MENU
Home Blog & Media Rebalancing Risk and Accountability

Rebalancing Risk and Accountability

August 9, 2022

Share this Post

Author

Jenna Thoretz

Advocacy Manager, US

Author

Riva Kantowitz, PhD

Founder
Radical Flexibility Fund

Locally-led development cannot be operationalized without considering risk and accountability practices. In Humentum’s fourth installment of our Operationalizing Locally-Led Development webinar series, a group of experts gathered to tackle questions around donor risk appetite, effective accountability to affected populations, and how risk and accountability can be better shared.

After the webinar, we sat down with panelist Dr. Riva Kantowitz, Founder of Radical Flexibility Fund, to hear her perspective on how organizations can reimagine risk and accountability practices to shift power and operationalize locally-led development.

Why are risk and accountability important to locally-led development? 

Risk and accountability are essential to locally-led development. Currently, the international development sector is very risk averse; our administrative requirements often make it difficult to fund new organizations or new types of programming. I think our understanding of risk—what is risky and what is not—is determined by perceptions and old narratives that are not supported by evidence and don’t speak to the capacity of today’s nonprofit organizations.

Currently, outdated perceptions of risk lead those in the Global North away from being accountable to local communities because we are so concerned about our risk posture. We prioritize upward accountability to funders and don’t think about downward accountability to local partners and communities. Donors need to rethink their definitions of risk and accountability, including the risk of their funding being ineffective by not supporting local organizations and how those interests might be shared and balanced more effectively.

What do equitable, locally-led risk and accountability practices look like to you?

There are a variety of innovative approaches to balancing and sharing risk and accountability with local partners. For example, pooled funds is a common approach, where multiple donors contribute to funding a project or initiative. In another less-utilized example, I was also recently in touch with a Nordic country donor that  developed an internal questionnaire, required for every grantee, that addresses such questions as how that funder will commit to supporting the partner beyond financial resources. It assesses whether the funder is prepared to be accountable to their partner and the community the partner works in. To that end supporting them to successfully implement programming and strengthen their organizational practices.

Radical Flexibility Fund (RFF) focuses specifically on flexible financing. What does this mean and why is it crucial to locally-led development? 

At RFF, we believe that grants are quite useful in certain circumstances, but we often look beyond grants for opportunities to create more sustainable funding pathways. Flexible financing is so important for sustainability and sustainably resourcing the work of local organizations is essential for more equitable, resilient, and accountable development. It requires us to look at new financing models and think innovatively about types of financing, including pooled and emergency funds, as well as cash transfers, social enterprise, bonds and community philanthropy.

Flexible funding mechanisms are also essential for mutual accountability. When local organizations have more diverse revenue streams, they become less dependent on grants, which empowers them. Ideally, this gives them more autonomy over which funding partnerships they enter and has the potential to force donors to think critically about how they can be accountable to their funding partners.

We often hear that the sector is stuck on rhetoric and has not transitioned to action on locally-led development. Where exactly do you think the sector is getting stuck and why?

I think we see the sector, donors specifically, getting stuck in the weeds when refining a theory of change or clarifying their internal processes. Often, their internal systems are designed in hierarchical, bureaucratic ways to be more risk averse, which has unfortunately led to a lot of disempowerment within these institutions. For example, many individuals at the program officer level, who are interfacing with local organizations and have a lot of expertise, are not empowered to make funding decisions. If the sector wants to change, to act, more people throughout the accountability chain need to be empowered to make funding decisions.

I also think it is time the sector considered a more venture capital model of solving problems. Currently, the sector is so averse to trying new ideas—which is the antithesis of how international and community development works to solve problems. We’re working on complex issues, and we need a system willing to try new approaches and potentially fail. I’d like to see more innovation incubators in development, particularly topics under democracy, governance, and peacebuilding, like those we see in technology and global health. This is a huge space for donors and INGOs to invest in and drive change forward.

Humentum works with INGOs, NNGOs, and funders to create more equitable, resilient, and accountable operating systems. What steps can each of these types of organizations take to improve risk and accountability practices in the longer term?

For NNGOs, the power imbalances at play make it difficult to push back against INGOs and donors when risk isn’t being appropriately shared or downward accountability isn’t prioritized. Regardless, NNGOs can begin asking donors important questions regarding their openness to feedback, their risk posture, and how they can provide support beyond financial resources. We have suggested a number of these questions in 10 Radical Actions, on our website.

INGOs can support their local partners in asking these questions, recognizing that the development landscape has shifted over the last decades and many of these national and local partners are equally able to manage resources and create and implement fantastic programs.  They can also better interrogate their own value add in the aid chain – including responding to complex crises, facilitating cross-regional and global learning, or continue to advocate on particular issues and for sectoral change in their own governments. INGOs can also help local partners share or mitigate risk. However, it is essential that INGOs continually interrogate their assumptions and actions and think critically about how to be accountable to their funding partners.

For funders, it is essential to step away from outdated notions of risk and expand options for how organizations, projects, and initiatives are funded. locally-led development is not just about whether a local organization gets direct funding or not. Instead, funders need to work with local organizations to understand how the work can best be facilitated and financed. There are advantages and disadvantages associated with any approach to funding. But funders need to be actively thinking about how they’re making informed decisions about risk and accountability – i.e., who is assuming the risk and who is accountable to whom? – and continually updating their practices in response to local organizations.

If you could make three practical policy or practice changes today, what would they be and why?

  1. Funders should allocate more resources for research, development, and innovation. We have a limited understanding from a systematic perspective of different ways of financing development and it’s essential we don’t leave this potential untapped.
  2. The sector should prioritize mutual accountability in all partnerships, especially  with local organizations. Donors asking internal questions to hold themselves accountable to the well-being of the organizations they fund should be a standard process and one that could increase their work’s impact. Likewise, grantees should get in the habit of being communicative about their needs and specific ways in which funders can facilitate their work.
  3. Funders need to fundamentally reconsider their internal  risk and accountability policies and processes. This begins with questions about how the current systems for risk and accountability are oriented. Are risk and accountability policies focused on donors or partners? How can they be reimagined to place local partners at the center and to better balance funder priorities?

 

Register for the next installment of Humentum’s Operationalizing Locally-Led Development series. In this webinar, financial innovators from across the sector will discuss financing practices that support and further locally-led development. We will explore topics such as flexible grant making, pooled funding, and venture capital approaches to financing development initiatives.

Register here