Locally Led Development: Who Achieves Sustainable Change?
Locally based institutions know best how to turn experience into solutions. This opens new opportunities für sustainable development cooperation.
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For decades, the development sector's main objectives have centred on improving the lives of people experiencing poverty, inequality, and vulnerability through sustainable approaches that create long-term change.
While the ambition is great and practical, it raises a fundamentally important question: who should be designing the solutions in the first place, and why?
Development programmes and designs have often been shaped by organisations in the Global North, far from the communities they were created for, and yet growing evidence and experience suggest that when local organisations are involved in shaping responses and practices, the outcomes are more sustainable and the cost is more manageable.
The problem extends beyond questions of effectiveness or programme design. This imbalance risks creating a system that does not adequately respond to the long-term needs of millions of people living in poverty.
People living with the realities of poverty and exclusion are not simply recipients of aid; they possess knowledge, networks and skills of their environment that are essential for lasting change.
Locally led development (LLD) has been identified by policymakers as a new approach in development cooperation. It refers to approaches that give local actors decisive influence over the design, implementation and evaluation of development programmes. Although the sector has increasingly recognised the importance of LLD in recent years, BRAC has been implementing and developing this approach for over half a century (1). We believe that solutions are more likely to succeed and scale when designed by the community they were intended to serve, and that sustainable, long-term change occurs when people are given the power to shape it themselves rather than having it imposed on them from outside.
BRAC’s Ultra-Poor Graduation Initiative (UPGI) is a strong example of this approach in practice. Building on BRAC’s Graduation approach, it supports people living in extreme poverty through a carefully sequenced package of support: meeting basic needs, providing a productive asset or livelihood opportunity, and offering intensive coaching that strengthens confidence, skills and agency. What makes this special is that the coaches come from the communities themselves. Rather than applying a fixed model, UPGI helps governments and partners adapt the approach to local realities, including urban settings, conflict-affected regions and climate-vulnerable communities. In this way, it shows how locally led development can combine deep community engagement – with evidence-based design and large-scale impact.
Local is more than a label
However, understanding what is meant by “local” is central to the discussion. In development practice, very superficial indicators are often used to assess a programme or organisation's local orientation, such as the share of local staff or the number of local offices. But what really matters more fundamentally to LLD is whether investments strengthen local structures and whether programmes build on existing local solutions.
Development actors, whether from government, philanthropy, or even Civil Society, need to identify organisations that are genuinely embedded in communities and draw on local knowledge and resources, or support partners that strengthen precisely such local organisations.
Local solutions can operate at scale
Another important point we need to emphasise is that local approaches can operate at scale. The experience of BRAC and of donor countries that have embraced locally led development demonstrates that locally rooted, community-driven models can grow globally, reach millions of people and still remain closely connected to people’s lives. BRAC’s UPGI programme clearly demonstrates the potential for scaling up this approach: Pioneered in Bangladesh, the Graduation approach has supported more than 2.3 million families to move out of extreme poverty. Today, the model has been adapted by more than 100 organisations across over 50 countries, and BRAC’s Ultra-Poor Graduation Initiative works with governments to scale it further — with the ambition of reaching 21 million people by 2030. Locally led development, therefore, should not be understood as a choice between community ownership and large-scale impact, but rather as an approach that can successfully combine both.
Direct funding of local solutions is an essential step towards building LLD. A large share of development finance continues to be managed and channelled through intermediary organisations, for which there is evidence of higher costs, lower efficiency and a weakening of local agency.
This high administrative cost is therefore diverting resources, and raises the question of whether resources could reach target groups more directly. There is already evidence that LLD can work when local organisations are trusted with direct funding. BRAC’s humanitarian “Pooled Fund Programme” in refugee camps around Cox’s Bazar in Southern Bangladesh, supported by Global Affairs Canada and Australia’s Department of Foreign Affairs and Trade (DFAT), provided direct financial and technical support to Bangladeshi organisations responding to the Rohingya crisis. Those organisations received 88% of the fund’s $9.3 million budget and delivered services at a cost 30 to 40% lower per outcome than international organisations operating in the same context.
At the same time, International NGOs spend 80% more on compliance requirements than their comparable multinational private-sector counterparts. Reporting consumes an estimated 2.3 million staff hours per year across the sector, meaning a significant portion of funding is spent on administrative procedures.
The irony is that an increasing number of intermediaries are involved at various stages of the compliance process, absorbing an increasing share of the already dwindling funding. At the end of the food chain, local actors then carry the whole weight of the reporting while only a small fraction of the funding reaches them, minimising their resources to carry out the actual work the funds were intended for.
People and communities experiencing extreme poverty require long-term engagement, trust in local solutions and corresponding investments that strengthen local systems. Intermediaries’ role should be limited to enabling and strengthening local structure, and must be time-bound.
What flexible funding makes possible
BRAC’s own experience demonstrates the importance of such approaches. BRAC’s ability to scale proven solutions as an organisation from the Global South was made possible through donors willing to readjust their risk appetite and invest directly in institutional core capacities. This enabled investments in talented staff, stronger management systems, research and innovation. The Strategic Partnership Arrangement (SPA), launched in 2011 between BRAC and the governments of Australia and Canada, illustrates how flexible financing agreements and collaborative decision-making structures can support local ownership while allowing programmes to respond to community needs. An earlier phase of the partnership involving the United Kingdom’s Department for International Development (DFID) reported that, while the SPA accounted for only 0.5 per cent of DFID’s budget, it contributed to 17 per cent of DFID-funded poverty-reduction outcomes.
The way local organisations are funded also determines their ability to deliver sustainable change. Many donors continue to limit local organisations through short-term, fragmented funding arrangements and low overhead cost allowances. Organisations from the Global South frequently receive less institutional support than their Western counterparts, resulting in underfunded institutions and missed opportunities for long-term impact. Funding structures often place a disproportionate compliance burden on local organisations and encourage implementation of predefined approaches rather than supporting local learning and innovation. A more effective approach would invest in organisations more organically, including staff, strategy and infrastructure, to enable lasting systems change.
Recent international events also created an opportunity to reconsider how development cooperation is structured. International pressure for reform has increased alongside growing resource constraints and discussions on new forms of partnership with countries and organisations in the Global South. The recently published guidelines on supporting locally led development from the Organisation for Economic Co-operation and Development (OECD) signal growing recognition among development actors that strengthening local ownership, shifting decision-making power and investing in local institutions are essential to achieving sustainable development outcomes.
This creates an opportunity to rethink traditional assumptions and strengthen the effectiveness of LLD approaches as a central benchmark for future cooperation.
What this means for German development cooperation
The experiences of organisations such as BRAC and of emerging partnership models also raise important questions for the future of German development cooperation. With the current global crises and tighter funding budgets, German development policy is going through a period of transition. The Reform plan of the BMZ (Federal Ministry for Economic Cooperation and Development) offers a very useful map, but the interesting question is which of the paths German development cooperation will actually embark on and how much headway they make. Using limited resources effectively is more pivotal than ever.
The following three guiding stars might help Germany embark on the right track:
Firstly, unlearn development stereotypes: Interestingly, German legislation already allows for direct funding of organisations from the Global South. It is subordinate guidelines, implementing regulations and budget explanatory notes that continue to assign these organisations as secondary. On top of that, well established stereotypes in the development sector, such as the false narrative that local actors are small, less trustworthy and less capable, further degrade and underestimate local organisations. Unlearning development cooperation means seeing local organisations and actors as what they really are: experts and stewards of their own fate.
Secondly, run the fairness test: do all development actors, whether small or big, North or South, receive equal treatment for equal performance?
And thirdly, don't reinvent the wheel. Rather than creating entirely new systems, reinforce existing locally led solutions and tested approaches, ensure resources are used more effectively, and support long-term solutions.
Existing examples suggest that progress may not necessarily require entirely new systems, but rather a willingness to build on approaches that already exist. This includes learning from international partnership models, creating more accessible financing channels for organisations from the Global South and strengthening mechanisms that make progress on locally led development more visible and measurable.
We must recognise that LLD is not only a discussion about funding mechanisms or programme structures. It is about recognising that local actors are not simply implementing partners but essential drivers of sustainable development. Strengthening local institutions and enabling them to shape solutions based on their own knowledge and experience creates opportunities for development cooperation that is more effective, more equitable and more closely connected to the realities of people’s lives.
Footnote:
(1) BRAC is a global leader in developing and scaling proven solutions to poverty and inequality. Founded in 1972 in post-war Bangladesh as a small relief effort, BRAC now works in 13 countries across Asia and Africa and has reached more than 145 million people through large-scale, locally led programmes. Its work combines integrated development programmes, humanitarian response, social enterprises, commercial ventures and higher education into a holistic solutions ecosystem.
