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Ups and downs in governance funding – what the latest ODA numbers can tell us (and what they can’t)
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A version of this blog was co-authored with Development Initiatives: What happened to aid for governance and civic space during Covid-19?

During the COVID-19 pandemic, many have been concerned about its ramifications on key aspects of civic life and governance, including for transparency, participation, and accountability (TPA). Many governments have struggled during this period, including many developing countries facing higher debt and reduced domestic resource revenues, directly affecting governance.

Civil society organizations (CSOs) have also been concerned. For example, Civicus, a global alliance with a mission to strengthen citizen action and civil society throughout the world, raised three funding concerns for civil society during the pandemic. These included risks to the sustainability of civil society organizations (CSOs) and jobs due to economic crisis and lockdown, relief funding bypassing critical issues that affect the most vulnerable, and less funding and opportunities for youth activists and those working on other social causes.

The Transparency and Accountability Initiative (TAI), a network of funders working on TPA, inclusive governance, and information ecosystems, has been watching and sharing about the challenging funding environment. TAI and its members see that funding for civil society and governance is absolutely critical during these times of crisis. Inclusive governance is valuable in its own right and underpins outcomes in many other sectors. Thus, last year, TAI published a brief summarizing perspectives on the possible trajectory of international funding in relevant areas in light of the pandemic and other shifting priorities. Since data on 2020 was not yet available, we drew on the viewpoints of 16 funders and experts, as well as announcements and news releases.

Some interviewees thought that funding would stay steady to core governance issues. Others believed that funding was increasing to issues with renewed relevance, such as public procurement. Still, others thought funding was going down as funders shifted to health and climate.

With the recent data released by the Organization for Economic Co-operation and Development (OECD) on funding in 2020, we can now get a better sense of what actually happened in 2020. Overall funding to governance and civil society increased in 2020 compared to 2019. Specifically, official development assistance (ODA) grants and loans and other official flows (OOFs) from multilateral development banks (MDBs) all increased. However, there were variations across the sub-sectors, e.g., increased funding to democratic participation and civil society but decreased funding to anti-corruption institutions and domestic resource mobilization.

In this blog, we share more on these findings. We analyze the overall increase by funding modality and designation to COVID-19. We then look at which funders increased and decreased funding. Finally, we look at what kinds of non-government organizations received the most funding.

Read the full briefing: The State of Governance Funding – Exploring the latest official development assistance figures.

To accompany our analysis, we constructed a dynamic dashboard of this funding data so that anyone can do their own analysis by region, country, issue, donor, and type of funding. It can quickly show answers for top donors and recipients, and it includes data for not only 2020 but also 2019 and 2015. For more on the dashboard, see below.


 

Funding to governance and civil society overall was up in 2020

In 2020, international funding disbursed to the general government and civil society sector from bilateral government donors, MDBs, multilateral organizations, and charitable foundations reached over $34.4 billion compared to $25.1 billion in 2019. This was not widely expected: many were worried that disbursements would face major impediments and reprioritization due to the pandemic.

In fact, a significant share of the increase in the sector seems due to the pandemic. In 2020, over $9.8 billion in the sector was marked with the keyword COVID-19. Thus, rather than the pandemic necessarily lowering funding to governance, some funders, including MDBs, increased funding as a response to the crisis.

However, across all the different types of funding, private development finance, which is often provided by charitable foundations, actually decreased by over $53 million. Although many TAI members increased their funding, a large cut by another foundation led to this decrease.

There were significant variations across purpose areas

This sector includes diverse purpose areas, from human rights and media and free flow of information to public finance management (PFM) and public procurement. Diving into these areas, the ones that saw the greatest absolute increases were some core areas of government work, including public sector policy and administrative management, PFM, macroeconomic policy, and decentralization and support to subnational government. These areas received substantially increased support from multilateral development banks (MDBs), which supported recipient governments with this funding. Major providers of these flows in 2020 included the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (AsDB), the World Bank, and the Inter-American Development Bank (IADB).

What about some of the sub-sectors that TAI members prioritize? Anti-corruption organizations saw funding disbursements drop by about $144 million, support to domestic resource mobilization (DRM) was down by $289 million, and human rights were down by about $53 million. See the graph.

Some sub-sectors saw relatively little change, including media and free flow of information, legal and judicial development, and women’s rights organizations, movements, and government institutions. These areas saw disbursements change less than 2% from their 2019 benchmarks.

Other sub-sectors saw increases in 2020. Democratic participation and civil society funding were up by $119 million and public procurement by over $25 million.  For democratic participation, there wasn’t just a single funder increasing, rather many funders increased, including the US (over $91 million), Open Society Foundations (almost $56 million), Germany (over $31 million), European Union (EU) institutions (over $29 million), Switzerland (over $16 million), Sweden (over $12 million), and France (over $11 million). Public procurement’s increase was due to more reporting from the World Bank.

 

EU institutions increased their ODA grants to the sector while the United States and the United Kingdom cut

As for ODA grants, there was an overall increase of $1.4 billion, with EU institutions alone increasing their disbursements by almost $970 million. A large share of this ($593 million) was made to facilitate orderly safe, regular and responsible migration and mobility. The remainder of the increase was made across many of the purpose areas, including public sector policy, PFM, and democratic participation. There were also large increases in ODA grants from donors including IDA, the African Development Fund, Canada, and the AsDB.

Looking at cuts to ODA grants, as expected, the United Kingdom (UK) decreased its ODA grants by about $236 million. This was long-announced, and now we see it in the data. Every sub-sector in government and civil society saw a cut from the UK, with the greatest amount cut from public sector policy and administrative management at almost $50 million.

Less expected, the largest decrease to ODA grants disbursements was not in the UK but in the United States (US). The US reduced ODA grant disbursements by almost $363 million. This reflects a $314 million cut in disbursements to Afghanistan and almost $27 million to Pakistan.

Funding to non-government organizations (NGOs) increased, with most of the funding going to donor country-based NGOs

Overall, non-government organizations (NGOs) received over $4 billion in 2020, almost $150 million more than in 2019. Thus, funders were not cutting funding to civil society overall in the first year of the pandemic.

There are diverse kinds of NGOs that donors can fund, and the OECD uses the categories of developing country-based, donor country-based, and international. Last year, TAI took a look at the type of NGOs receiving funding for governance work and found that in 2019, 68% of funding was disbursed to donor-country NGOs. That trend continued in 2020. The absolute amount of funding to both donor and developing country NGOs was up and most of it ($101 million) went to donor-country NGOs. Thus, the percentage through donor country-based NGOs remained at 68% in 2020. See the figure below. The localization agenda, at least in this sector, did not make much progress in 2020 despite calls to support more organizations in countries directly.

Concluding Thoughts

Overall, international funding increased to the sector, and a good portion of this appeared related to the pandemic and loans from MDBs. We saw that the prediction that some governance areas would see increases came to fruition, including for democratic participation and civil society. At the same time, there were cuts to funding, e.g., the UK cut across the board and the US cut to Afghanistan.

Funding for civil society did not drop in 2020, but there were also higher needs for funding. Even though funding was up to developing country civil society, the increase was relatively minor when considering it was for all countries, and CSOs were also under pressure due to economic crisis and lockdown.

Overall, private development finance from foundations was down to the sector in 2020. This kind of funding is often viewed as catalytic and especially valuable to civil society, so TAI hopes that this trend was reversed in more recent years.

Next year, when data for 2021 is released, we will be looking to see if the overall level funding leveled off or decreased if MDBs and other major donors maintained funding, and how the key purpose areas like human rights and anti-corruption changed.  We will also be looking at how private development finance changed. TAI’s data suggests fewer new grants were made in 2021 compared to 2020.[1] Candid has already found that foundations may have dropped their funding in 2021 compared to 2020,[2] and TAI also sees this in its grants data.

TAI will continue to undertake this kind of funding analysis going forward. We see it as helping funders and partners see their own fits in the overall bigger picture, test assumptions about underlying trends, and inform advocacy. For example, funding data shows that despite calls during the pandemic to increase direct funding to organizations in developing countries, this mostly did not happen.

Again, take time to draw some of your own conclusions by exploring the funding dashboard.

 

 

 

[1] See TAI’s grants database, https://www.transparency-initiative.org/blog/9545/tpa-funding-data/.
[2] Stephanie Beasley, “US foundations decrease global COVID-19 giving despite ongoing needs,” Devex, June 3, 2022.
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