate in ways that are difficult for the U.S. government and publically-funded institutions. This capacity for exploration adds an underappreciated value to NGO programs that can be further refined and scaled up through stronger partnership with the USG.

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Innovation and Evidence Building

Case Study

After identifying an alarming rise in the number of children finishing primary school unable to read, Save the Children developed an innovative, evidence-based response called Literacy Boost. This program uses a three-pronged approach that includes community action to significantly improve childrens core reading skills. Communities get involved by creating libraries, reading buddy camps and support workshops for parents. After the four pilot countries showed improvements in childrens literacy skills and even school attendance, Save the Children, along with World Vision, is now working to scale up Literacy Boost in countries across Africa, Asia, Latin America and the Caribbean.

Proven Capacity Building Expertise U.S. NGOs operate in partnership with local community organizations, NGOs and private sector organizations. In many cases, capacity building for those partners is a key element of successful NGO programs. As USAID shifts to local contracting, the capability of these organizations will become increasingly important. Some capacity will be built through direct funding. At the same time and to complement such efforts, U.S. NGOs can be a key partner in building the readiness of local organizations to engage directly with donors, and in bolstering their ability to deliver development results. Results in Capacity Building Case Study

Counterparts 2006 2009 program in Armenia provides insights into the power of investing in building local capacity. Through a tailored effort to build the capacity of three civil society organizations, the program created a national cohort of institutions able to independently coach, train and deliver technical assistance to non-profits, governments, and small enterprises. With their new capacity, these organizations have since served over 240 organizations in Armenia. For example, one organization now serves as the Ministry of Educations lead partner in designing standards and manuals for education institutions across the country. As a further sign of their capabilities, these organizations have expanded to deliver services in nine other countries including Afghanistan, Georgia, Egypt and Kazakhstan.

Growing Concerns over a Changing Relationship

Despite these assets, InterAction and its membership are increasingly concerned that the quality of the relationship between our community and USAID has eroded in recent years. This erosion has manifested itself in numerous ways, and flows in large part out of a fundamental misunderstanding by USAID leadership of the character and current nature of the NGO community and its commitment, expertise, and ability to achieve development results -- attributes which we have sought to define in the first section of this paper. We are particularly concerned about the following: A lack of strategic policy engagement USAIDs policy engagement with NGOs in recent years has been inconsistent and in some cases seemed like an afterthought. For example, the Advisory Committee on Voluntary Foreign Aid (ACVFA), the principal interface and advisory body linking USAID to the NGO community, is rarely convened and many of its recommendations to the incoming Administrator were disregarded. The engagement of NGOs in the QDDR, PSD, and new presidential initiatives was often cursory. When NGO perspectives are considered, it is generally only after a policy had been reached. A shift from a partnership framework to a control focus - InterAction members increasingly report that USAID field missions view all U.S. NGOs as implementers to be tightly controlled rather than

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true partners - just as major U.S. corporations are now seen as a true partner - with expertise and experience in their own right. This is reflected in increasingly prescriptive funding solicitations, mandates on preferred staffing structures, and overly burdensome reporting requirements. The growing shift to contract-based solicitations moves U.S. NGOs into the limited role of implementer (original intent of a contract) and away from being a partner (original intent of a cooperative agreement). Appropriately rebalancing the USAID solicitation stream to increase grants and cooperative agreements would allow USAID to take better advantage of NGOs expertise in conceiving, designing, implementing, and monitoring programs. Rhetoric casting NGOs as costly middlemen rather than valued partners Language that reduces the work of U.S. NGOs to a costly implementer reflects a limited understanding of our role and potential we are donors, thought leaders, and practitioners. USAIDs comments ignore the vast support that it provides to local entities through its NGO partners and the key role NGOs play in developing evidence of what works and producing replicable results. The social capital, financial resources and local networks NGOs have development are assets that far exceed those of other implementers (including USAID) and should be harnessed, not discounted. In sum, we are concerned that the partnership between USAID and the U.S. NGO community is at risk even as a shifting aid environment, federal budget challenges, and rapid methodological innovation make it incumbent on both sides to ensure strong collaboration.

Building a Better Future - Actionable Recommendations

Here are recommendations that would form the basis of a renewed USAID-US NGO partnership aimed at increasing development effectiveness: 1. Engage in Regular, Substantive Policy Dialogue: USAID has done a good job briefing the NGO community on the emerging details of its major policies as they are developed; however this affords little opportunity for front-end contribution. We ask that either USAID restructure ACVFA so that its members are primarily development NGOs, or create a separate, high-level consultative mechanism that would allow for ongoing strategic policy discussions with the NGO community. As stated in ACFVAs charter, the committees role would be to consult with, provide information to, and advise USAID and other U.S. government agencies on development issues. 2. Develop a USAID-U.S. NGO Engagement Strategy: To help ensure effective collaboration between USAID and U.S. NGOs, the agency should develop a strategy that identifies all the areas of potential collaboration and leveraging between our two sectors. This would range from a traditional implementing partner role to several other forms of collaboration and could be modeled afiv ter AusAids new Civil Society Engagement Framework. 3. Maximize Opportunities for Field Collaboration: Engage with U.S. NGOs -- consistent with aid effectiveness principles -- as counterparts with expertise that qualifies them to participate in needs assessment, program design, implementation and monitoring. To achieve this, USAID should appropriately rebalance its solicitation stream (outside of its 30% local procurement target) to increase grants and cooperative agreements that would take advantage of U.S. NGOs field-based expertise.

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4. Ensure Donor Alignment: Consistent with Busan and Paris Principles, USAID should optimize available development resources by partnering with NGOs to mobilize the $8.3 billion in private resources they invest in USAID partner countries. As private development actors in their own v right , U.S. NGO resources should be leveraged through USAIDs public-private partnership initiative known as the Global Development Alliance.

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US NGOs are defined as US non-profits that meet the guidelines set by USAID to be registered as private voluntary organizations. Estimate based on research of the top 100 InterAction member NGOs 990 IRS forms. The Help Commission Report on Foreign Assistance Reform. Leverage is the New Framework, p.152. http://www.helpcommission.info/Beyond%20Assistance%20-%20HELP%20Commission%20Report%20FINAL.pdf AusAid Civil Society Engagement Framework: Working with CSOs to help people overcome poverty. June 2012. http://www.ausaid.gov.au/Publications/Pages/civil-society-engagement-framework.aspx The Private Sectors Role in Development http://www.interaction.org/sites/default/files/InterAction%20Policy%20Paper_Private%20Sector%20in%20Development.pdf

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