In partnership with a collaborative of private foundations, Humentum released its ‘Breaking the Starvation Cycle‘ report this year, revealing inadequate coverage of administrative costs by funders and key recommendations moving forward. Our research team worked with 81 national NGOs in ten countries in Africa, Asia, Latin America, and Europe. This report also shared how one NGO, Twaweza, succeeded in getting funders to adapt their requirements to fund its strategy rather than its projects, highlighting the power of true collaboration.
Twaweza is an NGO that works to enable citizens to exercise agency and governments to be more open and responsive in Tanzania, Kenya, and Uganda. It undertakes effective public and policy engagement through powerful media collaboration and global leadership of initiatives such as the Open Government Partnership. Read their story below.
Proactively engaging funders around a single organisation plan and budget
Twaweza has proactively worked to get its funders to support a ‘one strategy, one plan, one budget and one set of reports’ approach, including acceptance of its audited financial statements for financial reporting. Funders are asked to participate in ‘basket funding’ – i.e., to contribute to the organisation’s activities in their entirety rather than to a specific programme; they do not prepare individual project budgets. Twaweza systematically targets funders who might be willing to support this approach, including a mix of governments (Sweden, Denmark, Finland, Switzerland, UK) and foundations. Twaweza is one of the few NGOs in the research survey that reported it believes that all the functions and operational facilities necessary to delivery the organisation’s work are adequately resourced. It credits this to the willingness of its donors to accept the funding model, which has enabled it to establish strong systems and support functions.
Strong cost recovery capabilities can sometimes mean saying “no” to funders
Recently, Twaweza submitted a proposal to an official bilateral donor for multi-year funding but realised further in the process that the donor would not agree to provide basket funding. Additionally, the donor would require specific customised reports involving separate budget codes, with financial reports submitted in their own reporting template for the funded project. Rather than consent to these conditions, Twaweza decided not to accept the funding. Negotiating can also sometimes be necessary to reduce the administrative burden of grant funding, which comes with its own price. In a different case, Twaweza negotiated for the relaxation of terms with a governmental donor, who asked for a separate audit and separate financial report. By standing their ground and arguing the case for their financial policies, the donor accepted Twaweza’s organisational audit and report, augmented by an auditor review of a subset of transactions funded by that specific grant.
Setting targets and negotiating funding to build unrestricted reserves
Twaweza has also worked proactively to build their financial reserves once they adopted a reserves target. Starting in 2020, they negotiated with their basket funders to routinely allocate 2% of restricted grant budgets to Twaweza’s unrestricted reserves, transparently accounting for this transfer as a line item in the organisational budget.
More financial flexibility has enabled innovation and agility which is increasing impact
In line with their one-strategy approach, Twaweza set up new entities to expand the educational project work it had been delivering; in 2020, the Twaweza Board funded this initiative with $300,000 from its reserves. The new entities have also adopted the model of one strategy, one plan, one budget, and one set of reports and financial statements for all donors. This strategic and innovative approach is multiplying and has already had a rapid and transformational impact.
One of the newly formed entities, Usawa Agenda in Kenya, used this flexible start-up funding to rapidly respond to the Kenyan government’s emerging plans for education in the context of the COVID pandemic. The availability of flexible funding allowed Usawa Agenda to fund research on the potential impact of the government’s decision to move to remote schooling without needing to secure specific funder approval. This research showed that only 20% of children nationally would access remote learning in Kenya, which would be inequitable. This was a key contributor to the government’s decision to defer the start of the term until schools could open rather than offer online schooling that would not reach enough students.
What’s so exciting about this case study?
For the Humentum research team working on cost recovery for over a decade, the creative and courageous approach Twaweza has taken is an inspiring beacon of hope. The most common phrase we have heard over the years is, “They’ll never agree to that.” Twaweza has shown that it is possible to get funders to collaborate and agree to adapt their compliance and reporting requirements to fund the organisation and its strategy, rather than its projects. Even more excitingly, they are spreading this practice across the region by starting up other NGOs through their networks. Twaweza’s story will hopefully encourage other organisations and funders to adopt similar approaches.