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Metrics matter: achieving USAID’s 25% funding target to local actors

BY SALLY PAXTON AND GUEST | FEB 28, 2023 | BLOG

By George Ingram, Nora O’Connell, and Sally Paxton In November 2021, the United States Agency for International Development (USAID) Administrator Samantha Power laid out a vision for international development with a big goal: by the end of 2025, at least 25% of USAID’s funding would go to local partners. Achieving this will be transformational: funding to local and national actors has the potential to be both more effective and more sustainable, as they bring more relevant expertise and long-term commitment to the work in their communities. However, almost as soon as a target was announced, the debate began over the definition of what counts as “local” and how to measure it. As with anything, the devil is in the details—and the stakes are high. According to Publish What You Fund’s groundbreaking new research, Metrics Matter: How USAID counts “local” will have a big impact on funding for local partners, the choice of methodology could determine whether more than $1.4 billion of additional funding is channeled to local actors each year. The report will be released tomorrow at an event online and in-person in Washington, DC. How metrics matter: three key choices USAID’s first year measuring funding to local actors is critical: it will establish the baseline and methodology that will drive the agency’s strategy and accountability for years, so it’s worth getting it right. It recently announced the proposed methodology for calculating how much funding is going to local actors, looking at what counts as local (the 25%); the pool of funding considered (25% of what?); and the aid data source. Publish What You Fund’s research proposes an alternate methodology that is closer to the intent of the 25% commitment and more transparent and accountable, including to local actors who are watching this issue closely.

  • What’s local: USAID’s own definition aligns with international definitions—locally registered, operating, owned, and governed. However, its announced measurement methodology only considers place of incorporation, physical address, and place of contract activity; this would include entities such as INGO’s or private contractors’ country offices that don’t meet USAID’s definition. This risks both over-counting funding to local actors and incentivizing international ones—who are still eligible for the other 75% of USAID funding—to set up country offices that will further crowd out local and national actors.

  • What’s part of the pool: USAID defines the potential funding pool narrowly, including only funding that is currently going to NGOs, the private sector, and academic institutions. This leaves out project-specific funding going to UN agencies and multilaterals without considering whether some of this work could be done by local actors. As with the above, by using a smaller pool of funding, USAID’s methodology will show a higher percentage of that funding going to local actors.

  • Whose data is it: Finally, USAID has said it will rely on the US Government System for Award Management (SAM) and the Global Acquisition and Assistance System (GLAAS) procurement systems for funding data. While the public can access some of this data, they cannot view the full set of information required to carry out this analysis. This limits the possibility to carry out independent replication of USAID’s data and results.

Publish What You Fund’s research demonstrates a way to calculate funding going to local actors that is more consistent with USAID’s own definitions and that is transparent and accountable to the global community, including local actors. Using aid data that USAID publishes to the International Aid Transparency Initiative (IATI) and other public data, Publish What You Fund was able to use the more stringent definition of what counts as a local and national organization and consider a broader pool of funding. Stakeholders in partner countries and donor countries alike can replicate the research or even play with the specific characteristics using Publish What You Fund’s USAID Local Partner Funding Dashboard that allows filtering by various criteria and countries. Allowing users to select their own criteria for determining what is local illuminates the impact of the various approaches and transforms debates on criteria from theoretical to meaningful.


USAID Measurement Approach

Publish What You Fund Measurement Approach

Difference

Simple local criteria:

· Registered and headquartered in country where project takes place

Detailed local criteria:

· Registered and headquartered in country where project takes place

· National staff and governance

· Excludes local subsidiaries of global entities

· Publish What You Fund’s criteria align with USAID’s own definition of local actors.

· USAID’s approach could let in locally established partners of INGOS and private sector entities

· Small pool of potential funding to local + national actors

· Includes funds going to private sector, civil society, and academia

· Larger pool of potential funding to local + national actors

· Includes funds going to private sector, civil society and academia

· Incudes project funds to UN agencies and other multilaterals

By excluding project funding to multilaterals, USAID uses a much smaller pool of funding

Mix of public and private data

Exclusively public data

USAID’s data cannot be replicated by external stakeholders, including local and national actors

Recommendation for USAID: Set a strong baseline for a strong legacy

Based on their research, Publish What You Fund puts forth practical recommendations for USAID. The recommendations include calling on the agency to reconsider its measurement approach and instead create a credible, replicable process that is accountable to global stakeholders. They also urge USAID to use a methodology that aligns more closely with the Administrator’s vision and eliminates adverse incentives—and that is consistent with its own definition of local. USAID can accomplish this by using a more rigorous methodology of counting local funding and using a more inclusive pool of potential funding. Publish What You Fund also urges USAID to use publicly available data, such as IATI data, for independent verification.

As noted above, these differences are not just theoretical. In Publish What You Fund’s research looking at ten countries, it found that from 2019-2021, 5.7% of eligible funds were channeled directly to local and national actors, while USAID’s approach nearly doubled that estimate (11.1%). That translates into a $732 million difference over three years for just this subset of countries.

Bottomline: USAID should establish a strong, credible baseline for measuring progress towards the 25% goal. By following Publish What You Fund’s recommendations, USAID can establish a methodology to drive reforms as bold as Administrator Power’s vision.

About the authors

Nora K O’Connell NKO Strategies Friends of Publish What You Fund Board Secretary

George M. Ingram Senior Fellow, Brookings Institution Friends of Publish What You Fund Board Chair

Sally P. Paxton US Representative, Publish What You Fund

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