Despite increasing interest in civil society in Southeast Asia, there is still much to be learned about this emerging sector. In particular, comparatively little is known about how civil society organizations (CSOs) are supported, financially and technically. In 1997 the Synergos Institute decided to extend its programme to Southeast Asia. The first step was to try to find out more about the role played by local development foundations or civil society resource organizations (CSROs) in channelling resources to CSOs.
A research project to survey the universe of CSROs in five countries (Indonesia, Malaysia, Philippines, Singapore and Thailand) strongly suggested that focusing Synergos’s work on CSROs in Indonesia, the Philippines and Thailand would gain positive returns to the largest number of low-income communities.
The CSRO sector in Southeast Asia
The survey revealed the existence of a total of at least 100 CSROs in the three countries. Follow-up research indicates the critical role they are playing in strengthening CSOs by providing resources in the form of grants or loans. Most CSROs are engaged both in operating their own programmes and in funding other organizations. Most projects funded by CSROs in the three countries were in the areas of education and training, community development and microcredit.
Overseas funds have been a major source of funding for CSROs in all three countries. International funding agencies, both bilateral ODA (overseas development assistance) agencies and Northern foundations and NGOs, have chosen to give grants to these intermediary organizations as a cost-effective way of channelling development funds to local NGOs and grassroots organizations. Motivations include a desire to achieve more effective and measurable results in the fight against poverty and a desire to avoid collaboration with undemocratic regimes.
The search for local funding
In recent years there has been a reduction overall in international funding, and CSROs have had to turn increasingly to local sources of revenue. In so doing, CSROs turn predominantly to three sources: corporations, individuals and earned income. Corporate philanthropy is a well-regarded practice in the Philippines, where corporations have played a significant role in the founding of a number of CSROs, including Philippine Business for Social Progress. Thai CSROs, on the other hand, count on donations from the general public as their primary source of domestic revenue. In Indonesia, several CSROs have demonstrated success in generating resources through earned income. Bina Swadaya, for example, currently generates over 90 per cent of its income from the sale of textbooks, home gardening magazines and supplies, and government contracts.
CSROs also provide important non-financial resources such as training and technical assistance to NGOs and grassroots organizations. In Thailand, the most popular services include offering training courses, providing information services and conducting research.
Towards creative CSRO-ODA partnerships
The key challenge facing local grantmaking organizations or CSROs in Southeast Asia is how to generate a sustainable flow of income to enable them to respond to the increasing demands being placed upon them.
In recent years ODA agencies have been exploring different ways of bypassing government bureaucracies and channelling their resources to low-income communities though intermediary CSOs. These experiments were usually initiated by innovative individuals within the agencies, encouraged by their own NGOs, politicians and public demanding greater impact from the use of bilateral aid. They show donors moving beyond directly managing funds directed at the NGO sector to the creation of funds directly managed by the civil society sector.
The ODA agencies have themselves learned much from these new approaches and have in most cases modified their strategies in the light of their experience. There has, however, been little analysis of what worked and why, and few attempts to share the balance sheet more widely. In an attempt to cull useful lessons from these endeavours, Synergos commissioned six case studies documenting the programmes of four ODA agencies (Canadian International Development Agency – two cases; Japanese Government – two cases; USAID, and the Swiss Government).
Analysis of these six cases reveals three different possible strategies.
- A development assistance programme is implemented in partnership with a local NGO or consortium of NGOs that over time results in the creation of a permanent CSRO or foundation with the capacity to pursue the goals of the original programme in perpetuity. This approach is represented by the two CIDA cases (PDAP – Philippine Development Assistance Program, and LDI – Local Development Institute/Foundation, Thailand).
- A donor government decides as part of a debt swap or debt forgiveness programme to negotiate the creation of a new permanent endowed fund or foundation that channels grants or loans to CSOs in pursuit of specific programme goals. This approach is represented by a Swiss Government case (FSSI) and a USAID case (FPE), both from the Philippines.
- A donor agency channels resources directly to local NGOs or CBOs. This approach has two variants: in the first, a local CSRO or foundation may be involved in selecting the micro-project and providing some technical assistance. In the second, a large NGO directly manages the resources. The Japanese Embassy Grant Assistance for Grass Roots Projects Program in the Philippines and the JICA Community Empowerment Program in Indonesia represent, respectively, these two approaches.
What makes for success?
Each option has advantages and challenges associated with it. All show evidence of the creative thinking of ODA agency staff, together with their counterparts in the civil society community, have put into developing these options. All involve taking risks by stepping outside the usual parameters of bilateral aid programmes and establishing new strategic alliances with a range of civil society actors.
The first and second options were successful mainly because ODA agency staff worked closely with civil society leaders and existing support organizations in the design of the new funding mechanisms. In the case of the endowed foundations, care was taken to ensure that strong boards were created with members who had considerable prior experience of asset management. These board members provided the necessary oversight of fund managers, who were given clear guidelines and have been able to increase the value of the endowments.
Options one and two contribute to national development by creating strong institutions with expertise in making grants and loans at the community level. They engage in policy research and are able to convene interested parties to influence policy and to build bridges between civil society, government and the business community. Such institutions, by demonstrating their ability to provide effective services to civil society, have been successful in raising additional funds from both domestic and international sources.
With regard to option three, the first case showed that small grants programmes can play a very useful role in complementing other donor programmes in critical areas such as infrastructure development and can help NGOs and CBOs leverage other resources. In both cases the chance of successful impact is enhanced if the ODA staff managing the programmes have close knowledge of the local non-profit sector and local language skills. It is also critical to ensure that complementary technical assistance and institutional development is provided to receipient local organizations.
David Winder is the Director of Global Philanthropy and Foundation Building Programs. He can be contacted by email at firstname.lastname@example.org
Ma Gisela Velasco is the Regional Director for Southeast Asia at The Synergos Institute. She can be contacted by email at email@example.com
1 Data were culled from several research projects commissioned by Synergos Institute and authored by the following: Vedi R Hadiz and Rustam Ibrahim in Indonesia; Alan Alegre and the Association of Foundations in the Philippines; Amara Pongsapich and Dr Nisada Wedchayanon in Thailand. The Sasakawa Peace Foundation supported the research and follow-up activities.
2 A surprising number of these organizations make loans. In the Philippines, for example, 24 out of 56 CSROs sampled gave a combination of grants and loans and 12 gave only loans.
3 Overall funds allotted for grants and loans constitute 44 per cent of total expenditure in the Philippines and 52 per cent in Indonesia.