Look at the due diligence questionnaire we send to a local partner before signing a grant. It asks for three years of audited accounts, a fraud policy, a procurement manual, an active safeguarding mechanism, and a dedicated compliance lead. These are sensible requirements, drawn up by people who care deeply about protecting public money and keeping communities safe. Yet when the grant budget is written, the line for indirect cost recovery is capped at three percent, or left out entirely. We ask an organization to operate with the compliance rigor of a global institution, while funding only the fuel, the flour, and the field staff directly tied to the project.
This gap did not open because anyone intended to be unfair. It grew out of a long effort to show taxpayers and donors that money goes straight to the front line. Overhead became a dirty word, a sign of administrative inefficiency to be trimmed at every opportunity. International organizations learned to absorb their own institutional costs across hundreds of global grants, using negotiated indirect cost rates to pay for internal auditors, legal teams, and risk managers. Local partners, operating grant to grant without institutional reserves, were never given that runway. We expected them to build professional infrastructure out of thin air, or to subsidize public operations out of their own pockets.
The trap of unfunded compliance
When we starve a partner of core operational funding, we do not eliminate risk. We simply force them to choose between two quiet failures. Either they stretch a small finance team to the breaking point, running multi-million dollar responses on evening overtime, or they produce the paperwork we demand without the internal capacity to enforce it. The policies sit in a binder, pristine for the audit, while the actual risk sits unmanaged on the ground. When a system breaks under that pressure, we point to a lack of capacity, rather than a failure of funding.
This pattern damages both sides. It keeps local organizations fragile, forever dependent on the next short project cycle to pay their central staff, unable to invest in training, legal advice, or secure systems. It also leaves the response vulnerable, because an organization that cannot pay its finance director between projects cannot maintain the continuity that true integrity requires.
Refunding the foundation
The build is to treat core operational capacity as a direct requirement of responsible aid, not an administrative luxury. We align what we demand with what we provide, making institutional support a standard feature of every partnership rather than an exception carved out after a struggle.
First, we apply fair and transparent indirect cost rates to local partners. If an international organization requires ten percent to maintain its governance, legal oversight, and financial controls, a local organization operating in a high-risk environment needs no less. We stop treating partner overhead as a negotiation to be won, and start treating it as the price of survival and safety.
Second, we fund core organizational health explicitly inside project proposals. That means adding line items for staff well-being, financial audits, legal counsel, and policy development directly into the budget. When we ask a partner to upgrade its procurement system or strengthen its safeguarding reporting, we pay for the software, the trainer, and the dedicated hours required to make it stick.
Third, we move toward flexible, multi-year core funding alongside project grants. True compliance is not built during an emergency response. It is built in the quiet months before a crisis, when an organization has the space to hire good people, refine its controls, and build a culture of integrity. Funding that stability is the single most effective risk management tool we have.
None of this requires us to lower our standards or accept financial loss. The desire to account for every dollar is sound, and the duty to protect funds is real. But real accountability costs money. Expecting a local partner to hold the line on risk without paying for the structure that holds it up is not stewardship. It is a slow way of setting our partners up to fail. If we want institutions on the front line that are strong, transparent, and resilient, we have to start paying for the foundation, not just the roof.