NEWS IN FOCUS: How will NGOs survive the withdrawal of DFID funds? - The shift in DFID's funding focus from service delivery to advocacy work casts doubt on the future of small- and medium-sized NGOs, Mathew Little reports

MATHEW LITTLE

Incurring the wrath of Clare Short seems to be a peculiar voluntary-sector talent. Whether being castigated as anti-trade luddites preventing the poor from enjoying the benefits of globalisation or scaremongers exaggerating the humanitarian dangers of the war in Afghanistan, NGOs have been a perennial target of Labour's secretary of state for international development.

But according to the director of FARM-Africa, Christie Peacock, the overseas aid sector faces more than icy words - it is also being frozen out of the funding regime by Short's Department for International Development (DFID).

"The genuine partnership that used to exist with a broad range of British NGOs has collapsed,

says Peacock. "Funding is going government to government and through multilateral agencies like the EU. A broad range of NGOs used to be real partners in aid programmes; now all but the favoured few only get funding when they occasionally hit the right button."

According to DFID's annual report, a quarter of DFID's £800 million budget goes to the EU, and "this is expected to rise further".

Small- and medium-sized NGOs have been primary victims of this change in funding and are being squeezed out of existence, according to Peacock.

Larger agencies can negotiate individual Programmes Partnership Agreements, while the rest of the sector is dependent on the Civil Society Challenge Fund which replaced the Joint Funding Scheme for NGOs shortly after Labour came to power.

The Challenge Fund is restricted to programmes which primarily involve advocacy work. "The Fund is all about a rights-based approach and empowering people and not service delivery,

says Peacock. Small- and medium-sized NGOs which focus on practical development work rather than campaigning are losing out.

Action Village India is a small UK-based NGO which has seen a successful project denied funding because it did not sufficiently align with the new DFID focus. A community-based project delivered with local partners, which offered loans for farming and small business development, succeeded in increasing the income of 700 of the poorest families in a part of Tamil Nadu to the local average of £250 per month. The charity applied for funding to extend the projects to other districts but was turned down as the scheme involved too much service delivery.

"The project was very successful but we can't raise funds,

says Action Village India co-ordinator Ivan Nutbrown. "We will have to go to individuals and scrabble around for money for trusts."

Nutbrown says that only larger NGOs are equipped to engage in the advocacy work such as pressing health centres to stock certain drugs or ensure that schools have the number of teachers desired by DFID. "Smaller NGOs involved in training farmers or setting up self-help groups have local people running them. But it's impossible to access funding for work that can be effective,

he says.

Small- and medium-sized NGOs are also finding it difficult to meet escalating management costs in projects as funders demand more professionalism. The actual delivery of the project is augmented by requirements to submit pre-project research, measure gender equity and communicate outcomes and lessons to other NGOs and the wider public.

DFID's demands for greater NGO accountability and professionalism are understandable suggests Waller - the problem is that the department has yet to reach a coherent view of the role of the UK-based NGO sector in reducing poverty in developing countries. "I don't have a problem with them as a bureaucracy,

he says. "But they are not clear about their attitude to civil society - does it have a value to them beyond its utilitarian value in implementing services?"

When DFID was created after Labour came to power, the department reputedly debated very seriously not funding UK-based NGOs at all.

Western NGOs have been subject to fierce criticism for their record in developing countries with accusations ranging from support for repressive regimes, to lack of accountability and sensitivity to the views of recipients of aid, and the affluent lifestyles of expatriate aid workers.

"There are real issues about outside NGOs,

says Waller. "There is an argument that NGOs have weakened states in countries such as Uganda - by putting money into NGOs and not the state, you damage the state. But international and national NGOs should be working together with other parts of civil society and the state, each is necessary and has a role to play."

In common with other departments, DFID are asking why they should fund charities and what is the added value they bring.

"It's a very good question,

says Waller. "Why should the Government incur the transaction costs of putting money through British NGOs? We have no right to exist if we are not relevant. But there are reasons such as linking civil society organisations in the North and in the South as part of a global movement for social justice and keeping people interested in international development."

There is also the argument that out of favour organisations should diversify their income. Daleep Mukarji, director of Christian Aid, concedes that some specialist NGOs should not have got themselves in the position of being reliant on grants in the first place. "It's not healthy when a good NGO closes, but for an NGO to be too heavily dependent on government isn't healthy either,

says Mukarji.

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