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Africa grantmakers' group releases report on funding

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By Talaya Grimes

Monday, May 23, 2011

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The Africa Grantmakers' Affinity Group (AGAG) has released the summary report of their recent study that asked a critical question often left unexamined in making grants to NGOs (non-government orgainization) in Africa — "does how funders provide money to the organizations they support matter as much as what is funded?"

An important recommendation from the report is the need for more frank and direct discussion between foundations, intermediary organizations and African NGOs about the advantages and disadvantages of different approaches in reaching common funding goals. Communication is key when working at a distance for both foundations and African NGOs so each can gain a better understanding of constraints that may affect the funding partnership.

The report is based on interviews with staff members from a sample of 30 foundations, 11 intermediary organizations and five African NGOs that asked:

• How all three types of organizations view and define organizational capacity.
• How and why foundations use direct or indirect funding.
• How African NGOs view the benefits of each approach.

Indirect funding describes support given through an international or local intermediary organization. In turn, these organizations subcontract work or regrant funding to local NGOs to carry out specific projects. Direct funding describes when organizations receive funding directly from foundations rather than through an intermediary organization.

• 86 percent of foundations used one method (either direct or indirect funding) for 90 percent of their grants and 14 percent used a mixture of methods.
• 43 percent of foundations made part or all of their funding indirectly through intermediaries.
• 57 percent of foundations used direct funding for part or all of their funding to NGOs in Africa.

The report found that African NGOs noted each method had different benefits in building organizational capacity.

• Direct funding enables them to build a direct and valuable relationship with foundations.
• Direct funding provides an opportunity to negotiate support for core and indirect costs.
• Indirect funding through intermediary organizations often brings more relevant issue-area technical assistance and peer learning opportunities.
• Indirect funding through intermediary organizations often has an integrated hands-on approach with more subject expertise about the local context.

Why foundations choose one method or the other.

• Foundations stated that funding philosophy, legal requirements and budget constraints are some of the main reasons for choosing one approach over another.
• Foundations that chose direct funding said that it provided a level of local engagement that cannot be achieved by funding an intermediary.
• For foundations unable to fund directly, funding through intermediary organizations gave them an opportunity to support African NGOs.

The report's findings and recommendations can serve as starting points for a dialogue between all stakeholders about the choice of funding method and the implications of that choice for all. These discussions can help foundations to ensure their grantmaking strategies are "making the right fit" when seeking to support NGOs in Africa.

The full report, Making the Right Fit: Supporting NGOs in Africa Using Direct and Indirect Funding, will be released later in 2011. The full report will give more details and analysis of the findings and recommendations.

Visit www.africagrantmakers.org for a copy of the report.

About the Africa Grantmakers Affinity Group (AGAG)

The Africa Grantmakers Affinity Group's mission is to promote increased and more effective funding in Africa though building and sharing knowledge about grantmaking in Africa. AGAG has a diverse membership of grantmakers and is the only philanthropy organization focusing on Africa. As part of its learning agenda AGAG conducts research and organizes learning calls and meetings to capture and disseminate information about funding practices and strategies. Visit www.africagrantmakers.org to view the group's publications and learn about the group's activities.

(Note: This report is provided as a service to our readers and a service to the group or individual mentioned in the release. Usually, only minor editing is done. The group or individual is responsible for all information provided.)

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