Over the last few decades, the global development sector has generally been driven by industrialized countries in Europe and North America. NGOs from these regions have become well versed in grant writing and budgeting to gain development dollars in an increasingly competitive funding arena. As a result, these NGOs sometimes place a higher priority on the desires of funding organizations than on the needs of communities in developing countries. Short-term projects, financial recordkeeping, and lengthy reporting often become the focus of projects, rather than long-term, sustainable community development. However, a new class of wealthy individuals are emerging in many low and middle income countries, and these individuals are increasingly donating to local foundations and organizations that address issues in their own countries. This has led to a growing trend of local philanthropy in developing nations.
China, Brazil, Turkey, and the United Arab Emirates have increased their foreign aid budgets enormously in the past decade, and south-south direct investment is growing by 20% annually. Much of this money has contributed to a rapid rise in private and family foundations in many developing countries all over the world. According to a joint report from the Aga Khan Foundation, Mott Foundation, and Global Fund for Community Foundations, the number of community foundations around the world grew by 86% between 2000 and 2010. As a result, local donors have invested heavily in community development. For example, the Kenya Community Development Foundation (KCDF) was founded by local leaders who were tired of international development programs that they believed harmed rather than fostered local capacity. Similarly, the Haiti Community Foundation was founded in response to the millions of aid dollars that were given to international organizations instead of being invested in local Haitian institutions. In both cases, these organizations are exploring how to let people play an active role in their own development and devise more sustainable, long-term development strategies.
Local philanthropists tend to focus on strengthening small, relatively unknown local groups who are often overlooked by government and international donors. The advantages of these local organizations working with local philanthropic groups are many: they appreciate local context, are familiar with the local funding sector, and do not have laborious bureaucratic systems. While local organizations may be small, they can be an important part of a healthy civil society and they can often foster trust and collaboration in communities. With increasingly growing support of local philanthropists, they also have the opportunity to try out new and innovative ideas that would be a tough sell to bureaucratic funders from Europe and North America.
Engaging Emerging Markets
In response to the rapidly growing trend of local philanthropy in developing nations, some international NGOs, such as Human Rights Watch, are attempting to work more closely with high earners in emerging markets, along with traditional donors from industrialized countries. Working with local donors and community organizations represents a dramatic shift for some international NGOs, but the benefits are that they can implement more integrated, flexible, and long-term projects that have greater community impact. Locally supported programs are more often built upon local context and are more able to utilize the motivation of people to help each other, strengthening local civil society as a whole. Perhaps with the rise of local philanthropists in developing countries, local organizations can demonstrate that development is more lasting when people are allowed to invest in their own resources and address challenges on their own terms.