Navigating in Troubled Waters A glance into the crystal ball for IBIS

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1 Navigating in Troubled Waters A glance into the crystal ball for IBIS Knud Vilby January 2014

2 Navigating in troubled waters, A glance into the crystal ball for IBIS

3 Navigating in troubled waters A glance into the crystal ball for IBIS By Knud Vilby, January 2014 Foreword International development cooperation will be going through dramatic changes in the coming years. Climate change will have severe impact on poor people in poor countries. Development aid as we know it is under pressure and the objectives of aid are changing. Focus will increasingly be on the private sector and aid for the least developed countries in Africa will come under pressure. These are some of the conclusions by Development Analyst Knud Vilby whom IBIS has commissioned to write the following report as one element in the analysis of how IBIS as an organisation shall respond to the dramatic changes foreseen. As a response to the expected changes IBIS will have to adapt in order to continue to be a strong advocate for equal access to education, resources and influence for poor people. IBIS foresees that the fight against injustice and inequality will be even more important in the coming decades and we at IBIS are committed to do our utmost to achieve a more just and equitable world together with partners in the global South, internationally, in Europe, and in Denmark. However, the dramatic changes foreseen will need stronger and more consistent responses, thereby increasing the pressure on IBIS and we are currently considering how we, as an organization, can become better equipped to meet these new demands. Therefore, IBIS has decided to analyze the perspectives of becoming part of the Oxfam family and will over the cause of the spring and summer 2014 analyze and discuss this opportunity with the view to taking a decision at the IBIS Annual General Assembly on September 6 th Therefore, this report focuses particularly on the consequences of the analyzed changes for Northern and International development NGOs such as IBIS. Funding trends are changing, partners in the global South are strengthened, and the traditional role of international development NGOs of providing aid to poor people and partners in the global South is changing. To IBIS, these changes will affect how we will strategize and work over the coming years. But the analysis and conclusions are equally relevant for small and big development NGOs and other actors engaged in development and humanitarian work. Therefore, we hope that this report will not only serve IBIS own efforts in responding effectively and timely to foreseen changes but that it will also contribute to the understanding and debate among the broader civil society in Denmark as well as internationally. From our side, we look forward to discuss these changes and how we shall respond to them with partners, members, friends and colleagues from other organisations. Mette Müller Chairwoman, IBIS Board Navigating in troubled waters, A glance into the crystal ball for IBIS

4 Navigating in troubled waters, A glance into the crystal ball for IBIS

5 1. Executive summary A great number of international studies and reports point towards the likelihood of dramatic future changes in the framework for international development cooperation. These changes may involve and fundamentally affect the work of Non governmental organisations (NGOs). This report brings together some of the indications, projections and conclusions of the many studies. It is a glance into the crystal ball to create awareness about likely changes and challenges, some in a not distant future, some detectable already now. Chapter 2 deals with overall change factors and with challenges related to climate change, increased environmental degradation, growing refugee problems and the geographical change in poverty. The majority of the world s absolute poor now live in middle-income countries, but it is likely that the challenge of poverty will change again already within the next years. ODI indicates that 80 % of the poor in 2025 will be living in Africa. It is essential to assess how the needs and demands for assistance differ in different types of countries. There will be an increased focus upon fragile states, but many of the least developed countries are also facing new challenges. In middle-income countries one of the most important challenges is to assist in redistribution of incomes and in making economic development and growth more sustainable. Chapter 3 describes the reduced international role of official development assistance (ODA) and the many other international and domestic resources increasingly available for financing development in developing countries. ODA moving from the North to the South today represents only a very limited part of the overall reality. And the future will reduce the role of ODA further. Chapter 4 describes the changing nature of ODA and a number of new ODA-objectives. ODA is basically not growing but will be used for a number of new objectives, not all in line with traditional development thinking. ODA will also increasingly be used as a catalyst for increasing private investments including in private-public partnerships with an objective of creating more jobs and increasing economic growth in donor countries. In addition ODA will be used as an important component in financing remedies against climate change and as part of security policy. When ODA is stagnant in size and is in the future to be used for many more objectives than is the case today one obvious consequence is that a number of more traditional objectives will be given lower priority and some traditional recipients of ODA will suffer. It is likely that low income countries in Africa will receive a smaller share of ODA and more ODA will be used for climate change financing in Asia and Latin America. It is also likely that less ODA in relative terms will be channelled through Northern NGOs and INGOs. An overall consequence is that ODA becomes less poverty-oriented. Chapter 5 looks at the consequences for Northern NGOs and INGOs of these quite disruptive changes and it focuses on dilemmas and potential conflicts. Organisations need to be much better prepared for change both through better planning and by improving the decision making, the political organisation and the management structure to become more proactive. Important choices have to be made: Is an organisation contributing to improving conditions for the most vulnerable part of the population through the strengthening of Navigating in troubled waters, A glance into the crystal ball for IBIS

6 existing power systems or through the change and transformation of the same systems? The role of long-term planning organisations is also challenged by dynamic spontaneous popular movements setting new agendas. Established organisations have to make choices or find a possible grey area or a bridge between seemingly contradicting viewpoints (5.1). This has to do also with the dilemma between following corporate logic and the logic of development science in an organisation or to work in much more open and unpredictable movement-oriented structures (5.3) Increasingly, Western organisations view working for rights based development through advocacy and local civil society support as a core objective. But the humanitarian and political space and the space for advocacy is shrinking in many countries. INGOs can in some cases support and protect smaller and more vulnerable local CSOs but in many cases international organisations are especially targeted by governments who feel under attack. The anti-terror agenda has made it easier for governments to label critical organisations as terrorist-friendly (5.2). The squeeze on traditional government funding of organisations and a future characterized by more diverse funding is as fundamental challenge (5.4). There is a potential for receiving funding from new and other sources, but organisations will have to use more internal resources (money and people) for fund-raising, and it will be an added challenge to get access to sufficient non-restricted funding (5.4.1). This new development is creating competition and potential conflicts between organisations (5.5) and between organisations and governments. There is a tendency towards Northern governments increasingly wanting to fund Southern CSOs directly without using Western/Northern NGOs as intermediaries (5.5.1). Differences between individual Northern NGOs and INGOs may be highlighted, but also difference between the roles of and the space for local and foreign civil society organisations in a country (5.5.2 and 5.5.3). The new reality calls for new types of cooperation and new alliances. An obvious recommendation in many studies is to develop the cooperation between the Civil Society and the private commercial sector. But choices will also have to be made when it comes to deciding on specific alliances and partners. It is important to maintain the focus on the environment and climate change and to asses whether working within an alliance is making development more sustainable or on the contrary adding to problems. Choices of partners have to do also with the need for the organisations to remain independent with full integrity. (5.6). Section 5.7 deals with questions of navigation and with the pro and cons of being a super tanker or a much smaller vessel. 2. Development Assistance and humanitarian aid: New challenges and changing needs The development landscape has been changing rapidly since the Millennium and all indications point towards an intensifying trend. The changes are radical in the sense that they do not only affect one or a few factors. On the contrary, almost all components in the composition of the landscape are at play: Demands are changing and moving, geographically and thematically. Funding sources are changing and donor policies are being revised. The roles of the civil society actors are changing and challenged. New players are arriving on the scene, new alliances are under development and new competition between former partners is potentially in the making. Navigating in troubled waters, A glance into the crystal ball for IBIS

7 Changes in structures and organisation of international development cooperation are taking place at a time when the global and international agenda setting is moving from North towards South and from the West towards East. This is a challenge for traditional donors from the West and the North. A number of recent studies focus on the dramatic nature of the overall changes taking place and on implications for the international civil society. The fundamental change in conditions will continue and is creating the necessity of ever changing agendas for development players including Civil Society Organisations, indicate the studies. It is therefore necessary to develop political- and management structures in CSOs, which make it possible to live up to the demand for continuous adjustment and an increased ability to adapt to diverse and frequently arising challenges. Titles of some of the studies indicate how farreaching the authors expect the changes to be: Civil Society at Crossroads INTRAC (2012), Riding the Wave International Civil Society Centre (2013), Redefining Aid UKAidNetwork (2013), The 21 st Century NGO. In the Market for Change The think tank SustainAbility with UNEP and Global Compact (2003) and maybe most dramatic: Horizon Creative destruction in the aid industry ODI (2012). In this introduction some of the major change factors, which have to do with changing demands on development assistance and humanitarian aid, are mentioned. The subsequent sections deal with these change factors in more detail. Changes in the funding patterns and objectives are dealt with in section 3 and 4 and changes in the challenges CSOs and especially INGOs are facing feature in section Poverty The majority of people living in extreme poverty no longer live in the poorest and least developed countries. The challenge of fighting and eradicating poverty is therefore changing. Most of the absolute poor today live in middle-income countries. Some but not all these countries qualify for Official Development Assistance (ODA) (according to OECD-rules), and some middle-income countries with a big minority of absolute poor do not want the involvement of international organisations in their development. Indications are, however, that this picture will change again before Some high-growth middle-income countries will be able to reduce absolute poverty, and according to ODI it is more than likely that the majority of absolute poor in 2025 will again live in the poorest and least developed countries, including in fragile countries. ODI indicates that more than 80 % of the poor will in 2025 live in Africa. 2.2 Environmental degradation and climate change The failure of international climate negotiations combined with population growth and the continued international emphasis on traditional non-sustainable economic growth means that problems related to environmental degradation and climate change are growing and adversely affecting especially some of the poorest countries. At the same time it is becoming increasingly difficult to eye any real possibility of raising the necessary and promised new and additional billions of Euros or dollars for climate adaptation and mitigation. Traditional official development assistance with an official focus on poverty eradication is therefore increasingly diverted to purposes related to environment and climate. Climate change makes the poorest suffer first and most and changes in the composition of development assistance can therefore be justified, but there will nevertheless be Navigating in troubled waters, A glance into the crystal ball for IBIS

8 competition between the focus on development measures to reduce poverty and climate interventions respectively. This competition will be sharpened by the fact that interventions in industrial and middle-income countries often give the fastest and biggest impact when it comes to climate programmes. It is therefore an obvious risk that ODA becomes less poverty-oriented. Climate changes may in 2025 have lead to increased numbers of major emergencies (droughts and flooding) which will have diverted funding away from long-term development assistance to short-term humanitarian emergency aid. As well as to more long-term assistance for increased numbers of forced migrants and climate refugees/internally displaced. 2.3 Refugees Europe (and USA) is already experiencing the growing pressure from an increasing number of refugees from Africa and the Middle East. Rapid population growth, growing unemployment and climate change may all contribute to an ever-increasing number of asylum seekers and refugees. Consequences will be growth in costly protection measures (securing Fort Europe better) and more funding for meeting immediate needs of growing number of refugees. Funding will most likely be drawn from ODA. Other likely consequences are growing isolationism and nationalism in Europe and other developed Western countries, which implies a potentially negative impact on the availability and size of ODA. 2.4 Challenges in fragile states There is already today an increased focus on fragile states characterized by not being able to handle growing problems of domestic/regional insecurity or fundamental development problems including those stemming from climate change. Fragile states are expected to move even more centre stage in relation to ODA in the future. Problems have to be analysed on a countryby-country basis and may vary a lot, but the trend is that there is a concentration of unsolved problems (e. g. in relation to Millennium Development Goals) in fragile states and that this will only be further cemented in future. Experiences and formats for development work from more traditional, stable developing countries cannot automatically be transferred to fragile states. Partnership models are challenged because of weak or non-existing partners. International organisations can be forced to implement programmes directly and new working modes have to be developed. Advocacy and capacity development may be even more important in fragile states than elsewhere but also much more difficult to realize. In some countries humanitarian aid and development assistance may be regarded primarily as a front for controversial security related assistance or direct military interventions i. e. winning hearts and minds. 2.5 Challenges in least developed countries Least developed countries are very diverse and have to be regarded as such, but a number of general challenges can be identified: The combination of high population growth and the impact of climate change and environmental degradation may increase poverty and unemployment problems in many countries. It may reduce food security and limit growth in agricultural production. At the same time, however, a substantial share of these countries are experiencing higher and relatively stable economic growth, e. g. due to foreign investments and higher commodity prices. According to the World Bank, countries with 2-3 % annual population growth need economic growth at above 7 % annually to effectively reduce poverty rates. The challenge of real redistribution from rich to poor is therefore growing, and there will be Navigating in troubled waters, A glance into the crystal ball for IBIS

9 an increasing and necessary focus on effective and more just taxation systems in so-called recipient countries: higher taxes, fight against tax evasion and corruption. There will also be a need for a stronger and more vocal population and civil society. The need to make growth more sustainable in relation to environment and climate will also increasingly come into focus. The possibility of raising more funding for development through domestic sources (both through taxation and domestic investments) is and will be growing in many countries (see 2.1). Lack of redistribution and insufficient job creation will increase political and religious tensions and make some countries less governable. Development work will under these circumstances be more political by nature, and the risk of offending systems and governments will rise (the consequence of a shrinking humanitarian space and space for rights-based advocacy). 2.6 Challenges in middle-income countries Middle-income countries (and not just the BRICS-countries) represent a number of development success stories. Some of the countries have been able to reduce poverty rates and many depend much less on ODA than was the case 20 years ago. At the same time, however, many of the countries are characterized by high inequality and a substantial minority of very poor people. Extreme poverty is often, but not always associated with minority problems and sometimes with discrimination of minorities. Rapid economic development also has very serious consequences for the environment in many countries, and the poorest parts of the population suffer the negative implications the most. The industrialised middle-income countries with high growth rates are responsible for a rapidly increasing share of greenhouse gas emissions and other types of climateaffecting and environment degrading factors. The overall international efforts to make development more sustainable will fail if the unsustainable nature of growth in middle- and high-income countries is not changed. There is a strong need to focus both on povertyeradication and sustainability, but the future role of ODA, from OECD-countries, is likely to be limited as a tool in this regard. 3. The reduced international economic role of Official Development Assistance (ODA) from OECD-countries ODA was once the most important foreign source for financing development in developing countries and in many leastdeveloped countries it was more important than any financial resources created domestically. That is not the case any more. ODA is only one among many resources available to lowand middle-income countries. Its relative importance is reduced and will be reduced even further. The most recent statistical figures and estimates tell the overall macro story: Annual level of Foreign Direct Investments (FDI) (2010) 514 billion USdollars Remittances to developing countries (2012) 400 billion USdollars ODA (2012) from OECD-countries 129 billion USdollars These are the three international sources of funding most frequently mentioned. But there are many other sources available for developing countries. Domestic resources have grown very rapidly. Growth countries and developing countries mobilized billion dollars in domestic Navigating in troubled waters, A glance into the crystal ball for IBIS

10 sources from tax, duties and other publicly generated revenue in 2012 (NGO-Forum Dec. 2013). This is billion dollars more than in 2000, and the annual growth rate in domestic resources mobilisation has been 14 %. The number of middle-income families is growing rapidly and this is increasing the taxbase further. The potential for imposing more duties and taxes on the exploitation of natural resources is also increasing in many countries. Countries outside the OECD-area, (such as China and India but including many other growth countries) are not only emerging as major investors in developing countries economy (exploitation of natural resources, investments in land and commercial industrial investments), they are increasingly emerging also as donors. Development assistance from countries like China and India may not live up to criteria and definitions from OECD/DAC, but it is of increasing importance both economically and politically. These countries are economically important, because they contribute to critical investments in infrastructure, and politically important because the funding availed though often earmarked is without the political and value-based conditionality often associated with Western assistance. It is difficult to provide reliable figures for the size of this new development assistance, but it is very substantial and growing. OECD/DAC criteria for ODA will be under revision from 2014 and the end result of the revision is hard to predict. It is likely that OECD-governments will put pressure on OECD/DAC to accept new forms of more commercially-oriented financial flows in addition to the non-development costs already accepted as ODA. DAC already now accepts a number of internal costs in donor countries as ODA. Part of the domestic administration of ODA, and also the costs of domestic programmes for asylum seekers and refugees are today defined as ODA. New big semi-private institutional donors, like e. g. Warren Buffet and Bill and Melinda Gates Foundation are also playing an increasing role both internationally and in recipient countries. They are big enough to be agenda-setting and policy influencing at both national and international level (not least in the health sector) with huge and often earmarked contributions and constructive involvement in policy dialogue. ODI (2012) indicates that private donations has reached an annual level of between 56 and 75 billion dollars because of growth in philanthropy, not least from major private corporate donors. The figures are only rough estimates. Overall figures hide the complexity of resource flows. There is e. g. a huge difference between different developing countries ability to attract foreign direct investments (FDI). In Africa, 15 years back, it was almost only oil- and mineral-exporting countries such as Nigeria and Angola, which received foreign investments. Today many more countries benefit from FDI but the spread is very uneven. Similarly, there are developing countries with a very long tradition for migration to Europe and North America and they receive a disproportionally big share of international remittances (e. g. Eritrea and The Philippines), while incomes from remittances in other countries are much more limited. There is agreement that remittance is an important source of foreign currency and also an important source for development at local level in many countries. New donors, just as the more traditional Western donors, have their strategic and political considerations. Some countries are seen as more interesting than others for strategic or commercial reasons. Though many more sources are available for funding today than was the case 25 years ago, and though this development will continue Navigating in troubled waters, A glance into the crystal ball for IBIS

11 and possibly accelerate, it does not mean that it has become easier to fund all important development activities. 3.1 Challenges in and potential for funding. Tanzania as an example No other country has received as much ODA from Denmark as Tanzania, which is still one of the main recipients of Danish development assistance and will continue to be so in the coming years. But discoveries of oil and not least of natural gas have changed the economic perspectives for Tanzania. Official projections are now that incomes from the exploitation of natural gas will, when the exploitation is at its maximum, provide annual incomes for Tanzania at a level three times the size of the total official development assistance Tanzania receives today from all donor countries. The exploitation of natural resources will also contribute further to the growing number of middle-income families and increase the potential tax-base considerably. Future scenarios for Tanzania show that a main challenge will be how to use growing incomes responsibly for both public investments and economic redistribution in a country where inequality is already creating social and political tensions. 4. The changing nature of and new objectives for ODA from OECDcountries Numerous indications document that traditional official Western donors (basically governments in OECD-countries) are reconsidering both the size and the content and composition of their ODA-policies. The revision of ODA-policies will continue over the coming years. Total Western ODA is neither growing in absolute terms or as a share of the BNI of donor countries. The UN target of 0,7 % of GDP towards development assistance from OECD countries will not be reached. The latest figures from 2012 showed that the average level was 0,29 % of GDP, a level marked by only small ups and downs over the past years, but lower than the 0,33 % reached in the 1990s and again as late as in Promises for new and additional funding for climate mitigation and adaptation have basically not been adhered to. Western governments are realising that the relative importance of ODA is reduced, while the demand for funding is growing, not least in relation to necessary environmental and climate policies and interventions. They are therefore trying to give ODA a new role. One of the most visible efforts tried is to use ODA as a catalyst and incentive for increased private funding, e. g. for climate change mitigation, green growth etc. in public-private partnerships and other types of alliances. An additional trend is to link ODA closer to military involvement as a soft component of security policy. The overall implication is that a reduced ODA is challenged to meet increasing and varied demands as well as different political objectives. The result is increased internal competition between intended recipients including intermediary organisations, which have traditionally received their funding from donor governments. This trend is only in its infant stage now and will continue to gain momentum. ODI (2012) is referring to figures showing that the NGO-alliance Interaction in USA 20 years ago relied on 70% funding from official government sources. Today 70 % of the funding comes from private sources. 4.1 The re-emergence of domestic employment and export promotion as objectives for ODA ODI (2012) predicts that, by 2025, mutual (bilateral) foreign trade and investment Navigating in troubled waters, A glance into the crystal ball for IBIS

12 interests will be powerful and transparent determinants of development cooperation for most countries. In such an environment, it is natural to consider that official aid will also be used increasingly to promote expansion of markets and investment opportunities. According to ODI, developing countries may need $ 1 trillion per year in investment capital in order to finance the backlog of infrastructure needs and maintenance and the greening of the infrastructure required by climate change. Increased South-South cooperation will solve part of the problem. It cannot, however, fill the gap, but traditional aid agencies will face increased competition. Many donor-countries will use ODA to promote public private partnerships and blends, involving a discreet role for aid agencies. The evidence on public-private partnerships in Africa shows mixed results, but donors could nonetheless catalyse private financing, including by providing partial credit guarantees to investors and relevant technical assistance to governments to safeguard the public interest. Reduced economic growth and growing employment problems in Europe have made it easier for traditional donor governments to argue in favour of using ODA to create winwin-solution by supporting activities which benefit recipient countries and are at the same time creating jobs and new export possibilities in the donor countries. One such example is the case of Denmark (and Korea and others) exporting green technology and green solutions to make economic growth in the South more sustainable, and at the same time benefitting the donor country s domestic economy. The involvement of public ODA and standards developed as part of development cooperation may possibly see higher levels of ethics and sustainability in public-private partnerships than is the case in purely commercial investments. In the early days of development assistance in the 1960s and 1970s ODA was often given on condition that parts of it were to be used in donor countries. Since then a policy of untying aid has been relatively successful, but what happens now is a kind of re-emergence of tied aid although sometimes in more sophisticated forms. The perspective is, in brief: More ODA will be used as a catalyst and incentive for private commercial investment flows More ODA will be used as an element in export promotion and employment creation in donor countries as part of green growth solutions More ODA will be used as a component in public-private partnerships in developing countries More ODA will possibly through public-private partnerships be used for promoting more sustainable and ethical standards for private investments in developing countries. 4.2 ODA as an essential element in security policy Until 2001 most links between development assistance policy and security policies were established through or in relation to UN operations and the links were few and relatively weak in most Western donor countries, especially the smaller ones such as Denmark. The war on terror using both military and civilian means changed this situation. The wars in Iraq and Afghanistan have been characterized by efforts to combine military involvement with softer components, (winning hearts and minds) not just of emergency aid and other types of humanitarian assistance but also through provision of long- term development assistance. Results have at best been very mixed, but the new strong link between Navigating in troubled waters, A glance into the crystal ball for IBIS

13 security and development has been established and is present now in a number of operations in Africa and the Middle East. A very substantial part of ODA from some donor countries has been redirected from traditional developing countries to countries with international military presence. Previously, decisions to prioritise individual developing countries as programme or focus countries were e. g. in Denmark based on analyses of the needs and the possibilities for creating sustainable results through ODA. Decisions to use ODA as an element in combined operations in fragile states have been based on very different criteria. The anti-terror-agenda has also created a security focus in many other types of development assistance. This focus has a number of elements: Development assistance as a tool to reduce the risk of terror Increased focus on the security of both international and national staff involved in delivering assistance Thorough screening of potential local partners to prevent cooperation with organisations supporting or perceived to support terror. The agenda of anti-terror has simultaneously made it easier for recipient governments to define opposition movements and organisations as terrorist organisations and ban them as being illegal. Foreign organisations (INGOs) have to manoeuvre in a difficult environment where this situation may lead to a further reduction of the humanitarian space. At the same time Northern NGOs and INGOs need to decide how and how much they want to be involved in civilian assistance directly linked to or protected by military operations. The longstanding principle of many humanitarian INGOs to refrain from operating with military escorts in order to remain an impartial actor is threatened. Most studies agree that fragile states will increasingly become a focus for ODA, because poverty problems and a number of other development-related problems will be concentrated in these countries. Terrorism alleged or real is often an element in the fragility of these states and it therefore likely that there will be more countries and areas characterized by this agenda. The perspective is, in brief: A substantial share of bilateral ODA is redirected to countries where ODA is used as one of several components in combined military and civilian operations. New modes and criteria have been developed and will be further elaborated on how to work with development in cooperation with or protected by military forces The agenda may make it difficult or impossible for donors (Including INGOs) to work with critical partners (organisations and movements) in these countries. 4.3 ODA in climate finance also in middleincome countries According to the scenario in ODIs Horizon 2025 Creative destruction in the aid industry (2012) half of public Climate Change Finance (CCF) will still be coming out of ODA up to 2025 (and almost all of it until 2020, or whenever a global carbon framework is put in place). This outcome will seriously undercut ODA availability for everything else, and make African and low-income countries (LIC) poverty targeting harder (because mitigation of climate change is focused more on Middle- Income Countries (MIC) and Asia/Latin America. Much depends on how soon or even if - it will be possible to develop other financing mechanisms for Climate Change mitigation, Navigating in troubled waters, A glance into the crystal ball for IBIS

14 such as different types of proposed international taxes. Results have so far been disappointing. AS ODI describes it, ODA to low-income countries and/or African countries will be affected negatively. ODI also expects that INGOs may tend to be negatively affected as funding channels, but not as advocacy platforms. This will, however, also depend on the ability of INGOs to find a role for themselves in relation to Climate Change Finance. The perspective is, in brief: Less ODA to low income countries and African countries and more ODA in the form of Climate Change Finance to Asia and Latin America Less ODA channelled through INGOs. 5. INGOs and Northern NGOs in the new and changing landscape Disruptive changes According to most studies the fundamental or disruptive changes are on the cards, incl. increased diversity between different types of countries and development situations: More stakeholders from both traditional and new sectors will be involved in development planning and implementation. There will be more competition for traditional funding and more diversity in alternative funding for development. Donor funding objectives will change. They will become more diverse and possibly more egoistical. There will be potential for more cooperation between sectors (commercial, government CSO), but also a higher potential risk for conflicts between political systems and the civil society and between commercial development interests and e.g. social movements. Traditional funding and implementation modes will increasingly be challenged. Northern NGOs and International NGOs will face tough challenges and have to make difficult choices. These choices may differ from country to country, depending on the nature of development problems faced. But the necessary and often even crucial contextualisation of specific activities could come under threat from an emerging new trend: The more international the brand of an organisation, the more decisions on how to operate in one country may influence how the organisation is regarded and treated in other countries. There is therefore also a limit to the degree of diversity one organisation can practise when working in several countries. Some of the obvious challenges and dilemmas are presented in the following. If the forecast of an ever-changing agenda for development organisations is true it is however not possible to predict all the actual challenges and dilemmas organisations will face. One of the most important overall conclusions therefore is that: NGOs need to prepare their decision- making political organisation and their management structure in ways which make it possible to act and to change in accordance with an ever- changing agenda. This may mean faster decision-making as well as decentralised decision-making. Change should in this situation not be seen as a threat but as creating new opportunities. With a high adoptive capacity in the organisation it may in the words of The International Civil Society Centre be possible to embrace change. As it is stated in the study Riding the Wave (2013): Leading change driven by an exciting vision is Navigating in troubled waters, A glance into the crystal ball for IBIS

15 preferable to initiating change from a burning platform. This is obviously much easier said than done but it points to the need for organisations to look and to plan for useful - and sometimes necessary responsible changes in proactive ways. This should be the case at both countryand headquarter levels. The vision of the organisation and the decision-making structure needs also to reflect this proactively. 5.1 The potential conflicts between strengthening and transforming systems Back in 2003, before the financial crisis, the think tank SustainAbility produced the report The 21 st Century NGO. In the Market for Change. One of the conclusions was that governments and businesses are now showing a real interest in the potential roles NGOs can play in developing and deploying solutions. A new market-focused opportunity is opening up, - but often requiring solutions that are not based on single-issue responses. The report asks the question: How can we civilise capitalism through markets? Since then the Occupy Wall Street Movement has focused on the fact that wealth and financial decision-power is concentrated still more. 1 % owns and decides, but We are the 99 %. The market system is structurally promoting and strengthening a further concentration of financial and political power, which in reality leads to an erosion of democracy and to growing national and international inequality. While the Occupy Wall Street movement is a temporary thing, already fading, the overall question and dilemma remains whether to work to improve the existing system or to work on changing the system: The dilemma and question is not limited to questions about the national and international role of the market or the pros and cons of globalisation and free trade for poor and vulnerable countries. The Arab Spring and the many contradicting developments since have also demonstrated that NGOs when allowed to work in a country have to navigate in environments characterized by diverse political, economic, religious and sometimes ethnic conflicts. If the national civil society is allowed to develop and grow in such an environment, it is often characterized by frequent changes, and the emergence of popular social movements, more than longer-term planning strategic organisations. Brian K. Murphy in 2000 wrote a paper called International NGOs and the challenge of modernity, in which he concluded that The greatest dilemma facing an activist organisation in the domestic or international arena is that the voluntary sector itself has become an intrinsic part of the system that it was once committed to transform. He contrasts the corporate logic with emphasis on professionalism and technique and framework analyses with the role of giving breath and heart to innovative and alternative ideas for developing and conserving creative, vibrant, tolerant, caring and dynamic societies. He concludes that the premises solidarity and rights are essential. The dilemmas of course also indicate organisational risks: The risk that organisations working for alternative ideas are considered by governments to represent the opposition and are banned or restricted. The risk that organisations working to improve the system and make it more democratic and accountable are considered part of a system, which popular movements want to change or fight. Navigating in troubled waters, A glance into the crystal ball for IBIS

16 International organisations, INGOs, will have to take stock of the situation on a country-by-country basis, but organisations with an international or a global brand will experience that decisions in one country or region will influence how the organisation is regarded and treated in other countries (See also 4.2). The table indicates some of the dilemmas and contradictions and some working areas Working within and respecting the established systems The grey area Searching for alternative solutions and development models Long term Efforts based on planning, organisation and long term strategies Most established INGOs and Northern NGOs working within Emergencies Development Long-term humanitarian problems like e.g. refugees NGOs and INGOs supporting the fight against poverty and inequality and for a more sustainable development and a rights-based development. IBIS support to indigenous peoples organisations in Bolivia The Anti Apartheid movement Movements and organisations working long-term for changing political systems (e. g. The Muslim Brotherhood). The former liberation theology movement in Latin America. Anti or alternative growth movements. Short term. Reactions And responses to more sudden changes and developments INGO and NGOsupport to more radical movements and organisations Movements like OccupyWallStreet We are the 99 %. The Arab Spring and many related movements including blogger initiatives Some environmental and climate movements (The Chipko movement in India. Possibly Greenpeace, when younger. Many local spontaneous initiatives) The Pussy Riot Movement. Navigating in troubled waters, A glance into the crystal ball for IBIS

17 5.2 The challenges of working with rightsbased advocacy in regions and countries with shrinking humanitarian and political/advocacy space The report Riding the Wave from the International Civil Society Centre quotes CIVICUS 2013 State of Civil Society report for pointing out that a shocking 57% of the worlds population live in countries where basic civil liberties and political freedoms are curtailed. For years, CIVICUS has reported on the shrinking space for civil society worldwide. These developments have also been experienced by many international civil society organisations. Work in many countries has become more difficult and often more dangerous. Some organisations have been forced to stop working in specific locations or countries altogether because of political interference, corruption or violence. The general feeling is that civil society organisations (including INGOs and Northern NGOs) were given more space internationally in the 1990 s while the political and humanitarian space has gradually been shrinking since the beginning of the new millennium. Reasons vary from country to country and region to region, but there are a number of more general trends: The new anti-terror agenda has since 2001 made it mush easier to label critical organisations and movements and media as terrorists or terrorist-friendly. Governments in countries moving towards more democracy and variations of multiparty systems increasingly regard neutral or critical organisations as part of the opposition and therefore regard these as a threat Many governments see the work of Northern NGOs and INGOs as a potential political interference in domestic policy issues and they are supported internationally e. g. by China s policy of interference. Many governments respond negatively or with apprehension not least to the rightsbased development agenda being highlighted by many INGOs. Governments especially tend to see advocacy along these lines as a political interference in domestic issues. Trends indicate that the problems linked to reduced humanitarian and political space may increase even further: Several of the new big players in development (e. g. China and India) are pursuing policies of non-interference and are giving some credibility to government restrictions on the work of international NGOs. The increased focus on advocacy and rights as a core component in the work of especially Western NGOs and INGOs will increasingly lead to governments regarding these as interfering political players in their countries. Critical local and national social and political movements (including climate change concerned movements) will increasingly seek the support of INGOs. Building tension between civil society and governments is therefore an increasing risk in the future. It needs mitigation and strategic responses if Western/Northern ODA actors are to continue to play a core role. 5.3 The need for more dynamic and change-oriented organisations versus the need for long-term planning The growing diversity among recipient countries and the changing agendas call for diversity and flexibility in the management structure and operations of Northern/Western NGOs and INGOs. When organisations are growing in size and developing international or globally well-known brands it becomes a challenge to be able to simultaneously signal an overall more or less uniform vision Navigating in troubled waters, A glance into the crystal ball for IBIS

18 and mission, and retain the right to respond differently to different situations in different countries. There will potentially be a limit to how far it is possible to stretch the vision if contextualisation is still to be a factor in implementation. Decision making on where, how and in which countries the organisation wants to operate becomes very important. The how will also include strong thematic programme priorities. Whereas the problem or in-built conflict is not in itself new it is accentuated further by the combination of global donor brands, increased recipient diversity and the challenge posed to certain Western values traditionally marking ODA. There is a risk that this trend leads to less contextualisation of ODA in stead of more. And more is what is needed. Another challenge is to develop a higher degree of flexibility and dynamism in programme development in the right balance between local demand, decentralised planning and decision-making at country level, versus the overall organisational strategy. The table operates with Brian Murphy s Corporate logic in the left column (See 4.1). According to Murphy the corporate logic leads to supporting existing systems that are not able to change or transform the negative development towards power concentration, environmental degradation and climate change. This is reflected in the likely results. The grey or bridging area column shows where CSOs may be able to assist in the necessary transformation of development and growth patterns. The table could be made with a different content. The important message is that organisations need to build the necessary bridges to catalyse a more sustainable development and also to reflect changes in the international agenda and in recipient countries and local civil societies. If the organisation wants to be able to embrace change it is important that timely and right decisions are taken as part of proactive modes of operation. Delayed and defensive decision-making in response to changes may send the wrong signals to stakeholders The structure for decisionmaking will need to be overhauled in many organisations to make it possible to live up to changing agendas and to take the necessary decisions with sufficient speed. On the surface there will often be contradictions between solutions to some of the different challenges INGOs face. Choices have to be made. Traditional Northern NGOs with a modus operandi developed over many years will probably find it difficult to adjust timely. Navigating in troubled waters, A glance into the crystal ball for IBIS

19 Development according to corporate logic The Grey area or The Bridging activity Support for rightsbased development Support based on solidarity with local initiatives Types of advocacy and Development for transformation and change Uniformity based on international experience and evidence Diverse Citizen-lead Localised and based on Strategic framework local experience analysis or LFA Value and/or protest Results-based driven management advocacy support System-challenging Planning and High emphasis on Mobilising professionalism environmental Dynamic and to a Pragmatism and sustainability certain degree neutrality unpredictable Development science Holds rights-based Predictability development and solidarity as fundamental values Results Results Results Positive results on Real partnership Intermediate results intermediate aims and Risk of government uncertain objectives likely. reprisals The system may fight Long-term positive back. The risk of changes unlikely in the government reprisals trend towards power Local and national concentration, awareness creation environmental degradation and climate change. Context-sensitivity leading to development of community spirit and ownership(democracy?) Navigating in troubled waters, A glance into the crystal ball for IBIS

20 5.4 The challenges of relying on more diverse funding. Less certain government funding Almost all studies operate with scenarios showing growing competition for funding. The signal is not new. The 2003 Study The 21 st Century NGO. In the Market for Change, already concluded that traditional sources of NGO funding are increasingly squeezed. Developments in the 10 years following this study have not documented this conclusion but indications today are that the squeeze is now being felt, and that the grip will become harder over the coming years. The trend is not moving in the direction of a significant real growth in Western ODA, on the contrary. Furthermore, ODA is being used for a number of new objectives making competition for government funding more challenging than before. If Policy coherence for development (PCD) comes to mean coherence of development with export promotion in public- private partnerships or coherence between development and security policies in fragile states, the civil society organisations will have to find new roles or they will experience a reduction in the level of government funding. Many Northern NGOs are already relying less on government funding than they did years ago and the organisations that are doing best have been able to base their activities on a more diverse funding from both domestic and international sources. Experience has shown that the potential for funding from other sources than government is considerable, but also that fund-raising is both costly and demanding in human resources. Many organisations are using a higher percentage of their total turn-over on fund raising than they did 10 or 20 years ago. The World Economic Forum (WEF) in January 2013 presented four different 2030 scenarios in The Future role of Civil Society. Questions on the likely level of funding of Civil Society in 2030 are asked in all scenarios. The picture is not clear but the most positive scenario based on a transparent world with many engaged sectors foresees high levels of financing for development, particularly from foundations, but very dependent on measurable, verified outcomes. The other scenarios expect low or fluctuating levels of funding. In the funding discussion WEF also focuses on changes in technology and in the way people are networking. Traditional institutions are declining and the power of the individual as a virtual citizen is on the rise. This is according to WEF not just influencing communication structures but also funding potentials. The mission of WEF is Entrepreneurship in the global public interest and WEF speaks warmly about the willingness of the private sector to engage in social responsibility programmes, in particular in partnership with civil society organisations. The executive summary of the reports states that the changes that civil society is undergoing strongly suggest that it should no longer be viewed as a third sector ; rather, civil society should be the glue that binds public and private activity together in such a way as to strengthen the common good. But this development should happen while CSOs retain their integrity and independence. Funding from domestic civil society constituencies and supporters in what has traditionally been called recipient countries is also expected to be a growing source of income. There is a rapidly growing group of rich people and middle-income receivers and in most countries, there is in addition a tradition for charity or other types of social responsibility. Just as governments in low- Navigating in troubled waters, A glance into the crystal ball for IBIS

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