The Promise and Challenges of Locally Led Development: Turning Ambition into Reality
The recent endorsement of locally led development by a coalition of international donors, including USAID and leading foundations, represents a profound shift in the global approach to development. The principle is straightforward: those who are closest to the challenges should be empowered to lead the solutions. But as we look toward operationalizing this principle on a large scale, we must confront the significant practical hurdles involved. Locally led development is a compelling vision, but implementing it presents complex challenges for bilateral aid agencies and private foundations alike.
Capacity to Deliver
One of the central issues is the capacity of local organizations to deliver on large-scale initiatives. Many community-based organizations have deep roots in their local environments and an intimate understanding of local needs. However, only a limited number have the financial capital, management infrastructure, and technical expertise to implement large-scale projects that meet the stringent compliance and accountability requirements of international donors.
For most bilateral aid agencies, including USAID, traditional funding models favor large contracts, sometimes ranging from $10 million to $500 million. These funding mechanisms often exclude smaller organizations that lack the administrative and operational capacity to compete. Moving toward a more locally led approach would require agencies to retool their systems to accommodate smaller, more frequent awards. This, in turn, demands a larger administrative workforce, which many donors, despite recent staffing increases, are ill-equipped to handle. Without significant investments in both capacity building and administrative staffing, bilateral and multilateral donors will continue to face challenges in scaling locally led development.
The Risks Involved
Risk is another fundamental challenge. Development work is inherently risky—financially, programmatically, and reputationally. Historically, donors have mitigated these risks by working with large, experienced international NGOs and contractors, which are well-versed in navigating complex donor regulations and compliance requirements. These organizations have the capacity to manage large contracts, maintain financial accountability, and ensure that projects align with donor standards on issues ranging from environmental sustainability to anti-terrorism financing.
By contrast, local organizations, while embedded in the communities they serve, may lack the experience and resources to manage these risks at scale. Although smaller grants can reduce some risks by focusing on highly targeted, community-driven outcomes, they also introduce new vulnerabilities. Local organizations often struggle to navigate donor compliance and accountability standards, which can lead to programmatic and financial management difficulties. A successful transition to locally led development requires a fundamental recalibration of how donors assess and manage risks in collaboration with local partners.
Bureaucratic and Systemic Constraints
Donor systems are often rigid, creating structural barriers to locally led development. Budgets are frequently tied to pre-determined sectoral priorities, presidential initiatives, and congressional earmarks, limiting flexibility in adapting to local needs and shifting dynamics. This issue is not unique to USAID but is also a common feature of other bilateral and multilateral donors. The unpredictability of donor funding cycles and the resulting abrupt shifts in resource allocation make it difficult for local organizations to plan and sustain long-term initiatives.
To succeed, locally led development requires flexible, adaptive funding mechanisms that give decision-making authority to country-level teams. These teams are better positioned to respond to the rapidly changing needs and political environments on the ground. Without this shift, the very systems designed to deliver aid may become impediments to achieving locally led development.
The Path Forward
So, how can we move beyond the rhetoric and make locally led development a reality? For donors—whether bilateral agencies, multilateral institutions, or private foundations—the answer lies in rethinking their approach to local partnerships. This means investing in local capacity building, creating more responsive and flexible funding mechanisms, and recalibrating risk management systems to account for the realities of local contexts. It also requires that donors decentralize decision-making, empowering country-level missions to act based on the realities on the ground.
At RBM Strategies, we believe that the future of development lies in the hands of local leadership, but we recognize that getting there will require structural change. To address these challenges head-on, we need concerted action from donors and local partners alike.
To continue this important dialogue, I’m excited to announce that we will be organizing a conversation as part of our AI Dialogue Series, which will explore how artificial intelligence and emerging technologies can support the shift toward locally led development. This discussion will bring together policymakers, development professionals, and thought leaders to explore innovative solutions for overcoming these systemic challenges. Stay tuned for more details as we look to bridge the gap between ambition and practice in development.
