OECD Pushes Global Aid System to Shift Power and Resources to Local Actors

The OECD’s new report calls for a major shift in global aid systems by giving local communities, governments and grassroots organisations greater control over development decisions and funding. It argues that traditional donor-driven models are ineffective and that locally led approaches can create more sustainable, inclusive and cost-effective development outcomes.

The OECD Development Assistance Committee (DAC), together with research and policy organisations including ALNAP, BRAC Bangladesh, Peace Direct, the Aga Khan Foundation, the Global Partnership for Effective Development Co-operation (GPEDC), the International Institute for Environment and Development (IIED), NEAR and King's College London, has released a major report calling for a complete rethink of how international aid is delivered.

The report argues that global development systems still give too much power to donor governments, international agencies and large NGOs, while local communities and institutions often remain excluded from key decisions. According to the OECD, real development progress will only happen when local actors are given greater control over funding, policies and programme implementation.

Why Traditional Aid Models Are Under Fire

For years, global aid agencies have spoken about "country ownership" and "local participation", but the OECD says these promises have often failed to translate into practice. Many development projects are still designed in donor capitals and implemented through complicated systems controlled by international organisations.

The report argues that local organisations are frequently consulted only after important decisions have already been made. As a result, communities often have little influence over the projects meant to improve their lives. The OECD says this top-down model weakens trust, creates dependency and produces programmes that are not always suited to local realities.

The document also links these problems to wider debates about colonial-era power structures in global development. It notes that aid priorities are still largely shaped by institutions in wealthier countries, while local voices struggle to influence global decision-making.

Local Communities Seen as Key to Better Results

The OECD strongly argues that local actors are often better placed to lead development efforts because they understand local conditions, politics, culture and social dynamics far more deeply than outside organisations. Communities facing poverty, climate disasters or conflict are usually the first responders during crises and often remain active long after international agencies leave.

According to the report, local organisations can also deliver projects more efficiently by reducing expensive international staffing and administrative costs. The OECD says this makes locally led development not only more inclusive, but also potentially more cost-effective and sustainable.

However, the report stresses that locally led development is not simply about giving more money to local groups. Instead, it is about shifting decision-making power so that communities help shape priorities, budgets and long-term strategies from the beginning.

Donors Urged to Reform Funding and Bureaucracy

A major focus of the report is the need to reform international funding systems. The OECD criticises the heavy paperwork, strict compliance rules and short-term project funding that often prevent smaller local organisations from accessing aid directly.

Many donor agencies, the report says, continue to prioritise financial control and risk avoidance instead of building long-term partnerships. This has allowed large international intermediaries to dominate aid delivery while local organisations remain dependent on external actors.

The OECD calls for more flexible and multi-year funding that allows local organisations to strengthen their own systems and respond to changing local needs. It also recommends simpler reporting systems and fairer risk-sharing arrangements between donors and local partners.

International NGOs and multilateral agencies are not excluded from the future aid system, but the report argues their role should change. Instead of acting as primary decision-makers, they should increasingly support local leadership and help strengthen local institutions.

Climate and Humanitarian Crises Add Urgency

The report highlights climate adaptation and humanitarian response as areas where locally led approaches are especially important. Communities on the frontlines of floods, droughts, conflicts and displacement often receive only a small share of international funding despite being the most directly affected.

The OECD argues that empowering local actors can improve resilience, strengthen accountability and make development programmes more sustainable over the long term. At the same time, it recognises that locally led development can be difficult in politically fragile or authoritarian environments where local organisations face security risks or restrictions on civic space.

Ultimately, the OECD describes locally led development as a major transformation rather than a small technical reform. The report concludes that international donors must be willing to share power, trust local institutions and rethink how aid systems operate if development efforts are to remain effective in an increasingly unstable world.