The Next Decade

Repositories and Risk Management: How Funders Can Collectively Address Localization

In 2021, according to the Inter-Agency Standing Committee, only 2% of funding for humanitarian action went directly to local actors. This statistic is problematic not only because of its paucity, but because it represents half the percentage recorded in 2020, when direct funding to local actors peaked at 4%. Moreover, neither percentage comes anywhere near the goal of “25% of humanitarian funding to local and national responders as directly as possible” by 2020.^[1] This ambitious goal was set by a group of the largest donor countries and international aid organizations, as part of 51 commitments set forth under the “Grand Bargain.”^[2]

Both public and private funders are increasingly looking to support front-line actors and pursue a localization agenda. However, many continue to struggle with the “how” given that minimally vetted organizations may be hard to identify and may further be seen as “high risk.” Fortunately, identifying actors via a shared repository while minimizing risk is exactly what was achieved when NGOsource launched. The repository model, focused on serving and highlighting the needs of NGOs, addresses both risk and identification and may be replicated on a global scale as a tool to meet ambitious localization goals. To succeed, it will require a willingness among funders to collectively resource, and advocate for, a uniform repository, as much as a willingness to provide ready and robust access to risk management resources to local organizations.

A nonprofit repository of vetted organizations, properly designed, serves several purposes. It elevates the profile of organizations who have not been previously identified by funders, particularly if the repository is built to target them. It reduces time and cost barriers of both funders and their grantees in meeting multiple compliance demands. Finally, it advocates for uniform, defensible due diligence that the sector as a whole signs off on.

NGOsource met a similar need at the time of its deployment, and few would disagree that it solved a major hurdle in international grantmaking. It did so by (1) gathering consensus and moving forward as a coalition of influential actors in the space; (2) investing in robust technology that cuts cost and simplifies completion for NGOs; and (3) investing in international partnerships allowing for multilingual and culturally appropriate deployment. The program now provides a replicable path forward for utilizing a nonprofit repository model to further the goals of localization.

How Do We Get There?

Several things are critical to the success of a global repository focused on localization:

• Willingness of local actors to own and shape a significant piece of the process;
• Robust data sharing and consent mechanisms that protect the sensitivity of the data and put the needs and safety of organizations first;
• Buy-in and investment from donors, international NGOs, and large foundations;
• Cross-sector and geographic collaboration among large and small organizations, funders, and standard setters; and

• Equal attention paid to organizational strengthening as to assessing.

STEP – a program of the TechSoup Global Network – seeks to achieve all of the above.

What is STEP?

STEP is a tiered due diligence framework that assesses civil society organizations across multiple streams of compliance. It serves to highlight strengths and weaknesses in meeting key required standards among most institutional funders. It eschews the notion of pass/fail due diligence in favor of one that examines an organization across a more nuanced spectrum of risk management. The framework has been translated and piloted in English, French, and Spanish, in each of India, Pakistan, the DRC, Guatemala, the Netherlands, the Czech Republic, Palestine, Kenya, Ghana, Indonesia, and South Africa.

A key component of the STEP program is that evaluators are part of the regions and communities in which the organizations that they vet operate. Independent local and regional organizations forming the TechSoup Global Network are familiar not just with local languages, but also with local culture and sector norms. Their insight into best practices, common (mis)interpretations, local regulations, and other unique factors make them more able to assess the strengths and weaknesses of local organizations. Their role as evaluators does more than just ease the process for the organizations being assessed – it puts the process into the hands of knowledgeable local actors.

Organizational strengthening is the most important outcome of STEP. As such, TechSoup has developed tailored recommendations and an online resource portal aimed at ensuring that the process provides value to the organizations completing it. The evaluation results in a bespoke learning path for each organization, with accessible resources to help it fill any identified gaps and “move up the tiers.” This organizational strengthening component is intended to ensure that local organizations have more visibility into the requirements asked of them by funders, as well as an opportunity to improve their risk management profiles and become more eligible for international funding.

Can STEP meet the need? We think so.
Willingness of local actors to own and shape a significant piece of the process

STEP’s success depends on the input and ownership of local actors. The model behind the preexisting TechSoup Global Network allowed an already globally connected alliance of local and regional organizations to coalesce swiftly around an idea. To operationalize this idea, however, is no small task. We must be vigilant in meeting the end goal of fully sharing responsibility and ownership with local actors. TechSoup’s role is not simply to “hand off” the process, but to work alongside local organizations as true partners in the program’s development. This requires joint fundraising, systems-sharing (already largely in place), and a mandate to defer to the decisions and pace of local actors.

Robust data sharing and consent mechanisms

Localization is about more than just raising the visibility, and opportunities for funding, of local actors. It is about actually ceding authority and ownership to local actors. Data ownership and the decolonization of data is a key component. Funders must accept that access to data must be contingent on express consent mechanisms. While an open repository with few restrictions on access may be more expedient, it threatens the safety of organizations and individuals and erodes trust. All parties — from funders to evaluators and local actors — must understand and agree that the true owner of data is the individual or organization to whom that data relates. Willingness to share such data may never be inferred. This principle is more than simply complying with data privacy regulations: it’s a cornerstone to achieving localization.

Donor buy-in and investment.

NGOsource modeled how initial buy-in from donors and funder coalitions proved enormously successful in convincing U.S. regulators and other funders of the appropriateness and value of an ED repository. Large foundations and INGOs have an opportunity to adopt and advocate for a program that serves them and their grantees, without having to modify their approach to risk and compliance. STEP has been supported by several foundations willing to pilot it and will continue to seek partners and advocates from all corners of the globe. Advocacy among the philanthropic sector is thus another critical component of the program’s success.

Cross-sector and geographic collaboration among large and small organizations, funders, and standard setters (including local standards and certifications)

STEP intends to adopt and recognize local standards and certification processes as a means to amplify existing local competencies as well as further reduce the total time organizations must devote to due diligence exercises. Thus, the program is eager to work with local certification and standard-setting bodies to “passport” organizations through parts of the evaluation that may have otherwise been satisfied under local standards. STEP must engage and collaborate rather than risk duplicating or diluting existing local mechanisms around risk management. To this end, the TechSoup Global Network is reaching out to non-governmental standard-setters in the global nonprofit sector, seeking ways to elevate and recognize their expertise and existing infrastructure.

Equal attention paid to organizational strengthening as to assessing

Due diligence to date has focused principally on the needs of the donor. It is considered a necessary step for grantees to procure funds and for funders to minimize risk. We need to stop thinking of due diligence as a donor-serving compliance requirement and instead think of it as an educational opportunity for both funders and grantees. It helps funders identify and measure risk, while supporting collaborative mechanisms to reduce that risk. It helps grantees uncover where there may be gaps in compliance processes or opportunities to strengthen operational processes. STEP aims to be a repository that assesses for the purpose of strengthening: every grantee should walk away from a due diligence exercise feeling that it benefited from the process. Likewise, every funder should utilize this opportunity to support and resource organizations with accessible compliance and risk management tools.

Are you a donor or organization for whom this mission resonates? If so, we hope you’ll join us.

^[1] According to the Inter-Agency Standing Committee, “Local and national non-state actors are ‘Organizations engaged in relief that are headquartered and operating in their own aid recipient country and which are not affiliated to an international NGO’. Note: ‘A local actor is not considered to be affiliated merely because it is part of a network, confederation or alliance wherein it maintains independent fundraising and governance systems’.”
^[2] “CORE COMMITMENT: 2.4. Achieve by 2020, a global aggregated target of at least 25% of humanitarian funding to local and national responders as directly as possible to improve outcomes for affected people and reduce transaction costs.”

Extending the Philanthropic Supply Chain

While NGOsource was created to serve grantmakers funding non-U.S. organizations deemed “equivalent” to U.S. public charities, this specific subset of entities does not capture the full breadth of organizations, individuals, and groups that comprise civil society at large. Alternately referred to as the “voluntary sector” or the “third sector,” “civil society” describes the collective body of individuals, groups, and organizations that operate independently of the government and the business sector. It encompasses a wide range of non-governmental entities, including community organizations, advocacy groups, nonprofit organizations, trade unions, professional associations, religious institutions, and grassroots movements. It may also include entities with government affiliations like public schools, hospitals, and municipalities. A uniting feature, regardless of structure, is the voluntary participation and engagement in public affairs, with the aim of promoting social, cultural, economic, and political interests and objectives. Civil society acts as a vital intermediary between the state and citizens, providing a platform for civic engagement, public discourse, and the expression of diverse viewpoints.

Within this broad definition of civil society, there are groups that have a more formalized structure and legal status, established through registration or incorporation, which gives them certain rights and responsibilities. However, these are not the only actors doing good in their communities. Other groups form — some with legal status and some without — to meet local needs. As we face a world with greater disruptions and risks to our daily lives, from climate change to pandemics and regime change, we must be prepared to identify and support a wider variety of individuals, groups, and organizations with our philanthropic resources.

Groups and individuals that fall outside formal civil society and actively address pressing community needs include mutual aid networks, fiscally sponsored organizations, movements, individual activists, indigenous organizations, social enterprises, and human rights defenders, among so many others. People reject the traditional forms of incorporating as public benefit organizations for a variety of reasons. It may be that they are rejecting the burden and overhead that comes with that structure. Perhaps the risks of formalizing are too great in their community or country.

Developing a New Trust Framework to Extend the Philanthropic Supply Chain

Global freedom declined for the 17th straight year, according to Freedom House’s Freedom in the World 2023 report, and online freedom has also decreased for more than 12 years. With civic spaces closing and less internet freedom as a result, there is even more need to ensure that a company, foundation, or government does not inadvertently finance or provide in-kind digital resources that support terrorism, war, fraud, or any activity that puts national security at risk.

The need for the support from infrastructure organizations like TechSoup has, at the same time, grown significantly, while the diversity of groups we seek to serve becomes more expansive. Philanthropy must be able to support them, not only from a social justice perspective, but also in order to be able to meet the complex challenges we — as a global society — face within and across countries. Thus, to fulfill our mission of enabling an equitable planet, and to serve the diversity of those who need our support, TechSoup seeks to evolve its criteria for establishing trust and eligibility.

TechSoup established a working group called “Expanding the Philanthropic Supply Chain.” This small, cross-cultural group of sector experts convened to identify and describe groups of civil society actors that are typically excluded from philanthropy and to develop a trust framework to extend philanthropy to these actors.

The working group identified five categories of civil society actors:
Exclusive Legal Identity — groups traditionally associated with civil society and public benefit
Non-exclusive Legal Identity — those groups not traditionally associated with civil society and public benefit but with other legally recognized statuses
Unable to Legally Incorporate — because the country does not offer an exclusive legal identity to civil society, or because it is a group of people who may not have status or access to the legal system in the country in which they are located, or because the organization is working on an issue that prevents them from being able to legally incorporate
Choose Not to Legally Incorporate — because it would bring a group unwanted attention or danger or because they reject the existing power structure and status quo
Other Entity Type — a type not captured in any categories listed above

We then sought methods of valorization that can be used to provide a “trust framework” to better deliver philanthropic support to all five groups, which we summarized in the following three methods:

1. Through a legal status traditionally associated with civil society
2. Through an associative intermediary who can provide verification
3. Through community members who document programmatic activities and impact

A resilient and adaptive civil society requires that we use all of these mechanisms to document trust, allowing us to provide philanthropic support to the identified groups. We also believe we need to support the technical systems that help organizations receive this verification, whether it is legal help to achieve public benefit status or a reputation system to allow intermediary or community verification.

These discussions are ongoing, and we believe they are fundamental for our continued understanding of how to optimally support civil society infrastructure. In this way, we can collectively ensure that local communities are served via inclusive and thoughtful frameworks that push funders and governments to recognize the unique and disparate challenges they face.

To learn more about each of the methods of valorization described above, as well as ways to engage with this work, contact us at eligibility@techsoup.org.

Returning the Power of Data to Civil Society Actors

As TechSoup evolves, we continue to move our programs towards models in which organizations have more clear ownership and control of their data. We collect a wide variety of information — from STEP, to the data necessary to manage our global technology marketplace, to the EDs we process for some of the largest funders in the world. How might we turn the power of that data over to the true owners, the civil society organizations that contributed it specifically, and to civil society more broadly?

Public data is increasingly accessible, from data published by the United Nations or the World Bank, to data that furthers impactful journalism. There are efforts like Google’s Data Commons that make that data accessible, behind a single interface. And there are small efforts like Radiant Earth or Datasette that provide small data providers a place to store, access, and share their data.

It's time to bring together the identity of civil society organizations and connect it to the data that we provide so that we can get a more complete picture of the world in which we all live, work, and play.

How will we get there?

This can happen in three steps:

1. Create a portable identity for CSOs that can hold a rich variety of information.
2. Advocate for that identity to be accepted so that organizations can access resources.
3. Develop systems that allow that identity to be accepted so that organizations can contribute resources.

Let’s go deeper on all three.

Create a portable identity.

Currently, organizations register as members with TechSoup and provide us with key pieces of information about their organizational identity. After that, they get a digital token, which is time-limited and can be used with certain corporations to unlock a donation or discount on a product. What would happen if we built out that token? If we made it not be time-limited but rather made it renewable? What if we turned it into a durable asset for the organization? What if we made, say, a piece of technology — a non-fungible token or steganographic token — that could hold information about the organization, about its ED, or about its STEP status? What if the organization itself had control over what it did or did not show? That portable identity could become a durable asset — a digital ID — that the organization could use in a variety of ways.

Advocate for the identity to be recognized and accepted by a variety of actors.

Once the organization has a digital identification — this more durable enriched token — we would, as a community, need to build out the ability for that to be accepted. It could be accepted, as our token is today, as proof of eligibility to receive a donation or discount. Also, it could be accepted as the first step in a grant application process, simplifying the information an organization needs to prepare and submit. It could be accepted to demonstrate an ability to be a member in a group or association. It could be used to set up fundraising more easily. It could allow an organization to be listed in a directory with very minimal time and new input of data needed from an organization.

Develop systems that allow organizations to contribute resources.

Our team at Caravan Studios, a division of TechSoup, has developed an app called Range. Range shows all the places a school-age youth can get a free meal during the summer. The data, shown on a map, is pulled from federally available open data. And that data is incomplete — it only shows registered summer meal sites — and is sometimes incorrect: an address may have changed, or the food site may not be able to be open. What if an organization could use its durable token, its digital identity, to log on to a website and correct the data. We could trust it because it has already been verified and eligible. This could expand our ability to show trusted data, validate the data we do have, and correct errors.

Now expand that to other kinds of data and services. We could, as a community, compile that data with provenance (since we know who it is coming from and their charitable status), and that data could be reflected in larger efforts. It could be aggregated and shared in Data Commons, alongside data from the World Bank, the United Nations, and federal governments. With that data, we could illuminate the places our systems of exchange and support have failed to reach, ensuring that we don’t leave too many of our fellow community members out of our policies, our decisions, our understanding of our world.

This is, in essence, the hard problem we are running towards. Pulling together the work we have been doing — in NGOsource over the last 10 years, and in TechSoup for more than 30 — allies us with people who want to make change, support our communities, and make our world a more inclusive and equitable sphere. Together, we have the assets. Together, we see the need. Now, we just have to harness the will and move forward.

To learn more about our data journey and to participate in these efforts, contact us at eligibility@techsoup.org.

Serving NGOs Today and in the Future: The NGOsource Learning Center

In 2022, NGOsource launched the Learning Center, a repository of diverse, multilingual learning content for NGOs and grantmakers navigating the equivalency determination (ED) process. Learning Center content is free and available in up to a dozen languages. Generously funded by several NGOsource grantmaker members, the Learning Center features articles, videos, FAQs, checklists, and quizzes on ED and related compliance content to help organizations understand complex U.S. tax law concepts.

As NGOsource continues to expand services and partnerships with grantmakers and global NGOs, there remains continued opportunity to provide learning materials and support guidance that meets the needs of diverse organizations. With an eye towards future partnerships that will allow NGOsource to assist organizations receiving grants through expenditure responsibility (ER) and a commitment to standardizing due diligence requests made of NGOs from a variety of stakeholders, the need to effectively communicate the context of legal requirements with accessible materials to simplify the process for all organizations will never be greater.

NGOsource is dedicated to always providing the highest quality guidance and is always seeking partnerships to provide the most relevant support in numerous languages to meet the needs of global NGOs. If you are interested in seeing specific content featured or otherwise want to support expanded learning content at NGOsource, please contact info@ngosource.org.