What happened to aid for governance and civic space during Covid-19?

The Covid-19 pandemic has brought challenges to and concerns about key aspects of civic life and governance, including transparency, participation and accountability. What’s more, the economic toll on citizens and governments has been significant. With governments facing multiple crises, lower revenues and higher debt, many will be pressed to reduce public budgets and meet loan conditionalities. These economic pressures may mean fewer resources are available for inclusive governance.

Civil society organisations (CSOs) such as Civicus have also raised concerns about the pandemic’s impact on civic space. These include risks to the sustainability of CSOs and jobs due to economic crisis and lockdown, relief funding bypassing the most vulnerable, and less funding and fewer opportunities for youth activists and those working on other social causes. This highlights that funding to support good governance and a thriving civil society should be one essential component of effective pandemic response and recovery.

As a network of funders focused on global funding that supports good governance, the Transparency and Accountability Initiative (TAI) has therefore been watching the financing impacts of the pandemic with keen interest. Before concrete data became available, there was much speculation and a range of views about what might happen: that funding would stay steady to core governance issues; that funding would increase to issues with renewed relevance, such as public procurement; or that funding would go down as funders shifted their focus to health and the climate.

With the recent data release by the Organisation for Economic Co-operation and Development (OECD) providing details of funding for governance and civil society in 2020, we can now get a better sense of what actually happened as the pandemic unfolded.

Covid-19 drove increases in overall funding to governance and civil society but some important areas saw cuts from 2019 levels

To many people’s surprise, funding to governance and civil society went up as a result of increases in both Official Development Assistance (ODA) from donors and other official flows (OOFs) from multilateral development banks compared to the year before. However, private development finance decreased by over US$53 million, mainly due to a large cut by one philanthropic foundation. Overall, funding in 2020 reached US$34.4 billion compared to US$25.1 billion in 2019. Contrary to concerns that Covid-19 would impede funding overall, it appears to have contributed to this rise; over US$9.8 billion of that funding was tagged with the keyword ‘Covid-19’.

However, this overall rise masks a mixed picture when we look at where that funding went. Many different subsectors, from human rights, media and free flow of information to public finance management (PFM) and public procurement, are included in the data under governance and civil society.

Increases went to core areas of government work such as public sector policy and administrative management, macroeconomic policy, decentralisation, and support to subnational government. These increases largely came from development banks, particularly the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB), the International Bank for Reconstruction and Development (aka the World Bank’s lending window for middle-income and creditworthy low-income countries), and the Inter-American Development Bank (IADB). Democratic participation is noteworthy for the attention it received from a range of donors, leading to a funding increase of over US$119 million.

In contrast, anti-corruption organisations saw funding disbursements drop by about US$144 million, support to domestic resource mobilisation (DRM) and human rights was cut by US$289 million and US$53 million respectively. Women’s rights organisations saw funding stay about the same, but Oxfam and women’s rights organisations report that grassroots organisations faced pressing funding gaps. These cuts are concerning, especially given the importance of these issues in the pandemic context (large-scale Covid-related fraud, deterioration of public finances, repression of civic activism). It is perhaps no surprise that citizen trust in government (and most institutions) has declined during the pandemic given the lack of investment in efforts that reinforce the social contract.

While many donors increased their ODA grants, the UK and US made significant cuts

As for ODA grants, there was an overall increase of US$1.4 billion, with EU institutions alone increasing disbursements by almost US$970 million, the majority share going to migration. The role of development banks in providing ODA grants also increased, most notably from the International Development Association (IDA), the African Development Fund and the ADB.

Looking at cuts to ODA grants, the UK (as expected due to overall cuts) decreased its ODA grants with a reduction of US$236 million. This impacted across the board, but we see the largest cut landing on public sector policy and administrative management (approximately US$50 million.) To put this into perspective, other areas, such as the humanitarian sector, experienced far worse cuts.

Less expected, the largest decrease to ODA grants disbursements was from the US (almost US$363 million). This is despite overall ODA from the US increasing in 2020. This likely reflects a change in priorities: Afghanistan saw the largest single cut in this type of support from the US of US$314 million.

Funding to civil society was not cut in the first year of the pandemic as many had feared but local NGOs got the minority share

Total funding channelled through NGOs in this sector reached US$4 billion, an increase of nearly US$150 million. The majority (68%) went to those based primarily in donor countries rather than local NGOs – the same trend as the year before. It means progress is slow on the localisation agenda in this sector despite calls to support more organisations in countries directly, and it reflects a broader lack of progress even in sectors where this is high on the agenda.

Where are we now? The use of funding data to challenge assumptions

While the 2020 headline figures for government and civil society funding are not as bleak as some had feared, significant variations, both by type of financing and trends in specific subsectors, point to the need for quality disaggregated data. It is important that funders make their own investment decisions based on an accurate understanding of the broader funding context and shifts by other funders. It is too easy to make assumptions that might not match reality.

One challenge is the lag in data production. With a two-year wait for OECD DAC updates, funders are forced into a certain amount of crystal-ball gazing. Given the overall trend in ODA, we expect that governance and the civil society sector likely saw funding level off in 2021. Unlike in 2020, no major cuts were announced, while loans from multilateral development banks probably still represented a large share of spending in the sector. It might have suffered more in 2022 when many donors diverted funds for Ukraine support, although there are some signs of rebalancing now (Sweden just announced the restoration of $398 million to its aid budget, including for human rights funding.)

In terms of philanthropic spending, Candid has already found that foundations may have increased their funding in 2021, with speculation that funding in 2022 may remain the same or increase. In its own data, TAI saw fewer new grants made in 2021 compared to 2020, which may herald an increase in 2022 as some TAI members ramp up again and invest in new strategies.

Going forward, TAI will be among those tracking not just the volume of grants, but what percentage are unrestricted. We all had to adapt during Covid-19 – as individuals and as organisations. Flexibility in operations is enabled by flexibility of funding. On the philanthropic side, at least, there were many grand promises in this regard, such as the 350 funder signatories to the London Funders pledge. Ideally, future funding data (for both public and private sources) will help tell us to what extent such promises have been translated into action.

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Find out more:

Read the full briefing: The State of Governance Funding – Exploring the latest official development assistance figures.

Explore the data: TAI’s dashboard allows you to unpack information on governance and civil society funding by region, country, issue, donor, and type of funding, including comparisons across years.

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