New Research by LINC, Peace Direct, and Foundation Center Identifies Key Drivers of Financial Sustainability for Local Civil Society Organizations
Research highlights factors and strategies that development stakeholders can act on to improve sustainability and ensure local ownership.
Manager of Knowledge Services Communications
+1 (212) 807-2575
+44 (0) 20 3422 5510
+1 (336) 554-5061
Washington D.C., London, and New York—May 30, 2018. Today, LINC, Peace Direct, and Foundation Center released three research reports and an interactive funding map detailing the drivers of financial sustainability of local civil society organizations (CSOs). The resources draw on outcomes from the first year of Facilitating Financial Sustainability (FFS), a three-year activity funded by USAID’s Local Works program to develop and test strategies for donors, policymakers, INGOs, and CSOs to work together to improve local CSOs’ financial sustainability across diverse development contexts.
Local CSOs, while often uniquely qualified to serve their communities, face significant barriers in developing and maintaining the resources needed to carry out their missions. Overcoming these challenges and improving local organization financial sustainability is a crucial part of reducing donor dependency and ensuring local ownership of the development process.
The FFS research covers six countries—Bosnia and Herzegovina, Colombia, Democratic Republic of Congo, Mexico, Philippines, Uganda—is based on interviews with more than 120 development stakeholders and analysis of close to 18,000 grant records. “This research is the first time that we have gotten a comprehensive picture of both how funders support local organization financial sustainability and what factors CSOs themselves see as critical to their sustainability”, says Rich Fromer, Managing Director of LINC. The analysis revealed five percent of foundation funding supported financial sustainability of local CSOs. CSO staff and funders in all of the country contexts emphasized that small pools of unrestricted funding over time are critical for improving sustainability. Yet, unrestricted grants to local CSOs accounted for just three percent of overall funding, and just 11 percent of that unrestricted funding was for more than one year.
Beyond identifying challenges faced by local CSOs, the research highlights specific strategies that have helped local organizations to improve their financial sustainability in varied development contexts. To test and translate the findings from the research into action, the next phase of the FFS project will bring together Action Learning Groupsconsisting of local development stakeholders in the Democratic Republic of Congo, Uganda, and Colombia to plan and implement activities to improve financial sustainability in their local context.
Additional key findings from the FFS research include:
- Social capital is a critical enabler for financial sustainability, especially in challenging environments or when CSOs have limited access to funding.
- While donors and CSOs tend to think about financial sustainability in terms of financing, non-financial assets such as land, materials, and volunteers can help CSOs reduce costs and build social capital and credibility within their community.
- Local funders and intermediary organizations play an important but often overlooked role in CSO sustainability due to their connection to international networks, knowledge of the local context, and ability to mobilize resources and support.
LINC is a US-based small business that assists local and international organizations to design effectively, increase institutional capacity, forge lasting partnerships, and measure impact. We have developed ground-breaking tools to map organizational networks, measure social capital, and leverage systems-based approaches to development. We understand the unique constraints local organizations face, and offer practical solutions via training, consulting services, research and advocacy. At LINC, we believe that a practical approach to engaging committed, capable local organizations in leading their own development increases international development effectiveness and sustainability. For more information, please visit linclocal.org.
About Peace Direct
Peace Direct is an international organisation working with 16 partner organisations in 11 countries supporting local people to stop war and build lasting peace. We believe that local people have the power to find their own solutions to conflict—and to build their own better futures. In the world’s most fragile countries, we seek out and support local peacebuilders who are making a real difference—building peace from the grassroots up, preventing conflict in the places where it starts—locally. Find out more at peacedirect.org, or tweet us at @peacedirect.
About Foundation Center
Established in 1956, Foundation Center is the leading source of information about philanthropy worldwide. Through data, analysis, and training, it connects people who want to change the world to the resources they need to succeed. Foundation Center maintains the most comprehensive database on U.S. and, increasingly, global grantmakers and their grants—a robust, accessible knowledge bank for the sector. It also operates research, education, and training programs designed to advance knowledge of philanthropy at every level. Thousands of people visit Foundation Center's website each day and are served in its five regional hubs and its network of more than 400 funding information centers located in public libraries, community foundations, and educational institutions nationwide and around the world. For more information, please visit foundationcenter.org, call (212) 620-4230, or tweet us at @fdncenter.
About Facilitating Financial Sustainability
Facilitating Financial Sustainability (FFS) is part of the USAID’s Local Works program, which promotes locally-owned and locally-led development by connecting local resources to local actors. FFS is a three-year activity—March 2017–March 2020—with the goal of identifying and improving the factors underlying CSO financial sustainability as a key element to empower local organizations and local populations to lead and influence development decision-making. For more information, please visit sustainability.linclocal.org.