International donors’ requirements can prevent refugee-led organisations (RLOs) from accessing funding. Yet, as RLOs in Egypt demonstrate, direct finance for RLOs can deliver efficient, cost-effective and sustainable displacement response.

Almost all RLOs in Egypt are grassroots entities operating solely on voluntary contributions of time, skills and resources from individuals dedicated to their communities. With a steadily widening gap between the needs of refugees and their access to services and rights, RLOs in Egypt fill critical gaps in service provision for refugees and migrants, particularly for those who are newly displaced and may not have access to services from UNHCR or I/NGOs.

Acting as first responders, RLOs provide immediate relief such as shelter, food, emergency loans and birth registration support. They play a vital role in connecting refugees with essential services such as legal documentation, healthcare, education and other basic needs. I/NGOs frequently utilise RLOs to deliver their services, relying on their premises and volunteers to reach the refugees. However, despite considering RLOs key partners, I/NGOs frequently do not share their funding with them. When I/NGO projects end, the services usually cease, but communities still turn to RLOs, leaving them with no choice but to continue providing support without any financial assistance.

Conventional finance methods can exclude

Traditional funding models,^[1] often characterised by top-down approaches, have limitations in addressing the complex challenges displaced communities face, typically requiring the implementation of partnership models widely used by UNHCR and UN sister organisations.

RLOs in Egypt often face significant barriers to accessing funds due to legal constraints that prevent them from being formally registered. The lack of official documentation and the absence of bank accounts make it difficult for donors to fund RLOs. To cover operational costs such as rent, utilities and staff compensations, RLOs rely on their internal resources and charitable donations. Despite these challenges, RLOs are pivotal to the refugee response and continue to demonstrate their capacity and impact through their work on the ground, assisting refugee communities despite having only limited resources. The success and efficiency of these RLOs provide stark evidence that refugees possess the knowledge and skills to design and implement projects for their communities.

New ways of financing RLOs

Emerging financing mechanisms promise more direct, impactful and durable community assistance by allocating financial resources directly to RLOs, empowering them to tailor interventions to the specific needs of their communities and fostering a sense of ownership and agency among displaced populations.

Recognising the vital role of RLOs, some NGOs and INGOs have sought to enhance their partnerships with these organisations. StARS, a refugee-led organisation in Cairo, of which two of the co-authors are staff members, initiated a project to provide holistic support to other RLOs in Cairo, aiming to build their institutional and operational capacity, and multi-year collaborative support. Through this initiative, StARS shared its expertise and facilitated access to funding opportunities for other RLOs.

New Vision, another Cairo based RLO, faced challenges accessing funding opportunities. Despite the acceptance of their application for a funding opportunity, the lack of formal registration and a bank account posed significant obstacles. New Vision overcame these barriers by signing a fiscal sponsorship with a partner RLO, making it possible to absorb funds through an intermediary, which enables the organisation to secure the resources it needs to fulfil its vital missions. The experience of New Vision underscores the importance of embracing flexible and inclusive funding mechanisms that empower RLOs to thrive and have a meaningful impact within their communities.

RLO’s cost efficiency, sustainability and effectiveness

One of the key advantages of RLOs is their cost effectiveness compared to NGOs and INGOs. RLOs demonstrate cost-effective practices by efficiently utilising resources, such as renting multipurpose offices and offering local salaries to refugee staff (as opposed to international humanitarian salaries). As grassroots organisations, RLOs are situated in neighbourhoods where refugee communities live, use the same low-cost rental spaces and avoid the high operational expenses associated with INGOs, such as advanced security measures, technological infrastructure and access restrictions (for example, requiring pre-scheduled appointments or referrals through partner organisations). These stringent security protocols, while often necessary, can limit accessibility for clients, particularly in emergencies, where immediate assistance is critical. In contrast, RLOs maintain an open-door policy, allowing individuals to seek assistance in person without prior appointments. RLOs also have deep-rooted connections within communities which ensures that resources are used effectively and relevantly, avoiding the end-of-year spending on less impactful activities that some larger organisations resort to.

StARS recently conducted an evaluation comparing assistance provided by StARS with assistance provided by Save the Children International (SCI) and the World Food Programme (WFP). The data shows that StARS programmes are more cost-efficient and have a significant impact in increasing accessibility across all nationalities and in reaching some of the most marginalised groups, such as survivors of GBV, survivors of torture and LGBTQI individuals, as well as irregular and undocumented migrants.

In Cairo, RLOs have been especially effective at reaching Syrians, Yemenis and Eritreans in their localities. The authors argue that this is related to the cultural background of these nationalities, they are typically more reluctant to seek services but rather receive them when embedded in the form of community solidarity. Due to their long-term engagements with communities and awareness of cultural sensitivities RLOs can often identify more isolated or at-risk individuals and groups that are reluctant to approach or access traditional service providers and I/NGOs.

With refugees living across urban neighbourhoods alongside host communities, RLOs play a vital role in easing the tension of displacement through various means. They provide orientation and accurate and updated information about the new environment, conduct community awareness-raising sessions, and strengthen community resilience and integration. RLOs facilitate refugee and migrant networking, community cohesion, social protection and cultural preservation. These efforts enhance integration and the well-being of their communities, making RLOs indispensable as community centres in different areas. A large portion of refugee children also attend community schools run by refugee-led organisations, this complements public schools and helps overcome language barriers, xenophobia and bullying.

RLOs provide livelihoods

Funding RLOs can be a method of financing displacement response as those working for RLOs benefit from sustainable livelihoods. In contexts where refugees may be denied work rights – often resulting in modern-slavery work conditions – RLOs can offer safe and dignified livelihood alternatives. This stability fosters a sense of security, allowing refugee staff to focus on their work without the constant worry of financial instability. Additionally, paid work offers opportunities and connections that were previously inaccessible, empowering refugee members by enhancing their skills, expanding their professional networks and increasing their influence within the community.

Furthermore, RLOs often engage in capacity-building initiatives within the community, providing training and skills development programmes that empower individuals. This sustainable approach helps break the cycle of dependency and creates opportunities for long-term resilience and growth. The uniqueness of the services at StARS, New Vision and other RLOs lies in their culturally sensitive approach, originality and deep understanding of the communities they serve. The services they offer are finely attuned to the specific needs, cultural nuances and lived experiences of community members.

The capacity building and operational improvements within RLOs continue to benefit the community long-term. Even during periods of financial scarcity, the skills developed by RLO staff, volunteers and programme participants enable them to support their communities effectively. RLOs remain responsive to community needs, mitigating funding shortages by minimising operational costs or relying on charitable contributions to maintain essential services and respond to emergencies.

Logistical challenges

RLOs still face challenges accessing finance. First, most RLOs struggle to meet the host country’s regulatory framework, making it challenging to receive funding directly from a donor without an intermediary.

Second, there is a lack of adequate intermediaries willing to facilitate funding. This is an issue as sometimes a memorandum of understanding (MOU) with a local partner is required to access bank accounts.

Lastly, while RLOs have advocated for new financing models and provided evidence of their effectiveness, there is still hesitancy from donors. This may be due to limited access to RLOs in certain contexts and the preference of donors for INGOs with well-established relationships. This raises the question of how RLOs can demonstrate their capability to absorb funding if they are not given the opportunity.

StARS and other RLOs in Egypt have successfully navigated donor funding challenges through innovative approaches. Educating donors about the unique challenges faced by RLOs has been instrumental. By familiarising donors with the RLO model and emphasising its cost-effectiveness, StARS has built trust and demonstrated efficient resource utilisation, leading to impactful outcomes. This approach has proven effective in attracting donor support and enabling StARS to secure fiscal sponsorship through other organisations. Additionally, some RLOs have addressed these challenges by affiliating with local organisations (although there are potential drawbacks associated with such arrangements).^[2]

Recommendations

Donors should recognise RLOs as key actors in global localisation and refugee leadership instruments. Their perception of RLOs being ‘too risky’ lacks empirical support and has resulted in overly stringent compliance and due diligence criteria, hindering many RLOs from accessing funding.
Recognising restrictions on the fundamental right of freedom of assembly in many refugee-hosting countries, donors should consider alternatives to the requirement of legal registration. Instead, donors may accept references, financial reports and evidence of past project implementation as valid alternatives to formal registration.
Since the requirement for a bank account often correlates with formal registration, which many RLOs lack, donors should encourage funding RLOs through fiscal sponsorship or alternative means. NGOs should act as intermediaries to facilitate funding.
Donors should streamline their requirements, focusing only on essential aspects of institutional capacity and governance necessary for effective project management, fundraising, monitoring, evaluation and staffing, without burdening RLOs with excessive administrative and governance documentation.
Proposal writing and reporting requirements should prioritise a community-centred approach, allowing for oral submissions of progress reporting, and the use of media and submissions in languages RLOs are proficient in, among other options.
Lastly, providing multi-year funding to RLOs allows them to accumulate experience, build financial systems, expand their capacity through networking for more funding opportunities and enhance their advocacy efforts. Promoting sustainability and enhancing their effectiveness in project implementation and community capacity building over time, therefore, it is recommended that donors expand project funding to cover at least two years.

Financing RLOs has a transformative impact on both the organisations themselves and the communities they serve. These new funding mechanisms empower RLOs, improve staff livelihoods, enhance community engagement and foster long-term resilience. Supporting and investing in RLOs is crucial in building sustainable, more equitable displacement responses and promoting the self-reliance and dignity of displaced people.

Alya Al Mahdi
Deputy Director of Programs, Saint Andrew’s Refugee Services (StARS)
amahdi@stars-egypt.org

Buay Peter Kun
Senior Policy and Advocacy Officer of Development, StARS
peter@stars-egypt.org

Daowad Adam
Director of New Vision Center For Educational & Social Development
Daod11@yahoo.com

[1] ODI (2023) The failure to fund refugee-led organisations: why the current system is not working, and the potential for change bit.ly/odi-failure-fund-rlos

[2] Hegazy N ‘The Sidelined Front-liners: Eritrean CBOs in Greater Cairo’ The American University in Cairo bit.ly/eritrean-cbo-cairo

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