Two general points emerge in the literature on civil society funding mechanisms. The first is that support to civil society actors is desirable and should be continued or scaled-up. Civil society is considered to play a key role in development and the theme of ‘partnership’ is widespread in the literature. Secondly, capacity building is an essential component of all support to civil society – whether this is direct (e.g. funding for organisational development) or indirect (e.g. funding an organisation to build the capacity of more localised actors). A key concern for donors, therefore, is to explore how to finance capacity building.
The literature identifies three principal mechanisms by which donors provide financial support to civil society actors: a) Direct support to individual or umbrella organisations; b) via southern governments; c) via intermediaries – largely northern NGOs. Further, this can be delivered through a number of different types of funds: core funding, basket’ funding, umbrella funds and Multi-Donor Trust Funds (MDTFs).
Each of these mechanisms comes with its own risks for donors and recipients alike. Some common concerns include:
- the ‘centralisation’ of funding towards larger, more professionalised NGOs, and the marginalisation of smaller organisations
- the potential for resource dependency amongst NGOs who regularly receive funds
- the involvement of southern governments in the allocation and channelling of funds to civil society actors, which risks financial mismanagement and the potential for governmental ‘co-option’ of civil society actors.
- cumbersome reporting procedures to donors
- funding delays and short-termism.