Norad tests new model for support to local sub-partners

Norway has committed to the declaration to promote locally led development, known as the Donor Statement on Supporting Locally Led Development. We have also committed to this through the Grand Bargain agreement.  

The global debate on locally led development, including the Grand Bargain process, has focused on covering the indirect costs of local organisations. The UN Inter-Agency Standing Committee is calling on donors to change their practice in this area. 

Against this backdrop, Norad set up a working group in 2024 which has looked at the possibility of giving local sub-partners contributions towards indirect costs based on a percentage rate. The working group has considered how such contributions should be organised so that they are in line with the applicable financial regulations. A number of Norwegian civil society organisations which receive grants from Norad have been consulted, as well as external stakeholders such as the Network for Empowered Aid Response (NEAR). 

New pilot 

Based on the workgroup’s conclusions, Norad has decided to conduct a pilot with selected volunteer grant recipients. The aim is to test a model where contributions to indirect costs are given on a percentage basis for sub-partners. The pilot will assess the feasibility and suitability of the model, and lay the foundations for a possible change in practice. 

A new model for the coverage of indirect costs will not necessarily replace the existing model, and Norad may in fact opt to offer two parallel models for grant beneficiaries to choose from. 

Norad will carry out the pilot involving 3-5 grant recipients for individual projects funded under chapter/items 150.70 Emergency relief and humanitarian aid, 170.70 Civil society, and 159.73 Ukraine and neighbouring countries. This will provide valuable insight into both the opportunities and benefits and the weaknesses and challenges associated with such a model for Norad, our grant recipients and their sub-partners.  

Grant recipients who have received a tentative or final award from Norad under the relevant chapters/items following certain calls for proposals in the autumn were invited to declare their interest in participating in the pilot. 

Participating organisations 

After many organisations declared their interest, the following organisations were chosen to participate in the pilot: Norwegian People’s Aid, Norwegian Olympic and Paralympic Committee and Confederation of Sports, Plan International Norge and Norwegian Refugee Council. These organisations will pilot the new model in cooperation with some of their respective local sub-partners with funding from all three chapters/items concerned.    

Norad hopes that this pilot will help shed light on the benefits and drawbacks of a new model for support for local sub-partners, so that the practice can be improved to the benefit of all parties involved.