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Paper Presented at ISTR Conference, Stockholm, July 2016 GLOBAL TRENDS and CHALLENGES: STRATEGIC IMPLICATIONS FOR NGOs John Hailey Professor of NGO Management Centre of Charity Effectiveness, Cass Business School City, University of London Abstract All the projections suggest that the character of civil society and the role of NGOs will change over the next fifteen years. This Paper explores the analysis by international Non-Governmental Development Organisations (NGDOs) of the global trends and strategic challenges they face. It provides a structured analysis of these studies of global trends and their implications for NGDOs. While such studies of the trends and their implications are relevant, timely and well-researched there is concern that much of the analysis is through the lens of international NGDOs. Evidence from interviews with the leaders of local NGDOs based in the global South, and the analysis of specific Southern-based NGDOs suggests a different view of the strategic challenges that local development organisations face and differing analysis of priority concerns and strategies to be adopted. This analysis highlights the differing perspective of Southern NGDOs of the consequences of the global trends they currently face, and that there analysis is as relevant as that prepared by international NGDOs. What is apparent from such analysis is that Southern NGDOs have a somewhat different interpretation on the implications of these global trends and different perspective as to what are the priority issues they face and the implications for the strategies they develop or the organisational capabilities they invest in 1 There is a growing debate as to the role and impact of NGOs involved in development work and humanitarian relief in an increasingly interconnected and globalised world. Recent analysis suggests that the character of civil society and the role of such Non-Governmental Development Organisations (NGDOs) will change over the next fifteen years. This Paper explores the global trends and strategic challenges they face, based on a structured analysis of recent studies of global trends and their implications for international NGDOs (INGDOs). It also reviews the differing perspectives of local NGDOs based in the global South as compared with those international NGDOs with their global reach. There is concern that much of the analysis is through the lens of international NGDOs, and that the perceptions and analysis of local NGOs working closely with local communities is often overlooked. This paper draws on recent reports and analysis published by INGDOs, as well as evidence from interviews with the leaders of local NGDOs based in the global South and locally commissioned analysis of such trends. This includes analysis prepared by ACORD, a Nairobibased Pan-African NGDO, and the research findings of a DFID/IIED sponsored study on Managing Disruptive Change. Such studies highlight the differing assessment of what are the priority issues and challenges they face. They suggest that local NGDOs based in the Global South have very different perspectives on the strategic challenges they face as compared with those of international NGDOs. This analysis also demonstrates is that the global context in which all NGDOs operate is changing, and that organisational capabilities and competencies are needed to ensure NGDOs remain relevant, sustainable and valued. GLOBAL TRENDS Interest in the implications of changing global trends have generated a number of recent studies drawing on current data to make “state of the world” projections and identify potential “mega-trends” and “game changing trends”. Examples include reports by the National Intelligence Council (2012), the Oxford Martin Commission (2013) and the World Economic Forum (2013) examining potential global trends 2030 and beyond. Such reports highlight such common areas of concern as:- the consequences of climate change, the impact of resource insecurity, demographic shifts, issues around social mobility and migration, the implications of growing economic inequalities, increased social activism and role of civil society, changing geopolitical dynamics, the impact of new technologies and greater interconnectivity through the web. Similar analysis has been published reviewing the specific issues about the future of aid and the new “aid architecture” (Baobob, 2015; BOND, 2016, Heiner, 2014; Hailey, 2016: ICAI, 2016; Kharas & Rogerson, 2012); new development practices (Wild, 2015; IDS, 2013) and the future of different development institutions (BOND, 2015: Edwards, 2014; Gnarig, 2015; ICSC, 2014; Crowley & Ryan, 2013). The conclusion of such analysis is that needs are changing, problems are changing, solutions are changing, funding is changing, thinking is changing. As a consequence the established models are no longer appropriate for the new 2 future. There is also concern at the speed of change or rapid onset of devastating humanitarian crisis – whether it is an earthquake as in Haiti or Nepal, the unexpected and dramatic consequences of the civil war in Syria. INGO often refer to Dornbusch’s Law that “crises take much longer to come than you think, and happen much faster than you would have thought”. INGOs: TRENDS & CONTEXT All the analysis suggests that NGDOs are part of a vibrant, dynamic sector. All the projections suggest that the number of non-profits, NGOs and charities grows year on year – estimates suggest that there are over 10 million registered CSOs worldwide. It is estimated that over 40,000 international NGDOs operate across borders delivering humanitarian and development support, or actively engaged in advocacy or international rights-based work. The seven largest INGOs (WorldVision, Save Children, PLAN, Oxfam, etc.) grew there income by over a third in the five years 2007-2012 to over $8 billion (Baobab, 2015). This is not a static picture and many new INGDOs are being established. Data from the UK Charity Commission suggests that over 400 new INGDOs are being registered each year (Hailey, 2016). Growth in the number of NGOs accredited to the United Nations nearly quadrupled between 1995 and 2012. In India alone the number of registered CSOs exceeds 3 million, an increase of over a million in a decade. The largest Southern-based INGO, the BangladeshiINGO BRAC, now employs over 125,000 people and operates in eleven countries. This growth has also been reflected in the development of new organizational formats and international structures intended to enable INGDOs to scale up, gain global spread and enhance interconnectivity. Major international NGDOs like World Vision and ActionAid have opted to develop a global federal model; others like Oxfam or Save the Children have developed innovative confederal models. Others have created their own networks of similar-minded organisations such as the ACT network for protestant faith-based INGOs, or the Caritas network for Catholic INGOs. This dynamic and changing environment has generated new interest in the way that the sector needs to evolve and change. There is much talk of need for consolidation, or at least greater collaboration. There is concern at the consequences of disintermediation resulting from the reduction in the number of intermediaries between the donor and the final beneficiary. This is reflected in the espoused strategy of some donors by-passing international NGDOs located in the North and transferring funds directly to NGOs in the South. Linked to this are discussions for the need to be more cost-effective, and for NGOs to work more closely with the private sector or to develop new social enterprise models (Hailey, 2016). There is pressure for them to adopt new SMART working processes, and enhance international working through more effective use of the web and digital interconnectivity and leveraging such technology to enhance programme implementation (Peterson, 2014). 3 GLOBAL TRENDS: ANALYSIS BY INTERNATIONAL NGDOs This momentum for change is partly based on analysis that international NGDOs themselves have commissioned or published into the trends and challenges that will affect the sector over the next fifteen years. These include analysis published by Trocaire, Action Aid, IBIS, Oxfam; and INGO support organisations like BOND and the Berlin-based International Civil Society Centre (ICSC). The following framework provides an outline of this analysis by identifying the global trends that impact on the work of INGDOs. INGDOs Trocaire (2011) Global Trends Likely to Impact on work of INGDOs are: climate change, shifting geopolitical power, demographic changes, pressure on natural resources, widening inequality, and changes in the aid architecture and international development framework. ActionAid (Evans, 2012) the consequences of such critical uncertainties arising from changing balance of power, demographic changes, inequality, and new technologies and innovation. These are seen creating an uncertain future and as a catalyst for transformational change – INGOs need to be ready to “shoot the rapids” Oxfam (Green, 2015) the shift of power and resources to the South, the changing location and demographics of poverty (less widespread poverty, more “pockets of poverty”), growing inequality with most pockets of poverty in middle income countries, influence of new institutions and organisation types supported new digital technology IBIS (Vilby, 2014) climate change & environmental degradation, growing refugee problems, geographical changes in poverty, reducing aid budgets. BOND (2015) climate change, demographic shifts, urbanisation, natural resource scarcity leading to higher commodity prices and continued marginalisation of the poor, geopolitical shifts, processes of technological transformation and innovation, impact of inequality ICSC (Gnarig, 2015) Climate change, impact of inequality & endemic poverty, demographic changes, demands for greater accountability, new development paradigms with arrival of new development actors (e.g. China) and shift of power to south – disintermediation Analysis of six recent global trends reports suggests a number of key issues or common themes most likely to impact the work of INGDOs. These are:- climate change and associated resource scarcity, demographic shifts, geographical changes in “pockets of poverty”, the consequences of widening inequality, changing power dynamics between North and South, and implications from greater access to new technologies and innovations. Projections of these mega-trends or “game-changers” have lead INGOs to consider what strategies they need to adopt, and what capacities they need to invest in, if they are to be “future-fit” and ready to face the challenges they may face. 4 The impact on INGDOs of the global trends identified above is the source of much speculation and discussion. There is general agreement that the challenges facing INGDOs include changes in relationship between Southern partners and local beneficiaries, changing attitudes to the work of NGOs and new thinking about civil society, new approaches to collaboration or co-creation, the influence of digital technologies and new ways of working, moves to greater transparency and communication, increased fragmentation and disintermediation, moves to changing growing pressure to demonstrate effectiveness and impact, and changes to the existing funding models. What is more uncertain is where INGDOs should focus their investment or what strategies to adopt to cope with the new future. The framework below outlines some of the alternative scenarios or strategies that are being proposed. INGDO Trocaire (2011) INGDO Strategies & Capacities in response to projected trends (see Frame 1) at a programme level focus on advocacy and engaging in politics and power, building a global culture of solidarity and the capacity of civil society in the South. At an organisational level INGDOs need to become more flexible and responsive, ensure financial sustainability by planning for a new funding environment, develop strong analytical capabilities, promote the use of innovative technologies ActionAid (Evans, 2012) Oxfam (Green, 2015) Invest in ensuring readiness and resilience; build new coalitions; invest in communications and linking local communities IBIS (Vilby, 2014) BOND (2015) building capacity to cope with disruptive change, develop internal mechanisms to cope with internal contradictions and dilemmas, or resolve contentious strategic choices ICSC (Gnarig, 2015) rethink development role and “business model” - reconsider how INGDOs add value, reinvigorate activist/advocacy roles, streamline systems and processes to improve speed of decision making & programming – ensure greater responsiveness and agility, develop new forms of collaboration and/or mergers, ensure financial sustainability by incorporating social enterprise models, invest in building brand and reputation systems thinking and “eco-system management” to cope with new complexities, building resilience, greater engagement with private sector models, transformational leadership and focus on managing change (invest in “change capital not delivery capital”), more flexible and agile, devolved organisational structures and responsive cultures build on the diversity of UK-INGDOs and promoting new forms of collaboration or mergers; shifting from a service provision role to more of an enabling role, greater emphasis on supporting the capacity development of partners; create and manage effective partnerships, influencing policy, rebuilding connections with local constituencies, and investing in leadership that is fit for purpose. Analysis of these alternative scenarios and strategies identifies some common themes such as:- the need to streamline systems and processes to enhance agility, flexibility and responsiveness, and linked to further investment in internal capacity to ensure readiness 5 and resilience; the adoption of new models of collaboration and partnership; some urgency in finding alternative routes to financial sustainability and new business models; more strategic focus and investment in enhanced advocacy and campaigning capacity; the recruitment and development of transformational leadership to embrace and implement change. The implication of such analysis is that over the next 20 years INGDOs needed to transform themselves and redefine their role. They need to reposition themselves in civil society and the wider development community by reframing their mission and role (e.g. moving to more brokering role as investor, knowledge mobilizer, or co-creator), and potentially restructuring or downsizing their operations in the North and transferring key management functions closer to the communities with whom they work in fragile states or low income economies. Implicit in this redefined role is the changing nature of their relations with an array of new partners and a greater understanding of the challenges that NGDOs based in the Global South face. GLOBAL TRENDS: PERSPECTIVES FROM THE SOUTH In light of the changing relationship between INGDOs and their Southern partners there is concern that there has been little research into the analysis from local NGDOs in the Global South of the trends and challenges they face and how they will handle the demands they may create. Researchers have referred to this as the “missing perspective”, and argue that it is important to recognise the analytical bias that can result from following a ‘Northern’ or ‘international’ development actor-centred analysis too closely (Buckley & Ward, 2015 p.16). Too often analysis of the global trends and their implications for the work of NGDOs is driven by the analysis of international NGDOs rather than local NGOs. In an attempt to address this issue researchers at the International Institute of Environmental & Development (IIED) explored the challenges that NGDOs in the Global South face and how they handle change and address disruption in their external and internal environment. This analysis of the perspectives of local NGDOs is based on interviews with a wide cross-section of NGO leaders and commentators based in the Global South (Buckley & Ward, 20151). The research offers insights into the trends and challenges facing such local NGOs. Respondents saw the major trends or “disruptors” that were likely to affect their work in the future as the consequences of endemic poverty, the impact of climate change and the effects of technological disruption or having access to new technologies. However, in many ways these were seen as background trends or “disruptors”, whereas as more immediate and therefore more important “disruptors” were the consequences of their relationship with the local communities with whom they worked or the impact of current funding trends. The work of local NGOs and civil society organisations was seen to be easily derailed by decisions made by their donors or partners. It was also apparent that 1 The author was one of the Advisory Panel to this programme of research 6 other actors in the international development community, including development agencies and international NGDOs based in the North, are themselves disruptors of local NGDOs’ efforts to tackle poverty and deliver positive outcomes. The study highlighted the consequences for such local organisations of ongoing funding uncertainties. Numerous examples were cited of the negative consequences of the “cut and shut” changes in donor policy, the disempowering side effects of tendering requirements for consortia, and reluctance on the part of international NGDOs to share scarce funding for organisational development with their Southern partners. The impact of such policies is felt more acutely felt in regions and countries where few local NGDOs have endowments or reserves to cushion operating budgets during periods of uncertainty (Buckley & Ward, 2015). The study also suggests that the demands on local NGDOs and other civil society organisations (CSOs) in the Global South are distinct from international NGDOs. This is partly because of their role as influential actors in civil society as well as their close relationships with local communities. These have distinct cultural and political dynamics, and the decisions they make has real implications in terms of the way their staff are treated by the local community. The study highlighted some of the constraints such organisations faced including the lack of space in which civil society operates, it also highlights that NGOs in the South are both diverse and have their own dynamic because of their close relationships with local communities and involvement in local civil society. Their size also means that they often feel the impact of disruption more acutely. But on a more positive note many of the local NGO leaders concluded that such disruption should not be seen as inherently negative, but should be appreciated for its creative potential — notably the way that changes in the external environment promotes creativity, encourages new ways of working and seeds innovation. This analysis supports the conclusions of earlier research into the strategies adopted by growing NGOs based in the Global South (Hailey & Smiley, 2000). In general, this study emphasised that local NGDOs operate in turbulent and uncertain times. They are at the “sharp end” of powerful external disruptors including natural disasters, emerging technologies, climate change, and the consequences of inequality, poverty and conflict. The perspective of NGDOs in the South is important because of their crucial role as local development actors and their close relationships with local communities they are able to achieve lasting change, and help deliver the SDG commitment to “leave no one behind”. In order to assess the validity of this research was compared with the analysis of global trends undertaken by a particular local NGDO. Each year the Pan-African NGDO, ACORD, based in Nairobi prepares such analysis for its Annual Assembly Meeting and Members Learning Forum. Founded over 30 years ago, ACORD is one of the oldest and largest PanAfrican organisations. It works in 17 African countries to promote social justice and lift Africans out of poverty with specific attention to livelihood development, women’s rights and peace building. Its programme work is guided by a belief that people themselves are the 7 primary actors in their own development, and that through the power of collective action African citizens have the ability to transform their future. A review of the papers produced for ACORD’s Annual Assembly and Members Forum suggest that four stand out trends are apparent. The first is the consequences of changes in the aid architecture and the changing relations between local NGOs, and INGOs and donors located in the Global North. There is increased competition between local NGOs and international NGDOs for a limited pool of aid funds. ACORD’s analysis also suggests that the traditional North-South development dynamic is being challenged by geopolitical and economic shifts, the increased focus on investment and trade as the route to economic development. This is reflected in the growth of foreign direct investment from emerging economies such as China’s, and the changing focus of donor countries from aid to trade. Second, is the consequence of web-based and digital communication systems. Access to the internet, social media and mobile phones means that the power and choice is increasingly being distributed to the individual. Such social networks and non-hierarchical communication has shifted the paradigm of the citizen’s experience. In reality several different realities coexist within the African continent. A young, dynamic Africa, with an emerging middle class that make technological leaps, and allows individuals to jump several stages to embrace the latest mobile technologies. This can be contrasted with the digital divide most apparent in fragile and failed states, such as South Sudan and Central African Republic, whose populations have limited access to electricity, let alone the internet or digital technologies. Third, is that local NGOs, such as ACORD, do not have the resources or capacity to scale up operations, roll out successful projects to new communities or to operate independently and “go it alone”. This is in contrast to the resources available to larger international NGDOs with their global reach and access to untied private donations. Such small local NGOs do not get the benefits of economies of scale, and are only likely to go to scale by working in partnership with other development organisations. This would include working in partnership with private sector businesses if it would mean being able to access new resources and skills – something that such a traditionally community, solidarity-based organisation would mean a significant shift in thinking and practices. Fourth, is the increasingly restrictive space in which local NGOs operate. This is partly as a result of new regulatory environment and restrictive legislation designed to constrain the work of many NGOs. New regressive legislation against civic action is being enacted, and, for example, it is not possible to do the same policy advocacy work in Ethiopia, Burundi or Rwanda as in Kenya. But the diminished space is also a consequence of the way that many large international NGDOs have reinvented themselves as global entities with the creation of local subsidiaries established in many of the countries in which ACORD operates with the consequent pressure on accessing resources locally, both in terms of funds and staff. It also 8 means that the policy space is becoming increasingly crowded which means that small local with limited research or advocacy capacity struggle to get their voice heard. (AAMP 20142). What is apparent from this review of recent research into the trends and challenges facing NGDOs is the different perspective and analysis of what is important and influential. Whereas international NGDOs emphasise mega-trends, the analysis of NGO leaders in the South and that of a local Pan-African NGO suggests greater concern with more immediate trends and challenges. They saw the challenges identified by international NGDOs as background trends or “disruptors”, whereas the complex political and cultural dynamics of local relationships, and the negative consequences of current funding policies and practices, were seen as having more impact on their future and the strategies they need develop. CONCLUSION This review of recent analysis by international NGDOs and local NGDOs based in the Global South has identified the range of different and diverse trends and challenges such organisations face. It has highlighted the different perspectives of different types of NGDOs, and identified that we need to distinguish between the influence of “background” megatrends and the disruptive influence of more immediate trends – particularly on the work of local NGDOs. This paper has also emphasised the need to undertake further research into the strategic and organisational issues faced by local NGOs and further analyse the challenges faced by the leadership of such organisations. There is concern that analysis of such trends suffers from the “missing perspective” of such leaders, and that too much analysis of global trends is dominated, or mediated, by the analytical capacity of international NGDOs with the resulting analytical bias. Research into the consequences of projected trends needs to acknowledge that the political and cultural context in which these organisations operate is varied and diverse. The regulatory environment that NGDOs face is increasingly onerous and demanding. The governance and leadership traditions in charities and NGOs vary considerably across the developing world. Staff working for NGDOs of all kinds face extraordinary demands – both at a personal and organisational level. They work with varied partners, on a variety of projects and programmes, with limited resources and weak infrastructure, in economicallyweak, politically volatile communities. They are involved in many different humanitarian and development activities and partnerships in a variety of cross-cultural settings. They have to manage the intricacies and unfairness of the current aid architecture, as well as navigate particular legal and regulatory constraints of the country’s in which they work. Any analysis of the consequences of projected trends need factor in the highly complex and political nature of much of the work that NGDOs are engaged. 2 The Author is a Board Member of ACORD 9 The impact on NGOs of the global trends identified in this paper is the source of much speculation and, as has been identified, resulted in much useful and timely analysis both by international NGDOs and local NGDOs in the Global South. There is general agreement that the challenges facing the sector will result in significant changes. These include changes in relationship between Southern partners and local beneficiaries, different funding relationships and models, new approaches to collaboration or co-creation, the influence of digital technologies and new ways of working, and increased fragmentation and disintermediation. In organisational terms this will result in strategies to enhance flexibility and responsiveness, the development of new streamlined systems and processes to enhance organisational agility and further investment in internal capacity to ensure readiness and resilience. To ensure that NGDOs, both in the North and the South, stay strategically relevant and futurefit they will need to invest in key organisational capabilities and in developing associated competencies, including: value-driven, relational, knowledge, responsive, innovative, and transformational capabilities. It is also projected that new models of collaboration and partnership will develop, and new business models and alternative routes to financial sustainability will evolve (Hailey, 2016). This paper has reviewed the array of challenges and changes facing NGDOs. Clearly this is diverse and changing sector. One of the implications of this analysis of these trends is the recognition that over the next twenty years international NGDOs will need to develop appropriate organisational capabilities to handle such change and reposition themselves in civil society. Implicit in this will be the changing nature of the relationships across the sector with a new array of partners – many of whom will have different values, come from different cultural traditions, and consequently have differing perspectives on the impact of global trends or what are the development challenges we face. 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