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Systems Change Funding: Lessons from Funders in Africa

13 March 2023 | Catalyst News

5 Lessons from Africa

On 19 January 2023, African Philanthropy Forum (APF) and Catalyst 2030 co-hosted the fourth in a series of global conversations for funders on the future of funding systems change (see the findings from the first salon, second salon, and third salon). The conversation convened donors, operating in Africa, to gather their feedback on the principles outlined in the NGO urgent letter. This social entrepreneur-led letter gained over 1,100 signatures. It calls for ten shifts in funding practice, including: providing multi-year, unrestricted funding, simplifying reporting and application procedures and embracing a systems change mindset. You can find out more about the principles and read the full list of signatories here.

The January Salon assembled African philanthropists and funding organisations to discuss the ten principles and consider what they would mean in practice for philanthropy and civil society across the continent. Thank you to those who participated in this discussion and who are paving the way for a new model of funding, in partnership with grantees and proximate leaders.

Here are five key takeaways from the conversation:

1. The challenge of funding networks

Donors often want to fund networks but, given their distributed nature, face administrative challenges when it comes to directing funds. This often leads funders to work via fiscal sponsors who can receive the funds on behalf of the organisation and distribute instalments as needed. In order to ‘fund networks’ and do justice to this principle in the NGO letter, we must ensure that a funder response considers this challenge and provides the tools to overcome it. For example, participants in this Donor Salon encouraged funders to push beyond the use of intermediaries and work with networks to enhance their capacity to exist without fiscal sponsors. This would include supporting networks’ efforts to resource staff and establish a legal entity and a bank account to receive funds. Having guidance and suggestions on how to do this in practice would support donors to make this shift.

2. ‘Unrestricted’ funding sounds great, but a lack of accredited organisations makes this harder

For those foundations that would like to embrace the principle of providing ‘unrestricted funding’, it can be hard to do so in practice due to a lack of accredited organisations on the continent. This is especially true for organisations that have offices in both the US and Africa. the US, organisations must have a 501(c)(3) accreditation to receive funding. This same accreditation does not exist in all cases for African organisations. An organisation’s lack of accreditation and verification can limit funders’ ability to give unrestricted funding. To overcome this, funders in the group discussed the importance of building transformational and trust-based relationships with their grantees. These may kick off shorter-term grants that could in turn, over the course of their relationship, transition into unrestricted, multi-year funding.

3. Streamlined paperwork needs to be inclusive

The group discussed that in addition to ‘simplifying and streamlining paperwork’, funders must also consider how their application procedures reach those who may not have access to the internet or who have limited literacy rates. Many proximate leaders across the continent are doing great work in their communities but are not able to access online bids due to a lack of electricity, internet, or in some cases, literacy. The group discussed how working directly with communities and ensuring manual submissions (as opposed to only online submissions) would ensure these groups could engage with calls for proposals. Considerations such as these ensure questions of power, equity and inclusion are embedded from the onset of the grantmaking process.

4. We cannot overlook the impact of INGOs on the continent

Large-scale INGOs have impacted development across the continent from the outset. We cannot overlook the traces of colonialism inherent in these practices and the impact that they have had on African philanthropy. When discussing the need for African funders to consider adopting new funding practices, we must be mindful of this history and prepare to have difficult conversations with the large-scale funders that continue to fund INGOs over African-led organisations. If we are to truly shift how philanthropy operates across Africa, we must listen to African leaders and ensure funders have the knowledge and resources to fund locally. Resources such as APF’s Start Point are leading the way on how to address this issue practically.

5. We all need to do more to shift typical power imbalances

There is still a deeply ingrained expectation that funders hold all the power, are the drivers of relationships and can therefore set the terms of agreement and interaction. This expectation is often embedded in both foundation staff and grantee-partners, impacting the extent to which trust based and transformational relationships can be established. The group discussed how, in cases where foundations are pushing to address this expectation and create equitable relationships, their grantee-partners often fall into learnt patterns of behaviour. In practice, this means grantee-partners don’t question funders’ suggestions, but rather accept them as a mandate;. This impacts grantee-partners’ work plans, monitoring and evaluation programmes and approaches to reporting. This is by no means the fault of individual funders and grantee-partners. Instead, it is the system of philanthropy itself and the learnt practices, behaviours and mindsets that are inherent to this system. We all need to do more to overcome this. The group discussed the potential to create Funder Codes of Conduct to share with grantee-partners to help set a new standard for interaction and to ensure that grantee-partners know that they can push back on funders’ suggestions.

Where do we go next?

As we learn from funders across the globe, our understanding of what is needed to shift the current funding paradigm becomes clearer and clearer. We will be taking stock of these global conversations in the coming months. First, however, we are going to Latin America for our next Donor Salon.

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